Kchevetskaia v Korlevic

Mr Korlevic’s application made in the 2023 proceedings and in proceedings 2026/112435 commenced by Mr Korlevic on 18 March 2026 (the 2026 proceedings), in the alternative to (5) above, for an order in the nature of a freezing order restraining Ms Kchevetskaia from removing from Australia or in any way disposing of, encumbering or dealing with the amount of $70,000 of any funds released to her from the funds presently held in court in the 2023 proceedings.

The amount of the funds held in court is $1,066,224.33.

Before addressing the six applications presently before the Court, it is necessary for me to correct the principal judgment in one important respect. In that judgment, I determined that Ms Kchevetskaia’s various notices of motion and applications in the 2023 proceedings should be dismissed as an abuse of process. I determined that, in those circumstances, the stay of the order made on 29 November 2024 dismissing the 2023 proceedings should be extended nunc pro tunc from 7 February 2025 until further order of the Court, but that the stay should extend only for the period of time necessary for the Court to determine O’Hearn Lawyers’ notice of motion filed on 20 January 2025 and to determine costs in respect of Mr Korlevic’s notice of motion filed on 21 November 2024 and Ms Kchevetskaia’s notices of motion and applications which had been dismissed as an abuse of process. I expressed an intention that the stay of the dismissal order should then be discharged, so that the 2023 proceedings would stand dismissed. In doing so, I accepted a submission made at the hearing on 27 February 2026 that this course would not prejudice Ms Kchevetskaia because it would result in the balance of the funds in court being paid to her, it would be open to her to commence fresh proceedings pleading her claim to set aside the Deed of Release and Indemnity, any claim against O’Hearn Lawyers, and all of her claims against Mr Korlevic that were the subject of the 2023 proceedings (many of which had been repeated in her points of claim filed without leave on 19 November 2025, and which could be pleaded in the fresh proceedings as claims that remained extant if the Deed of Release and Indemnity were set aside), and Ms Kchevetskaia would be able to commence such fresh proceedings after using funds to be paid to her out of court to obtain legal advice if she wished to do so. [1]

On closer review of the pleadings in the 2023 proceedings, it has become apparent to me that the dismissal of the 2023 proceedings would prejudice Ms Kchevetskaia because the six-year statutory limitation period in respect of the claim for damages for breach or repudiation of contract pleaded against Mr Korlevic in paragraphs 22 to 30 and 63 of the statement of claim filed in the 2023 proceedings has arguably expired. [2] Paragraphs 34 to 36 of the statement of claim pleads that the plaintiffs terminated the development deed and the building contract (referred to together as “the Agreement”) for “substantial breach” and “default” in August 2021. The statement of claim alleges breaches of contract during the period between July and December 2019 (paragraphs 22 and 23) and further breaches at some time after February 2021 (paragraphs 25 to 27). The statement of claim relies on all of the matters pleaded in paragraphs 22 to 27 as constituting repudiation, including a failure to complete the construction work and procure an occupation certificate by the contractual sunset date of December 2019 (paragraphs 28-30). If it is the 2019 breaches taken together that are relied on as constituting the alleged repudiation, or if Ms Kchevetskaia wishes to pursue her pleaded claims for damages for the alleged breaches in 2019 in addition to or in the alternative to her claim for damages for alleged repudiation (paragraph 63), then those claims appear to have accrued as early as July 2019. If so, the statutory limitation period in respect of such claims expired in July 2025. In my view, the dismissal of the 2023 proceedings foreshadowed in the principal judgment would therefore expose Ms Kchevetskaia to the risk of the loss of her causes of action against Mr Korlevic in contract.

Such prejudice was not intended to be a consequence of the dismissal of the 2023 proceedings that was foreshadowed in the principal judgment at [72] at the time that the orders set out in the principal judgment at [73] were made on 5 March 2026. Indeed, the dismissal was intended to cause no prejudice to Ms Kchevetskaia. Accordingly, pursuant to the slip rule in r 36.17 of the UCPR, or alternatively pursuant to the inherent power of the Court, I withdraw the second sentence of paragraph [72] of the principal judgment, being the sentence that reads: “Once those matters have been determined, the stay of the dismissal order will be discharged, and Ms Kchevetskaia will be entitled to an order for the payment of the balance of the funds in court to her.” This will have the consequence that order 1 made on 29 November 2024 dismissing the proceedings will remain stayed pursuant to order 1 made on 5 March 2026. The 2023 proceedings will therefore remain on foot and Ms Kchevetskaia’s existing causes of action will be preserved. It would therefore be premature to determine Mr Korlevic’s application for the costs of his notice of motion filed on 21 November 2024 seeking an order dismissing the 2023 proceedings. Accordingly, I also withdraw the words “and the costs of Mr Korlevic’s notice of motion filed on 21 November 2024” in the first sentence of paragraph [72] of the principal judgment. [3] Those costs will remain reserved in accordance with order 2 made by Kunc J on 29 November 2024. [4]

