Calokerinos, Executor of the Estate of the late George Sclavos v Yesilhat; Yesilhat v Calokerinos, Executor of the Estate of the late George Sclavos

Supreme Court of NSW|2017-12-13|Before: Slattery J

ande [2005] NSWCA 40 Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344 Morse v Morse (No. 2) [2003] TASSC 145 Moussa v Moussa [2006] NSWSC 509 Myers v Elman (1940) AC 282 Nationwide News Pty Limited v Naidu (2007) 71 NSWLR 471 Ofria v Cameron (No. 2) [2008] NSWCA 242 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Re Felicity: FN v Secretary, Department of Family & Community Services (No. 4) [2015] NSWCA 19 Rob Evans of Rob Evans and Associates v European Bank Limited (2004) 61 NSWLR 75 Rockcote Enterprises Pty Limited v FS Architects Pty Limited (No. 2) [2008] NSWCA 205 Rolls Royce Industrial Power (Pacific) Limited v James Hardy & Co Pty Limited (2001) 53 NSWLR 626 Sze Tu v Lowe [2014] NSWCA 462 Singer v Berghouse (1993) 114 ALR 521; [1993] HCA 35 South Eastern Sydney Area Health Service v King [2006] NSWCA 2 Vale v Eggins (No. 2) [2007] NSWCA 12 Yesilhat v Calokerinos [2015] NSWSC 1028. Texts Cited: J D Heydon and M J Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis) Category: Consequential orders (other than Costs) Parties: 2013/358168 Plaintiff: Cleopatra Sclavos Calokerinos, as executor of the estate of the late George Sclavos First Defendant: Okan Yesilhat Second Defendant: Gokan Yesilhat Third Defendant: Australia's Best Tyres & Auto Pty Ltd ACN 151 629 131

Mr Sexton SC, Mr P.M. Knowles for Ms Vera Culkoff Mr Eardley for Mr Salvatore Russo

Solicitors: Plaintiff: Angela Coombs, Aston Reid Lawyers Defendants: Salvatore Russo, Russo & Partners File Number(s): 2013/358168; 2014/212466 Publication restriction: No

Judgment

This is the Court's second judgment in these proceedings. The Court's first judgment was delivered on 9 June 2017: Calokerinos, Executor of the Estate of the late George Sclavos v Yesilhat; Yesilhat v Calokerinos, Executor of the Estate of the late George Sclavos [2017] NSWSC 666. Both judgments should be read together. Events, matters and things are referred to in this judgment in the same way as they are in the Court's first judgment. This means also that Mr Okan Yesilhat only, as distinct from his brother, will at times just be referred to as "Mr Yesilhat", and the deceased as "George".
This judgment deals with five groups of issues for which further consideration was reserved on 18 June 2018, after argument following the first judgment: 1. Preliminary issues; 2. Whether an award of damages should be made in favour of the estate; 3. The question of whether Mr Gokan Yesilhat and Australia's Best Tyres should repay loan monies to the estate, which monies are currently the subject of findings that Mr Okan Yesilhat should repay them to the estate; 4. What costs orders, if any, should be made for or against Mr Gokan Yesilhat and Australia's Best Tyres? 5. Whether indemnity costs should be ordered against Mr Okan Yesilhat or any of the other Yesilhat parties.
The Court allowed the parties to adduce limited additional evidence in relation to these five groups of issues. Otherwise the parties were required to rely on the evidence adduced in the main hearing. No further oral evidence was allowed. Evidence, together with written and oral submissions, were advanced on these issues.
Ms V. Culkoff of counsel continued appear for the plaintiff and Mr M. Evans for the defendant.

The Course of Proceedings since the Principal Judgment

Between August 2017 and June 2018, the Court has dealt with a number of applications consequent upon the principal judgment. On 17 August 2017, the Court varied certain interlocutory orders made by Lindsay J, on 27 November 2013, at the commencement of the debt/trust proceedings. Informed by the Court's first judgment, the variation allowed certain funds quarantined by injunction to be paid in pro rata discharge of any liability found to be owed by Mr Okan Yesilhat to the estate.
On 24 October 2017, the Court dismissed the estate's application for Ms Culkoff, counsel for the Yesilhat parties, to pay personally any costs orders that the Court might make in favour of the estate. And the estate was ordered to pay Ms Culkoff's costs of that application. A similar application that the estate made for Mr Russo to pay personally any costs ordered was also dismissed. The estate was ordered to pay Mr Russo's costs of that application. Reasons for both of these decisions are given below.
Based on the first judgment, orders were also made on 24 October 2017 granting probate in solemn form of the will of the late George Sclavos, dated 16 October 2012, to Mrs Cleopatra Sclavos Calokerinos and the Registrar in probate was directed to complete the grant of the probated will in solemn form.
The Court heard final argument on three preliminary issues on 24 October 2017 and gave directions for submissions on the remaining issues, which were dealt with on 13 December 2017 and on subsequent dates in 2018. The Court noted, in its orders made on 24 October 2017, that it had completed the hearing of submissions at that hearing on these three preliminary issues: 1. whether Mr Okan Yesilhat may have the benefit of the costs jurisdiction in family provision proceedings, so as to have his costs paid out of the estate; 2. the incidence of costs in the proceedings about the contest concerning the Greek properties; and 3. the question of whether the costs ordered by White J, or any other interlocutory costs orders, should now be varied in light of the Court's findings in the principal judgment.
The Court directed, on 24 October 2017, that no further written or oral submissions on these preliminary issues would be permitted. The Court then gave directions for supplementary submissions on other issues. Those other issues were ultimately defined in the Court's orders of 13 December 2017.
The estate became concerned, in October 2017, that Mr Okan Yesilhat and Mr Gokan Yesilhat were seeking to transfer their shares in Australia's Best Tyres to another company related to them, Aantcorp Pty Limited. The estate applied in new and separate proceedings, the fourth set of related proceedings ("the Aantcorp proceedings") before Kunc J on 20 October 2017, for an injunction to restrain the Yesilhat parties from dealing with their assets pending resolution of the outstanding consequential issues in the proceedings ("the Aantcorp issue"). After Kunc J made those orders, Robb J extended them. I further extended them on 17 November 2017 and then again on 13 December 2017, until the giving of further consideration of the Aantcorp issue. The Aantcorp issue will need to be resolved, in the meantime, the orders made today will extend the orders made already in relation to the Aantcorp issue, until a further order is made.
On 13 December 2017, the Court heard most of the remaining evidence and argument in relation to the issues, the subject of these reasons. That argument resulted in an application by the plaintiff and the estate by motion to adduce further evidence in relation to the quantum of Mr Okan Yesilhat's liability to repay loan monies to the estate. That further evidence was adduced. And supplementary submissions were filed on that issue.
When the matter came before the Court, on 18 June 2018, each of the Yesilhat parties and the Calokerinos parties re-opened their cases, for the limited purposes of adducing evidence of various transactions that involved a further reconciliation of the amounts advanced before George Sclavos' death. As a result of that additional evidence, the Court made a declaration that the total sum deposited by the Yesilhat parties on the direction of Mr Okan Yesilhat to the accounts of the late George Sclavos was $167,645, a figure larger than had previously been brought to account as having been redeposited to George's accounts by Mr Okan Yesilhat.
The recognition that this amount had been so deposited meant that the amount of the judgment for the advances before George Sclavos' death needed to be revised. That was done by consent, varying the previous orders so that the total net amount due and payable to the Calokerinos parties by Mr Okan Yesilhat became $218,955 plus interest. The Court made no orders for the costs of the motion and each party agreed to bear his, her or its own costs of the motion.
The Court finally reserved judgment on 18 June 2018.

