Federal Court of Australia

Viscariello v Najjar [2025] FCA 655

ORDERS

THE COURT ORDERS THAT:

1.    The parties are to confer with a view to reaching an agreement as to the quantum to be awarded to the applicants having regard to the reasons delivered today, together with any extant issue of costs of this proceeding.

2.    In the event that agreement as to quantum and costs is reached, on or before 23 June 2025, the applicants are to submit a minute of order specifying the consent orders sought on the originating application, such minute to provide for the finalisation of this proceeding and the vacation of the order in paragraph 4.

3.    In the event that agreement as to quantum and/or costs is not reached, on or before 23 June 2025, the respondent is to file and serve an affidavit specifying the nature and extent of the disagreement.

4.    Any dispute notified in accordance with paragraph 3 is set down for hearing at 3.30pm (ACST) on 27 June 2025 with one hour set aside.

5.    Liberty to apply.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

CHARLESWORTH J

1    The original parties to this action engaged in a mediation on 5 September 2024 pursuant to a Mediation Agreement executed two days prior. Adelaide Connection Pty Ltd (ACN 169 947 317) is a party to the Mediation Agreement. The mediation encompassed the claims originally made in this proceeding as well as litigation in the District Court of South Australia in which Adelaide Connection was the plaintiff. The primary claims in both proceedings were resolved on terms set out in a Deed of Settlement dated 16 October 2024.

2    The parties are now in dispute as to the proper construction of the Mediation Agreement insofar as it contains provisions dealing with the parties’ own costs of and incidental to the mediation. The Court granted leave to the first applicant (Mr John Viscariello) to amend the originating application so that the construction issue could be determined in a short timeframe within this proceeding and without the need for additional proceeding to be commenced. Adelaide Connection has been joined as a party to facilitate the final resolution of all issues.

3    It has not been necessary to proceed on pleadings. At the commencement of the hearing the parties informed the Court that affidavits filed by them in advance of the hearing would not be read. The parties belatedly reached agreement on a number of matters, sensibly reducing the length of the hearing and the evidence upon which they relied. The issues between the parties are defined in their written submissions, excluding those parts upon which they no longer rely.

4    It is common ground that:

(1)    the Deed of Settlement and the Mediation Agreement are legally binding and no issue under Masters v Cameron (1954) 91 CLR 353 arises;

(2)    the disputed issue turns upon the terms of the Mediation Agreement objectively construed in accordance with well-establish principles (see Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153);

(3)    in construing the Mediation Agreement, no occasion arises for the Court to refer to extrinsic materials, neither party submitting that the terms to be construed are ambiguous in a sense that would justify that course (see Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; Western Export Services Inc v Jireh International Pty Ltd (2011) 282 ALR 604; HCA 45).

5    The Court has before it the Mediation Agreement (comprising the document originally executed by the parties, together with an initialled page which constitutes a variation to Schedule 2) and an invoice relied upon by Mr Viscariello as evidence of an amount now said to be payable by the respondent, Mr Walid Najjar to him under the Mediation Agreement (Invoice).

6    The amount sued for is $23,619.75 plus pre-judgment interest. The amount is not large. Regrettably, the dispute in connection with it has proven to be irresolvable by means other than further litigation.

7    The Court ordered that limited questions as to quantum are to be tried separately, so as to avoid (if possible) the expense of argument going to particular items charged on a solicitor’s invoice. This judgment nonetheless deals with some questions of construction that will be relevant to the quantum assessment, in the event that quantum cannot be agreed.

8    The issue turns entirely on the construction of the Mediation Agreement. Its relevant provisions are as follows.

9    By some introductory clauses the parties agreed to enter into the mediation and to appoint a mediator for that purpose.

10    Clause 14 has the heading “MEDIATION COSTS AND EXPENSES”. It is as follows:

14.1    The mediator’s costs are those described in Schedule 2, item 2.1.

14.2    Any other costs associated with the mediation are those described in Schedule 2, item 2.2.

14.3    Unless otherwise stipulated in item 2.3 of Schedule 2, the parties agree that they will each be liable to pay half of the mediator’s costs and other expenses set out in Schedule 2.

