Calokerinos, Executor of the Estate of the late George Sclavos v Aantcorp Pty Ltd

Present proceedings

1. The present proceedings were commenced on 20 October 2017 by leave given by Kunc J to file Ms Calokerinos' summons in court. When Ms Calokerinos filed her statement of claim on 15 December 2017, she alleged that, as a result of the primary proceedings decided by Slattery J, Okan Yesilhat would be ordered to repay to the estate of Mr Sclavos $304,110 plus interest of $158,590.54 as of 26 June 2017. Ms Calokerinos estimated that her costs of the primary proceedings were in excess of $1,200,000.
2. When the Primary Judgment was delivered by Slattery J, each of the Yesilhat brothers held 50 shares in ABT. Gokan Yesilhat was the sole director of ABT. It had come to Ms Calokerinos' attention that, on about 20 June 2017, Okan had transferred his 50 shares to Gokan Yesilhat, and that, on about 29 August 2017, Gokan Yesilhat had transferred 100 shares in ABT to the present first defendant, Aantcorp Pty Ltd ("Aantcorp"). Ms Calokerinos alleged that the transfers were effected by the second defendant in these proceedings, Nam Thanh Nguyen, on the instruction of the transferors, and that Mr Nguyen was, relevantly, the sole director of Aantcorp, and was a tax agent engaged as an accountant for the Yesilhat brothers and ABT.
3. Ms Calokerinos believed that the transfers of the shares in ABT from Okan to Gokan Yesilhat, and then from Gokan Yesilhat to Aantcorp, all for no consideration, were transactions intended to defraud creditors and were voidable by operation of s 37A of the Conveyancing Act 1919 (NSW).
4. The relief sought by Ms Calokerinos in the present proceedings consisted of orders setting aside the transfers of the shares in ABT and requiring that they be re-transferred, so that they would be subject to execution in the hands of the Yesilhat brothers in enforcement of the orders, including an order for costs, that Ms Calokerinos expected to receive in the primary proceedings.
5. The alleged liability of Aantcorp was as a recipient for no value of the shares, and the alleged liability of Mr Nguyen was that he effected the transaction as agent for Okan and Gokan Yesilhat, in circumstances where there was no commercial purpose for the transactions.
6. By the time of the hearing that is the subject of these reasons for judgment, Okan Yesilhat had ceased to be involved in the proceedings as he had been made bankrupt, and ABT had been ordered to be wound up and had been deregistered. Consequently, apart from Ms Calokerinos, only Aantcorp, Mr Nguyen and Gokan Yesilhat appeared and were represented.

Freezing orders

1. It is necessary to explain the freezing orders that were made in favour of Ms Calokerinos in these proceedings.
2. On the day the proceedings were commenced, Kunc J made freezing orders pursuant to Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 25.11 against all five defendants. The freezing orders were specific as to how the defendants were respectively restrained from dealing with their assets, rather than in the standard general form in Practice Note SC Gen 14. The only relevant order for the purposes of these reasons was that made against ABT, which was in the following terms: "10. Pursuant to rule 25.11 of the Uniform Civil Procedure Rules (NSW), 2005, the Fifth Defendant is restrained from disposing of, dealing with, encumbering, or diminishing its assets valued at more than $5,000. 11. Orders 5 to 10 inclusive are to have effect up to and including 30 October 2017."
3. On 21 October 2017, Kunc J varied order 10 to make it clear that the restraint related to "any asset, the value of which exceeds $5,000 other than in the ordinary course of business."
4. On 27 October 2017, I made a further order at the request of the relevant parties varying the freezing orders in the following terms: "5. Orders 8, 9 and 10 are varied so that the orders do no[t] prevent dealings which do no[t] cause either the third, fourth or fifth defendants to reduce the value of their respective unencumbered assets below $1.26 million."
5. I was not required before I made order 5 to consider the cumulative effect of that order together with the previous two orders.
6. The Court has made orders from time to time extending the freezing orders.
7. When the initial freezing order was varied on 21 October 2017, the consequence appears to have been that ABT was prohibited from dealing with any of its assets with a value exceeding $5,000, other than in the ordinary course of business. That order would not necessarily have had the effect of requiring ABT to retain assets with any particular net value. The effect of the order that I was asked to make on 27 October 2017 may not in retrospect be clear. ABT would still be prohibited from dealing with its assets valued at more than $5,000 except in the ordinary course of business. However, the probable effect of order 5 made on 27 October 2017 was that ABT was prohibited from engaging in transactions that collectively reduced the value of its "unencumbered assets below $1.26 million". There may be scope for argument as to the true effect of the orders.
8. The meaning of the freezing orders will be relevant to the consideration below of a claim made by Ms Calokerinos that Gokan Yesilhat, as the sole director of ABT, caused that company to breach the freezing order against it with the result that he committed a contempt of court. That may require some consideration of the meaning of the freezing order. For the moment it will be sufficient to note that the expression "unencumbered assets" refers to assets not subject to any security or other encumbrance that reduces the beneficial interest of ABT in the assets. Strictly, it does not encompass unsecured debts. A company may have unencumbered assets of $X and unsecured liabilities of $X, so its net assets are $0. The act of incurring the unsecured liabilities will not reduce the unencumbered value of the assets. It may be that the variation to the freezing order that was agreed between the parties on 27 October 2017 was intended to require ABT to maintain its net assets at $1.26 million or more. It arguably only required ABT to maintain its unencumbered assets at that amount. ABT might incur unsecured debts that would undermine the position of an unsecured creditor like Ms Calokerinos.