The Claim for Costs Against Ms Vera Culkoff and Mr Salvatore Russo Personally

As earlier indicated, the Court dismissed the claim for costs that the Calokerinos parties made against Ms Culkoff and her instructing solicitor, Mr Russo. The reasons for that dismissal may be briefly stated.
The Calokerinos parties' submissions on this issue, filed on 27 June 2017, sought orders that Ms Culkoff and Mr Russo personally pay the costs of the proceedings. The submissions did not set out the precise basis on which the orders were sought. But Mr Sexton SC and Mr Knowles, who appeared for Ms Culkoff, put submissions when the matter was argued on 24 October 2017, analysing two potentially relevant sources of power, the Civil Procedure Act 2005, s 99 and the Legal Profession Uniform Law Application Act 2014, Schedule 2, clause 5, and the Court's inherent jurisdiction. In submissions Mr Evans largely, and in my view correctly, accepted this structure of the sources of power on behalf of the Calokerinos parties.
Mr J. Sexton SC and Mr P.M. Knowles of counsel only appeared in this part of the proceedings. When argument on this issue was concluded on 24 October 2017, they were excused from further attendance.
These reasons deal with the submissions that Mr Sexton SC and Mr Knowles made on behalf of Ms Culkoff. These submissions were adopted by Mr Russo.
Through her counsel, Ms Culkoff submitted as follows: 1. The Court has no power to make the orders sought against her, either under Civil Procedure Act, s 99 or the Legal Profession Uniform Law Application Act 2014, Schedule 2, clause 5; 2. The Court should first decide whether there is prima facie case justifying the making of a personal costs order; and 3. That the Court should conclude, irrespective of the availability of the powers in question, that the circumstances of the case do not justify the making of a personal costs order against her.
In the result, the Court has dismissed the application, primarily on the basis that there is no power to make a personal costs order against Ms Culkoff in the circumstances of the case presented here. Even if there were power to make such a costs order, it is not a power that should be exercised against Mr Russo.
Ms Calokerinos moved for these costs orders shortly after the Court delivered the first judgment in the main proceedings. The Court did not make particular directions to structure the allegations against Ms Culkoff, so they could be formally met at the hearing on 24 October 2017. That day was, in effect, the first day that the Court considered this issue.
This represented a condensed procedure. For the full and fair consideration of an application for costs against a barrister or solicitor, the procedure sanctioned by the Court of Appeal should ordinarily be followed. In Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153 ("Lemoto"), (at [149]), McColl JA set out a suggested procedure that the Court might follow for determining applications of this nature. Her Honour said: "[149] While recognising that the procedure to be adopted pursuant to Div 5C is a matter for the court considering making a s 198M order, I would suggest that such a court: (1) consider whether there is a prima facie case that a solicitor or barrister has provided legal services to a party without reasonable prospects of success within the meaning of s 198J; the solicitor or barrister should be given an opportunity to be heard on whether a prima facie case has been made out; full particulars of the basis of the application should be provided; (2) if the court considers there is a prima facie case, the legal practitioner should be given the opportunity to show cause why a s 198M order should not be made; again this requires giving the solicitor or barrister sufficient particulars of the prima facie case; (3) after any explanation is provided, the court should determine whether a finding that the legal practitioner has provided legal services to a party without reasonable prospects of success within the meaning of s 198J should be made; in considering this issue the onus of proof may differ depending upon whether or not the rebuttable presumption in s 198N(1) and (2) is operative; (4) if the court concludes the legal practitioner has provided legal services to a party without reasonable prospects of success within the meaning of s 198L the court should consider whether it is, in all the circumstances, just to make a s 198M order; (5) if an order is made, it should specify whether it is a repayment order or an indemnity order and whether the solicitor or barrister is ordered to pay "the whole or any part of" the relevant costs; (6) provide reasons for the decision."
The detailed procedure McColl JA suggested in Lemoto has not been followed here. But Ms Calokerinos' submissions describe Ms Culkoff's alleged misconduct in sufficient detail that it is possible for the Court to decide the power question and to make some limited observations on the merits as to whether a prima facie case is made out, or is likely to be made out, on the material alleged.
The allegations that Ms Calokerinos made against Ms Culkoff were wide ranging. They included allegations that Ms Culkoff's conduct in the following respects should attract the costs orders being sought. Ms Calokerinos contended that Ms Culkoff: submitted that Mr Yesilhat was honest; received warnings about possible professional misconduct from the Court; misrepresented the findings of experts; made serious allegations without a proper basis; repeatedly misled the Court; re-examined on incorrect evidence; maintained illogical claims that were without merit; wasted Court time; relied upon Mr Yesilhat's evidence that had been plagiarised from the Calokerinos parties' affidavits; failed to question the accuracy of Mr Yesilhat's evidence; pressed false claims to force a settlement; knowingly constructed a false case; and coached Mr Yesilhat to give false evidence.
These claims could not be made out as complaints of misconduct on their face without substantial submissions and reference to evidence on both sides. They would require time to be answered. Many of them are likely to be dismissed as being nothing more than complaints about the vigorous conduct of these proceedings by Ms Culkoff. Some of the allegations require more detailed enquiry before they could be dealt with on a final basis. That enquiry is likely to be extensive and is not appropriately dealt with now.
The issue of the availability of a personal costs order should be dealt with expeditiously. If the Court were to find that there was a prima facie case for a personal costs order against Ms Culkoff, it was submitted on her behalf that she should be given a further opportunity to put forward evidence and submissions as to why the costs order should not be made. But in doing so, it was submitted that Ms Culkoff might have had to seek Mr Yesilhat's consent to disclosing privileged communications: Lemoto (at [6]). These proceedings are not over. There are still consequential orders to be made as this judgment shows. The disclosure of confidential communications could lead to be a possible conflict of interest between Ms Culkoff and Mr Yesilhat. That in turn could effect Ms Culkoff's ability to continue to represent Mr Yesilhat in these complex proceedings until these matters are resolved.
The Court is of the view that neither Ms Culkoff nor Mr Yesilhat should be put in this position unless there is appropriate power for the making of the orders that are sought against Ms Culkoff, and, if so, there is a prima facie case for a personal costs order. The Court therefore dealt with these matters and made orders on the day they were argued.
Civil Procedure Act, s 99. The first claimed basis of jurisdiction to make the orders sought is Civil Procedure Act 2005 ("CPA"), s 99. Section 99 relevantly provides as follows: "99 Liability of legal practitioner for unnecessary costs (1) This section applies if it appears to the court that costs have been incurred: (a) by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or (b) improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible. (2) After giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following: (a) it may, by order, disallow the whole or any part of the costs in the proceedings: (i) in the case of a barrister, as between the barrister and the instructing solicitor, or as between the barrister and the client, as the case requires, or (ii) in the case of a solicitor, as between the solicitor and the client, (b) it may, by order, direct the legal practitioner: (i) in the case of a barrister, to pay to the instructing solicitor or client, or both, the whole or any part of any costs that the instructing solicitor or client, or both, have been ordered to pay to any other person, whether or not the solicitor or client has paid those costs, or (ii) in the case of a solicitor, to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person, whether or not the client has paid those costs, (c) it may, by order, direct the legal practitioner to indemnify any party (other than the client) against costs payable by that party."
Through her counsel, Mr Sexton SC and Mr Knowles, Ms Culkoff submits that CPA, s 99 does not empower the Court to order a legal practitioner for one party to pay directly to another party the costs for which the legal practitioner's client would otherwise be liable: see Re Felicity: FN v Secretary, Department of Family & Community Services (No. 4) [2015] NSWCA 19 ("Re Felicity"), (at [10]). Nor does CPA, s 99 permit the making of an order that a legal practitioner indemnify his or her own client for costs paid to a third party: Re Felicity at [10].
The only order available under CPA, s 99 will be an order that Ms Culkoff (or Mr Russo) pay to Mr Yesilhat some or all of the costs that he might be ordered to pay the Calokerinos parties, regardless of whether or not Mr Yesilhat in fact meets such a liability for costs: Re Felicity, (at [18]). Even though such an order is theoretically available, it is not one which should be made in this case. Such an order would not ensure that any costs were actually paid to Ms Calokerinos by Mr Yesilhat. They could operate in practice in fact to confer a windfall benefit on Mr Yesilhat. Ms Calokerinos did not seek such orders.
Mr Evans correctly conceded in submissions that CPA, s 99 was not a sufficient basis for him to seek cost orders against Ms Culkoff directly in favour of Ms Calokerinos. This basis of jurisdiction can be put to one side.
The Uniform Law. Another possible source of power is the Legal Profession Uniform Law Application Act 2014, Schedule 2, clause 5 ("Uniform Law"). Those provisions are as follows: "5 Costs order against law practice acting without reasonable prospects of success (1) If it appears to a court in which proceedings are taken on a claim for damages that a law practice has provided legal services to a party without reasonable prospects of success, the court may of its own motion or on the application of any party to the proceedings make either or both of the following orders in respect of the practice or of a legal practitioner associate of the practice responsible for providing the services: (a) an order directing the practice or associate to repay to the party to whom the services were provided the whole or any part of the costs that the party has been ordered to pay to any other party, (b) an order directing the practice or associate to indemnify any party other than the party to whom the services were provided against the whole or any part of the costs payable by the party indemnified. (2) The Supreme Court may on the application of any party to proceedings on a claim for damages make any order that the court in which proceedings on the claim are taken could make under this clause. (3) An application for an order under this clause cannot be made after a final determination has been made under Part 7 by a costs assessor of the costs payable as a result of an order made by the court in which the proceedings on the claim concerned were taken. (4) A law practice or legal practitioner associate of the practice is not entitled to demand, recover or accept from a client any part of the amount for which the practice or associate is directed to indemnify a party pursuant to an order under this clause."
But as Ms Culkoff correctly submitted, in my view, the power available under the Uniform Law is limited in two ways. First, the discretionary power is only enlivened where a "law practice has provided services to a party without reasonable prospects of success". And secondly, the power only applies in relation to a "claim for damages"; although a claim for damages, in this sense, may possibly extend to equitable compensation or other similar relief: Degiorgio v Dunn (No. 2) (2005) 62 NSWLR 284; [2005] NSWSC 3, (at [13] - [15]).
Here Mr Yesilhat makes a claim for provision under Succession Act 2006, Part 3. That and his challenge to a grant of probate of the informal will do not answer the description of a "claim for damages". Moreover, the claim that the Calokerinos parties make against Mr Yesilhat for recovery of funds is mostly a claim in debt, not damages.
The loans made to Mr Yesilhat before George's death were sought to be recovered by action in debt. Some of the recovery after George's death can be characterised as a claim for equitable compensation and may therefore conceivably fall within the extended definition of "damages".
But the Uniform Law power should not be exercised here for two reasons. First, as so much of the case was involved with the probate issue, the succession issue and the debt issue, it would be difficult to separately consider the making of orders under the Uniform Law against Ms Culkoff. The pleadings covered so many other matters. And issues about the credibility of the parties were heavily interrelated with all other issues.
Secondly, the Uniform Law, s 347 requires certification of the reasonable prospects of success of any pleading which is seeking "damages" in this extended sense. But the Amended Statement of Claim, that Ms Calokerinos filed did not have any such a certificate appended to it. This meant, in substance, that she was not treating her own claim in the debt/trust proceedings as one for "damages". It would be inconsistent for the plaintiff now to assert against Ms Culkoff, in those circumstances, and for the purposes of seeking costs orders that this was a claim for "damages", when she conducted the proceedings as non-damages a claim on the basis of the Calokerinos parties' own s 347 non-certification.
The Inherent Jurisdiction. That leaves the Court's inherent jurisdiction. The Court has a general power to make costs orders against solicitors in the exercise of its supervisory jurisdiction: Re Felicity, (at [10]). But that supervisory jurisdiction does not extend to conferring a power to make a costs order against a barrister: Lemoto, (at [86]).
The lack of jurisdiction in the Court to make a costs order directly against a barrister concludes against Ms Calokerinos' contention that Ms Culkoff is liable to an order for costs personally on this basis.
Thus, the two statutory bases of jurisdiction, and the jurisdiction based upon the inherent power of the Court, cannot provide a platform for the orders now being sought against Ms Culkoff and in my view the claim against her should be dismissed.
Mr Sexton SC made an application for costs of the application. There was no basis for the Court to otherwise order. Ms Calokerinos was ordered to pay Ms Culkoff's costs of the application.
Mr Salvatore Russo. Mr Russo's position is identical to that of Ms Culkoff, so far as the statutory platform for jurisdiction, under CPA, s 99 and Uniform Law, Sch 2, cl 5, are concerned. These provisions are no more effective against him, as an Australian legal practitioner, than they are against her.
But Mr Russo's position under the Court's inherent jurisdiction is slightly different from Ms Culkoff's. Mr Evans accepted that the only basis on which the Court might make an order for costs against the solicitor, Mr Russo, in this case is within the Court's inherent jurisdiction. The law as stated in Myers v Elman (1940) AC 282 ("Myers") is that the power to award costs in the Court's inherent jurisdiction is exercisable against the lawyer in favour of the lawyer's own client and in favour of the opposing party. That scope is well described in McColl JA's judgment in Lemoto, (at [84] - [87]) in which Myers is cited and discussed by her Honour, (at [85]).
It was first argued by Mr Eardley on behalf of Mr Russo, that CPA, s 99 had modified the pre-existing common law statement of the scope of the Court's inherent jurisdiction to award costs against solicitors. Clear words would be required to limit the Court's inherent jurisdiction to make orders for costs against a solicitor in favour of the other party. As Mr Evans submitted, CPA, s 99 does not set out a comprehensive code for the exercise of the Court's jurisdiction in this area, but appears to confer additional powers. If such an important aspect of the Court's inherent jurisdiction were to be limited through this legislation, one would expect legislative express reference to that limitation to be made - and it is not.
As an order for costs may be made in the inherent jurisdiction against Mr Russo in favour of the Calokerinos parties, Mr Russo's submissions turned to the issue of the merits of the claims made against him. This really came down to the following contest: Mr Evans pointed to a number of features of the presentation of Mr Yesilhat's case as warranting the making of a costs order in the inherent jurisdiction against Mr Russo. In contrast, Mr Eardley contended that not even a prima facie case of misconduct warranting a costs order against Mr Russo had been made out on the material that Mr Evans advanced.
Mr Russo's General Answer. Ms Calokerinos made a range of points to base her claim for a costs order against Mr Russo, which are summarised below. But first, it is useful to look at a general answer Mr Russo fielded to all these points.
Mr Eardley submits, Mr Russo's main answer to the Calokerinos parties' contentions: that this was always essentially a case about credibility. Mr Eardley submitted, based on Lemoto (at [92]), that the solicitor for a party is "not the judge of the credibility of the witnesses". Mr Eardley further submits that, so much of this case is wrapped up in the credibility of all the witnesses, Mr Russo should not have been expected to be a gatekeeper or judge of Mr Yesilhat's, or their, credibility before his case was presented and fully tested.
In my view, Mr Eardley's submission is correct. Although the Court has firmly dismissed Mr Yesilhat's case, it was complex and was highly dependent on the credibility of various witnesses on both sides. Although there were improbabilities in aspects of Mr Yesilhat's case, and although he fabricated his alleged de facto relationship with George, the Court accepts that it was not the kind of case where Mr Russo should not have even accepted instructions to file a Statement of Claim. This, in substance, is what the Calokerinos parties are putting. Mr Russo was entitled to believe his client, even though his client was telling lies.
There was no conduct on Mr Russo's part that was so egregious, or showing such a level of incompetence or negligence about recognising the improbability of Mr Yesilhat's case, that there is a basis for a costs order now to be visited upon Mr Russo. Mr Eardley rightly says that the fact that the Yesilhat parties lost these proceedings does not mean that there was not a reasonable basis for Mr Russo in sworn evidence, to advance them on this material in the first place.
Analysis of Ms Calokerinos' arguments. The rest of this section of these reasons addresses Ms Calokerinos' principal submissions and Mr Russo's answer to each. Some of Ms Calokerinos' arguments overlap to a degree.
First, Ms Calokerinos suggested that statements and accounts of events being advanced in Mr Yesilhat's case were patently false, and must have been known by Mr Russo to have been patently false.
But the material does not support the conclusion that Mr Russo must have known he was putting forward a false case. It is not in contest that he had instructions from his client swearing to the truth of the evidence that founded his case. So much is proved from the filing of the affidavits that Mr Yesilhat swore. The sworn evidence of his own client should ordinarily constitute a quite sufficient basis for a solicitor, such as Mr Russo, to act.
Ms Calokerinos' submissions bolster her argument in other ways. She makes much of the fact that shortly after Mr Yesilhat's first affidavit was sworn on 24 April 2014, Mr Russo attended the Leppington pharmacy in May 2014. It is said that there he had a conversation with Mr Torrisi there, a matter not disputed by Mr Russo.
Ms Calokerinos submits that Mr Russo must therefore have personally seen, as early as May 2014, that the Leppington pharmacy had no bed, nowhere to lie down, no bathroom, no kitchen, no laundry, no space for clothes and other personal effects and nothing that would give the premises any sense of domesticity. It is sought to be inferred from this, that Mr Russo must have realised that Mr Yesilhat's case of "secret sex in the dispensary area" over a 14 year period, first alleged in the affidavit of 24 April 2014 served shortly before, "must have been a lie".
Ms Calokerinos further submits that Mr Russo should have been prompted by his visit in May 2014 to ask questions of Mr Torrisi about photographing the rear of the dispensary, and arranging a view by both sides. It is also suggested that Mr Russo failed to enquire about the existence of any will in favour of Mr Yesilhat being kept in the dispensary area, about the existence of the wages book, and who might be in possession of it.
It also contends by Ms Calokerinos that Mr Russo failed to enquire about the pharmacy computers and printers being used in May 2014. They allege that the Jones v Dunkel inference that the Yesilhat parties ultimately pursued, in relation to computers that used to be at the pharmacy, was "always was a red herring". Ms Calokerinos alleges that, from May 2014, it was open to the Yesilhat parties to make further enquires and gather evidence about the pharmacy computers, rather than make wild allegations about the computers somehow being spirited away from scrutiny.
It is put again that Mr Russo did not enquire about these things because he knew that Mr Yesilhat's case about a secret sexual relationship in the pharmacy was "all made up".
This is all too conspiratorial, even for this case, in which Mr Yesilhat did fabricate a whole relationship. Mr Russo's visit to the pharmacy has not been demonstrated to be other than the kind of visit that a solicitor keen to understand a case should undertake. And what Mr Russo would have seen at the pharmacy does not found an inference that he must have concluded his client's case was false. All the visit would suggest is the conclusion that there were real improbabilities in Mr Yesilhat's case of a relationship at the rear of the pharmacy. But Mr Yesilhat had a superficial explanation for some of the improbabilities and had sworn to his version of the facts. Mr Yesilhat's case, as advanced, faced very significant challenges but it was open to acceptance. This is not prima facie evidence of misconduct by Mr Russo.
Second, Ms Calokerinos contended that they could not understand how their probate and debt cases could have been opposed in the way that they were by Mr Yesilhat. They submitted that parts of Mr Yesilhat's probate case became speculative, suggesting, for example, that there was something sinister about a family friend of George, such as Mr Efstathiou, coming to clear out George's house after his death, or the other matters that Mr Yesilhat pointed to as fabrications in Ms Calokerinos' case.
It was true that some of the material Mr Yesilhat advanced came from a rather extreme perspective. But more than anything, this really reflected Mr Yesilhat's comprehensively jaundiced view of the Calokerinos parties. But for the reasons that will be elaborated more specifically below, Ms Calokerinos does not make good a case that Mr Russo was deliberately advancing these allegations knowing that they were wrong. Mr Yesilhat held extremely suspicious views of the Calokerinos parties (as they did of him). And he (somewhat like they did, although without a proper basis) genuinely believed that the Calokerinos parties' witnesses were fabricating their evidence.
Ms Calokerinos also pointed in support of this argument to the difficulty, evident from the solicitors' correspondence, that her lawyers encountered in obtaining from Mr Yesilhat's lawyers any proof in relation to the alleged secret relationship between George and Mr Yesilhat over a period of some 14 years.
But that difficulty is no greater than would be expected in a case that very largely depended on Mr Yesilhat's own testimony. There was little objective evidence for Mr Yesihalt's lawyers to advance in support of his case, and that ultimately was one of the reasons that Mr Yesilhat lost the case.
Third, Ms Calokerinos suggested that Mr Yesilhat's alleged sexual relationship with George was only first alleged after Mr Russo became involved in the proceedings. It is contended that this fact is evidence that Mr Russo was involved in manufacturing a false case of such a relationship. But the emergence of this allegation, after Mr Russo was engaged for Mr Yesilhat, is equally consistent with Mr Russo and Ms Culkoff being the first lawyers to take a thorough statement from their client, in which he elaborated this apparently sensitive matter for the first time. Moreover, the deceased only died in August 2013 and this allegation was first made in April 2014; not an unduly long period for a plaintiff's case to first be fully elaborated.
Ms Calokerinos also suggested on this point that Mr Yesilhat was able to rely upon legal knowledge of rights upon intestacy and intestate succession of a surviving spouse, including a de facto spouse, and the elements that would constitute a de facto relationship, all of which was knowledge they could only have gained from lawyers.
Related submissions were made about Mr Yesilhat's case concerning Probate Form 112: it was submitted that knowledge could only have been sourced from lawyers, who would have the requisite knowledge to find and download a document such as Probate Form 112. Ms Calokerinos contends that Mr Yesilhat could not have reached these conclusions himself, as he did not have a legal qualification to do so.
But these features of Mr Yesilhat's case do not make a prima facie case of some conspiracy involving Mr Russo to manufacture a false case. Mr Yesilhat presented as an intelligent person who was capable of finding and exploiting Probate Form 112 for himself. And it is not at all improbable that, as occurs in many cases, the lawyers acting for a party such as Mr Yesilhat, who are aware of the legal significance of the facts in his story, ask probing questions about his account, so that they can present the full story consistent with the application of legal principles. Such conduct does not mean that the lawyers are conspiring with the client to adduce evidence that fits the legal test required. This can be the result of the usual interview process by lawyers, who know the law. Tipping off the client to improve his case is clearly impermissible conduct. But there is no basis to infer that has happened here. The submission wholly underestimates Mr Yesilhat's own independent capacity for invention and deceit.
But the Calokerinos parties' submissions ask rhetorically, "did Mr Yesilhat arrive at this view himself?" and "to put it in another way, could he have concocted this part of his story without assistance?" This was said to be the most likely logical explanation for the part of Mr Yesilhat's case that relied upon Probate Form 112.
It is true that Mr Yesilhat's evidence contained many of the legal elements necessary for the various forms of relief that he sought. These included Mr Yesilhat's knowledge of all the following matters: intestacy laws, the need for a relationship of some years to support a de facto claim, the nature and extent of an alleged common residence to support a de facto claim, a story about a sexual relationship to support the de facto claim, a story about the degree of financial dependence and interdependence to support a de facto claim, Mr Yesilhat's story about mutual commitment to a shared life, Mr Yesilhat's claim of performance of household duties, and Mr Yesilhat's claim about the reputation of public aspects of the relationship.
The fact that evidence relating to all of these matters was included in Mr Yesilhat's case is no more remarkable than any other party adducing evidence consistent with the requirement of applicable legal principle. Really it is only evidence of the fact that Mr Yesilhat's lawyers were competently obtaining evidence from their client in affidavit form that supported the essential elements of their client's case. Rather than a conspiracy, this is the conventional provision of competent legal services. No further inquiry into this contention is warranted on the material that Ms Calokerinos has relied on.
Fourth, Ms Calokerinos' submissions, in support of her application for costs against Mr Russo, emphasise the overall strengths of the estate's case, and the weaknesses of the case on the other side.
Those relative strengths and weaknesses laid the foundations for the Court to reach the conclusions that it did in the first judgment. But the relative strengths and weaknesses are not on their own sufficient to require the conclusion that Mr Russo knew that Mr Yesilhat's case must have been so obviously wrong that he should have decided it should never be presented. For him to take that approach placed him at a high risk of breaching his duties of care and fidelity as a solicitor to his own client. Legal practitioners should not be deterred from pursuing their clients' interests by fear of personal liability to the opposing party: Degiorgio v Dunn (No 2) (2005) 62 NSWLR 284; [2005] NSWSC 3 (at [27]). No further inquiry into this contention is warranted on the material Ms Calokerinos has advanced.
Fifth, Ms Calokerinos contended that the Yesilhat parties' affidavits generally, and Mr Allen Middlebrook's affidavits in particular, were "largely fabricated throughout the course of the proceedings". This was a wide ranging contention that had a number of sub-components that are discussed below. It is not possible in these reasons to cover the full range in detail of the material which is alleged to constitute the evidence of fabrication of evidence by Mr Yesilhat's lawyers. But the examples that are given here are some of the main ones that represent Mr Russo's alleged misconduct.
The alleged fabrication was said on the Calokerinos parties' argument to have been achieved by "borrowing evidence from the affidavits served by Ms Calokerinos, or from material produced in response to a subpoena issued by Ms Calokerinos". The contention on behalf of the Calokerinos parties was that both Ms Culkoff and Mr Russo "must have been aware of that fact". But in my view, looked at from his own lawyers' perspective, the content much of Mr Yesilhat's response affidavits is largely consistent with adapting his case to new material served by the other side and is not prima facie evidence of misconduct by Mr Russo.
Ms Calokerinos also suggests that the Yesilhat parties had a strong motivation to invent evidence to answer a debt claim against them in excess of $510,000, and to help respond to criminal charges against Mr Yesilhat. But it is further argued that in fabricating this case, Mr Yesilhat also fabricated the broader case that he was a de facto spouse of the deceased and that he was a beneficiary of George's estate, either by way of intestacy or through an unseen will, all of which fabrication Mr Russo must have been aware.
The Calokerinos parties submit that the alleged mistyping of "Strathfield" as "Stanmore" in Mr Yesilhat's first affidavit, grounds the conclusion that "the Court should find all Mr Okan Yesilhat's affidavits were prepared with the active assistance of his lawyers". It is not difficult at one level to draw this inference. All his affidavits were undoubtedly prepared "with the active assistance of his lawyers". But presumably what is meant here is that the lawyers were actively involved in fabricating evidence. The mistyping of "Strathfield" as "Stanmore" does not establish the lawyers were involved in such conduct.
Mr Torrisi says that Mr Russo alleged to him in May 2014, "we think the will has been forged". Ms Calokerinos suggests that the use of the word "we" is some evidence that the idea of a forged will was one fabricated by Mr Russo himself and that Mr Russo should have said something like "Okan says". In my view, this is nothing more than a common expression used by lawyers to refer to their cases, temporarily merging the differences between lawyer and client in speaking.
But this is not a rational basis to indicate that the lawyer is fabricating the client's case. Nor does it indicate that the lawyer was a participant in a deliberate strategy to put a false case before the Court or to defeat the debt claim by pursuing a grand strategy in advancing the probate and family provision proceedings. Nothing in Mr Russo's correspondence shows that he was consciously pursuing such a collateral purpose. None of this represents a prima facie case of misconduct against Mr Russo warranting a costs order against him personally.
Yes, Ms Calokerinos' reaction is not entirely surprising. There was a grand strategy based on a wholly fabricated story arrayed against her. But it was not Mr Russo's deceitful strategy; it was Mr Okan Yesilhat's.
Sixth, the principal allegation of falsity in which Mr Russo was alleged to be involved relates to the October 2012 informal will. It is submitted that Mr Russo should have satisfied himself about the genuineness of the signature on the will by comparing it with copies of that signature otherwise available to his client, before making allegations of will forgery. In particular, it is said that Mr Russo should have compared the signature on the bank authority with that on the will.
The evidence of forgery was virtually non-existent, as the first judgment shows. But that is not to say that the allegation should never have been made.
In correspondence dated 31 March 2014, Mr Russo asserted that documents that he held with the deceased's original signature appeared to be patently inconsistent with the signature in the purported will. The argument Mr Russo's letter seemed to advance was that, on the basis of his lay examination of the signature, it did seem to be very different from other signatures that appeared to be authentic.
This was long before Ms Novotny's report had been obtained. Lay examination appeared to be the basis upon which the allegation of forgery was originally mounted. It is not necessary to have expert evidence to make an allegation of forgery. A lay comparison of signatures may be enough, depending on the facts of each case.
But Ms Calokerinos also points out that the Yesilhat parties refused all requests to explain what the "patent inconsistencies" in signatures actually were and refused to reply to correspondence on that subject. Whilst replying to correspondence would have been a more co-operative approach, it was not necessarily an indication of fabrication of evidence.
But Ms Calokerinos further argues that when a call was made in Court, the bank authority that was signed by the deceased which was produced, contained a signature which was not dissimilar from that in the will. Therefore, it is said that when Mr Russo referred to these other documents in correspondence, he was engaging in actively misleading conduct. But opinions about the similarity or dissimilarity in signatures can vary reasonably among lay people: that is why experts are engaged for a more definitive opinion. None of this represents a prima facie case of misconduct against Mr Russo warranting a personal costs order against him.
Seventh, Ms Calokerinos submit that there is support for the conclusion that the Yesilhat parties were engaging in a tactic to mask their belief that their case would really never go to trial. Rather, it is suggested they were hoping to get a settlement before trial, by whatever means possible.
There is some support for this conclusion. But this is an observation true of much litigation and is not prima facie evidence of misconduct on Mr Russo's part. Maintaining the external impression that one's case, or one's defence, is stronger than it actually is not an illegitimate tactic in litigation, provided it does not involve dishonest conduct. None of this represents a prima facie case of misconduct against Mr Russo warranting a costs order against him personally.
Eighth, Ms Calokerinos alleges that Mr Russo's conduct in the proceedings was obstructive. Some of his conduct can certainly be characterised as unco-operative. But it should be remembered that Mr Russo's conduct was engaged in during passionately contested proceedings. Whilst the conduct of Mr Yesihat's case received adverse comments from the Court from time to time during the hearing, and was not always ideal, it was not in my view conduct which would warrant the making of a costs order personally against Mr Russo.
In my view, the application for costs against Mr Russo fails. The Court will order the Calokerinos parties to pay Mr Russo's costs of the application.

