Melbourne Rebels v Rugby Australia - Security for Costs Quantum Dispute

Original Word Document (88.2 KB) Federal Court of Australia

Melbourne Rebels Rugby Union Pty Limited v Rugby Australia Limited, in the matter of Melbourne Rebels Rugby Union Pty Limited [2026] FCA 392

| File number(s): | VID 1059 of 2024 |
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| Judgment of: | MOORE J |
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| Date of judgment: | 8 April 2026 |
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| Catchwords: | PRACTICE AND PROCEDURE – application for additional security for costs – where parties agree additional security should be provided but disagree as to the quantum – where security sought by defendant only discounted for recoverability and there is no allowance for appropriate security not being complete security – where some costs not elucidated or evidenced in proper form – order for additional security made subject to further discounts |
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| Division: | General Division |
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| Registry: | Victoria |
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| National Practice Area: | Commercial and Corporations |
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| Sub-area: | Commercial Contracts, Banking, Finance and Insurance |
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| Number of paragraphs: | 23 |
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| Date of last submission/s: | 27 March 2026 |
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| Date of hearing: | Determined on the papers |
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| Counsel for the Plaintiff: | Mr B Quinn KC and Mr H Forrester |
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| Solicitor for the Plaintiff: | Maddocks |
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| Solicitor for the Defendant: | Johnson Winter Slattery |
ORDERS

| | | VID 1059 of 2024 |
| IN THE MATTER OF MELBOURNE REBELS RUGBY UNION PTY LIMITED | | |
| BETWEEN: | MELBOURNE REBELS RUGBY UNION PTY LIMITED ACN 140 597 066

Plaintiff | |
| AND: | RUGBY AUSTRALIA LIMITED ACN 002 898 544

Defendant | |

| order made by: | MOORE J |
| DATE OF ORDER: | 8 April 2026 |
THE COURT ORDERS THAT:

1. The plaintiff provide a further tranche of security for the defendant’s costs of these proceedings in the sum of $2,120,507.52, comprising $1,190,000 for pre-trial costs and $930,507.52 for trial costs (Security), by the payment of the Security into Court by 4:00 pm on 17 April 2026.

2. The plaintiff provide a copy of this order to the plaintiff’s funder, Mr Leigh Clifford, by 10 April 2026.

3. If the plaintiff fails to comply with Order 1 of these orders, the proceeding be stayed until payment of the Security is made or until further order of the Court.

4. The defendant’s interlocutory application dated 9 March 2026 otherwise be dismissed.

5. The defendant pay the plaintiff’s costs of the defendant’s interlocutory application dated 9 March 2026 incurred after 27 March 2026.

6. With the exception of the costs in Order 5 above, the parties otherwise bear their own costs of the interlocutory application dated 9 March 2026.

7. Each party has liberty to apply in respect of Orders 5 and 6.

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

REASONS FOR JUDGMENT

MOORE J:

Introduction

1 By interlocutory application dated 9 March 2026 (Further Security Application), the defendant, Rugby Australia Limited (Rugby Australia), seeks a further tranche of security for costs in the sum of approximately $2.9 million from the plaintiff, Melbourne Rebels Rugby Union Pty Limited (Melbourne Rebels) to be paid within seven days of an order of this Court. Melbourne Rebels concedes that further security for costs should be provided, but contends that the quantum of any further security should be limited to approximately $1.65 million.

2 Pursuant to orders made by this Court on 14 February 2025, an initial tranche of security in the sum of $555,000 has been provided by Melbourne Rebels (Initial Security). That initial tranche of security covered the stages of discovery, lay evidence and mediation. At the time the Initial Security was ordered, Rugby Australia reserved its right to seek further security from Melbourne Rebels, if necessary, at a later date.

3 It appears that the parties have attempted to resolve the issue of the quantum of further security that should be provided since October 2025. Most recently, on 27 March 2026, the plaintiff’s solicitors (Maddocks) sent a letter to the defendant’s solicitors (Johnson Winter Slattery) offering to pay additional security in the sum of $2,200,000, comprising $1,100,000 for additional pre-trial costs and $1,100,000 for trial costs. That offer was rejected by Rugby Australia and the parties have not been able to resolve the issue.

4 This proceeding is listed for hearing commencing on 18 May 2026 for an estimate of three weeks. The proceeding will be heard concurrently with a related tax proceeding VID 1213 of 2025 on the first day of the hearing. Having regard to the proximity to the hearing, I indicated to the parties that I proposed to determine the dispute as to security on the papers, unless either party sought an oral hearing. Neither party has sought an oral hearing, and written submissions have been filed and served by both parties.