Although the 2023 proceedings are to remain on foot, this does not affect the dismissal of Ms Kchevetskaia’s notices of motion and applications in the 2023 proceedings as an abuse of process. It remains the case, as foreshadowed in the principal judgment, that it is open to Ms Kchevetskaia to commence fresh proceedings seeking orders setting aside the Deed of Release and Indemnity. The 2023 proceedings will remain on foot to be determined in the event that Ms Kchevetskaia succeeds in setting aside the Deed of Release and Indemnity in any such proceedings. It is also open to Ms Kchevetskaia to commence proceedings against O’Hearn Lawyers, notwithstanding that her materials filed in the 2023 proceedings did not articulate a reasonable cause of action against O’Hearn Lawyers. Any new proceedings seeking orders setting aside the Deed of Release and Indemnity and/or making claims against O’Hearn Lawyers will be subject to the rules of pleading that apply to all litigants in this Court.

In determining the applications referred to at [2] above by O’Hearn Lawyers and Mr Korlevic for their costs of Ms Kchevetskaia’s notices of motion and applications that were dismissed in the principal judgment, the Court will need to determine whether any such costs ordered in their favour should be payable forthwith, or whether payment should await the final determination of the 2023 proceedings. Either way, funds held in Court will not be released to Ms Kchevetskaia until the 2023 proceedings have been determined.

In relation to the six applications referred to at [2] above, I have determined for the reasons explained below and after considering all of the parties’ detailed submissions that:

O’Hearn Lawyers is entitled to an order pursuant to r 55.11 of the UCPR that the sum of $141,329.62 be paid to it out of the funds held in court in the 2023 proceedings;

O’Hearn Lawyers’ costs of Ms Kchevetskaia’s notices of motion and applications that were dismissed on 5 March 2026 are to be paid by Ms Kchevetskaia on the ordinary basis in the sum of $94,961.22 pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW), and those costs are payable forthwith out of the funds held in court;

Mr Korlevic’s costs of his notice of motion filed in the 2023 proceedings on 21 November 2024 remain reserved in accordance with the orders made on 29 November 2024;

Mr Korlevic’s costs of Ms Kchevetskaia’s notices of motion and applications that were dismissed on 5 March 2026 (but excluding the costs of his application for a gross sum costs order in respect of those costs) are to be paid by Ms Kchevetskaia on an indemnity basis in an amount to be agreed or assessed and, upon the quantum being agreed or assessed, those costs are payable forthwith out of the funds held in court;

this Court does not have power to make orders for security for the costs of proceedings in the Federal Circuit and Family Court of Australia and Mr Korlevic’s application for an order under r 36.17 of the UCPR varying the principal judgment at [72] so as to provide for such security must be dismissed; and

there is presently no risk of dissipation of assets that would support a freezing order in the terms sought by Mr Korlevic, but it is open to Mr Korlevic to press that application in the event of any material change in circumstances.

I have also determined that there should be liberty to apply to discharge the stay ordered on 5 March 2026 of the order made on 29 November 2024 dismissing the 2023 proceedings. That will facilitate any party making an application to bring the 2023 proceedings to an end in the event that Ms Kchevetskaia does not commence fresh proceedings disclosing a reasonable cause of action to set aside the Deed of Release and Indemnity within a reasonable period of time. If and when the 2023 proceedings are dismissed, it will be open for Mr Korlevic to apply for an order in respect of his costs of his notice of motion filed on 21 November 2024 seeking an order dismissing the proceedings and it will also be open to Ms Kchevetskaia to apply for an order for payment of funds held in court to her.

The property was sold in April 2022. Completion of the sale occurred in September 2022. The 2023 proceedings were commenced on 11 August 2023. As I have already mentioned, Ms Kchevetskaia was the sole plaintiff in the proceedings from June 2024. On 30 July 2024, Ms Kchevetskaia and Mr Korlevic executed the Deed of Release and Indemnity which provided that Mr Korlevic would pay the whole of the net sale proceeds ($1,066,224.33) to Ms Kchevetskaia and the 2023 proceedings would then be dismissed by consent with no order as to costs. Ms Kchevetskaia seeks to set aside the Deed of Release and Indemnity. For the reasons explained in the principal judgment and at [4]-[7] above, that application must now be the subject of fresh proceedings. The settlement moneys were paid to O’Hearn Lawyers as Ms Kchevetskaia’s solicitors. O’Hearn Lawyers paid the money into court in the 2023 proceedings on 9 January 2025. As I have already mentioned, the amount of the funds presently held in court is $1,066,224.33.