(1) The Preliminary Issues

The preliminary issues raised are as follows: (1) the application of family provision costs jurisdiction in making costs orders in these proceedings; (2) the costs incurred in relation to the Greek properties; and (3) varying past costs orders in light of the Court's first judgment. Each of these three preliminary issues will be dealt with in turn.

Preliminary Issue - Application of Family Provision Costs Jurisdiction

Mr Yesilhat raises the first preliminary issue. He argues that although he lost his Succession Act family provision claim, he should nevertheless have the benefit of the Court's exercise of the special discretionary jurisdiction in which cost orders are sometimes not made against unsuccessful family provision applicants. He submits that on this basis no costs order should be made against him and that Australia's Best Tyres and Mr Gokan Yesilhat should have their costs out of the estate.
The estate's reply may be shortly stated. The estate submits that Mr Yesilhat should have a costs order made against him in accordance with ordinary principles under Uniform Civil Procedure Rules, r 42.1 under which costs follow the event unless it appears that some other order should be made. The estate argues: (1) that Mr Yesilhat's family provision claim is only one small part of the wide ranging contest between these parties, a contest which includes a range of issues in the probate proceedings and the debt/trust proceedings; and (2) that even if Succession Act considerations are engaged in relation to the costs of his unsuccessful family provision claim, here the Court has made findings that Mr Yesilhat has invented evidence and no such costs discretion should be exercised in his favour.
For the reasons which follow, the Court concludes that although the power to exercise Succession Act, s 99(1) costs jurisdiction is available in this case, Mr Yesilhat should not have any special costs discretion associated with family provision claims exercised in his favour.
Succession Act 2006, s 99(1) makes special provision for costs orders in family provision matters. Succession Act, s 99(1) gives the power to the Court to order costs in family provision matters that would not necessarily be open to the Court in other cases to which Civil Procedure Act 2005, s 98(1) in combination with Uniform Civil Procedure Rules 2005 ("UCPR"), r 42.1 apply. Succession Act, s 99(1) provides that the Court may make cost orders in proceedings under the Succession Act, Chapter 3 in relation to an estate and those costs may "be paid out of the estate or notional estate, or both, in such manner as the Court thinks fit".
Before the Succession Act 2006 was passed, substantially equivalent provisions in the Family Provision Act 1982 had long demonstrated the exercise of this costs jurisdiction. Gaudron J described this jurisdiction in the High Court's costs decision in Singer v Berghouse (1993) 114 ALR 521; [1993] HCA 35 ("Singer"), (at [6]) as follows: "6. Family provision cases stand apart from cases in which costs follow the event. Leaving aside cases under the Act which, in s.33, makes special provision in that regard, costs in family provision cases generally depend on the overall justice of the case. It is not uncommon, in the case of unsuccessful applications, for no order to be made as to costs, particularly if it would have a detrimental effect on the applicant's financial position. And there may even be circumstances in which it is appropriate for an unsuccessful party to have his or her costs paid out of the estate".
Singer itself was an example of a case in which a costs order was not made against an unsuccessful applicant.
This particular aspect of the Court's jurisdiction has often been applied, both in New South Wales and interstate. It is often applied where a costs order would adversely affect the financial position of an unsuccessful applicant, in a manner sufficient to change adversely their financial circumstances to make the bringing of another application for family provision more probable: De Feu (decd), Re [1964] VR 420 at 428; see also McDougall v Rogers, Re; Estate of Rogers [2006] NSWSC 484, (at [57]), Moussa v Moussa [2006] NSWSC 509, (at [8] and [10]), Morse v Morse (No. 2) [2003] TASSC 145, (at [4]), and Bartkus v Bartkus [2010] NSWSC 889, (at [24]).
But recent cases in the Court of Appeal show that the starting point for analysis of costs in such situations is Civil Procedure Act 2005, s 98. In Chapple v Wilcox(2014) 87 NSWLR 646; [2014] NSWCA 392, the Court of Appeal, said (at [123]): "In McCusker v Rutter [2010] NSWCA 318 (a case under the former legislation), this Court made it clear that the question of costs in family provision matters is to be determined by reference to the discretion conferred by s 98 of the Civil Procedure Act 2005 (NSW), but with the added discretion made available by the special provision also available to be deployed."
The Court of Appeal further said, (at [137]): "In McCusker v Rutter (above), the plaintiff made an unsuccessful claim under the Family Provision Act and the trial judge decided that there should be no order to costs. On appeal, Young JA said (at [29]-[33]) that "the authorities show that it is relatively rare that a court should make such an order . . ." but that "[a] series of decisions at first instance show that there is some more flexibility where there has been an unsuccessful claim made under the Family Provision Act". Young JA then quoted what had been said by Gaudron J in Singer v Berghouse (see [122] above) and continued (at [34]): 'Examples of situations where courts have thought no order should be made against an unsuccessful plaintiff are afforded by Sherborne Estate (No 2): Vanvalen v Neaves (2005) 65 NSWLR 268 per Palmer J and Moussa v Moussa [2006] NSWSC 509 per Barrett J. Whilst it is clearer in a case where if an order for costs is made against an unsuccessful plaintiff he or she will instantly become impecunious and so may be able to make a fresh application under the Act so that it is counter-productive to make an order as to costs against such a plaintiff, what Gaudron J said in Singer shows that it is not only in such cases that it may be inappropriate to make an order for costs against an unsuccessful plaintiff under the Act."
And the Court of Appeal concluded in Chapple v Wilcox at [140]: "The question in this case, therefore, is whether there is any demonstrated reason for departure from the principle that costs should follow the event. The only potentially relevant factor is the respondent's unfavourable financial position (assuming that it has continued after the death of his mother) and, as referred to by Young JA in McCusker v Rutter (above), the circumstance that, if an order for costs is made against him, he "will instantly become impecunious"."
Mr Yesilhat submits that the Court should depart from the principle that costs follow the event in this case, with respect to his costs, for two main reasons. First, he says that such orders would unfavourably affect his financial position and would do so sufficiently adversely that they bring this case within these special legal principles. Secondly, he submits that the objective evidence in support of the claim that he made was not without merit and substance (although rejected in the first judgment) and that objective evidence gave weight to his claim as a reasonable one to be brought.
In his first main contention on the family provision cost discretion, Mr Yesilhat says that if an order for costs were on top of the repayment of the monies judged owing by him in the cost/debt proceedings made against him he would become impecunious. He points to his relatively straightened financial circumstances at the time the proceedings were heard. He claimed then to have net assets of only $185,720, being comprised of assets totalling $1,361,920 and liabilities of $1,176,200, leaving this small net balance.
There was a limited description of Mr Yesilhat's financial position in the first judgment, (at [784]). But in the first judgment, the Court's other reasoning meant that contests about Mr Yesilhat's assets and liabilities did not have to be determined. The Court found that it was "not necessary to decide this issue as Mr Yesilhat is not an eligible person": first judgment, (at [785]).
Mr Yesilhat says that the extent to which the first judgment refers to his overall liabilities as being $185,720, rather than his net assets being in that sum, the first judgment is factually incorrect. There has not been sufficient focus on this issue in oral submissions to determine whether this submission could be dealt with under the slip rule. But that does not matter for present purposes. The Court is prepared to deal with Mr Yesilhat's present submissions on the basis that the evidence is as he has stated it to be. On the present application, the Court will assume he had at the time of hearing net assets only of $185,720.
He says this limited sum has been eroded by the significant costs of a 21 day hearing. It can readily be concluded that these costs would well exceed $185,720. At the time of his submissions on this issue, he claimed his legal costs were $460,000. Ms Calokerinos' claimed costs well exceeded that figure. These figures sound reasonable and are likely to be correct.
Secondly, to enliven this aspect of the Court's costs jurisdiction, Mr Yesilhat points to a number of other factors. The first factor is that objective evidence supported his claim as being not without merit, despite the findings in the first judgment to the contrary. It is not necessary to detail all the evidence to which he points to support this contention. But some of its main features can be briefly surveyed. They have all been dealt with in the first judgment. What follows in this paragraph are the matters to which he particularly points in support of this contention. Expert forensic evidence shows the signature on the will was written before the printed typescript overlapped it, suggesting (it is said) fabrication of the will. But of course other inferences are available as the first judgment shows, (at [689] - [690]). George had three linked bank accounts with Mr Yesilhat, indicating a high degree of trust invested in Mr Yesilhat. Mr Middlebrook, George's accountant for 24 years, provided strong corroborative evidence of George making gifts to Mr Yesilhat, of the unrestricted account linkage between the two and of a close personal relationship between Mr Yesilhat and George. The deceased's diaries made numerous references to Mr Yesilhat. George's correspondence with the unnamed priest was suggestive of some conflict about his sexual identity. Mr Yesilhat was unable to create the will with his good computer skills using a dot matrix printer. And finally, apparently gratuitously, George provided significant financial assistance to Mr Yesilhat.
As the first judgment shows, the Court either rejected much of this evidence or rejected the inferences that Mr Yesilhat sought to draw from it. But Mr Yesilhat's point, at this stage of the proceedings, is that the objective evidence justified him at least in bringing his family provision claim.
Mr Yesilhat refers to some subsidiary factors in support of the exercise of the special costs jurisdiction in family provision matters: he says Ms Calokerinos was not willing to participate in a mediation; and he says that Ms Calokerinos conducted this litigation intensively, relying upon 63 affidavits and issuing in excess of 27 subpoenas and notices to produce that "left no stone unturned" in examining all aspects of Mr Yesilhat's evidence and life.
In summary, Mr Yesilhat says that taking all these matters into account, and taking into account the size of the estate, there should be no order for costs against Mr Yesilhat, with respect to his unsuccessful claims, and that each party should bear their own costs.
Mr Yesilhat's submission on this issue is not persuasive. It is open to the Court to exercise Succession Act, s 99(1) jurisdiction and not to make a costs order against Mr Yesilhat, despite his lack of success in his family provision claim. But this is not a case where that cost jurisdiction should be exercised in Mr Yesilhat's favour. This is so for several reasons.
First, it is almost impossible to separate out the evidence relating to Mr Yesilhat's family provision claim from the evidence associated with the other issues in the case. Attempts to separate the two would result in unreasonably protracted demarcation disputes about the relevance of particular evidence to particular subject matters in the proceedings.
Moreover, even if that separate were possible, the material purely related to the family provision proceedings would be relatively small. Possibly only material relating to Mr Yesilhat's financial position would be referable solely to his family provision claim. All the other strongly contested evidence in the case concerning Mr Yesilhat's relationship with George is relevant to at least some of the other issues in the proceedings. Civil Procedure Act, s 98 and UCPR, r 42.1 will therefore apply to all these other issues. It is not easy to see how a separate order under Succession Act, s 99(1) of any significance can be made in this case.
Secondly, this is not the kind of case in which Succession Act, s 99(1) orders would ordinarily be made to relieve an impecunious unsuccessful plaintiff of an adverse costs order. The common logic for such orders is that an otherwise "eligible person" who faces a substantial costs order would automatically have their financial circumstances reversed, thereby giving them potential grounds to bring another application. Where the plaintiff is an "eligible person" under Succession Act, Part 3 and able to bring a claim and the only real issue is whether adequate provision has been made for the plaintiff, it is logical not to make a costs order against an unsuccessful plaintiff. At least one basis for not making the order is to discourage further litigation.
But this is not such a case. The Court has found Mr Yesilhat was not an eligible person under the Succession Act. As the Court's findings now stand, there is no danger of a costs order being made against him, leading to a further family provision application on his part.
Thirdly, the Court has found that Mr Yesilhat fabricated evidence of his relationship with the deceased. The fabrication of evidence to try to bring a plaintiff within a narrow class of potentially eligible persons to make a family provision claim is not the kind of conduct that would incline the Court on discretionary grounds to relieve a plaintiff against the consequences of his failure on that very claim.
Finally, the other factors relied upon do not assist Mr Yesilhat's case. Ms Calokerinos' failure to engage in mediation does not suggest a different costs order is appropriate. Her refusal to negotiate to settle is well justified by her comprehensive victory in the proceedings. Mr Yesilhat did not seek to secure an order for mediation under Civil Procedure Act 2005, s 26. Nor should the fact Ms Calokerinos fought the proceedings vigorously be held against her. She was justified in doing so.
Although Succession Act, s 99(1) jurisdiction to make a special costs order is theoretically available to Mr Yesilhat, the Court will not exercise that jurisdiction and will approach the remaining costs issues under Civil Procedure Act, s 98.
It should also be noted at this point that this is not a case in the probate jurisdiction where it could be said the deceased was responsible in the way he made his will for the costs that have been incurred here. The contest in these proceedings especially about the alleged de facto relationship, goes well beyond such considerations.

