Win but no costs for firm trying to recover $84k

Schembri McCluskys represented Osborne in a Victorian Supreme Court appeal from criminal proceedings in the County Court.

In 2022, the firm filed proceedings in the Magistrates Court of Victoria when Osborne failed to pay his legal fees, and an order was made for the payment of $54,196.23, plus $11,125.62 in interest.

Further orders were made in September 2022 for Osborne to pay Schembri McCluskys’ costs in the sum of $15,223.90.

An appeal has been filed in the Supreme Court of Victoria alongside a stay application against the execution of the Magistrates Court judgments. The Federal Court understands the progress of the appeal has awaited the outcome of the higher court’s appeal proceedings.

In April 2023, Schembri McCluskys filed a creditor’s petition, demanding payment of $84,429.27. Osborne opposed this with an allegation the legal services bill was void because his County Court case had been sabotaged by the tampering of transcripts.

Sequestration orders of Osborne’s estate were made in July 2023 by a judicial registrar of the Federal Circuit and Family Court.

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Osborne appealed this decision in the Federal Circuit and Family Court, which dismissed his application. It is this dismissal Osborne has appealed from in the Federal Court proceedings.

In one part of his 20 grounds of appeal, Osborne alleged the primary judge “wrongly estopped from me from [sic] contesting the matter”.

Justice Hespe found the primary judge’s reasons were based on the misapplication of the principles of res judicata and issue estoppel, which did not justify a refusal by the court in bankruptcy proceedings to examine the circumstances leading to the judgment debt.

That reasoning was “directly contrary” to the High Court in Ramsy, where it stated “the circumstances that under the general law a prior existing debt is taken to merge in a judgment has not been regarded as in some way operating to relieve a Bankruptcy Court of the paramount need to have satisfactory proof of the petitioning creditor’s debt”.

Noting that although the primary judge had limited evidence, Justice Hespe said the material they did review supported a finding that the judgment debt had followed a contested hearing where Osborne was afforded the opportunity to present arguments.

While that does not preclude the Federal Court from going behind the judgment, Justice Hespe said the material “did not raise a real question as to whether Osborne had failed to present his case on its merits at the trial in the Magistrates Court”.

“Based on the material before it, the court is satisfied that there was a debt owed to the petitioning creditor and that the making of the sequestration order was not erroneous,” Justice Hespe said.

Although Osborne’s appeal was dismissed, Justice Hespe said it was not for the reasons advocated by Schembri McCluskys.

“The respondent’s case before this court and the primary judge proceeded on a basis which was misconceived. In the circumstances of this case, the court declines to order cost.”

The case: Osborne v Schembri McCluskys Pty Ltd [2025] FCA 691