Notices of motion

1. On 1 October 2021, Ms Calokerinos filed a notice of motion in which she sought the Court's leave to amend her statement of claim. Among other matters, leave to amend was sought because Okan Yesilhat had become bankrupt, and an order had been made for the winding up of ABT and it had been deregistered. Ms Calokerinos also proposed to amend her statement of claim in certain other ways.
2. On 5 October 2021, Ms Calokerinos filed a notice of motion seeking an order pursuant to Supreme Court Rules 1970 (NSW) r 55.6, or alternatively UCPR r 40.6(2)(c)(i), that Gokan Yesilhat had committed contempt of court and for consequential orders. The statement of charge filed with the notice of motion referred in par 1 to the freezing order that was first made against ABT on 20 October 2017, to the effect that it be "restrained from disposing of, dealing with, encumbering, or diminishing its assets valued at more than $5,000."
3. The basis of the alleged contempt was that Gokan Yesilhat, as the only director of ABT, had caused the company to incur liabilities which led to a winding up order for it being made, which Ms Calokerinos alleged involved contraventions of the freezing order. The freezing order contained a direction that any directors of ABT would be in contempt of court if they caused the company to breach the freezing order made against it.
4. The statement of charge was defective because it specified breach of the initial freezing order, which had been varied by the time the alleged contempt had been committed.
5. On 27 October 2021, Aantcorp and Mr Nguyen filed a notice of motion in which they sought orders that the proceedings against them be dismissed generally, pursuant to UCPR r 13.4(1), or alternatively that the whole of the proceedings against them be struck out pursuant to UCPR r 14.28(1).
6. On 11 November 2021, Gokan Yesilhat filed a notice of motion in which he sought orders that the notice of motion filed by the plaintiff on 5 October 2021 seeking to prosecute him for contempt of court be summarily dismissed or alternatively struck out on the same grounds as were relied upon by Aantcorp and Mr Nguyen. Gokan Yesilhat also sought an order that the notice of motion be dismissed pursuant to the inherent jurisdiction of the Court, in that it was an abuse of process and the statement of charge was bad for duplicity.
7. On 23 November 2021, Ward CJ in Eq (as her Honour then was) set down the four notices of motion for hearing.
8. By order 1 made by her Honour, the plaintiff was given leave to file an amended notice of motion for contempt by 30 November 2021, such motion to be returnable for hearing before me on 23 February 2022, together with Gokan Yesilhat's motion to strike out the amended notice of motion.
9. Her Honour listed Ms Calokerinos' application for leave to file an amended statement of claim and the motion by Aantcorp and Mr Nguyen to strike out the pleading for hearing on 24 February 2022.
10. Ms Calokerinos filed an amended notice of motion and amended statement of charge on 1 December 2021 pursuant to the leave given by her Honour. The amended statement of charge alleged breaches of the freezing order made against ABT in each of its manifestations.
11. Although the amended notice of motion and amended statement of charge were filed, they were apparently inadvertently not served on Gokan Yesilhat. He did not receive a copy of the amended documents until the court book produced by Ms Calokerinos was delivered to his legal representatives on 22 February 2022, the day before the hearing.
12. The terms of the amended statement of charge are now only relevant to Gokan Yesilhat's outstanding claim for an order that Ms Calokerinos pay his costs of the contempt of court application. I will defer reference to the relevant terms of the amended statement of charge until I consider the costs application, as those terms will be more meaningful in that context.

Hearing on 23 February 2022

1. When the proceedings were called for hearing on 23 February 2022, counsel for Ms Calokerinos informed the Court that it would be necessary for Ms Calokerinos to submit to an adjournment of the hearing of the matters before the Court on that day, because Ms Calokerinos had not given Gokan Yesilhat proper notice of the terms of the amended documents.
2. Although the notices of motion in which Aantcorp and Mr Nguyen had an interest were listed to be heard on the next day, 24 February 2022, those parties were represented by counsel at the hearing on 23 February 2022.
3. Once it became apparent that the hearing listed for 23 February 2022 could not proceed, I engaged counsel for the parties in some discussion concerning the appropriate case management orders that should be made by the Court to ensure that the contempt of court application made by Ms Calokerinos against Gokan Yesilhat would proceed in an efficient way.
4. It is not necessary to consider that discussion in detail. It is sufficient to note that it concerned the difficulties that Ms Calokerinos might face in specifying, with the necessary precision, the acts of Gokan Yesilhat, as a director of ABT, that led to the winding up order being made against the company, that might cause Gokan Yesilhat to be responsible for the value of ABT's unencumbered assets falling below $1.26 million. This discussion occurred in the context that Ms Calokerinos had sought substantially to rely for her evidence on a creditors' report issued by the liquidators of ABT, and in circumstances where Ms Calokerinos probably could not oblige Gokan Yesilhat to produce documents in his possession, custody or control because he could assert a privilege against being subjected to a penalty.
5. Counsel for Ms Calokerinos took instructions, and initially advised the Court that Ms Calokerinos would not pursue her prosecution of Gokan Yesilhat for contempt of court.
6. Later, after counsel had received further instructions from Ms Calokerinos, counsel informed the Court that Ms Calokerinos had decided to submit an order for the dismissal of the entire proceedings.
7. As it followed that all of the notices of motion would also need to be dismissed, I made the final orders in the proceedings that are set out at the beginning of these reasons for judgment.
8. It is in these circumstances that the only issue that remains to be determined is the costs orders that should be made.

Determination of costs orders

1. On the issue of costs, on 23 February 2022, I made the following order because of the failure of Ms Calokerinos to properly serve Gokan Yesilhat with the amended notice of motion and the amended statement of charge: "4. Orders the plaintiff to pay the fourth defendant's costs of and occasioned by the adjournment of the amended notice of motion."
2. After I made an order otherwise reserving the costs of the proceedings, I made the following additional orders: "4. Stands the proceedings over for submissions on the issue of costs to 9:15 AM on 24 March 2022. 5. Direct all parties to serve and deliver to the associate to Robb J outline submissions on costs by 21 March 2022."
3. On 25 February 2022 the parties requested, by consent, that the Court make additional case management orders on the costs issue. In short, the orders required Ms Calokerinos to prepare a chronology of the history of these proceedings and any other relevant matters arising in the primary proceedings, and to submit that chronology to the legal representatives for the other parties to enable them to insert amendments to the chronology. This exercise was required to be completed before 17 May 2022, when the proceedings were listed before me for mention.
4. The Court received Ms Calokerinos' and Gokan Yesilhat's costs submissions, both dated 21 March 2022, and Aantcorp's and Mr Nguyen's submissions dated 22 March 2020 (meaning 2022).