Preliminary Issue - The Greek Properties

Mr Yesilhat says he was put to extra expense in gathering evidence in relation to the existence and to George's ownership of the Greek properties. He contends that such additional expense was entirely the result of misleading information that Ms Calokerinos gave to the Court. He contends this misleading information required him to undertake property searches in Greece and to engage expert evidence about Greek real estate.
The estate submits, in reply, that the Court has already found there was no misleading conduct on the estate's part about the Greek properties and that no special costs order should therefore now be made about that subject matter in Mr Yesilhat's favour.
The Court concludes for the following reasons that a separate order for costs should be made in relation to the Greek properties.
Mr Yesilhat founds his claim for costs associated with the Greek properties on a statement that Mr Evans made at a pre-trial directions hearing on 18 November 2015, when the Court was trying to ready the proceedings for trial. The Court emphasised on that occasion the need to reduce unnecessary costs on disputes about non-essential issues, and especially issues which would ultimately be resolved by matters of incontestable fact such as the state of a Greek land property register. The Court asked Mr Evans the question: "Do you have any documents concerning the inheritance of property or the will of George Sclavos, the deceased's father on your side?" To this, Mr Evans replied, "My instructions are there is no property in Greece. I can make enquiries about the other matters your Honour has raised".
Mr Yesilhat submits that the statement Mr Evans made on behalf of Ms Calokerinos on this occasion was unqualified and did not, for example, describe the situation more fully (and in conformity with the true situation) as being one where the deceased owned some 50% of a number of properties in Greece at one stage, but that she believed they had since been transferred to Ms Calokerinos and Ms Sclavos-Lahana.
Mr Yesilhat submits that the categorical statement to the Court, "There is no property in Greece" was really only open to one natural inference that "There never was any property in Greece in which the deceased held any interest".
Mr Yesilhat says that because of what he had been told by George, he did not believe this to be true. And the statement therefore set him on a course of enquiring about the properties in Greece. And he undoubtedly incurred costs of retaining a Greek lawyer to undertake those searches on an urgent basis. The searches included coordinating searches on the island of Kythera.
Mr Yesilhat issued a subpoena to Ms Chrysanthe Sclavos (Ms Calokerinos' mother), who it was thought would be in a position to know whether George had inherited any properties in Greece from his father, when his father died in 1992. Rather than proceed by subpoena, the Court directed that the Calokerinos parties make enquiries of Chrysanthe Sclavos about any properties in Greece and whether they were still held by relatives of any of George's relatives.
Messrs Aston Reed Lawyers replied in relation to these enquiries on behalf of Ms Calokerinos. They replied that George's father's probate documents, including his last will and inventory of property, did not assist Mr Yesilhat. Messrs Aston Reed Lawyers pointed out, "We bring your attention to the inventory of property in which no property in Greece is listed".
By 17 December 2015, the Yesilhat parties had undertaken searches in Greece which had revealed there were some 11 parcels of real estate in which George held a half share. It was said in response to this, on behalf Ms Calokerinos at a directions hearing on 17 December 2015, that the "Sclavos name is very common on the name of Kythera".
Mr Yesilhat then gave instructions to, and obtained affidavit evidence from, Mr Tripidakis. This evidence indicated that, not only were there 11 parcels of real estate in Greece but there were also bank accounts and loan agreements held in George's name, even though prior answers to Mr Yesilhat's notice to produce for documents relating to the Greek properties had said that "there was nothing to produce".
Mr Yesilhat submits that, as a result of this course of events, he is entitled to his costs on an indemnity basis, in respect of his searches for the Greek properties.
Ms Calokerinos opposes such an order. Her principal submission is that she did not mislead the Court about the Greek properties and she has the benefit of findings in the first judgment to that effect.
The Court dealt with the issue of the Greek properties extensively in its first judgment: (at [602] - [665]). In the first judgment, the Court decided a number of the issues that Mr Yesilhat now seeks to re-agitate. In those paragraphs the Court fully dealt with his submission that she misled the Court about the Greek properties and concluded on that subject, (at [619), as follows: "619 In response to these contentions, Ms Calokerinos said that she believed that the Greek properties had been transferred from the deceased to herself and Ms Sclavos-Lahana when the 12 month renouncement period elapsed on 13 August 2014. She said that she thought that there were no Greek properties in the name of the deceased as at November 2015. I accept her explanation. The pre-trial directions hearings were concerned with many issues of which the Greek properties were but one. And she had not dealt with them recently before November 2015. Though incorrect in fact, her instruction to her counsel are explicable on this basis and do not affect her credibility in my view. "
These findings cannot be revisited, except on appeal. But even accepting the Court's findings in the first judgment, the question that Mr Yesilhat now raises of the cost of preparing searches for and expert evidence about the Greek properties must still be considered. Ms Culkoff submits, on Mr Yesilhat's behalf that all costs associated with conducting searches in Greece and calling the legal expert concerning Greek property could and should have been avoided if Ms Calokerinos had informed the Court something in substance to the effect that "there were 11 properties in Greece but we believe that they have been transferred out of the deceased name after his death".
In my view, Mr Yesilhat's submissions are correct to the extent that they contend that what Ms Calokerinos first said to the Court about the Greek properties put Mr Yesilhat in the position that he had to undertake unnecessary searches about these Greek properties. Although the Court has not found that Ms Calokerinos deliberately misled the Court, nevertheless the statements to the Court had the actual effect of wasting the parties' resources, the time of the Court, and Mr Yesilhat was required to engage experts that he would probably not otherwise have done.
A special costs order is warranted in relation to the subject of the Greek properties. The Court does not make this order because Ms Calokerinos intentionally misled the Court. Therefore there are no grounds to make any orders on the indemnity basis against her. The orders are made because, despite the many other understandable pressures on Ms Calokerinos that explain (see the Court's first judgment) why the information about the Greek properties was not quickly forthcoming, the effect of the lack of provision of information was an unnecessary incurring costs on all sides. Overall responsibility for that outcome rests on Ms Calokerinos, rather than on Mr Yesilhat. And the Court gave a very clear warning that the costs of this issue would potentially be looked at separately from other issues.
What is the appropriate costs order about the Greek properties? Mr Yesilhat has been put to unnecessary expenditure because he did not have information about the Greek properties that would have avoided that expenditure.
It is true that Mr Yesilhat would always have had to undertake some, at least limited, legal work in relation to investigating the Greek properties before he was forced by lack of information to engage experts and undertake a more detailed investigation. But if disclosure of full information about the Greek properties had been prompt, Mr Yesilhat's work and legal expenditure about them would have been minimal: really he would only have had to make enquiries as to whether there were any Greek properties. It is appropriate therefore to make orders that cover this whole subject matter, rather than trying to carve out any subcomponent of these costs. But Ms Calokerinos' conduct about the Greek properties was not deliberate and does not warrant an order for indemnity costs against her.
The following orders are appropriate on this issue: (1) the estate should pay Mr Yesilhat's costs associated with investigating and calling evidence concerning the Greek properties on the ordinary basis; and (2) the estate should not include in any of its costs claimed against Mr Yesilhat any amount in respect of the Greek properties. The Court's orders with these reasons will reflect this conclusion.

Preliminary Issue - Varying Past Costs Orders

The estate contends that because it was successful in the first judgment that any costs orders made against the estate prior to the final judgment, including those made by White J on the strike out application, should now be vacated.
Mr Yesilhat submits that the estate chose to bring various prior applications, which turned out to be unsuccessful and that the estate bears responsibility for the failure of those applications, notwithstanding its later success in the first judgment.
In the result, for the reasons which follow, the Court finds that none of the previous costs orders should be vacated.
The principal prior costs order made in the proceedings is in respect of the estate's strike out application heard before White J: Yesilhat v Calokerinos [2015] NSWSC 1028. The estate's strike out application failed.
Ms Calokerinos seeks to vary the existing costs orders in two ways: (1) to convert existing costs orders in her favour on the ordinary basis into indemnity costs orders; and (2) to reverse costs orders made in favour of Mr Yesilhat. The preliminary issues here deal with issue (2). Under the heading "Indemnity Costs" later in these reasons, the Court deals with issue (1).
In relation to issue (2), Mr Yesilhat submits that Ms Calokerinos was unsuccessful in striking out proceedings against him and that costs on an indemnity basis should not be substituted for the orders White J made.
This submission is persuasive. Ms Calokerinos decided to pursue the course of striking out Mr Yesilhat's case and occupying the Court's time with that motion. The application failed on its merits. Mr Yesilhat's case could not be struck out for the reasons White J then explained. Merely because Mr Yesilhat's case has now failed, after full examination of the evidence, does not provide a proper basis to reverse White J's costs order.
The strike out application need never have been brought. The costs that Mr Yesilhat incurred on the strike out application would not have been incurred had Ms Calokerinos not brought it. Mr Yesilhat was correct in defending that application: his case was one which could not be struck out without a trial on the merits, as the available evidence was sufficient for it to go to trial. Those costs orders should stand.
Similarly, White J dismissed the application Ms Calokerinos brought for security for costs: Yesilhat v Calokerinos [2015] NSWSC 1028. Ms Calokerinos did not appeal from that decision. Again, that was not a decision which is now liable to modification based upon the outcome of these proceedings. As White J explained, there was not a proper basis for a successful application for security for costs against an individual such as Mr Yesilhat. The application for security for costs was rightly dismissed. That remains the position even now, as the Court's first judgment does not bear upon security for costs issues.
No other previous costs orders made in Mr Yesilhat's favour against Ms Calokerinos have been separately identified as now warranting reversal. They will all stand.

(2) Damages Issues

After George Sclavos died on 13 August 2013, the estate was unable to meet a number of its obligations. Prime among these was the payment of its API pharmacy account held in the deceased's name. The API account balance was due and payable on 25 September 2013, in the sum of $84,256.61, which sum was calculated and invoiced as at 31 August 2013.
The estate contends that it would have been able to pay the API balance of $84,256.61, in full in September 2013: (a) if the Yesilhat parties had paid back the loan to them before that time; and (b) if Mr Okan Yesilhat had not fraudulently removed the $206,500 from the deceased's accounts in the period from 13 August 2013 to 9 September 2013.
As a result of the failure to pay the API balance and the other monies that will be detailed below the estate alleges it incurred API penalty interest, additional API expenses and other monies in 2013 and 2014. It claims all these amounts as damages. The other monies include a strata levy on certain real estate that George owned at the time of his death, and credit card and overdraft fees and interest. The claim is more detailed.
The API Account Fees. To administer his pharmacy practice, George held what is known in the pharmacy profession as "an API account" in his own name, being account number 325. A balance of $84,256.61 was due and payable on George's API account on 25 September 2013, but calculated and invoiced as at the end of 31 August 2013.
Ms Calokerinos submits the estate would have been able to pay the $84,256.61 to API in full if the Yesilhat parties' loan repayments had been received. She also submits the estate would have been able to pay this money on API account 325, if the fraudulent transactions had not taken place immediately after George's death between 13 August 2013 and 9 September 2013, leaving aside the repayment of the monies already owed to George at the time of his death.
As a result of the non-payment of the monies due on API account 325, it seems not be in issue that the estate incurred penalty interest throughout 2013 and 2014. The Leppington pharmacy was able to continue to trade until it was sold in 2014, but it did so only on cash on delivery terms.
The amount of penalty interest incurred before the sale of the pharmacy to API on API account 325 was $19,314.59. This represented interest on unpaid API accounts between 13 August 2013 and 1 August 2014. The outstanding debt was only paid to API by the estate on or shortly after 1 August 2014, when it says it could afford to do so. Ms Calokerinos says she was unable to satisfy the estate's liabilities on the API account, thereby incurring interest charges, because Mr Yesilhat had removed all the available money in George's accounts immediately after his death. Had Mr Yesilhat not removed the almost $170,000 that he did from George's accounts, Ms Calokerinos alleges there would have been ample available funds to meet the invoices on the API account.
The Court found in the first judgment that Mr Yesilhat dishonestly diverted to himself, or for his benefit, all the funds transferred from the deceased accounts on and from the day the deceased death, founding an institutional constructive trust in favour of the estate over the proceeds that came into and remain in Mr Yesilhat's hands: first judgment, (at [817]).
No claim is made on behalf of the estate for an account of profits from Mr Yesilhat as a result of his use of this money. But the estate says it is entitled to damages, or equitable compensation, for this breach of trust for the whole of the amount claimed for interest on the API account.
The Strata Levy. The estate's second damages claim relates to a special levy payable on George's Vaucluse investment property. This special levy of $40,799 was payable in full on that property in September 2013. Ms Calokerinos submits, on the same basis as for the API amounts, that this Vaucluse property levy could have been paid, if the fraudulent transactions had not taken place between 13 August 2013 and 9 September 2013.
The special levy of $40,799 was struck by SP2000 for each strata unit in the building containing the Vaucluse property at an extraordinary general meeting that was held on 12 September 2013. Because of the estate's lack of funds it is alleged the strata manager, Net Strata, permitted the estate to pay the special levy via a repayment plan. But the estate was only able to pay $5,000 towards this levy before the Leppington pharmacy was sold.
Through Net Strata the strata plan cancelled the payment plan on July 2014. But the estate had by then already incurred $902.33 in interest due to its alleged inability to pay the $40,799 special levy.
Creditcard and Overdraft fees. Finally, in the third component of its damages claim, the estate incurred cash advance fees on 13 August 2013 and 20 August 2013 due to the transactions performed by Mr Yesilhat on George's Mastercard account, account 7485. The cash advance fees incurred on 13 August 2013 was $300. The cash advance fee incurred on 20 August 2013 was $70.
Ms Calokerinos claims the estate would have been able to repay all the loan facilities held solely by George in full and would not have incurred any interest charges from 1 September 2013, if Mr Yesilhat had not undertaken the post death fraudulent transactions between 13 August 2013 and 9 September 2013.
The estate calculates that it incurred CBA interest charges of $13,472 from 1 September 2013 until November 2014 on the following accounts (identified by their numbers), and in the following amounts: 1. Overdraft Mastercard account 485 = $574.24 2. Overdraft account 775 = $950.10 3. Overdraft account 183 = $120.35 4. Overdraft account 401 = $5,418.39 5. Overdraft account 428 = $6,414.85
The estate's cash problems eventually came to an end. Ms Calokerinos sold the following assets in 2014: the property in Prestons on 8 May 2014 for $420,000; a 50 per cent share of a property in Casula (that he held with Anna Sclavos) on 11 November 2014 for $410,000; the sale of the Leppington pharmacy in August 2014 for $363,559.17; and the sale of six motor vehicles that George owned in about mid-2014, realising a further $37,300.