14.4    Unless otherwise agreed and stipulated in item 2.3 of Schedule 2, each party will pay its own costs and expenses of the mediation including its own legal representation.

14.5    Unless otherwise agreed and stipulated in item 2.3 of Schedule 2, the parties agree that none of the mediator’s costs or other expenses stipulated in item 2.1 of Schedule 2 hereto will be costs recoverable as part of the party/party costs of any legal proceedings relating to the dispute.

11    Before the variation Schedule 2 is as follows:

SPECIAL CONDITIONS:

The following special conditions apply to this Mediation Agreement

2A.    Unless otherwise ageed in writing by the parties, the mediation must not exceed three (3) hours

2B    That Walid Najjar will bear the full costs of the mediation including mediator’s costs and the cost of the hire of any venue for the conduct of the mediation.

2C.    The only document to be provided to the mediator in respect of both the aforesaid Federal Court proceedings and the Magistrates Court / District Court proceedings is one single position paper incorporating submissions for both proceedings per party, not exceeding five (5) pages·in length focusing on the core issues and arguments.

COSTS OF THE MEDIATION

2.1    Mediator’s fees and expenses

Hourly rate:    $N/A

Daily rate:    $N/A

Maximum fee (if applicable):    $TBA

2.2    Hire of premises:    $500.00

Location: Law Society of South Australia

2.3    Other expenses:

Further or alternative conditions relating

to costs and expenses

See Special Conditions above

12    I will refer to the paragraphs under the heading “SPECIAL CONDITIONS” as Condition 2A, Condition 2B and Condition 2C.

13    The starting point of each parties’ submissions was clause 14.4.

14    The amount specified in the Invoice is said by the applicants to form a part of the costs of the mediation that Mr Najjar is liable to pay by reason of Condition 2B, stipulated (by cross reference) in Item 2.3.

15    Mr Viscariello submitted that the position otherwise provided for in clause 14.4 (that the parties pay their own costs and expenses of the mediation including their own legal representation) did not apply, because it had been “otherwise agreed and stipulated” in Item 2.3 of Schedule 2. It was submitted that the subject matter of Condition 2B encompassed not only the costs and expenses referred to in clause 14.3, but the subject matter referred to in clause 14.4 of the Mediation Agreement. The encompassing of that subject matter was supported by the heading to clause 14 by the breadth of costs and expenses encompassed in that clause considered as a whole, as well as the word “including” in Condition 2B.

16    For Mr Najjar it was submitted that Condition 2B was confined to a stipulation directed to the more limited subject matter of clause 14.3, namely that it made provision for Mr Najjar to pay all of the “mediator’s cost and other expenses” referred to in Item 2.1 and Item 2.2, rather than half of those costs. It was submitted that there was no discrete agreement and stipulation for the purposes of clause 14.4 relating to the subject matter of the parties’ own costs and expenses including their own legal representation. It was submitted that the general words of Condition 2B could not displace the more specific position for which clause 14.4 provides. In the alternative, it was submitted that if the applicants’ construction was correct, the phrase “full costs” must be construed to be limited to costs assessed on a party-party basis or alternatively limited to reasonable costs directly referable to the mediation itself. The Invoice was referred to for the purpose of identifying the kind of charges that may not meet the latter descriptions.

17    Among other things, Counsel for Mr Najjar submitted that the usual practice was for parties to litigation to bear their own costs of a mediation. The submission, as I understood it, was that the usual practice formed part of a context against which the Mediation Agreement should be interpreted.

18    The related issues are:

(1)    whether for the purposes of clause 14.4 there has been anything agreed and stipulated in Item 2.3 of Schedule 2 and, if so, the content of that agreement and stipulation; and

(2)    if Condition 2B is an agreement and stipulation for the purposes of clause 14.4, whether the phrase “full costs of the mediation” should be construed to mean costs of the kind that might be assessed on a party-party basis or alternatively limited to costs reasonably incurred or (as submitted by the applicants) all costs lawfully incurred.