Parties' chronologies

1. The Court requested that the parties cooperate in preparing a chronology of relevant events in the primary proceedings and these proceedings primarily because counsel for Ms Calokerinos had informed the Court that she would make submissions to the effect that the costs orders that were appropriate in these proceedings should be influenced by what had occurred during the course of the primary proceedings. As it can be a difficult and problematic exercise for a judge to determine costs orders in proceedings that the judge has not determined on the basis of a final hearing, and as that difficulty may be enhanced where events in complex related proceedings in which the judge has had no involvement may be relevant to the costs issue, I took the view that the most efficient way for the Court to achieve a sufficient understanding of the relevant underlying facts was for the Court to impose upon the parties the unusual obligation to cooperate in the preparation of a chronology.
2. As it has happened, Ms Calokerinos has provided to the Court a complex chronology of some 58 pages containing her statement of relevant facts, the responses of Aantcorp and Mr Nguyen, and Ms Calokerinos' replies.
3. Gokan Yesilhat did not participate in this exercise, but instead provided to the Court a brief chronology of less than two pages. That was prepared with the agreement of Aantcorp and Mr Nguyen.
4. To avoid the process of determining the appropriate costs order becoming unnecessarily protracted and expensive, I advised the parties that I would proceed upon the two competing chronologies that had been provided.
5. The chronology prepared on behalf of Ms Calokerinos incorporated a substantial number of outline findings of fact and credit made in the primary proceedings. In many cases, Aantcorp and Mr Nguyen responded by asserting that the relevant entries in the chronology were not relevant. It is fair to describe the apparent intent in including many of the entries as being to demonstrate that the conduct of Okan Yesilhat was reprehensible, and to support an argument that the involvement of the other defendants in Okan Yesilhat's conduct was unlawful in a manner that would justify the Court in visiting a contrary costs order on those other parties.
6. I should record that I have had regard to the chronologies prepared by the parties, but only insofar as they have pointed the Court to some objective event that is relevant to the costs issue. Where that event has been a finding in a judgment published by the Court, I have not acted upon that aspect of the judgment as a finding of fact or credit, but have acted only on the basis that I consider that the fact of that finding as known to the parties - rather than the truth of the finding - was relevant to the determination of the appropriate costs orders.