O’Hearn Lawyers first issued an invoice to Ms Kchevetskaia on 6 August 2024. A further invoice was issued on 16 December 2024. The total amount of the invoices is $141,329.62 (including GST), of which $89,415.98 is for solicitors’ fees, $51,569.21 is for barristers’ fees, and $344.43 is for other disbursements.

At the time those invoices were issued, Ms Kchevetskaia did not raise any objection to the fees charged, and did not dispute her liability to pay the invoices. Ms Kchevetskaia did not apply for the costs to be assessed, as was her right pursuant to s 198 of the Legal Profession Uniform Law 2014 (NSW) (the Uniform Law). The time for Ms Kchevetskaia to apply for assessment has now expired.

Ms Kchevetskaia does not dispute that O’Hearn Lawyers did the work for which it claims to be entitled to the fees totalling $141,329.62 (including GST). Ms Kchevetskaia does not submit that those fees have not been calculated and charged in accordance with the costs agreement. Ms Kchevetskaia does not dispute signing the irrevocable authority to which I have referred at [15] above. Ms Kchevetskaia disputes the entitlement of O’Hearn Lawyers to assert a lien over the funds held in court “without examination of the circumstances in which those costs were incurred and the adequacy of the professional services provided”. Ms Kchevetskaia submits that those professional services were inadequate because they were ineffective to resolve what she describes as the “central issues” in dispute – namely, Mr Korlevic’s refusal to transfer back to Ms Kchevetskaia and Mr Nalivaiko the one third interest in the property which they had transferred to him in April 2019 in accordance with the development deed, [6] his refusal to accede to their claim to be entitled to the whole of the net sale proceeds of the property after it was sold in August 2022, [7] and his refusal to agree to the release of two-thirds of those net sale proceeds to them unless they agreed to the release of the remaining one-third to him – in the period of just over two and a half years that elapsed between the engagement of O’Hearn Lawyers and the settlement conference on 30 July 2024.

Ms Kchevetskaia therefore submits that O’Hearn Lawyers’ claim to payment of $141,329.62 by way of enforcement of a solicitor’s lien should be determined “on its merits” at a later stage, rather than paid out of the funds in court at this stage. Ms Kchevetskaia characterises a determination of that claim on its merits as requiring a determination of all of her complaints about the conduct of O’Hearn Lawyers. Those complaints would now appear to encompass:

a complaint that O’Hearn Lawyers did not achieve her objective of having Mr Korlevic transfer his one-third interest in the property to her and having the whole of the net sale proceeds paid to her (although Ms Kchevetskaia does not articulate how O’Hearn Lawyers could or should have sought to achieve that outcome without a contested hearing of the 2023 proceedings); and

the complaints articulated in Ms Kchevetskaia’s points of claim filed without leave in the 2023 proceedings on 19 November 2025, which claim damages or equitable compensation against O’Hearn Lawyers without disclosing a reasonable cause of action. [8]

For the reasons explained in the principal judgment, Ms Kchevetskaia’s notices of motion seeking to pursue those complaints within the 2023 proceedings have been dismissed as an abuse of process, and her application for leave to file her points of claim in the 2023 proceedings setting out those complaints has been dismissed on the grounds that no reasonable cause of action was disclosed. As I have stated earlier in these reasons, it remains open to Ms Kchevetskaia to commence fresh proceedings pleading any cause of action that she may identify against O’Hearn Lawyers. As O’Hearn Lawyers submitted, the prospect that Ms Kchevetskaia may do so is not a reason to defer the determination of its notice of motion filed on 20 January 2025, which has already been delayed by fifteen months as a result of Ms Kchevetskaia’s conduct in the 2023 proceedings which I described in detail in the principal judgment.

I accept the submission made on behalf of O’Hearn Lawyers that the evidence of Mr Benjamin O’Hearn, in his affidavit affirmed on 17 April 2025, describes the work done by O’Hearn Lawyers over the course of its retainer up to and including the settlement conference that culminated in the execution of the Deed of Release and Indemnity on 30 July 2024, and establishes a sufficient causal link between the exertions of O’Hearn Lawyers and the funds paid by Mr Korlevic in accordance with that Deed, which represent the net sale proceeds of the property and which are now held in court.