Evidence

5 Rugby Australia relies on two affidavits in support of its Further Security Application, comprising an affidavit of Joseph Scarcella affirmed on 20 February 2026 and its annexure “JS-45”, and an affidavit of Joseph Scarcella affirmed on 9 March 2026 and its annexure “JS-46”.

6 In response to the Further Security Application, Melbourne Rebels relies on the affidavit of Gina Wilson affirmed on 13 March 2026 (Wilson Affidavit) and its annexure “GLW-51”. The Wilson Affidavit annexes a letter from a costs consultant, Mr Chris Grisenti of Blackstone Legal Costing, who was asked by Maddocks to provide his comments regarding the quantum of additional security sought by Rugby Australia.

7 No objections were raised by either party with respect to the above evidence, and this evidence will therefore be read on this application.

Rugby Australia’s Position

8 Rugby Australia now seeks further security for costs of $2,940,676.69, comprising $1,700,000 for further pre-trial costs (Additional Pre-Trial Security) and $1,240,676.69 for the costs of the trial (Trial Security). Including the $555,000 of Initial Security already provided, Rugby Australia seeks a total of $3,495,676.69 in security for costs in this proceeding.

9 The evidence in support of these amounts is in an unorthodox form, in that there is no affidavit from the responsible solicitor providing a schedule of estimated legal expenses. Rather, the schedules have been set out in correspondence, and are not stated in sworn evidence to represent reasonable estimates.

10 Rugby Australia’s estimate of $1,700,000 for Additional Pre-Trial Security is calculated as follows:

(a) $995,240, applying a recovery rate of 60% to $1,525,400, to account for amended pleadings, each party’s discovery, each party’s lay and expert evidence, the engagement of tax counsel, and preparation for the trial.

(b) $60,000, applying a recovery rate of 60% to $100,000, for costs thrown away by reason of the amendments to the statement of claim pursuant to Order 2 of the orders of this Court dated 21 November 2025. The calculation of this amount is not explained, and no other detail is provided. This is not sufficient evidence on an application of this type, and this insufficiency is relevant to the appropriate approach.

(c) $500,000 to account for excess costs it previously incurred above the Initial Security amount of $555,000. Rugby Australia claims it incurred $1,485,000 in costs in excess of the Initial Security, although the Court was not referred to any evidence of this amount or its composition, other than a bare assertion in a letter that the total had been spent. This is not sufficient evidence on an application of this type, and again, this is relevant to the appropriate approach.

(d) $150,000, applying a recovery rate of 60% to $250,000, to account for additional costs arising from Melbourne Rebels’ amendment to its claims and disputes over privilege and particulars. Although there is evidence as to the cause of the additional costs, the calculation of this amount is not otherwise explained, and again this is relevant to the appropriate approach.

11 There is no table or schedule which sets out the above amounts, and it has to be gleaned from a number of sources. This is a somewhat unhelpful way of presenting evidence.

12 Rugby Australia’s estimate of $1,240,676.69 for Trial Security is calculated as follows:

(a) $440,110, applying a 60% recovery rate to $733,500, for estimated solicitor fees in relation to the hearing.

(b) $602,881.69, applying an 85% recovery rate to $709,272.58, for estimated counsel fees, which include fees for three senior counsel (including one tax senior counsel) and two junior counsel (including one tax junior counsel). This figure assumes 15 days of hearing day fees and three days of work on non-sitting days for Rugby Australia’s three non-tax counsel, and one hearing day fee and one day of preparation for the two tax counsel.

(c) $197,695, being the estimated costs of all of Rugby Australia’s other disbursements including flights and accommodation to attend the hearing in Melbourne. This figure is not discounted in any way.

13 A table has been prepared in support of this sum which contains high level estimates of costs based on an assumed number of hours or days multiplied by hourly rates. The following points may be noted:

(a) In terms of counsel, the rates for five counsel are calculated, but two of those counsel (being tax counsel) are estimated to work for only two days each, and given that Melbourne Rebels has caused tax issues to be added to the proceedings, I do not consider this to be excessive.

(b) The daily rates are high – for example, the two leading senior counsel have a combined daily rate of $56,000. Those are no doubt the actual costs for those counsel, who are leading in their fields, but the rates are relevant on an application for security.

(c) The table assumes recovery rates of 60% for solicitors and 85% for counsel. No other discount is applied – that is, there is no allowance (other than in recovery rates) for appropriate security not being complete security.