19    Additional arguments raised by the parties are encompassed in the reasoning that follows.

CONSIDERATION

20    Both parties referred to headings in the Mediation Agreement as relevant to its proper construction.

21    Considered in light of its heading, clause 14 is directed to the subject matter of “mediation costs and expenses”, a phrase that encompasses a variety of subject matter, discernible from each of the sub-clauses. The purpose of clause 14 is to allocate between the parties the burden of the various “mediation costs and expenses” referred to in it. The words of the heading indicate that the concept of mediation costs and expenses is broad, so as to include the costs associated with parties’ legal representation.

22    Clause 14.1 defines the “mediator’s costs” as those (and only those) described in Item 2.1 of Schedule 2. By Schedule 2 (as varied), the parties agreed what those costs were. Argument proceeded on the sensible basis that the phrase “mediator’s costs” encompassed the fees that the mediator charged for his services.

23    Clause 14.2 is concerned with “[a]ny other costs associated with the mediation”. For the purposes of that sub-clause, the parties specified in Item 2.2 of Schedule 2 the costs of the hire of a venue.

24    Clause 14.3 commences with the words “Unless otherwise stipulated in Item 2.3 of Schedule 2”. Had there been nothing stipulated in Item 2.3, the agreed position would have been that the parties “will each be liable to pay half of the mediator’s costs and other expenses set out in Schedule 2”. The reference there to the mediator’s costs and other expenses set out in Schedule 2 may be fairly understood to refer to the costs and expenses referred to in clause 14.1 and clause 14.2, as described by the parties in Items 2.1 and 2.2. The circumstance that the three parties might each pay half of the costs and expenses referred to in clause 14.3 was not the subject of any discrete submission. Mr Najjar accepted that he had agreed to pay all of the expenses referred to in that clause and he has done so.

25    Clause 14.4 deals with the subject matter of the parties’ “own costs and expenses of the mediation” including the parties’ costs of their legal representation. The disputed question is whether the requirement that each party pay their own costs has been displaced by reason of it having been otherwise “agreed and stipulated” in Item 2.3 of Schedule 2.

26    As Counsel for Mr Najjar acknowledged, for the purposes of clause 14.3 of the Mediation Agreement, a “stipulation in Item 2.3 of Schedule 2” can be made by way of a cross-reference within Item 2.3 pointing to any other clause or Item. That being the case, it must follow that a stipulation for the purposes of clause 14.4 can be made in the same manner.

27    I accept the submission that in order for there to be any alternate position to that specified in clause 14.4 the alternative must be both agreed and stipulated. That construction accords with the natural meaning of the words of clause 14.4.

28    However, I do not accept that an agreement displacing the default position in clause 14.4 must be expressed in terms that make express reference to clause 14.4 nor that the agreement must state by express words that the parties intend to depart from the default position. Such an intention may be evinced from the ordinary meaning of the parties’ chosen text, interpreted in accordance with ordinary rules of construction. No particular form of words is necessary.

29    In addition, to the extent that it was submitted that there must be separate and distinct stipulations for each of the subject matter referred to in clauses 14.3, 14.4 and 14.5, I reject the submission. There is nothing in the Mediation Agreement requiring the stipulation or agreement of alternative positions to be achieved by way of separate and discrete clauses or paragraphs.

30    The task of construction therefore requires an examination whether there exists an agreement that the rights and obligations of the parties be other than those specified in clause 14.4. That in turn invites the question as to the scope of matters Condition 2B was intended to cover.

31    I accept the applicants’ submission that Condition 2B is intended to encompass the subject matter to which clause 14.4 relates, with the result that it specifies alternative rights and obligations to those that would otherwise be conferred or imposed under that sub-clause. Two aspects of the text and structure of the Mediation Agreement support that construction.

32    First, Condition 2B employs the phrase “costs of the mediation”. As I have mentioned, the heading and content of clause 14 (considered as a whole) indicate that the costs of a mediation has several components, including the cost of engaging a mediator, the expense of hiring a venue, and the parties’ respective liabilities to pay the fees of their legal representatives. By Condition 2B, the parties did not express themselves in language singling out any particular component of those overall costs.