Relevant chronology

1. The relevant chronology of events as I understand it is as follows:

• 9 June 2017: Slattery J published the Primary Judgment. In his statement of conclusions and orders, Slattery J found: "[t]hirdly, Mr Yesilhat must repay all monies the deceased advanced to him before the deceased's death, which monies were loans, not gifts. Mr Yesilhat must restore to the estate all monies transferred to the plaintiff after the deceased's death, which were fraudulently transferred without any colour of authority and which he now holds on constructive trust for the estate."
• In the reasons for judgment, Slattery J referred to Okan Yesilhat as the plaintiff and Mr Yesilhat. Slattery J only formally determined the liability of Okan Yesilhat in the Primary Judgment and not the liability of any other party.
• His Honour also said, as part of the statement of his conclusions and orders: "[i]f any party believes the Court has not decided any issue in these proceedings, which still needs decision then that should be notified in the short minutes of order." This is apparently a reference to his Honour's comment at [817] of the Primary Judgment: "[t]he position of the other defendants was not fully addressed in the parties' submissions, so I will reserve it for further consideration." As I have stated, the other defendants referred to in the Primary Judgment are Gokan Yesilhat and ABT.
• 20 June 2017: Mr Nguyen, as agent for Okan Yesilhat, transferred Okan's 50 shares in ABT to Gokan Yesilhat.
• 7 September 2017: Mr Nguyen, as agent for Gokan Yesilhat, transferred all 100 shares in ABT to Aantcorp.
• 20 October 2017: Ms Calokerinos commenced these proceedings.
• The statement of claim filed on 15 December 2017 alleged that Slattery J had found that Okan Yesilhat was liable to repay to Ms Calokerinos $304,100 plus interest, which Ms Calokerinos calculated in her statement of claim as $158,590.54. The statement of claim pleaded that the costs were still to be determined and that Ms Calokerinos sought her costs in excess of $1,200,000 on the indemnity basis against the Yesilhat brothers and ABT.
• 24 October 2017: Aantcorp and Mr Nguyen complied with the relief sought in prayer 7 of the original summons (equivalent to 1(g) of the statement of claim) by transferring 50 shares in ABT to Okan Yesilhat and 50 shares in ABT to Gokan Yesilhat. Aantcorp and Mr Nguyen's solicitor advised the solicitor for Ms Calokerinos that the 100 ordinary shares in ABT were no longer held by Aantcorp and that 50 shares had been re-transferred to each Yesilhat brother. The letter asserted that an attached ASIC extract confirmed this transaction. The alleged confirmation was not tendered in evidence.
• 15 December 2017: the statement of claim was filed in these proceedings.
• 29 January 2018: defences were filed by Aantcorp and Mr Nguyen. The defences did not submit to the orders sought by Ms Calokerinos. They "do not admit or deny" relevant allegations in the statement of claim. They admitted that there was no consideration for the transfers to Aantcorp, and alleged that the shares were transferred to Aantcorp to serve as collateral for a prospective loan between Aantcorp and the Yesilhat brothers which never eventuated.
• 8 March 2018: a joint defence was filed for the Yesilhat brothers, and a separate defence for ABT was also filed.
• 3 May 2018: Aantcorp and Mr Nguyen advised Ms Calokerinos that they were willing to comply with the relief sought. Their solicitor's letter of this date to Ms Calokerinos' solicitor stated: "they have always maintained that they are willing to transfer them back to any party as so desired. The 1st and 2nd Defendant are still willing to, either as a court order or through consent, transfer the shares to whomever, being the 3rd and 4th Defendant as sought in 1(g) of the Statement of Claim if so desired." The letter accepted that Aantcorp and Mr Nguyen "possess the shares in question". It is not clear how this position was consistent with that stated by the solicitor in the 24 October 2017 letter, which asserted that the re-transfer had already taken place. The solicitor claimed that: "there is absolutely no evidence" that Aantcorp and Mr Nguyen "had prior knowledge of the transfer being an attempt to defraud creditors."
• 10 May 2018: Aantcorp and Mr Nguyen served Ms Calokerinos with a Calderbank offer. The letter stated: "As a means of minimising further costs, the first defendant puts forward the following proposition as a form of compromise: as full and final resolution of the proceeding between the plaintiff and the first defendant, and with no admission as to liability, the first defendant will consent to undertaking that which is requested of them as set out in prayer 1(g) of the relief sought in the statement of claim and will not oppose the relief sought under 1(a) through (f) of the statement of claim. In return the first defendant seek that its costs up to the date of this letter be paid by the plaintiff on an ordinary basis. If accepted a deed will be drafted to reflect these terms."
• Mr Nguyen, as second defendant, made an offer in equivalent terms. The offer was open for seven days.
• 2 October 2018: Lindsay J made an order vacating the hearing of these proceedings listed for 4 and 5 October 2018, pending the delivery of further judgments by Slattery J. His Honour made an order that the parties' costs of the adjournment be their costs in the proceedings.
• 22 May 2019: Slattery J published Judgment (No 2). At [297(1)-(4)], Slattery J made costs orders against Okan Yesilhat, but at [297(5)] he reserved the question of costs as between Ms Calokerinos and ABT and Gokan Yesilhat. At [297(15)], Slattery J also made a declaration that ABT was liable to repay to Ms Calokerinos all amounts actually received by it from Mr Sclavos, less monies actually repaid.
• Slattery J also commented, at [229]-[230]: "[229] The difficulties for Ms Calokerinos' case on this point is that the Court's findings and the pattern of advances is quite consistent with George Sclavos advancing some of the money to Mr Okan Yesilhat and then he, Mr Okan Yesilhat, advancing the money as a separate inter-sibling loan to his brother to assist him [to] acquire Australia's Best Tyres. Ms Calokerinos' case did not eliminate this inference of an inter-sibling loan from an objective analysis of the advances that were made directly between Mr George Sclavos and Mr Okan Yesilhat and then paid on to Australia's Best tyres. It would be difficult to eliminate an inter-sibling loan in my view for any money, transferred by Mr Okan Yesilhat to Mr Gokan Yesilhat… [230]…the surrounding circumstances do not create a strong basis to begin to analyse this situation as one of a direct loan between George and Mr Gokan Yesilhat and the Court declines to do so.…"
• 13 December 2019: Slattery J published Judgment (No 3). By order 1 his Honour gave judgment for Gokan Yesilhat against Ms Calokerinos.
• 10 July 2020: Ms Calokerinos' solicitors sent Aantcorp and Mr Nguyen a letter alleging fraud against them. The letter included the following statements: "4. We say the first and second defendants in the Aantcorp proceedings (your clients) were active participants to facilitate the fraud against the Estate in June 2017. That is, your clients allowed and also most likely gave the professional advice to move the two set of share transactions for the company in 2017. The timing of the transactions were around two weeks after the release of the first judgment of Slattery J in June 2017, we say those relevant share transfers occurred with an express intention to defraud the Estate and also defeat creditors of the company; 5. Under no circumstances will the Executor consent to letting any defendant party out of the 2017 Aantcorp proceedings."
• 16 July 2020: Aantcorp and Mr Nguyen's solicitors sent Ms Calokerinos a letter, again notifying her that they had always been willing to comply with the relief sought, and stating that there had never been any need to incur the costs of the proceedings.
• 11 August 2020: Slattery J published Judgment (No 4). His Honour made orders as follows: "[80] The Court will make the following orders, notations and directions: (1) Order that the defendants, Mr Okan Yesilhat and Australia's Best Tyres, pay two thirds of the plaintiff's costs of these proceedings incurred after 9 June 2017, which costs shall be assessed on the ordinary basis; (2) Note that the Court makes no order as to costs in relation to the plaintiff's withdrawal of her claim for damages on behalf of the estate of the late George Sclavos in the "the debt/trust proceedings", to the intent that each of the plaintiff and the defendants shall bear their own costs of the plaintiff's claim for damages in those proceedings; (3) Order that the plaintiff pay Mr Gokan Yesilhat's costs of the debt/trust proceedings, which shall be assessed on the ordinary basis and on the basis that he shall receive (a) the costs attributable to his defence which are 7.5% of the common costs incurred by all the defendants in the proceedings, together with (b) any specific expenses referable solely to his participation in the proceedings, being for example expenses related to the preparation of his affidavits. (4) Judgment for the plaintiff in the debt/trust proceedings: (a) against Mr Okan Yesilhat in the sum of $123,600; and (b) against Australia's Best Tyres Pty Limited in the sum of $95,355; (5) Order Australia's Best Tyres Pty Limited pay the plaintiff's costs of the debt/trust proceedings up to 9 June 2017 on the ordinary basis; (6) Order that the defendants, Mr Okan Yesilhat and Australia's Best Tyres Pty Limited pay interest to the plaintiff from 3 April 2013 until today on the judgments entered against those defendants today at the rate fixed from time to time for interest up to judgment pursuant to Civil Procedure Act, s100; (7) Direct the plaintiff to serve upon the defendants and provide to the Court by 5pm on Friday, 14 August 2020 the final calculations of interest up to the date of judgment. (8) Direct the defendants to indicate by 5pm on Friday, 21 August 2020 to the plaintiff and provide to the Court any disagreement with the plaintiff's calculation of interest and the basis for that disagreement; and (9) Grant Liberty to apply."
• 29 October 2020: liquidator appointed to ABT.
• 3 November 2020: Ms Calokerinos offered to the defendants to discontinue the proceedings on the basis that each party paid their own costs.
• 6 November 2020: Gokan Yesilhat made an offer seeking indemnity costs and damages for his agreement to discontinue the proceedings.
• 5 November 2020: Ms Calokerinos withdrew the 3 November 2020 offer, and issued a revised offer in the form of proposed short minutes of order discontinuing proceedings against only the fifth defendant, ABT.
• 28 May 2021: Appeal Judgment published.
• 7 June 2021: Okan Yesilhat declared bankrupt.
• 22 July 2021: ABT deregistered.
• 3 August 2021: Aantcorp and Mr Nguyen's solicitors sent Ms Calokerinos' solicitors an email outlining the difficulties with her case against them including that, as a result of the deregistration of ABT, the shares the subject of her claim had ceased to exist, and offering to settle the proceedings.