Availability of the Damages Claim

But Mr Yesilhat denies that Ms Calokerinos can now even bring a damages claim. The parties debated on and before 24 October 2017 whether or not a claim for damages was open to the estate. As a result of that debate on 24 October 2017, the Court ordered that Points of Claim and Points of Defence be filed, to better define the claim, together with submissions as to whether or not the estate's damages claim was still open. The parties filed the Points of Claim and filed Points of Defence. This threshold issue is considered first.
Ms Calokerinos' submissions and Points of Claim assume that the estate's damages claimed is still open. But the Yesilhat parties seek an order that the damages claims be dismissed and that Ms Calokerinos be ordered to pay all the costs associated with this aspect of the proceedings.
Mr Yesilhat submits that the damages claim is no longer open for three main reasons: (1) Ms Calokerinos was seeking to reopen the hearing after judgment and to lead further evidence to substantiate the claim; (2) the Yesilhat parties would be prejudiced were that be allowed to happen; and (3) the claim is answered by an Anshun estoppel.
The starting point is Ms Calokerinos' Amended Statement of Claim, filed on 23 June 2014, which made a claim for damages. Prayer 6 of the relief sought in that Amended Statement of Claim was for an order that "the defendants pay damages for the losses suffered by [the] estate of the late George Sclavos by reason of the defendants' non-payment of loan monies and also the subsequent wrongful withdrawals from the deceased's CBA and Westpac accounts after death". The damages claim has always been part of these proceedings.
The Amended Statement of Claim identified damages relief more specifically in paragraph 45(b). In addition to the return of monies loaned, the estate sought "damages for the interest charges incurred due to the estate's inability to pay supplier pharmaceutical accounts (e.g. API) after death on time and also the bank and interest charges incurred after death due to the estate's inability to pay the CBA loan account balances after death". This pleading put the defendants on early notice of the nature of the claim that is now being brought on behalf of the estate.
The Court made it clear during the hearing that it would not hold a separate damages hearing, with separate cross-examination on the credit of parties and witnesses who had given evidence prior to the first judgment. The Court contemplated that uncontentious, mainly documentary, evidence could be admitted at a damages hearing and possibly even expert evidence, provided that did not involve the recalling of witnesses who had already given evidence and whose credit had already been adjudicated upon. The hearing of any damages claim will be so limited.
As the scope of a damages hearing was itself a matter in contest, it was anticipated that the Court would decide whether the additional evidence put forward by Ms Calokerinos would be accepted or not. That additional evidence is principally comprised in her short affidavit dated 11 July 2017. Although Ms Calokerinos was a party to the proceedings whose credit might be in issue, the Court is prepared to admit parts of this affidavit to the extent that it contains uncontentious statements of fact or annexes documents that record facts that are likely to be indisputable.
The Court will make rulings to that effect if and when this damages issue in the proceedings is determined. In short, to the extent that the 11 July 2017 affidavit describes debt facilities, interest payments, the existence of special levies and invoices, the affidavit can be read. To the extent that it goes beyond such matters, the affidavit will be rejected.
The Points of Reply to the Points of Claim show that much of this uncontentious documentary material is accepted by Mr Yesilhat as available to be read on a damages hearing, and appropriately so.
But Mr Yesilhat's first point fails. The damages claim is not seeking to reopen the hearing. It merely takes advantage of an existing pleaded claim, which the Court said could be determined after the first judgment, provided certain limitations were observed. The issue is not whether the hearing is being reopened, but whether the evidence sought to be adduced is within the limits notified by the Court for the damages hearing.
Mr Yesilhat's second contention is that a re-opening of the hearing with the leading of further evidence will prejudice him. He claims the following prejudice. He could have led evidence in relation to the sale prices of the Prestons property and the pharmacy if they had been sold in August 2013 and not when they were, in order to demonstrate that the interest Ms Calokerinos now claims would have been offset by the increased purchase price of these properties.
Mr Yesilhat submits that the Prestons property, sold in May 2014 for $420,000, was sold for a price that "was considerably greater than the sale price that would have been obtained in August 2013". It is submitted that this thereby offsets or extinguishes any claim that the estate may have for damages, bearing in mind that the estate's total claim for damages is only $34,058.96. But he presently has no evidence as to what the sale price of the Prestons property would have been in August 2013.
Mr Yesilhat further submits that Mr William Callaghan, an officer of the CBA could have been called and cross-examined to conclusively demonstrate the estate could and should have accessed the three fixed term deposits. It is further put that Mr Moylan, the Calokerinos parties' accounting expert, would also have been cross-examined as would the deceased's own accountant, Mr Middlebrook, about the deceased's practice in relation to the three fixed term deposits and his income from the pharmacy in the two years preceding his death.
There is some force in Mr Yesilhat's argument here. The position that now arises is perhaps a product of a number of factors. The Court made clear what the limited nature of a future damages hearing would be. The Court was not prepared to allow the recall of parties on any contentious issue once they had already been cross-examined and their credit had been determined in the first judgment. That would for example rule out recalling Mr Moylan or Mr Middlebrook. Just as Ms Calokerinos cannot now be called on any contentious issues involving her credit.
But the Court's indication about a damages hearing would not rule out leading expert evidence, for example, about the price differential between the sale of the Prestons property and the pharmacy in August 2013, rather than at a later time. Nor would it eliminate the calling of a new witness, Mr William Callaghan, of the CBA. If this damages claim was to be pursued those evidentiary options are available to Mr Yesilhat, if he wished to pursue them.
Mr Yesilhat has not had a chance to investigate or call this evidence. The Court will therefore not finally determine damages issues. Mr Yesilhat will be given an opportunity to decide, whether or not he wants to put on such evidence. To proceed now to decide the damages issues would deny him procedural fairness. But the Court will not allow the recalling of Mr Middlebrook or the cross-examination of Mr Moylan.
The Court nevertheless gives in these reasons below an indication of an approach that might be taken in analysing the current damages evidence. This is done merely to assist the parties to possibly resolve this issue themselves. This indication of the issues does not represent final findings in the proceedings. But consideration of the inferences that are available from the existing evidence is useful. The possible inferences considered here may be quite different should further evidence be called. If the parties elect not to call any further evidence this discussion may present a framework for the parties either to agree upon or to put short final submissions in relation to damages.
Finally, in his third contention, Mr Yesilhat says that the bringing of the damages claim is barred by the principles of an estoppel stated in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45.
Mr Yesilhat puts two submissions on this subject: (1) that Ms Calokerinos has failed to bring forward all matters that could and should reasonably have been raised at the hearing before the first judgment, including the estate's claim for damages, and (2) that some of the matters claimed in the Points of Claim could give rise to the possibility of conflicting judgments between the first judgment and any subsequent judgment.
But these contentions are not persuasive. The damages claim is not a separate proceeding such as might attract an Anshun estoppel. The damages claim now being considered was made in the Amended Statement of Claim in these proceedings. The damages allegations were directed to be incorporated into Points of Claim and Points of Defence merely for convenience in isolating the relevant issues for decision. Their filing does not represent the commencement of fresh proceedings.
Mr Yesilhat's submission is correct as to the relevant principle: the Court should not make conflicting findings. But there is no danger of conflicting findings in judgments. In considering the damages claim, the Court will not make findings that could conflict with the first judgment.
Anshun estoppels are not a bar to Ms Calokerinos maintaining her claim for damages in these proceedings.

An Approach to Analysis of the Damages Claim

Mr Yesilhat seeks to contest the estate's claim for damages at several levels. Mr Yesilhat's first defence is that the estate could have accessed any one or more of the three fixed term deposits that the deceased maintained with the CBA. The three deposits would together have made available a total sum of $178,027.31. His second defence is that other properties of George could have been sold to pay down his debts.
Mr Yesilhat says that these three fixed term deposits could have been applied to satisfy all the outstanding monies owed to API, thereby saving penalty interest. He submits that the special levy over the Vaucluse property could also have been satisfied in this way.
Mr Yesilhat contends that once the API invoice of $84,256.16 and the Vaucluse property special levy of $40,799 were satisfied out of the CBA fixed term deposits, a balance of $52,972 would have remained available to the estate. He submits this could have been used to discharge the other amounts owing on the various overdraft accounts George held with the CBA.
This damages claim has some prospects of being at least partially successful. But even on the present evidence, the claim faces some logical difficulties, as indeed does the defence to it. These difficulties are worth discussing at a general level for the benefit of the parties without the Court making final findings.
Exhibit 46 was created following upon the cross-examination of Mr Greg Borg, an officer of the CBA who gave oral evidence. It became clear when he was cross-examined that he was not the person from CBA with the best knowledge of the conduct of the banking relationship between George (and his estate) and the CBA. So after Mr Borg had left the witness box, the Court directed that email correspondence take place between the legal representatives of the parties with a view to obtaining information to avoid another CBA officer, Mr Bill Callaghan, being called as a witness.
That email exchange took place. The emails were tendered (as Exhibit 46). The evidence from Exhibit 46 is that the deceased's accounts were referred to Mr Bill Callaghan following George's death. Exhibit 46 says, "Accounts were stopped and the limits on the overdraft facilities were cancelled. As a result, the overdrawn balances or excesses eventually became > 90 days past due which in term resulted in the relationship being reported to Group Credit Structuring as a potential TIA (Troublesome and Impaired Asset)".
Exhibit 46 makes clear that the CBA's records show that, on 12 December 2013, it was notified that the "executor is currently engaged in legal proceedings against a third party who is alleged to have fraudulently transferred $231,000 from the deceased's accounts on the day of and several days after his death". Exhibit 46 says that it was not this event and the allegations of fraud that caused Mr Callaghan to intervene in relation to the CBA accounts.
Mr Borg explained (in Exhibit 46 and in his oral evidence) that it was merely due to the overdraft limits being cancelled upon notice of George's death that resulted in the overdrawn balances ultimately exceeding 90 days. This resulted in this banking relationship being referred on 26 September 2014 to Group Credit Structuring - Risk Management Team, as a potential TIA.
Mr Yesilhat fields two main defences to this damages claim. The first defence, as indicated, is that the estate could have accessed the three fixed term deposits. The second defence is that the estate could have liquidated assets. Mr Yesilhat says that either of these actions would have put the estate's accounts in funds, enabling external liabilities such as those on the API account to be met.
The outstanding amount on the API account and the special levy on the Vaucluse property amount to a combined liability of $124,855.16 ($84,056.16+$40,799.00), well within the value of the fixed term deposits.
Mr Yesilhat first argues that the fact that the matter was not referred to Mr Callaghan until 26 September 2014 demonstrates that access to the three fixed term deposits was available to the estate prior to that date. The presently available evidence does not readily support the inference that the CBA fixed term deposits were unavailable to be used. But their possible use is limited in any event by a number of practical factors.
First, it might possibly be inferred that the CBA was unlikely to deal with anyone on behalf of the estate until Ms Calokerinos had obtained probate, which she did not do until she applied for probate in October 2013. Probate was granted by the Registrar in Probate on 5 December 2013.
Secondly, even after the bank was prepared to deal with Ms Calokerinos in relation to the fixed term deposits, just what an executor in her position should have done with them is not an easy question. A quick decision to liquidate the fixed term deposits may have been problematic. Ms Calokerinos in her role as executrix, was legitimately distracted by many other challenges. On 27 November 2013, she had commenced the debt/trust proceedings and was actively seeking to ascertain what had happened to the monies George had loaned to Mr Yesilhat and the monies Mr Yesilhat had fraudulently taken from the estate. In the short term, an executrix in her position may arguably have still believed that one of Mr Yesilhat's loans might be repaid and that the fixed term deposits would not have to be sacrificed to meet current liabilities.
Ms Calokerinos was still investigating the affairs of the Leppington pharmacy. She may have reasonably assumed some pharmacy income may yet come in to meet these liabilities. George had been able to run the pharmacy, lending money to Mr Yesilhat and paying his bills without sacrificing the fixed term deposits up until his death. A reasonable executor in Ms Calokerinos' position, once she was in control as executrix from early December 2013, would arguably have made the same assumption, until it became obvious that the income of the pharmacy would not be enough. The evidence is that the deceased only made a modest return from the pharmacy ranging from year-to-year in recent years in the range $37,718 to $71,826. And just which end of that financial spectrum the 2013/2014 financial year was going to be was not something that an executrix in her position could work out quickly.
A decision to break fixed term deposits early sacrifices interest and would not be lightly taken. Ms Calokerinos will be able reasonably to argue she had to wait at least another few months into early 2014 before realising them.
Thirdly, it was not until 24 April 2014 that Mr Yesilhat served his principal affidavit and alleged a same-sex relationship with George and that the amounts advanced were gifts and not loans. The filing of that affidavit was arguably an important moment in which Ms Calokerinos must have realised that she was unlikely now, without large-scale litigation, to recover, in the short term, any of the monies Mr Yesilhat owed to the estate, thereby for the first time accelerating the decision to sell George's property and use the fixed term deposits.
Fourthly, even after it was obvious to an executor in Ms Calokerinos' position that she had to liquidate the interest-bearing deposits the task arguably still had to be carried out.
This discussion at least suggests that interest savings from breaking the fixed term deposits were potentially available, but would not have commenced contemporaneously with George's death but some months later.
Mr Yesilhat's second argument is that the estate, if it really was short of cash, should have accelerated the sale of estate assets rather than waiting for periods of up to a year to do so. He submits that there is no reason why the Prestons property could have been sold well prior to 8 May 2014. Equally it is said that the pharmacy could not have been sold well prior to August 2014, a year after George's death.
These submissions must take into account the timeframe within which Ms Calokerinos became executrix. The sale of the Prestons property on 8 May 2014, five months after her obtaining probate 5 December 2013, might arguably be assessed as not unreasonable in the circumstances. And some caution was warranted on her part as her claim to probate was challenged.
Moreover, the sale of the pharmacy about 12 months after George's death, in the complex circumstances of this case, may also arguably be assessed as not unreasonable. There was uncertainty over the assets, cash flow and the liabilities of the pharmacy, as its proprietor was dead. The pharmacy would arguably not have been widely marketable because of those uncertainties and because of the shadow of already intense litigation. It is not entirely surprising that the pharmacy was sold to Mr Sam Cameron. He had prior knowledge of the business and was less troubled as a buyer by reason of these uncertainties.
But the speed of Ms Calokerinos seeking assets may not matter much if the proceeds of the fixed term deposits were available to her.
In summary, the damages claim contains considerable scope for further contention. It is hoped that the parties may be able to reach some measure of agreement on it without further occupying the Court's time. If not, directions will need to be made for a damages hearing.
This is especially important given the damages claim is small compared with the further costs to be incurred at such a hearing. The Court must have regard to proportionality in the incurring of costs: Civil Procedure Act, s 60.

(3) Should Gokan Yesilhat and Australia's Best Tyres Repay the Loan Monies?