33    Secondly, the remaining words of Condition 2B indicate that the costs and expenses encompassed in the phrase “costs of the mediation” are not limited to the heads of expense referred to in Items 2.1 and 2.2, being the mediator’s costs and the expense of hiring a venue. I reject Mr Najjar’s submission that the word “including” confines the subject matter to the things mentioned after it. Such a construction is not in accordance with the ordinary meaning of the word “including”, considered in the context of the paragraph in which it appears and its interconnectedness with clause 14.

34    The reference to the costs of the mediation must in my view encompass costs of and incidental to the mediation and is not restricted to costs incurred on the day that the mediation was conducted.

35    I do not accept that clause 14.4 (as a particular provision) must prevail over the broadly and generally expressed Condition 2B. To the contrary, clauses 14.3, 14.4 and 14.5 are each expressly made subservient to any agreement and stipulation in Item 2.3. In the present case, the parties have expressed their agreement and stipulation in the broadest of terms, so as to capture a range of subject matter to which clause 14 relates and replace the rights and obligations that would otherwise arise with an alternative position.

36    Conditions 2A and 2C may be understood as agreements between the parties having the effect of reducing the overall expense of the mediation by confining its scope in terms of time and material. They evince an intention that costs incurred by non-observance of those provisions may not be properly characterised as costs of the mediation. It is common ground that the parties varied Condition 2A by extending the agreed time the mediation would continue for, thus increasing the overall expense. Conditions 2A and 2C are otherwise neutral on the question of which party is liable to bear the expenses.

37    The word full bears the same meaning as all of. It operates so as to shift the burden of any part of the “costs of the mediation” (as construed above) from the applicants, such that all of those costs and expenses are to be paid by Mr Najjar.

38    I have not overlooked Mr Najjar submission that it was the usual practice for parties to litigation to bear their own costs of a mediation. To the extent that the submission was intended to erect a presumption against which the Mediation Agreement should be construed, there is no evidentiary foundation for it. As Counsel for the applicants correctly submitted, the question is not what might occur in other cases, but what has been agreed between the parties as recorded in the Mediation Agreement, objectively construed. Whether or not the construction advanced by the applicants would amount to a bad bargain for Mr Najjar is irrelevant.

39    As to questions of construction relevant to the quantum of the applicants’ claimed costs, I have concluded that Mr Najjar has a contractual obligation to pay all of the costs referred to in both clause 14.3 and clause 14.4 of the Mediation Agreement. As Counsel for the applicants acknowledged, the obligation is to pay the costs that have been lawfully incurred, construing the Mediation Agreement in a manner that would avoid the reward of unlawful activity.

40    To succeed in his alternative submission that he must pay only those costs that have been reasonably incurred Mr Najjar must show that such a limitation arises by necessary implication. However, his submissions did not address the criteria for the implication of such a term and it is not the Court’s task to consider those criteria independently of submissions and relevant evidence (if any) in support. On the limited material before me, I am not satisfied that the obligation is limited to costs reasonably incurred. I have already mentioned that the phrase “costs of the mediation” is limited to costs of and incidental to the mediation having the temporal and documentary scope agreed by the parties in Conditions 2A and 2C.

41    The Deed of Settlement is not before the Court. Rather, the parties have extracted some parts of it in their written submissions. The effect of the extracted clauses is that the parties’ rights and obligations under the Mediation Agreement continue in full force and effect and, to the extent that there is any inconsistency between the two agreements, the terms of the Mediation Agreement are to prevail. To the extent that any party made submissions to the effect that the Deed of Settlement otherwise provides support for their respective arguments about the proper construction of the Mediation Agreement, those submissions have not been accepted.

42    The parties should be given the opportunity to briefly confer on the quantum of the judgment in light of these reasons, and as to the costs of this latest chapter of their dispute.

Associate:

Dated:    19 June 2025