Costs orders contended for by parties

1. Ms Calokerinos submitted that the appropriate costs order was that no order should be made that any party pay the costs of any other party, with the intent that all parties would bear their own costs of the proceedings.
2. The primary submission of Aantcorp and Mr Nguyen was that Ms Calokerinos should be ordered to pay their costs on the ordinary basis up to 10 May 2018, and on the indemnity basis thereafter. 10 May 2018 was the date of the Calderbank offer served by Aantcorp and Mr Nguyen. Alternatively, they submitted that Ms Calokerinos should be ordered to pay their costs of the proceedings on the ordinary basis.
3. Gokan Yesilhat submitted that Ms Calokerinos should be ordered to pay his costs of the proceedings generally on the indemnity basis, and in addition, she should be ordered to pay his costs of the notice of motion, as amended, for orders punishing Gokan Yesilhat for contempt of court.
4. Gokan Yesilhat's submissions also reminded the Court that the freezing orders were extended until further order. The Court has been told that the liquidator of ABT has obtained an order vacating the freezing order made against that company. I will make an order vacating all freezing orders that may continue in effect.

Legal principles

1. The effect of s 98(1)(a) of the Civil Procedure Act 2005 (NSW) is that the costs of the proceedings are in the discretion of the Court. Subject to the requirement that the Court act judicially in exercising its discretion, the Court has power to fashion the costs orders that it makes to suit the requirements of justice in the individual case.
2. The effect of UCPR r 42.1 is that the general rule is that, if the Court makes any order as to costs, the Court is to order that the costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs.
3. In a practical sense, the event in the present case is that the Court has made an order dismissing Ms Calokerinos' proceedings against all of the active defendants, and as a consequence it has dismissed all of the extant notices of motion.
4. As Ms Calokerinos' proceedings were dismissed without any hearing on the merits, there was some reference in submissions to the judgment of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 (Lai Qin), in which his Honour said at 624 (footnotes omitted): "…On 22 January 1996, as I have said, the Minister exercised his discretion and granted a protection visa to the prosecutrix. She was then released from detention. The prosecutrix, having obtained the relief she sought, naturally has not proceeded with her action in this Court. It will be necessary to return in a little more detail to the facts of the case, but it is first necessary to state the principles which govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra-curial means."
5. The distinguishing feature between the present case and that which was decided by McHugh J is that in that case the matter did not proceed to a merits hearing because the effect of the change in circumstances was that the plaintiff had achieved the outcome that she sought to vindicate in the proceedings, without the need for a court order to achieve that effect. In the present case, Ms Calokerinos has not achieved the outcome sought in her prayers for relief. Furthermore, Ms Calokerinos of her own motion abandoned her claims by inviting the Court to dismiss the proceedings. Ms Calokerinos must be taken to have chosen that course based upon legal advice concerning the difficulty and cost in continuing to prosecute her claim in relation to her prospects of success. In essence, Ms Calokerinos must be taken to have decided to cut her losses by avoiding the risk that her continuation of the proceedings would increase her costs as well as the costs of the remaining defendants, who would probably be entitled to orders for costs against Ms Calokerinos if her claims failed at a final hearing.
6. There are cases in which judges have counselled against the Court being too ready to punish parties who voluntarily capitulate by imposing costs orders as a result of the parties' decision to abandon their claim or defence. As a matter of policy, it may not be in the interests of the proper administration of justice for the Court to too readily impose cost orders against parties who are prepared to terminate litigation by making realistic and practical assessments of their own prospects of success: see for example Stateland Developments Pty Ltd v Princi [2007] NSWSC 709 at [11] (Gzell J) and Bruce v Magee (t/as Armstrong Legal) [2017] NSWSC 1687 at [16] (McCallum J, as her Honour then was). However, the proper exercise of the Court's costs discretion will always require a careful analysis of the facts of the particular case. The circumstances in which a plaintiff voluntarily abandons its proceedings may be sufficient even on a summary basis to satisfy the Court that the abandonment reflects a recognition in hindsight that the plaintiff's prospects of success were not sufficient to justify the litigation, and the Court may be satisfied that the plaintiff's prospects of success were so low that the plaintiff ought not to have commenced the proceedings on the basis of the evidence that was available to it. In such a case, it may be proper for the Court to order the plaintiff to pay the defendant's costs of the proceedings.