The estate submits that the $304,100 advanced by George Sclavos, in the period 1 March 2011 to 24 July 2013, was advanced to both Mr Okan Yesilhat and to Mr Gokan Yesilhat, or otherwise directly to Australia's Best Tyres. The estate submits therefore that judgment should be entered, not only against Mr Okan Yesilhat, but against Mr Gokan Yesilhat and Australia's Best Tyres, jointly and severally for the full amount of the debt of $304,100, plus interest and plus any damages due to the non-repayment of the loaned monies to the estate.
Mr Gokan Yesilhat and Australia's Best Tyres dispute this, contending that Mr Okan Yesilhat received the money, not them.
The question presently posed to the Court for decision relates solely to the liability of these additional parties for advances made before George's death. Monies transferred after George's death must be dealt with later. A framework for this is given below.
A Preliminary Issue. But a preliminary issue arises: whether it is now open to the Court to make findings in relation to the liability of Australia's Best Tyres and Mr Gokan Yesilhat for the advances from George, before his death, given that findings have already been made against Mr Okan Yesilhat about these same advances. The answer to this lies in the first judgment.
The Court made findings in relation to the debt/trust proceedings in the first judgment, (at [786] - [823]). That section of the first judgment is divided into three sub-sections, Monies Paid Before the Day of the Deceased's Death (at [787] - [793]), Monies Paid On or After 13 August 2013 (at [794] - [801]), and Mr Yesilhat's Authority Defence (at [802] - [817]). The Court concludes this discussion (at [817]) and begins another subject, Estoppels Based on George's Alleged Representations (at [818] - [823]).
The present contest on this preliminary issue is to some extent caused by the setting out of the Court's judgment. An important sentence in the first judgment, and one that is highly relevant to this issue and which appears to have escaped the parties' attention, is located at the end of paragraph [817].
That sentence is as follows, "The position of the other defendants was not fully addressed in the parties' submissions, so I will reserve it for further consideration". This sentence represents a separate idea from the rest of paragraph [817]. In the final editing of the judgment it should perhaps for greater clarity have been placed in a separate paragraph of its own for greater emphasis. But the idea expressed is clear and is then picked up in the orders made (at 828). The Court ordered, "Reserve for further consideration all issues of costs and issues that this judgment indicates should be so reserved". One of those issues "so reserved" was the potential liability of the other defendants in the debt/trust proceedings, Australia's Best Tyres and Mr Gokan Yesilhat. Their potential liability had not been fully addressed in the parties' submissions before the first judgment.
This makes otiose much of the debate about the preliminary issue. The Court regards the issue of Australia's Best Tyres' and Mr Gokan Yesilhat's liability as open, because the first judgment said it was reserved for further consideration.
As the Yesilhat parties correctly point out, there are many express findings in the judgment about the liability of Mr Okan Yesilhat. But these findings must be seen in context: they are all subject to the Court's reservation of the issue of Australia's Best Tyres' and Mr Gokan Yesilhat's liability.
One example of a finding about Mr Okan Yesilhat's liability to repay funds comes shortly after paragraph [817] of the Court's first judgment. Paragraph [826] summarises the position concerning Mr Yesilhat's liability in respect of monies advanced to him before the deceased's death and the monies he transferred after the deceased's death as follows: "826. Thirdly, 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."
But summary findings such as this, and more detailed findings in the first judgment about Mr Yesilhat's liability to repay loan monies, are correct only as far as they go: they are findings about Mr Yesilhat's own liability to repay the loan monies. They are not findings that Australia's Best Tyres and Mr Gokan Yesilhat are not liable for the loans in question. The Court has not yet addressed Australia's Best Tyres' and Mr Gokan Yesilhat's liability to repay these loans. Rather the Court has reserved that question for further consideration by a combination of the last sentence in [817] and 828.
This conclusion resolves, at least in the short term, a number of costs arguments joined between the parties. Mr Yesilhat argued that as there was no finding against Australia's Best Tyres or Mr Gokan Yesilhat that the case against those two parties had failed and they should have their costs of the proceedings.
But it is premature to consider a submission about costs in favour of Australia's Best Tyres or Mr Gokan Yesilhat. The Court has not determined their liability with respect to the loans made before George's death or indeed, as will be seen below, in respect of monies transferred on and from 13 August 2013. The Court will defer consideration of costs orders in respect of Australia's Best Tyres and Mr Gokan Yesilhat until all questions of their liability to the estate have been determined.
The Other Defendants' Liability. Paragraph 40 of the Amended Statement of Claim expressly pleads that "the deceased advanced the sum of $386,100 to the defendants during the period 8 March 2011 to 1 August 2013" and seeks its repayment. The Court has already determined Mr Okan Yesilhat's liability to repay those monies. Ms Calokerinos submits that Australia's Best Tyres and Mr Gokan Yesilhat are equally liable for the advances made before George's death. She points to evidence in support of that conclusion. Ms Calokerinos deploys several arguments to this end. In my view, for the following reasons those arguments establish the liability of Australia's Best Tyres but no liability against Mr Gokan Yesilhat.
Ms Calokerinos advanced a number of separate reasons in the evidence for Australia's Best Tyres and Mr Gokan Yesilhat to be jointly liable with Mr Okan Yesilhat to repay the loans. The Court now considers each of her principal arguments and the answers to them.
First, Ms Calokerinos submits Mr Gokan Yesilhat gave evidence that the advances to his brother were a gift. Mr Gokan Yesilhat was cross-examined about these loans and replied that the money that George Sclavos paid to Mr Okan Yesilhat and Australia's Best Tyres was a gift and that any repayments of that were not repayments to George were not repayments of a debt.
But evidence like this does not establish Mr Gokan Yesilhat's liability for these loans. It shows nothing more than that Mr Gokan Yesilhat had been told by his brother, Mr Okan Yesilhat, that George Sclavos had given his brother this money and that Mr Gokan Yesilhat believed what his brother said. In my view, this construction is more likely and is consistent with the Court's findings in the first judgment about the relationship between the two brothers: see the first judgment at [31]. In my view, evidence such as this does not assist in establishing Mr Gokan Yesilhat's liability for the loans.
Secondly, Ms Calokerinos argues that the loans made in the early period from 8 March 2011 to 1 July 2011 are consistent with George loaning money to both Mr Okan Yesilhat and Mr Gokan Yesilhat for the deposit for the purchase of the business, Australia's Best Tyres. Ms Calokerinos points to the Court's findings in the first judgment at [280] and [288].
But the Court's findings at [280] and [288] are only helpful to Ms Calokerinos' argument to the extent that the Court found (in [280]), "George helped Mr Yesilhat and his brother acquire Australia's Best Tyres". But beyond that the findings are entirely consistent with loans being made to Mr Okan Yesilhat.
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 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. George intended the money to go to Australia's Best Tyres and Mr Okan Yesilhat. Mr Gokan Yesilhat was a shareholder of Australia's Best Tyres but that does not make him a recipient of a loan from Mr George Sclavos. The correct analysis is that George loaned the money to Okan Yesilhat or Australia's Best Tyres.
This analysis is consistent with the relationship between the three men. Although the Court has found that Okan Yesilhat did not have an intimate relationship with George Sclavos he was a lot closer to George Sclavos than his brother. His brother did not visit George Sclavos at the pharmacy and had nothing like the personal relationship with George that his brother did. 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.
Ms Calokerinos points to the evidence of third parties. After that she points to the transfer of significant sums into George's accounts.
Thirdly, she says a number of third parties did refer to the fact that George said in conversation to them that the loans were to be made to both brothers. But in my view that is indirect evidence. There is no evidence of direct transfers from George Mr Gokan Yesilhat. Reliable though they were the evidence of all of these third parties is filtered and a less reliable basis for inference than the actual transactions that are available to the Court.
Fourthly, Ms Calokerinos also points to significant transfers to and from George's accounts especially at the time of the purchase of the business. The fact that these large advances were made is well established. But in my view it is equally consistent with the structure that the Court has set out of George making loans to Mr Okan Yesilat, for the benefit of Australia's Best Tyres but then Mr Okan Yesilhat independently making loans, with what became his own money, to Mr Gokan Yesilhat.
This contest became the subject of extensive debate and reference to the evidence between the parties. But in my view it did not move beyond the fundamental contest described above. But the question of Australia's Best Tyres liability can be dealt with on a far simpler basis in my view.
There is no doubt that Australia's Best Tyres received money from George and that all the money it received, George expected it to receive: after all he was repaid by it. The evidence shows that Australia's Best Tyres received that money either directly or through Mr Okan Yesilhat. It paid money back to George. To the extent that Australia's Best Tyres received that money directly or indirectly, in my view, a restitutionary remedy is available to Ms Calokerinos against Australia's Best Tyres.
The pleadings (paragraph 45 of the Amended Statement of Claim) have long made a claim for "monies loaned by the deceased to the defendants or one of them", a claim sufficient to encompass the restitutionary relief of the old common law action of "monies lent". It is not necessary for the Court to trouble itself about the agency relationship between Mr Okan Yesilhat and George, or Australia's Best Tyres. The fact is some, but not all, of the money was received by Australia's Best Tyres. To the extent that the money was received, and has not been repaid by Australia's Best Tyres, the company is liable in restitution to repay the money to the estate. The Court will make declarations to that effect.
But the precise amount that was received by Australia's Best Tyres, and not repaid, has not been separately isolated in the calculations, as distinct from the gross sum that was advanced and not repaid to all the Yesilhat parties. That separate sum will need to be isolated and can be made the subject of a separate judgment against Australia's Best Tyres.
Monies Transferred After George's Death. The liability of Australia's Best Tyres and Mr Gokan Yesilhat in relation to monies transferred after George's death is still to be determined. Because these issues are still unresolved no final determination of the costs position of Australia's Best Tyres or Mr Gokan Yesilhat is yet possible. Mr Gokan Yesilhat could yet be found liable for receiving funds that he knows were transferred in breach of fiduciary duty after 13 August 2013.
How should the parties approach this issue? They should exchange submissions about it and attempt to agree at least on what money was received (if any) after George's death by each of Australia's Best Tyres and Mr Gokan Yesilhat.
In Ms Calokerinoss Amended Statement of Claim she pleads $206,500 was "wrongfully withdrawn from the CBD accounts of the deceased" between 13 August and 9 September 2015 (paragraph [27]). The pleading then asserts in paragraph [28], "the defendants hold said sum on constructive trust for the estate of the deceased". The Court has already found in the first judgment that the monies so transferred was fraudulently transferred from the estate of the deceased: first judgment, (at [795]), and that an institutional constructive trust would be implied in the estate's favour. A declaration to that effect will be made against Mr Okan Yesilhat.
Australia's Best Tyres and Mr Gokan Yesilhat may be liable for "knowing receipt" within the first limb of Barnes v Addy (1874) LR 9 Ch App 244 ("Barnes v Addy") of the monies so defrauded: Rob Evans of Rob Evans and Associates v European Bank Limited (2004) 61 NSWLR 75, (at [160] and [161]); [2004] NSWCA 82. Paragraph 28 in the Amended Statement of Claim is a plea of knowing receipt of stolen funds, "the defendants hold a said sum". It is not a Barnes v Addy second limb case of the third party's participation in a fraudulent design. The finalisation of the case therefore becomes simpler. Under the first limb of Barnes v Addy it is only necessary to provide that the transferee had notice that the property was trust property and that it was being misapplied: El Ajou v Dollar Land Holdings PLC [1993] 3 All ER 717 at 733 and J D Heydon and M J Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis) (paragraphs [1335]).
The quantum of the funds received by Mr Okan Yesilhat and transferred to Australia's Best Tyres or Mr Gokan Yesilhat should be readily ascertainable. The state of their knowledge upon receipt is the matter in issue. But even if they are innocent volunteers they may be liable to disgorge the funds received as the traceable products of stolen money acquired without consideration: Heperu Pty Limited v Belle (2009) 76 NSWLR 230, (at [92], [93], [154] - [155]); [2009] NSWCA 252 and Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 (at [162]). All that now remains is to deal with Australia's Best Tyres and Mr Gokan Yesilhat's pleaded liability as possible constructive trustees.
As against Australia's Best Tyres such liability should not be difficult to establish. Mr Okan Yesilhat's knowledge probably also represents Australia's Best Tyres' knowledge at the time of the transfers. He was presumably acting as a director of the company or as an agent of the company to transfer money from George Sclavos' accounts into Australia's Best Tyres' accounts, and his knowledge in those capacities will ordinarily be attributed to Australia's Best Tyres.
An agreed figure should be reached as to what monies Australia's Best Tyres and Mr Gokan Yesilhat (if any) actually received of the monies transferred after George's death. This aspect of the proceedings should be pursued co-operatively by the parties without recalling witnesses. The remaining issues on this question should be resolved on the basis of existing documentary evidence. The question of the relevant knowledge of the recipients will require supplementary submissions. The parties will be directed to consult and agree as far as possible on directions for this to happen.

(4) Costs Orders Against Gokan Yesilhat and Australia's Best Tyres

Mr Gokan Yesilhat and Australia's Best Tyres were parties to the debt/trust proceedings Ms Calokerinos commenced as executrix of the estate. They were not parties to any of the other proceedings. The estate submits that Gokan Yesilhat should pay its costs of the debt/trust proceedings. It submits that: he supported the fabricated case with which Mr Okan Yesilhat defended this action; and that the fabricated defence case was a part of a wider attempt by Mr Okan Yesilhat to pressure the estate's executrix into a settlement involving forgiveness of the debt for the benefit of both Mr Okan Yesilhat and Mr Gokan Yesilhat. The estate further submits that Mr Gokan Yesilhat gave evidence supporting Mr Okan Yesilhat's false story that he did not know the deceased was dead when he (Mr Okan Yesilhat) started to withdraw money from the deceased's account by internet transfer late in the afternoon of 13 August 2013. The estate also seeks costs orders against Australia's Best Tyres.
By these reasons the Court awards costs, and indeed indemnity costs, against Mr Okan Yesilhat in respect of the whole of the proceedings. But Ms Calokerinos' claim for costs against Australia's Best Tyres and Mr Gokan Yesilhat is more problematic.
Australia's Best Tyres had limited involvement in the proceedings. It was the recipient of some of the funds Mr Yesilhat advanced, using his access to George's accounts. It has been found liable in respect of the advances that it received. An order for costs should be made against it at a later time, but only in respect of that aspect of the proceedings. Australia's Best Tyres was not responsible for the fabricated Succession Act claim. Nor was it responsible for the unsuccessful challenge to the grant of probate of the October 2012 will, the informal will. And the involvement of Australia's Best Tyres in the debt/trust recovery action was merely as a recipient of that limited amount of funds.
No costs order should yet be made against Mr Gokan Yesilhat. The liability case against him failed, as is discussed above. His evidence supported aspects of Mr Okan Yesilhat's case in all three proceedings, but only in a limited way and without his knowing participation in furthering his brother's fabricated case. As the Court's first judgment showed, Mr Gokan Yesilhat looked up to his older brother, whose actions and motivations he largely accepted at face value and as genuine. But as has been seen, he has not yet been absolved of all liability to the estate in these proceedings. There is no basis as yet for a contention that Mr Gokan Yesilhat should pay Ms Calokerinos' costs of these proceedings. This issue can be revisited when Mr Gokan Yesilhat's final liability is established.
Mr Gokan Yesilhat also seeks costs against Ms Calokerinos. But the Court will not determine the question of whether Mr Gokan Yesilhat should have costs against Ms Calokerinos, until it is clear to the Court that he is not liable in all aspects of the proceedings, a point that has not yet been reached. Moreover, the Court wishes to know how his claim for costs is said to be calculated and what the likely quantum of that claim would be. The Court's overall objective is to quell this dispute. If Mr Gokan Yesilhat claims that his costs are of the same order as those of Mr Okan Yesilhat, a costs order in Mr Gokan Yesilhat's favour is likely to generate a further massive and counter-productive dispute between these parties.
So as preliminary to that future argument the Court will direct Mr Gokan Yesilhat to isolate from his brother's costs and identify in the form of a bill of costs his own separate costs of the proceedings. When the quantum of those claimed costs are known the Court will consider whether or not any order for costs should be made in his favour.
If the Court does make an order for costs in Mr Gokan Yesilhat's favour, the Court is likely to proceed to fix a specified gross sum instead of assessed costs, in respect of those costs at the same time as it makes a specified gross sum costs order in respect of other parties' costs of the proceedings, if that is the course the Court takes for other parties.