(d) The estimated disbursements are also at the higher end. For example, it is assumed that everyone on the team staying in a hotel in Melbourne has a room costing $805 per night. It is assumed that every flight for every member of the team costs $955.

(e) Melbourne Rebels asserts that the estimates reveal a “Rolls-Royce” approach to litigation. That may be going too far, but I accept that the estimates are not modest.

Melbourne Rebels’ Position

14 Melbourne Rebels contends that the amount of security sought by Rugby Australia is “excessive and unreasonable”.

15 In the Wilson Affidavit, which was affirmed on 13 March 2026, Ms Wilson contends that the total quantum of additional security that should be provided by Melbourne Rebels is $1,651,558.77. As indicated above, on 27 March 2026, after the Wilson Affidavit was affirmed, Melbourne Rebels offered a revised quantum of additional security in the sum of $2,200,000. Contrary to the submission of Rugby Australia, I do not think that undermines the contention that only $1,651,558.77 should be ordered. Parties frequently make a pragmatic offer inferior to their stated position in an effort to resolve the dispute. That is the very nature of compromise.

16 Melbourne Rebels contends that the appropriate quantum of Additional Pre-Trial Security should be $764,330, and the estimated Trial Security should be $887,228.77. Including the $555,000 of Initial Security, the total amount of security that the Wilson Affidavit states is appropriate is $2,206,558.77. That is approximately $1.3 million less than the total security sought by Rugby Australia.

Consideration

17 The evidence and submissions do not entirely join issue. That is because the Rugby Australia submissions respond to points made in the Wilson Affidavit, but the Melbourne Rebels submissions raise new points, to which Rugby Australia has not responded. The new points include that the amounts claimed include allowances for tasks (discovery and lay evidence) that have (or had) already been completed. It is impossible on the material before me to assess the validity of those particular new points raised by Melbourne Rebels.

18 Otherwise, the submissions of Melbourne Rebels include the following points:

(a) The costs are excessive. This is dealt with below by additional discounts.

(b) That $134,060 claimed for “Defendant’s expert evidence” is too high. It is not clear why I would conclude that this is too high, and in any event, this will be further discounted.

(c) That there is a significant amount of work completed by solicitors that could have been undertaken by junior counsel at cheaper rates. I do not accept this submission. Other than in some clear case, it is not for the Court to second-guess the division of tasks between solicitors and counsel.

(d) That the costs estimates assume many hours of work by senior solicitors when more junior solicitors could be used. I have accepted this in part in the analysis below, in that I think a discount is appropriate having regard to the fact that the resourcing is at the higher end of the spectrum.

19 It is otherwise not necessary to deal with the points and counter points in detail. They are inconsistent with the broad-brush nature of the calculation of an appropriate amount of security.

20 It is appropriate to further discount the amount sought by Rugby Australia, for several reasons. First, the amounts sought have been discounted for recoverability (in that the amounts claimed are 60% of solicitors’ costs and 85% of barristers’ costs), but the amounts have not otherwise been discounted for the purpose of calculating the appropriate level of security, as would usually be the case. It would not ordinarily be appropriate to provide complete security for all costs estimated to be recoverable, and I do not think it is appropriate in this case. Secondly, the rates allowed and the approach to resourcing is at the higher end of the spectrum. That is a choice made by Rugby Australia, and for the purposes of security there should be at least some discount to account for this. That is not expressing any view as to the recoverability of any costs. Thirdly, as set out above, the state of the evidence of costs is such that it is difficult to assess the reasonableness of some of the amounts claimed. Again, a discount is appropriate in these circumstances.

21 I propose to apply a 30% discount to the pre-trial costs and a 25% discount to the trial costs, reflecting that there is greater uncertainty in the evidence as to the pre-trial costs, including because some amounts are not the subject of any breakdown or explanation and are bare assertions. That produces figures of $1,190,000 for Additional Pre-Trial Security and $930,507.52 for Trial Security, being a total of $2,120,507.52. I will order security to be provided in this amount, and order that the proceedings be stayed if security is not provided.

Costs

22 Neither party made submissions on costs. To avoid loose ends, I will deal with costs, but also grant each party liberty to apply in relation to the costs orders in case something particular has been overlooked.

23 The amount of security ordered is less than Melbourne Rebels offered to pay in its letter of 27 March 2026, and Rugby Australia should pay the costs of Melbourne Rebels after that date. Otherwise, given that the debate was about the quantum of security only, where it was common ground that security should be ordered, and given that neither party has had complete success in relation to its position, each party should bear its own costs of the debate about security on Rugby Australia’s application.

| I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Moore. |
Associate:

Dated: 8 April 2026

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