Costs of Aantcorp and Mr Nguyen

1. It will be necessary to consider the claims for costs orders by the two sets of defendants separately. I will begin with the claim made by Aantcorp and Mr Nguyen.
2. I am satisfied that it was not unreasonable for Ms Calokerinos to have joined Aantcorp and Mr Nguyen as parties to the proceedings when they were commenced on 20 October 2017. That was shortly after Slattery J delivered the Primary Judgment and the involvement of those defendants in the share transfers that took place supported at least a colourable case that the transfers had been made to thwart Ms Calokerinos' success, when Slattery J finally gave judgment in the proceedings.
3. The only relevant judgments were possible judgments against Okan and Gokan Yesilhat. The transfers of shares in ABT would have been irrelevant to the enforcement of a judgment against the company. Although there was only a positive appearance that judgment would be entered against Okan Yesilhat, there remained at least a possibility that Gokan Yesilhat would be found liable in some way to Ms Calokerinos, even if only in relation to costs. Aantcorp was a proper party, as it was the transferee of the shares. It is less clear that it was necessary to join Mr Nguyen, but he was an active party in the transfer, and it is unlikely that he incurred significant legal costs in addition to the costs incurred by Aantcorp.
4. I think it is necessary to ignore the events of 24 October 2017, where it is said that Aantcorp re-transferred the shares in ABT to the Yesilhat brothers. The inconsistency between that alleged event and the subsequent offers made by Aantcorp and Mr Nguyen is unexplained.
5. When Aantcorp and Mr Nguyen filed their defence on 29 January 2018, they did not submit to the orders sought by Ms Calokerinos in her statement of claim, and they offered the obscure response that the shares had been transferred as collateral for a prospective loan that had not in the event been made. The terms of the defence created the appearance that Aantcorp and Mr Nguyen would resist Ms Calokerinos' claim.
6. Up to this point, in my view, the abandonment by Ms Calokerinos of her claim would reasonably have attracted the application of the Lai Qin principle, if it had occurred because of a realisation that the proceedings had become futile or were in the circumstances not justified by the legal costs that would be incurred by all of the parties.
7. Aantcorp and Mr Nguyen made their first unequivocal offer to re-transfer the shares in ABT to the Yesilhat brothers on 3 May 2018, and on 10 May 2018 they followed that offer up with a formal Calderbank offer. In my view, Ms Calokerinos ought to have accepted the first offer, but in any event she should have accepted the offer that was specifically described as a Calderbank offer. The dates of the two offers are sufficiently close that there is no practical reason to distinguish between them.
8. A suggestion was made on behalf of Ms Calokerinos in response to this proposition that she did not accept the offer because it was safer for her to leave the shares in ABT in the hands of Aantcorp, because if they had been re-transferred to the Yesilhat brothers there was an enhanced risk that their value would have been dissipated in some way because of improper conduct by one or both of the brothers. There is no basis for the Court to find that there was any real likelihood that the Yesilhat brothers would have dissipated their interest in the shares in ABT (particularly if that would have involved a breach of the freezing orders). It is the right of a plaintiff to choose what relief will be sought, and the plaintiff cannot complain about or resist an unqualified offer by the defendant to give the plaintiff the relief that it has sought.
9. The letter dated 10 May 2018 was an unusual Calderbank offer in the sense that, ordinarily, for a Calderbank offer to be effective it must involve a genuine element of compromise by the offeror. In the case of the present offer, there can be no greater compromise than an offer to give the offeree all of the relief sought. The policy that underpins the Calderbank principle a fortiori justifies an order for the payment of the offeror's costs on the indemnity basis where the offeror, having considered the merits of any defence, decides to give the offeree all of what it has sought. That may be the only way that defendants can put a stop to litigation they do not wish to resist.
10. I am satisfied that an order should be made that Ms Calokerinos pay the costs of Aantcorp and Mr Nguyen, but only from 10 May 2018, and that those costs should be payable on the indemnity basis.
11. It is therefore necessary only to note that Ms Calokerinos compounded her unsatisfactory response to the communications she received from Aantcorp and Mr Nguyen by making an unwarranted allegation of fraud against them on 10 July 2020.
12. It is also not in the circumstances necessary to give any effect to the further offer made by Aantcorp and Mr Nguyen on 16 July 2020 to give Ms Calokerinos the relief that she sought.
13. As Ms Calokerinos will be ordered to pay the costs of Aantcorp and Mr Nguyen from 10 May 2018 on the indemnity basis, it adds nothing for the Court to observe that Ms Calokerinos' claim against those defendants became absolutely futile when ABT was deregistered on 22 July 2021. Notwithstanding that futility, Ms Calokerinos named Aantcorp and Mr Nguyen as respondents to her notice of motion that was filed on 1 October 2021 seeking leave to amend her statement of claim, which reasonably prompted Aantcorp and Mr Nguyen to file their notice of motion seeking an order dismissing Ms Calokerinos' claim against them on 27 October 2021.

Costs of Gokan Yesilhat

1. It will be necessary to consider separately Gokan Yesilhat's claim for an order for the costs of the proceedings generally, and his claim for an order for the costs of Ms Calokerinos' prosecution of her notice of motion filed on 5 October 2021 that Gokan Yesilhat had committed a contempt of the freezing orders made by the Court against ABT.