(5) Indemnity Costs

The estate submits in the debt/trust proceedings that Mr Okan Yesilhat, Mr Gokan Yesilhat and Australia's Best Tyres should all be ordered to pay the costs of the plaintiff/executrix of the estate on the indemnity basis.
The estate seeks indemnity costs on the basis of a Calderbank letter dated 27 March 2014 and on the basis that Mr Okan Yesilhat conducted the proceedings by telling lies to shield himself from liability and to shield Australia's Best Tyres from liability. The false evidence is said to have been given with the intent to defeat the just claims of the estate against the company, against Mr Okan Yesilhat himself and Mr Gokan Yesilhat.
These submissions are now dealt with in turn, starts with Mr Okan Yesilhat's conduct of the proceedings.

Mr Yesilhat's Fabricated Case

Mr Yesilhat has comprehensively lost these proceedings. In the probate proceedings, he failed to set aside the grant of probate of the October 2012 will to Ms Calokerinos. A substantial judgment was entered against him in the debt/trust proceedings. And in the administration/family provision proceedings he failed to establish his claimed ground for relief: a de facto relationship with George. Except in the respects covered above under the preliminary issues, the Court will make an order for costs of the proceedings against him.
But this order will only operate up to the date of the Court's first judgment. The Court will look at costs after that afresh, as Ms Calokerinos has not been successful on a number of her applications since that time. The Court will at the end of all issues about consequential orders hear a final argument about the costs incurred after the first judgment that are not already the subject of costs orders.
The next question for determination is whether or not that order for costs should be made on the indemnity basis.
In the first judgment, the Court made serious findings against Mr Yesilhat of knowingly giving false evidence. But as authority stands in New South Wales, even deliberate false evidence in proceedings will not automatically attract an indemnity costs order. In Harrison v Schipp [2001] NSWCA 13, the Court of Appeal overturned an order made by a trial judge for indemnity costs on the following basis, (at [132] - [139]): "132 The trial judge correctly observed that his discretion as to costs extended to ordering costs on an indemnity basis "in appropriate circumstances". He cited from a number of cases, to which I will return, and then said - "This is a case in which the particular circumstances involve relevant delinquency on the part of the Cameron Harrison interests. On my findings, Mr Cameron and Mr Harrison manipulated Mrs Schipp and took unconscientious advantage of her vulnerability. Paragraphs 646 through to 652 of the judgment detail the extent to which Mr Cameron and Mr Harrison took unfair and unconscionable advantage of Mrs Schipp's weakness. Paragraph 634 includes a finding that at least from early 1988 Cameron and Mr Harrison did not seriously intend to develop Mary Street. Generally, paragraphs 635 through to 645 set out the events which occurred and paragraphs 659 through to 676 examine those events from a number of perspectives. Of course not every case in which unconscionable conduct and/or breaches of fiduciary obligation is found will ground a plaintiff's entitlement to indemnity costs from a defendant. The discretion which the court has as to costs is to be exercised judicially, that is to say upon proper grounds and the Court will not lightly depart from standard practice in the awarding of costs. In Warman International Ltd v Dwyer (1995) 182 CLR 544 at 560, Mason CJ, Brennan, Deane, Dawson and Gaudron JJ made it clear that the making of a discretionary order against a fiduciary will depend upon the circumstances of the case including the powers and obligations of the fiduciary and the relationship between those powers and obligations and the subject matter of the claim [cf Jones v Mortgage Acceptance Nominees (1996) 142 ALR 461] The same approach is required to be taken in dealing with unconscionable conduct where found. The circumstances of the case are all important. The present is however a case in which on an over-view of all of the findings at paragraphs 241-253, 383, 423 and 424, 431-456 (particularly 433 and 434), 596-601, 604-606, 607, 638 and 641, 648, 649, 652 and 670, the plaintiff's claim to indemnity costs against the Cameron Harrison interests is in my view made out. In this case the special or unusual circumstances constituted by the defendants' unconscionable conduct and breaches of fiduciary obligation justify the making of an order that the Cameron Harrison interests pay Mrs Schipp's costs on an indemnity basis." 133 Some of the passages from the cases which his Honour cited referred to delinquency, using that word or otherwise, in the conduct of the proceedings (Degmam Pty Ltd (in liquidation) v Wright (No 2 ) (1983) 2 NSWLR 354 and re Smith, ex parte Rundle (No 2) (1991) 6 WAR 299, both referred to as involving "relevant delinquency" in a citation from Oshlack v Richmond River Council (1998) 193 CLR 72 at 89). Other cases spoke of the width of the discretion, without referring to delinquency, one referring to the need for "some special or unusual feature in the case". In Degmam Pty Ltd (in liquidation) v Wright (No 2) the defendant suffered a special order as to costs because she had made deliberately false allegations in her defence and had by prolixity and prevarication grossly prolonged the litigation. Immediately before the passage from his reasons last set out the trial judge set out from re Smith, ex parte Rundle (No 2) , with underlining for emphasis, that orders for costs on a solicitor and client or indemnity basis are - " … normally made in circumstances where the conduct of a party against whom such an order has been [made] in connection with the litigation has been deserving of criticism." (at 301) 134 Mr Harrison contrasted with this the "relevant delinquency" by regard to which the trial judge apparently exercised his discretion, delinquency in that Mr Cameron and Mr Harrison had acted unconscionably and in breach of fiduciary duty. He submitted, in my view correctly, that the delinquency on which his Honour acted was not the delinquency in the conduct of the proceedings which the cases cited by him, and a number of other cases to which Mr Harrison referred, regarded as warranting a special order as to costs. And he said, again correctly, that Warman International Ltd v Dwyer (1995) 182 CLR 544 at 560 was not concerned with costs, but with an order for accounts against a defaulting fiduciary. Indeed, the costs order in Warman International Ltd v Dwyer was not a special order, see (1992) 46 IR 250 at 262 (Derrington J); 23 February 1992, unreported (CA); (1995) 182 CLR 544 at 570 (HC). 135 Mrs Schipp's response emphasised the width of the discretion as to costs. She said that there was "relevant delinquency" within the cases, even if the trial judge had not acted by regard to it, in that "much of the time during the trial was taken up by Harrison in propounding the authenticity of documents which they [sic] must have known to be false". And she said that it was open to his Honour to act by regard to unconscionable conduct or breach of fiduciary obligation, delinquency not in the conduct of the proceedings, in order to ensure "that the restitution to the defrauded beneficiary is complete: see Hagan v Waterhouse (No 2) (1992) 34 NSWLR 400". 136 The trial judge did not exercise his discretion by regard to the time taken by Mr Harrison in propounding false documents, or otherwise by regard to delinquency in the conduct of the proceedings. Hagan v Waterhouse (No 2) provides no support for indemnity costs as a means of providing complete restitution, or otherwise for regard to the substantive unconscionable conduct or breach of fiduciary duty when exercising the discretion as to costs, and such regard would in my view not be correct. The unconscionable conduct or breach of fiduciary duty leads to compensatory or other relief and costs on the normal basis, and more must be established for a special order as to costs. In my opinion his Honour's exercise of his discretion was on a wrong principle. 137 The discretion must be re-exercised. It is true that evidence of Messrs Cameron and Harrison was not accepted, indeed they were found to have given false evidence and propounded false documents. But I do not think there was delinquency approaching that considered to justify a special order as to costs in Degmam Pty Ltd Pty Ltd (in liquidation) v Wright (No 2 ), or that departure from the ordinary basis on which costs should be assessed between litigants was otherwise warranted. 138 It was necessary that the circumstances in which Mrs Schipp came to put her money into the two properties and leave it with Messrs Cameron and Harrison be gone into, in particular with exploration of her understanding of what she was doing and the influences working upon her. I am not satisfied that this was a case in which the appellants, properly advised, should have known that they would be found liable ( Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401), or that the Court's time and Mrs Schipp's money were wasted on "totally frivolous and thoroughly unjustified defences" ( Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 at 362), to use some of the expressions relevant in this area. 139 Departure from the settled practice of costs on a party and party basis is discretionary, and beyond the need for a sufficient special or unusual feature in the case no fixed rule can be laid down. Some of the matters thought to justify it are collected by Sheppard J in Colgate-Palmolive Pty Ltd v Cussons (1993) 46 FCR 225 at 233-4. In the present case no other sufficient special or unusual feature is present. The trial judge's order as to costs should be set aside so far as it provided for costs on an indemnity basis. 136 The trial judge did not exercise his discretion by regard to the time taken by Mr Harrison in propounding false documents, or otherwise by regard to delinquency in the conduct of the proceedings. Hagan v Waterhouse (No 2) provides no support for indemnity costs as a means of providing complete restitution, or otherwise for regard to the substantive unconscionable conduct or breach of fiduciary duty when exercising the discretion as to costs, and such regard would in my view not be correct. The unconscionable conduct or breach of fiduciary duty leads to compensatory or other relief and costs on the normal basis, and more must be established for a special order as to costs. In my opinion his Honour's exercise of his discretion was on a wrong principle."
Harrison v Schipp has been applied to deny litigants indemnity costs even where they have proved unconscionable conduct or breaches of fiduciary duty. In Medsara Pty Ltd v Sande [2005] NSWCA 40, (at [121] and [122]) the Court of Appeal denied indemnity costs to a party found guilty of unconscionable conduct and said as follows: "[121] The relevant principle is that expressed by Giles JA in Harrison v Schipp [2001] NSWCA 13 at [136]: The unconscionable conduct or breach of fiduciary duty leads to compensatory or other relief and costs on a normal basis, and more must be established for a special order as to costs. [122] Applying that principle, I would not award indemnity costs but award the Vendors costs on the usual basis."
The law in New South Wales is that even where fraud or other deplorable conduct is established in litigation it will ordinarily lead to an order for costs on the ordinary basis, unless something more is established. Fraud of course will often involve the fraudulent party falsely denying the fraud, as occurred here. Put at its simplest, Mr Yesilhat contrived a false story of a relationship with George, which he then denied in cross-examination was a false story. Without more, those features of the case may not alone ordinarily attract an order for indemnity costs.
Ms Calokerinos sought to resist the conclusion that an ordinary costs order was appropriate by distinguishing Harrison v Schipp. Ms Calokerinos submits that this case is indeed much closer to Degmam Pty Ltd (in liq) v Wright (No. 2) [1983] 2 NSWLR 354 ("Degmam") than it is to Harrison v Schipp. They submit that the relevant delinquency in this case was indeed equivalent to that adjudged by Holland J in Degmam as warranting an indemnity costs order.
It is worthwhile to examine what it was in Degmam that Holland J regarded as so warranting condemnation by an indemnity costs order. Holland J set this out (at 358) in the following passage: "The next question therefore is whether there is a case made out for a special order. I think that there is. I do not wish to repeat what I had to say, in my reasons for judgment, about the merits of the defences and causes of action put forward by the defendant or the manner in which she conducted herself in the course of the litigation and in the witness box. It is sufficient to say that the allegations of fact she made as the basis of her defences and causes of action were in my opinion false and deliberately concocted by her in an attempt to deny the plaintiff its rights and to shift all blame and legal liability to the plaintiff from herself to the second cross-defendant. As well as that, she so conducted herself in the proceedings, by multiplying allegation upon allegation, and by prevaricating in the witness box, as grossly to prolong the litigation, thereby to cause the other parties to incur liability for solicitor and client costs far beyond what they could reasonably have expected to incur in litigation of genuine issues. The discretion which the court has as to costs is, as has been said many times, to be exercised judicially, that is to say upon proper grounds and the court will not lightly depart from standard practice in the awarding of costs. It is suggested that the absence of precedents for orders of the present is a reason for hesitating to make such orders."
In my view, a proper application of principle justifies an order for indemnity costs against Mr Okan Yesilhat in this case, but only against him. The reasons for an order for indemnity costs enumerated below only apply to him. To the extent that Mr Okan Yesilhat engaged in large scale fabrication of evidence, in my view Mr Gokan Yesilhat was not co-fabricator. Mr Gokan Yesilhat has been disbelieved in a number of places in the first judgment - for example, about his and Mr Okan Yesilhat's visit to the pharmacy on the afternoon of George's death. But disbelieving him on a matter such as this does not make him a co-fabricator of the false de facto relationship with George.
Australia's Best Tyres is controlled by both Mr Okan Yesilhat and Mr Gokan Yesilhat. Australia's Best Tyres acts in the proceedings only partly at Mr Okan Yesilhat's initiative. An order for indemnity costs against it is not warranted. But looking at Mr Okan Yesilhat the position is clear: this is a textbook case for an indemnity costs order against him.
Mr Okan Yesilhat fabricated a detailed story of a de facto relationship with the deceased lasting over a decade. The fabricated relationship infused every part of each of the probate proceedings, the debt/trust proceedings and the administration/family provision proceedings. That falsely concocted relationship was the entire basis of his family provision claim, his claim to administration of the estate and his defence to the debt/trust proceedings, and a substantial part of the logic behind his claim to revoke the grant to Ms Calokerinos of probate of the October 2012 will.
One way or another he relied upon his relationship in every part of the case. The fabricated de facto relationship provided the only real standing for Mr Yesilhat to challenge the October 2012 will. The fabricated relationship provided the most potentially plausible basis for resisting the inference that George's advances during his lifetime to Mr Yesilhat were loans. The fabricated relationship was a basis on which Mr Yesilhat claimed to be "an eligible person" within Succession Act, Part 3. And the fabricated relationship was said to add plausibility to Mr Yesilhat's claim that he had the necessary authority to transfer monies out of George's accounts after his death.
Mr Yesilhat's pleaded case, his lengthy testimony and his own cross-examination piled fabrication upon fabrication. But his instructions to his counsel, based upon his false allegations of a de facto relationship, also occasioned a protracted and detailed cross-examination of the witnesses for the estate. As the Court's first judgment shows, he invented oral evidence again and again to cover perceived weaknesses in his original false case and to maintain it.
Mr Yesilhat's conduct in these proceedings is a vivid example of Holland J's words in Degmam: "[Mr Yesilhat] so conducted [himself] in the proceedings, multiplying allegation upon allegation, and by prevaricating in the witness box, as grossly to prolong the litigation, thereby to cause the other parties to incur liability for solicitor and client costs far beyond what they could reasonably have expected to incur in litigation of genuine issues". Indeed in this analysis one is reminded of the famous couplet from Sir Walter Scott's Marmion, (often wrongly attributed to Shakespeare), "Oh what a tangled web we weave, when at first we practice to deceive".
This case occupied 21 hearing days. Without Mr Yesilhat's invention of a false relationship with George, it is difficult to see the proceedings occupying more than 3 to 4 hearing days at most. In such a truncated hearing the only issues to have been contested, in the absence of the fabricated de facto relationship, would have been straightforward questions such as the following: (1) the authenticity of the 2012 will; (2) the contention that the monies advanced to Mr Yesilhat the subject of the debt/trust proceedings were gifts rather than loans (but an allegation put in the context of no personal relationship between the two); and (3) whether the monies transferred out of George's accounts after his death were so transferred with George's authority (but again without the super added contention of a personal relationship as justifying giving the authority).
These issues are not complicated. One only has to review the first judgment at a high level of generality to see that the contest about the alleged de facto relationship permeated every aspect of these proceedings and was responsible for much of the bulk of that lengthy judgment.
In short, the deeply cynical allegation of false de facto relationship caused nothing short of a procedural explosion in this case, causing Ms Calokerinos to incur massive costs, well beyond the costs that she would ordinarily have incurred had she not been fighting against Mr Yesilhat's well-spun web of deception.
Ms Calokerinos is George's niece. The Court has found her and her sister to be women of integrity and honesty. That they might find Mr Yesilhat's false allegations so offensive that they should resolve to oppose his false case and defend George's known reputation is not at all surprising. And the false allegation of a relationship, contrary to his known character was objectively likely to provoke the vigorous response that it did.
Two examples of invention piled upon invention leading to lengthy attacks on the plaintiff's witnesses will suffice - Mr Torrisi and Mr Efstathiou. There are many others. First, Mr Yesilhat propounded false evidence to explain why, despite his alleged de facto relationship with George, he did not attend George's funeral. This issue preoccupied the Court in evidence about, and then analysing in the first judgment, an entirely baseless attack on Mr Torrisi. Secondly, and equally wasteful of the Court's time, was the repeated evidence and submissions attacking Mr Efstathiou, concerning his discovery of the informal will and the alleged destruction of another will in Mr Yesilhat's favour by Ms Calokerinos or others.
The multi-layered conspiracies which Mr Yesilhat propounded in his case were designed to show that other parties and witnesses, with their false, malicious or greedy motives, were all attacking his genuine de facto relationship with George. Far from any of these people having the motives attributed to them, it was the relationship with George that was wholly invented. There are many other examples in the proceedings of exactly the same conduct on Mr Yesilhat's part.
Mr Yesilhat sought to deflect this conclusion by saying that this was a case far more like Harrison v Schipp than Degmam. But in my view, for the reasons given, that counter attack fails.
It should be noted at this point that the parties have filed with the Court submissions about the possibility of making a specified gross sum costs order in lieu of assessed costs. Those submissions are noted but that issue is not yet before the Court. Once the parties have dealt with the consequences of these reasons and all costs orders have been finalised, that matter can be considered.
It is also necessary to give short consideration to the claim for indemnity costs based on the Calderbank letter.

