Albert St Group Pty Ltd v Universal Real Estate Vic North Pty Ltd

This Federal Court decision is about costs after part of a multi-party case was resolved, not about whether the underlying consumer law allegations were true. The applicant had added its former solicitors as a third respondent, then later reached a commercial resolution with that party and sought dismissal of the claim against it with no order as to costs between them.

The second respondent argued that it had incurred wasted costs because the third respondent was joined late and then released. Bennett J rejected that argument. The Court held there was no coherent basis to criticise the timing of the joinder, no proper basis to infer capitulation from the settlement, and no evidence of unreasonable conduct sufficient to justify a special costs order.

The proceeding began on 7 August 2024. Albert St Group Pty Ltd sued Universal Real Estate Vic North Pty Ltd and Anurag Chawla. Broadly, the case concerned alleged misleading and deceptive conduct by a real estate agent in relation to the sale of a former gold mining site in Sebastopol, a suburb of Ballarat in Victoria.

At the outset, the applicant did not sue Frank J Horvat & Co Pty, although that firm was mentioned in the factual narrative. That changed at a case management hearing on 26 May 2025, when the applicant sought leave for the matter to continue by pleadings and also sought leave to join the firm as a third respondent. The second respondent did not oppose the joinder at that time, but it did ask for costs thrown away by reason of the joinder. Those costs were reserved.

The legal question was not whether the applicant should have won against the third respondent on the merits. The Court instead had to decide whether the second respondent should receive a costs order because the applicant had joined the third respondent part-way through the case and later discontinued against it.

The second respondent advanced three main arguments. First, it said the joinder was late, inefficient and unreasonable because the relevant facts were known from the outset. Second, it said the dismissal of the claim against the third respondent with no order as to costs showed that the applicant had capitulated, and that all affected parties should therefore be indemnified.

Third, it relied on the overarching purpose provisions in ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth), arguing that the applicant's conduct had caused unnecessary expense and inefficiency. The Court also considered s 43, which gives the Court a broad discretion to make costs orders, including in relation to part of a proceeding.

Bennett J refused the second respondent's costs application. The Court ordered that the proceeding against the third respondent be dismissed, that there be no order as to costs associated with the joinder and dismissal of the proceeding involving the third respondent, and that the second respondent pay the costs of the costs application itself.

On the complaint about late joinder, the Court said there was no coherent basis to conclude that the timing of the joinder materially altered the costs landscape for the second respondent. A key point was that the joinder occurred before the matter proceeded by way of pleadings. The Court also noted that this was not a case of joining an entirely wrong entity or person.

The second respondent's own position was effectively that the third respondent should have been sued earlier, not that it should never have been joined at all.

For business owners, the first practical point is that costs fights are separate disputes with their own evidentiary burden. It is not enough to say that another party's procedural choices made the case more expensive. You need to show why the conduct was unreasonable and how it caused identifiable costs that should fairly be shifted. General statements that work would have been cheaper or quicker are unlikely to carry much weight on their own.

The second point is that settlement is not treated as an admission of weakness. Businesses often assume that if a claimant drops one respondent, the remaining respondents can point to that as proof the claim was flawed from the start. This decision shows that assumption can be wrong. Courts are cautious about drawing adverse inferences from settlement because doing so would discourage commercial resolution.

This case also shows the importance of the procedural record. The Court looked closely at what had actually happened: when the third respondent was joined, whether the second respondent objected, what was pleaded afterwards, what evidence was filed, and what happened at mediation. Those details mattered more than broad assertions that costs had been wasted.

If your business may later seek a costs order, keep a clear record of the steps you say were caused by another party's conduct. Identify the work, explain why it became unnecessary, and connect that to a legal basis for a costs order. If you are opposing such an application, the same record can help show that the step complained of was procedurally proper, commercially sensible, or still relevant to the ongoing case.

The judgment was delivered on 6 May 2026 by Bennett J in the Federal Court of Australia. It is a costs ruling in an ongoing broader proceeding. The Court's reasons address the dismissal of the proceeding against the third respondent and the second respondent's application for costs arising from that development.

The ruling should be read as authority on costs discretion, settlement, joinder and the limits of drawing inferences from a commercial compromise. It is not a final merits ruling on the underlying allegations concerning the property transaction.

The Court referred to s 43 of the Federal Court of Australia Act 1976 (Cth) as the source of the broad costs discretion, including the power to make costs orders in relation to part of a proceeding. It also referred to ss 37M and 37N, including s 37N(4), as part of the overarching purpose framework relevant to litigation conduct and costs.

The reasons also relied on established authority that, where a matter settles without a hearing on the merits, courts generally should not conduct a hypothetical action to determine who would have succeeded. That principle was central to the rejection of the second respondent's capitulation argument.