Costs of the proceedings generally

1. I will deal first with Gokan Yesilhat's claim for an order that Ms Calokerinos pay his costs of the proceedings generally. As noted, Gokan Yesilhat has sought an order that all of his costs be paid by Ms Calokerinos on the indemnity basis.
2. Gokan Yesilhat's submissions start by acknowledging the Lai Qin principle and that the Court is required to decide the costs issue without having the benefit of a hearing on the merits. However, he submitted that the Court in this case can comfortably conclude that Ms Calokerinos' case would inevitably have failed against him. Gokan Yesilhat supported that submission with an analysis of the judgments in the primary proceedings whereby it became increasingly probable over time and was ultimately established that Gokan Yesilhat had no liability to Ms Calokerinos. He submitted that the ultimate result ought to have been clear from a careful reading of the Primary Judgment, but in any event the observations of Slattery J in Judgment (No 2) at [229] made the position clear, even though his Honour did not actually give judgment for Gokan Yesilhat against Ms Calokerinos until Judgment (No 3) was published on 13 December 2019.
3. As I understand his submissions, in substance Gokan Yesilhat says that Ms Calokerinos' proceedings against him in this case were doomed to fail because the series of judgments published by Slattery J determined that he has no liability to Ms Calokerinos. As a subsidiary matter, it ought to have become increasingly obvious to Ms Calokerinos that she would fail in the principal proceedings against Gokan Yesilhat. That has a bearing upon whether she ought reasonably to have continued these proceedings against him.
4. Ms Calokerinos' claim in the proceedings was based upon the proposition that the shares in ABT originally held by Okan and Gokan Yesilhat were transferred to Aantcorp with the intent to defraud the transferor's creditors. It was clear from the time of publication of the Primary Judgment on 9 June 2017 that a substantial judgment would be entered against Okan Yesilhat. Okan Yesilhat's shares in ABT were transferred first to Gokan Yesilhat, before he transferred them on to Aantcorp. So far as a claim that these transactions defrauded creditors of Okan Yesilhat is concerned, liability on Gokan Yesilhat's part would depend upon him being liable as a participant. In relation to Gokan Yesilhat's transfer of shares in his name to Aantcorp is concerned (both the 50 shares received from Okan Yesilhat and his own 50 shares) Gokan Yesilhat's liability would depend upon the fact or likelihood that he would become a judgment debtor of Ms Calokerinos whom the transfer might be intended to defraud.
5. Ms Calokerinos' statement of claim filed on 15 December 2017 alleged in pars 9 and 12 that Okan Yesilhat was a present creditor (meaning debtor) to Ms Calokerinos because of the findings in the Primary Judgment. The statement of claim recognised that Slattery J had only found liability on the part of Okan Yesilhat, but noted in par 10 that the orders for costs were still to be determined and that Ms Calokerinos would seek an order for costs against Gokan Yesilhat. Gokan Yesilhat was alleged in par 13 to be "a future, contingent or prospective creditor to the Plaintiff" (meaning debtor).
6. I am satisfied that it was reasonable for Ms Calokerinos to commence these proceedings, including as against Gokan Yesilhat, when she filed her summons on 20 October 2017, and obtained the freezing orders. I also accept that it was reasonable for Ms Calokerinos to file her statement of claim on 15 December 2017 on the basis that there was a prospect that she would obtain a costs order against Gokan Yesilhat. The nature of the transactions involving transfers of the shares in ABT coming so soon after the publication of the Primary Judgment justified suspicion on Ms Calokerinos' part that steps had been taken to thwart judgments that she would have obtained or had prospects of obtaining.
7. I note Gokan Yesilhat's submission that Ms Calokerinos ought to have understood from the conduct of the primary hearing before Slattery J and the terms of the Primary Judgment that it was not likely that any judgment would be entered against Gokan Yesilhat. The Court is not in a position to judge the validity of that submission.
8. Ms Calokerinos ought to have understood from Judgment (No 2) published on 22 May 2019 at [229] that Slattery J would not find Gokan Yesilhat liable to Ms Calokerinos, and on that basis it was improbable that any costs order would be made against him. That position was made clear with the publication of Judgment (No 3) on 13 December 2019, when Slattery J gave judgment for Gokan Yesilhat against Ms Calokerinos. That position was put beyond doubt by order 3 made when Judgment (No 4) was published on 11 August 2020, whereby Slattery J ordered Ms Calokerinos to pay Gokan Yesilhat's costs.
9. I accept Gokan Yesilhat's submission that by 11 August 2020, all hope of a costs order being made against Gokan Yesilhat had disappeared, because Ms Calokerinos was ordered to pay his costs, and that the proceedings ought to have been immediately discontinued. Ms Calokerinos ceased to have any rational basis for believing that she could establish, as alleged in par 10 of her statement of claim, that it was possible that Slattery J would make a costs order in her favour against Gokan Yesilhat. It became clear that the claim against Gokan Yesilhat would fail when he ceased to be a prospective debtor, as Ms Calokerinos' claim that his transfer of 100 shares in ABT was done with the intent to defraud creditors of Gokan Yesilhat could not survive the order that Ms Calokerinos pay his costs of the primary proceedings.
10. I find that it was reasonable for Ms Calokerinos to commence and prosecute these proceedings until Slattery J delivered Judgment (No 2) on 22 May 2019, when it became sufficiently apparent that her claim against Gokan Yesilhat would fail. No order for the costs of the parties as between Ms Calokerinos and Gokan Yesilhat should be made up to that date. However, from 22 May 2019 Ms Calokerinos was sufficiently on notice that she faced a substantial risk of failure in establishing any liability to her on the part of Gokan Yesilhat that she should be treated as having taken the risk that her claim would fail and accordingly be liable to Gokan Yesilhat for his costs of these proceedings on the ordinary basis. From 11 August 2020 it had become so clear that the basis of Ms Calokerinos' claim that the transfer of Gokan Yesilhat's shares was undertaken with the intent to defeat his creditors had completely failed that it was delinquent for her to continue the claim after that date, rather than to discontinue it. Ms Calokerinos should be ordered to pay Gokan Yesilhat's costs of the proceedings generally on the indemnity basis from 11 August 2020.
11. Ms Calokerinos' later failure to discontinue these proceedings insofar as they concerned the transfer of Gokan Yesilhat's shares in ABT became more problematic still when she learned that a liquidator had been appointed to ABT on 29 October 2020, and that failure became inexplicable when ABT was deregistered on 22 July 2021, when the shares ceased to exist and the proceedings became absolutely futile. In the circumstances, this conduct augments the grounds for ordering Ms Calokerinos to pay costs on the indemnity basis, but has no practical effect on the order that indemnity costs be paid from 11 August 2020.
12. It is not necessary for the Court to decide whether the failure of Ms Calokerinos to accept Gokan Yesilhat's 6 November 2020 offer to accept the discontinuance of the proceedings against him was a valid Calderbank offer that would justify an order that costs be paid on the indemnity basis from that date. The parties' chronologies describe the offer as being to accept a discontinuance of the proceedings on the basis that Ms Calokerinos pay Gokan Yesilhat's costs on the indemnity basis and damages. It is unlikely that this offer would be found to have satisfied the Calderbank principle, as the Court has not found that Ms Calokerinos should pay Gokan Yesilhat's costs from the commencement of the proceedings and has found that part only of the costs that should be paid to him should be payable on the indemnity basis. Furthermore, no basis has been established for Ms Calokerinos to be ordered to pay damages to Gokan Yesilhat, and no such order will be made in his favour.
13. The formulation of the order for costs that should be made in favour of Gokan Yesilhat against Ms Calokerinos in respect of the cost of the proceedings generally should take into account what I understand to be the case that Okan and Gokan Yesilhat and ABT had common legal representation until the appointment of a liquidator of ABT on 29 October 2020 and the declaration of Okan Yesilhat's bankruptcy on 7 June 2021. For convenience, I will set out again order 3 made by Slattery J in Judgment (No 4) concerning the costs payable by Ms Calokerinos to Gokan Yesilhat in the primary proceedings: "(3) Order that the plaintiff pay Mr Gokan Yesilhat's costs of the debt/trust proceedings, which shall be assessed on the ordinary basis and on the basis that he shall receive (a) the costs attributable to his defence which are 7.5% of the common costs incurred by all the defendants in the proceedings, together with (b) any specific expenses referable solely to his participation in the proceedings, being for example expenses related to the preparation of his affidavits."
14. As Okan Yesilhat plainly was the principal defendant in these proceedings, it would be unjust for the Court to ignore the involvement of Okan Yesilhat and ABT (both of whom were found by Slattery J to be liable to Ms Calokerinos) and to simply make an order that would oblige Ms Calokerinos to pay all of the costs incurred by Gokan Yesilhat when he was jointly liable for the costs with the principal defendants.
15. As the parties have not made submissions concerning the proper wording of the costs order, I will give Ms Calokerinos and Gokan Yesilhat the opportunity to do so. Ms Calokerinos should deliver written submissions to my Associate (limited to three pages) within seven days of the publication of these reasons for judgment and Gokan Yesilhat should respond (also limited to three pages) within a further seven days.