The Calderbank Letter

The estate's solicitors, Messrs Aston Reid Lawyers, sent a letter to Russo & Partners Solicitors, the solicitors acting for the Yesilhat parties, on 27 March 2014. The estate claimed it was a letter sent under the principles of Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586. The Yesilhat parties dispute that the letter of 27 March 2014 qualifies as a Calderbank letter, for a number of reasons.
The text of the 27 March 2014 letter, was as follows: "We refer to the above matter and we note that you are now the solicitor on record for the first, second, and third defendants in this matter. We refer to the Directions Hearings in this matter today (Court Room i A before Registrar Equity A Musgrave) and to the order that your clients are to serve their affidavit evidence on or before 24 April 2014. We note that the central factual and legal issues in this case is the question of whether the defendants had authority to operate on the accounts of the deceased and whether, assuming they had any such authority, that authority was revoked by the death of the deceased. In our client's view, and our view, any such authority that the defendants assert, must have been revoked by the death of the deceased, as a matter of law, whether the defendants knew of the death or not, in this regard, we rely on authority of Noonan v Martin (1987) 10 NSWLR 402. In other words, there is no legal or other basis upon which the defendants can claim let alone retain title to the moneys withdrawn by them from the accounts of the deceased on and from the date of his death. Accordingly, we proposed that these proceedings be settled on the following basis: 1. Defendants consent to moneys presently held in the CBA accounts ending in numbers xx3095 and xx4085 in the account name of Mr Okan Yesilhat ("the frozen accounts"), plus any interest to date on those two accounts, be immediately released to the plaintiff as executor of the estate of the late George Sclavos - we understand that the sum of these two CBA accounts is approximately $208,000. 2. Subject to point three below, proceedings otherwise be dismissed, to the intent that the plaintiff does not otherwise press claims against the defendants for losses flowing to the estate of the late George Sclavos by reason of the withdrawal of moneys from the accounts of the deceased by the defendants or any of them on and from the date of death of the deceased; 3. The question of the costs of the proceedings not otherwise covered by existing costs orders, to be determined by the court. 4. The settlement of these proceedings for the recovery of moneys withdrawn from the accounts of the deceased on and form the date of his death is made without prejudice to the plaintiff's right to seek recovery of moneys loaned by the deceased to the defendants or any of them prior to his death which remain unpaid. This offer is made in accordance with the principles enunciated in the decision of Calderbank v Calderbank (1975) No 3 All ER 333, and our client reserves the right to tender this offer on an application that the ordinary rule as to costs be displaced and that indemnity costs be awarded to the Plaintiff as against the First, Second and Third Defendants from the date of this offer, in the event that this offer is rejected. Owing to the urgency of this matter, particularly with regard to the ongoing viability of the pharmacy business, this offer will remain open for 14 days from today, such that this offer will close at 5:00pm on Thursday 10 April 2014."
The principles that apply to making awards of indemnity costs based upon the non-acceptance of Calderbank letters are well established. Two fundamental principles must be satisfied. First, the Calderbank letter must be shown to have been a genuine offer of compromise: Leichhardt Municipal Council v Green [2004] NSWCA 341, (at [21] - [24]). Secondly, it must be demonstrated that rejection of the offer was unreasonable: Ofria v Cameron (No. 2) [2008] NSWCA 242, (at [20]). Offerors bear the persuasive burden of satisfying the Court to exercise its discretion in their favour: Evans Shire Council v Richardson (No. 2) [2006] NSWCA 61.
The considerations relevant to determining whether a refusal of a Calderbank offer is unreasonable were comprehensively stated in Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344 ("Miwa"), (at [12]), based on Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No. 2) (2005) 13 VR 435; [2005] VSC 298 ("Hazeldene's"), (at [25]). The Victorian Court of Appeal (Warren CJ, Maxwell P and Harper AJA) in Hazeldene's stated the following factors were relevant considerations in determining whether the rejection of a Calderbank offer was unreasonable: the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree's prospects of success, assessed as at the date of the offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it. Ward J (as her Honour then was) also discussed the principles in A v N [2012] NSWSC 549 ("A v N"), (at [14]-[19]).
The determination of whether rejection of an offer was unreasonable is an evaluative judgment to be made by reference to the terms of the offer and all their relevant surrounding circumstances: King Network Group Pty Limited v Club of the Clubs Pty Limited (No. 2) [2009] NSWCA 204 (at [11]). The test of unreasonableness should not be upheld other than on clear grounds: Chaina v Albaro Homes Pty Limited [2008] NSWCA 353, (at [113]). The discretion to award indemnity costs may be refused where the litigation changes, for example: where all the relevant evidence has not been served before the offer Vale v Eggins (No. 2) [2007] NSWCA 12, (at [22]); where the full parameters of the dispute were still uncertain at the time of the offer (Equity 8 Pty Limited v Shaw Stockbroking Limited [2007] NSWSC 503, (at [42]); or, where the offeror's case changes after the offer (South Eastern Sydney Area Health Service v King [2006] NSWCA 2, (at [85]). And the filing of other pleadings such as a Cross Claim after the offer may make it more difficult to show that rejection was unreasonable: Rolls Royce Industrial Power (Pacific) Limited v James Hardy & Co Pty Limited (2001) 53 NSWLR 626; [2001] NSWCA 461.
Although a Calderbank offer may be made on an inclusive-of-costs basis, the failure to clearly separate out the costs component risks a finding that the evaluation of the reasonableness of the offer is impossible (Rockcote Enterprises Pty Limited v FS Architects Pty Limited (No. 2) [2008] NSWCA 205, (at [51]).
More complex issues may render it difficult to show that rejection of the offer was unreasonable: Nationwide News Pty Limited v Naidu (2007) 71 NSWLR 471; [2007] NSWCA 377.
To assess the reasonableness of non-acceptance of an offer, the Court must evaluate what was disclosed in the material in the proceedings at the time of service of the offer: Castro v Hillery [2003] 1 Qd R 651 ("Castro"), (at [72]); [2002] QCA 359. This assessment of reasonableness must be made without the benefit of hindsight: Miwa, (at [11]).
In applying these principles to this case, some matters assume greater prominence. The 27 March 2014 letter was issued about four months after the commencement of the debt/trust proceedings and the grant of probate to Ms Calokerinos of the October 2012 informal will. It sought orders for the return of alleged loan monies, then totalling some $380,000. The 27 March 2014 letter was sent prior to Mr Yesilhat serving evidence in the debt/trust proceedings of his alleged intimate relationship with the deceased and prior to all the extensive evidence Ms Calokerinos adduced in response to that allegation. Ms Calokerinos already had interlocutory injunctive relief in her favour restraining Mr Yesilhat from dealing with the sum of $206,500 from accounts 3095 and 4085. But the pleadings in the debt/trust proceedings developed substantially after 27 November 2017, including by the filing of an Amended Statement of Claim on 23 June 2014. The dispute about the validity of the October 2012 informal will had barely emerged by late March 2014. Issues concerning the validity of the will are not mentioned in the letter at all. And the administration/family provision proceedings were only commenced in May 2014, just over a month after this letter was sent.
The 27 March 2014 letter states that the "central factual and legal issues (sic) in this case is the question of whether the Yesilhat parties had authority to operate on the accounts of the deceased and whether that authority was revoked by the death of the deceased". The letter asserts that George's death revokes any pre-existing authority to operate on his bank accounts. The letter makes clear that it only covers Mr Yesilhat's liability for monies withdrawn from the accounts of the deceased after the date of his death. It leaves open the potential liability of Mr Yesilhat (and the other defendants to the debt/trust proceedings) to action in respect of monies loaned by the deceased to the Yesilhat parties prior to his death. The letter leaves open for determination by the Court the question of the costs of the proceedings.
The letter was served on 27 March 2014 and the offer was left open for 14 days to 10 April 2014. Messrs Russo & Partners replied to the letter the following day, 28 March 2014. The reply asserted that the monies claimed to be repayable were gifts "not repayable on demand".
The letter of 27 March 2014 was not effective as a Calderbank letter for several reasons. First, it does not offer to settle the whole of then known proceedings; it left open the recovery of loan monies prior to George's death. It is therefore impossible to determine if the offer has been bettered or not by comparison with the first judgment. And the parts of the proceedings that it does not offer to settle cannot now be conveniently isolated from the parts of the proceedings that it did offer to settle. It did not cover the administration/family provision proceedings. Ultimately, the offer made bears little relationship to the contests in proceedings at the time of the first judgment. This offer was made: when the scope of the dispute was uncertain; before the proceedings changed with the addition of several pleadings of quite different issues; before most of the evidence was served; and, where ultimately (the offeror's) Ms Calokerinos' case changed substantially after the offer, albeit in response to Mr Yesilhat's case.
Secondly, the offer in the 27 March 2014 letter does not deal with the question of costs in a manner consistent with Calderbank principles. The offer simply declares that costs of the proceedings, not otherwise covered by existing cost orders, are "to be determined by the Court". A binding Calderbank letter should require the offeror to pay the offeree's costs, or to make some offer, which gives certainty to the offeree as to the outcome in respect of costs incurred up to the date of the offer, so that can be compared with the outcome of the first judgment. This offer does not do that. It is not possible to tell if the offer has been bettered or not on costs, and therefore whether it was reasonable to reject it.
Thirdly, although 14 days was offered for the acceptance of this offer (as it commonly is) it was not sufficient time, in my view, in the circumstances of this particular case. The massive volume of evidence which has emerged since the proceedings commenced shows this. The evidence about the question of loans and monies removed from the deceased's accounts before and after his death shows how inadequate it was to give a mere 14 days' notice to Mr Yesilhat to respond. In my view, at least one to two months would have been required for him to have a reasonable opportunity to assess his likely exposure in damages at that point, long before the Yesilhat parties had served their final evidence in the debt/trust proceedings.
There may be other reasons as why it was not unreasonable for the offer to be refused. But these reasons are sufficient to disqualify the letter as a Calderbank letter.

Conclusion and Orders

There are several other matters still to be resolved, including final amounts of judgments, interest and possible lump sum costs orders. The parties should co-operate in bringing these issues to an end. But the Court will now make orders, declarations and directions.
There was an extensive contest about the scope of final relief and what declarations should be made. That contest should at least indirectly be resolved by these reasons. But further consideration will be reserved to the extent any party wishes still to seek more declaratory and final relief.
For the purposes of the orders made below, the proceedings for convenience will bear the following names: 1. Proceedings 2013/321052 will be referred to as the "the probate proceedings"; 2. Proceedings 2013/358168 will be referred to as "the debt/trust proceedings"; 3. Proceedings 2014/212466 will be referred to as "the administration/family provision proceedings"; and 4. Proceedings 2017/317671 will be referred to as "the Aantcorp proceedings".
Starting with the parties to the debt/trust proceedings, the plaintiff in those proceedings in her role as executrix of the estate of the late George Sclavos ("the estate") will be referred to in the orders below in all proceedings as "Ms Calokerinos" and the first, second and third defendants in those proceedings will be referred to in these orders as "Mr Okan Yesilhat", "Australia's Best Tyres" and "Mr Gokan Yesilhat", and all together they will be referred to as "the Yesilhat parties". And Aantcorp Pty Limited, a defendant in the Aantcorp proceedings, will be referred to in these orders as "Aantcorp".
Accordingly, the Court makes the following orders, declarations and directions: 1. Order that, subject to Orders (2), (3) and (4) hereof, Mr Okan Yesilhat shall pay Ms Calokerinos' costs of these proceedings on the indemnity basis up to and including 9 June 2017. 2. Order that Ms Calokerinos pay on the ordinary basis Mr Yesilhat's costs of or associated with investigating and calling evidence concerning the Greek properties ("the Greek properties' costs"). 3. Order that Ms Calokerinos should exclude from the assessment of any costs claimed against Mr Okan Yesilhat any amount in respect of the Greek properties' costs. 4. Note that the Court has declined to vary any past costs orders made in these proceedings for or against any party before the date of this judgment and such costs orders are not included in the indemnity costs orders in (1). 5. Reserve the question of costs as between Ms Calokerinos on the one part and Australia's Best Tyres and Mr Gokan Yesilhat on the other part. 6. Direct that Mr Gokan Yesilhat isolate from the Yesilhat parties' costs of these proceedings and identify in the form of a separate itemised bill of costs his own costs of the proceedings that he would not have had to expend if he were not a party to the proceedings and which may on that account be invoiced to him rather than to his brother, Mr Okan Yesilhat. 7. The administration/family provision proceedings are dismissed. 8. Dismiss the claim by the Yesilhat parties to have: 1. any of their costs paid out of the estate under Succession Act 2005, s 99, on principles analogous thereto; 2. their costs in respect of the Greek properties paid on the indemnity basis. 1. Reserve for further consideration the question of what other declaratory, or, final relief, or other consequential relief should be given in the proceedings. 2. Declare that all monies transferred by, or at the direction of, Mr Okan Yesilhat out of the estate, between 13 August 2013 and 9 September 2013 inclusive, and now held by him or under his control, are held by him on constructive trust for the estate. 3. Direct that the question of the costs of these proceedings incurred after 9 June 2017 will be considered at the conclusion of all argument about consequential relief against all parties. 4. Note that although the Court has jurisdiction under Succession Act 2006, s 99(1) to make a special costs order in relation to Mr Yesilhat's Succession Act claim, the Court has declined to make any such special order for costs in favour of any of the Yesilhat parties. 5. Upon Ms Calokerinos (who is the plaintiff in the Aantcorp proceedings) giving the usual undertaking as to damages, extend the operation of Order 11 made on 10 October 2017 in the Aantcorp proceedings by Kunc J until further order. 6. Direct the parties to attempt to agree on damages in light of these reasons. 7. Declare that Australia's Best Tyres is liable to repay to Ms Calokerinos all amounts actually received by Australia's Best Tyres either directly (or indirectly through Mr Okan Yesilhat) as moneys lent to Australia's Best Tyres by the late George Sclavos but less all moneys actually repaid by Australia's Best Tyres to the late George Sclavos. 8. Direct the parties by 8 July 2019 to either agree on the net amounts, or to isolate their areas of disagreement about the net amounts, actually received by Australia's Best Tyres from the late George Sclavos as moneys lent as declared in (15). 9. Direct the parties to consult with a view to reaching agreed directions to conduct any further hearing required: for the making of possible specified gross sum costs orders; to deal with issues of liability for monies paid after George's death; for damages; for costs after 9 June 2017; for interest, and for all other unresolved questions in the proceedings. 10. If the parties cannot agree on directions, then they should provide their competing directions to the Court by Friday, 5 July 2019 at 5.00pm. 11. Adjourn these proceedings to Monday, 8 July 2019 for mention at 9.30am before me. 12. Grant liberty to apply.

Amendments 31 May 2019 - [75] first line, "Yesilhat" to "Calokerinos" [121] "Sklavos" to "Sclavos" DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 May 2019

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