Costs of the contempt of court application

1. I will now deal with Gokan Yesilhat's application that Ms Calokerinos be ordered to pay his costs of the contempt of court application on the indemnity basis.
2. This is a separate claim to the general claim made by Ms Calokerinos against Gokan Yesilhat in these proceedings, as it is based upon Gokan Yesilhat's status as the sole director of ABT and the assertion that it was Gokan Yesilhat's conduct that caused ABT to breach the freezing orders made by the Court, by reason of its acting in a way that led to its winding up and deregistration. This claim has nothing to do with transactions involving transfers of shares in ABT.
3. As I have noted above, I have already made an order against Ms Calokerinos that she pay Gokan Yesilhat's costs caused by the adjournment of the contempt of court notice of motion.
4. I have also recorded that the statement of charge annexed to the original notice of motion and the amended statement of charge annexed to the amended notice of motion specified breaches by ABT of the wrong freezing order.
5. I am satisfied that Gokan Yesilhat is at least entitled to an order that Ms Calokerinos pay his costs of the application that he be dealt with for contempt of court on the ordinary basis. First, the Court must infer from Ms Calokerinos' decision to request the Court to dismiss the amended notice of motion, in the circumstances described above, as reflecting a judgment either that her claim would fail or that the difficulty in formulating a proper statement of charge and obtaining the evidence to sustain her claim, was such as to make it preferable in her own interests for the claim to be dismissed. No issue of futility or external impediment caused Ms Calokerinos' decision. Ms Calokerinos decided to make the claim, and then decided to withdraw it, so naturally she should be ordered to pay Gokan Yesilhat's costs.
6. As a further reason why such an order should be made, the steps that Gokan Yesilhat has been required to take to date have been substantially wasted by Ms Calokerinos' reliance upon the wrong freezing order.
7. The remaining issue is whether Ms Calokerinos should be ordered to pay Gokan Yesilhat's costs of this aspect of the proceedings on the indemnity basis.
8. Ms Calokerinos' claim for orders based upon Gokan Yesilhat's alleged contempt of court is based upon the original form of the statement of charge that was annexed to her notice of motion filed on 5 October 2021. The draft amended statement of charge that was annexed to the 1 December 2021 notice of motion is not relevant because it was not served on Gokan Yesilhat until the day before the hearing on 23 February 2022, leave to rely upon it has not been given, and the Court has not received any submissions concerning its meaning or effect.
9. In principle, Ms Calokerinos had an interest in enforcing the freezing orders made against ABT because, in Judgment (No 4) published by Slattery J on 11 August 2020, his Honour gave judgment for Ms Calokerinos against ABT for $95,355 and ordered that ABT pay costs to Ms Calokerinos.
10. If the freezing orders had required ABT to maintain its net assets above a stipulated amount, then compliance with the orders may have obviated the winding up of ABT, and in any event assets may have been preserved that would be available to satisfy all or part of the judgments.
11. As noted above, the statement of charge was drawn on the basis that Gokan Yesilhat had caused ABT to breach the first freezing order made on 20 October 2017, which was to the effect that the company "be restrained from disposing of, dealing with, encumbering, or diminishing its assets valued at more than $5,000." It is not appropriate for the Court to express any final view about the meaning of this order, but on its face, it only prohibited ABT from dealing with individual assets with a value of more than $5,000, and did not require the net assets of the company to be maintained at any particular value.
12. The gravamen of the charge of contempt of court is found in the allegation in par 8 that Gokan Yesilhat "caused the said company to deal with and dispose of, and otherwise to diminish its assets below a value of $5,000." This allegation assumed that the effect of the 20 October 2017 freezing order was that ABT was required to maintain net assets with a value of at least $5,000. The statement of charge relied upon the statutory report of the liquidator of ABT which listed substantial unsecured creditors and administrative failures on behalf of the company.
13. Ms Calokerinos concedes that the original statement of claim was misconceived because it relied upon a freezing order, the terms of which had been varied. There is also an argument from the terms of the statement of charge that it misconceived the proper construction of the freezing order that was made, and that it proceeded upon the basis that the freezing order required ABT to maintain its net assets above $5,000 when it did not do so.
14. It is clear that the application based upon the original statement of charge would have failed, which is the reason why Ms Calokerinos filed her notice of motion seeking leave to rely upon the amended statement of charge.
15. I am not satisfied, however, that it has been shown that the original formulation of Ms Calokerinos' claim was so delinquent that it was entirely unreasonable for her to have made the claim in the first place. The Court does not know what the fate of the amended statement of charge would have been if leave had been given to rely upon it. There are reasons to suspect that Ms Calokerinos' case would have faced difficulty, both on the basis of the real meaning and effect of the final form of the freezing order, and the difficulty in demonstrating that the conduct of Gokan Yesilhat was the specific cause of breaches of the freezing order that ultimately lead to the winding up and the deregistration of ABT.
16. It has not been established that the just outcome is that Ms Calokerinos be ordered to pay Gokan Yesilhat's costs of the contempt of court claim on the indemnity basis. The Court should apply the principle referred to in the authorities noted at [63] above. In the circumstances, it was appropriate for Ms Calokerinos to realise and act upon the difficulties that her case faced and to invite the Court to dismiss it.

Orders

1. The Court: 1. Notes that all costs orders previously made by the Court remain in effect. 2. Orders the plaintiff to pay the first and second defendants' costs of the proceedings on the indemnity basis from 10 May 2018, with their being no order as to costs between those parties before that date with the intent that they will bear their own costs for that period. 3. Subject to orders 4 and 5, makes a costs order against the plaintiff in favour of the fourth defendant to pay the relevant portion of his costs of the proceedings as follows: 1. there be no order for costs for the period from the commencement of the proceedings up to 22 May 2019 with the intent that the parties will bear their own costs for that period. 2. the plaintiff shall pay the fourth defendant's costs between 22 May 2019 and 11 August 2020 on the ordinary basis. 3. the plaintiff shall pay the fourth defendant's costs for the period after 11 August 2020 on the indemnity basis. 1. For the purposes of order 3, the relevant portion shall be determined following the provision by the plaintiff and the fourth defendant of submissions as required by par 92 of the reasons for judgment to determine the proportion of the costs incurred jointly by the third, fourth and fifth defendants that should be paid by the plaintiff to the fourth defendant. 2. Orders the plaintiff to pay the fourth defendant's costs of the notice of motion filed on 5 August 2021, as amended, claiming an alleged contempt of court by the fourth defendant on the ordinary basis. 3. Orders that any freezing order made by the Court against any party in these proceedings that remains in effect be vacated.

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