In circumstances where Ms Kchevetskaia did not dispute the costs invoiced by O’Hearn Lawyers or apply for those costs to be assessed within the time period in which it was open to her to do so under s 198 of the Uniform Law, I accept the submission made by O’Hearn Lawyers that the sum of $141,329.62 in respect of which it claims the lien represents the amount that is properly owing to it by Ms Kchevetskaia pursuant to the costs agreement. I arrive at that conclusion more comfortably because the amount claimed appears to me, on an impressionistic level, to be modest compared to the nature and complexity of the dispute that gave rise to the 2023 proceedings, as described in the submissions made by Ms Kchevetskaia in opposing the payment out of court to O’Hearn Lawyers at this stage. Ms Kchevetskaia’s submissions describe the complex circumstances that O’Hearn Lawyers had to grapple with throughout their engagement as a result of the terms of the development deed which she and her late husband had entered into, the events which had happened in relation to the development before O’Hearn Lawyers were engaged, and the position taken by Mr Korlevic which was beyond the control of Ms Kchevetskaia and O’Hearn Lawyers. Ms Kchevetskaia’s submissions assert that Mr Korlevic’s position was wholly unmeritorious and that she is “the victim”. I express no view about the merits of the dispute.

For all of those reasons, I am satisfied that O’Hearn Lawyers has an equitable lien over the funds held in court which Ms Kchevetskaia obtained by way of compromise of the 2023 proceedings as a result of O’Hearn Lawyers’ exertions. It is not to the point that Ms Kchevetskaia had hoped to achieve something more than the outcome provided for in the Deed of Release and Indemnity which she executed at the end of the settlement conference on 30 July 2024. The quantum of money for which O’Hearn Lawyers has the equitable lien is the amount of $141,329.62, being the amount that is properly owing by Ms Kchevetskaia to O’Hearn Lawyers pursuant to their costs agreement dated 26 October 2021. O’Hearn Lawyers is therefore entitled to an order pursuant to r 55.11 of the UCPR that the sum of $141,329.62 be paid to it out of the funds held in court in the 2023 proceedings.

O’Hearn Lawyers does not seek any order in respect of the costs of its notice of motion filed on 20 January 2025.

In the principal judgment, I alluded to the possibility that the Court may consider staying any such order in favour of O’Hearn Lawyers for a period of time to allow Ms Kchevetskaia an opportunity to commence any fresh proceedings against O’Hearn Lawyers. [9] Having given further consideration to that question, I do not consider that such a stay would be just. I accept the submission made by O’Hearn Lawyers that it is not appropriate for money to which it is otherwise entitled to be withheld against the mere possibility that Ms Kchevetskaia will commence fresh proceedings disclosing a reasonable cause of action against O’Hearn Lawyers. I also accept the further submission made by O’Hearn Lawyers that payment of the funds out of court at this stage does not give rise to a risk to Ms Kchevetskaia that she may subsequently be unable to recover those funds as part of a claim for damages in any such fresh proceedings.

I note for completeness that, consistently with his position that the funds held in court are funds to which Ms Kchevetskaia is entitled pursuant to the Deed of Release and Indemnity, Mr Korlevic did not seek to be heard in relation to O’Hearn Lawyers’ application for the payment of $141,329.62 out of those funds by way of enforcement of its equitable lien.

I now consider the scope of the costs that should be included in the costs order in favour of O’Hearn Lawyers, and the quantum of those costs.

At a hearing in the 2023 proceedings on 13 March 2026, I expressed concerns that Mr Korlevic and O’Hearn Lawyers may have acted unreasonably in endeavouring to progress Ms Kchevetskaia’s application to set aside the Deed of Release and Indemnity towards a hearing in the period after February 2025 in circumstances where she had not filed points of claim, the bases of her claim to set aside the Deed appeared to be expanding with each new motion and affidavit that she filed, and Mr Korlevic and O’Hearn Lawyers considered that the proceedings stood dismissed as a result of the stay of the dismissal order made on 29 November 2024 not having been extended beyond 7 February 2025. [11] The purpose of my expressing those concerns was to afford Mr Korlevic and O’Hearn Lawyers the opportunity to adduce any further evidence explaining their conduct and/or to make submissions about their conduct.

Having now reviewed their further evidence and submissions and reflected on the matter, I consider that my concerns were infused with the benefit of hindsight. Viewing their conduct in the circumstances in which it occurred at each stage of the proceedings during the period from February to November 2025, I accept that O’Hearn Lawyers and Mr Korlevic were doing their best to facilitate a hearing of Ms Kchevetskaia’s application to set aside the Deed based on those materials and without points of claim, in circumstances where the Court had effectively excused Ms Kchevetskaia from filing points of claim at the directions hearing on 7 February 2025 for the reasons that Kunc J explained to the parties at that hearing. That approach was intended at the time to facilitate the just and efficient determination of Ms Kchevetskaia’s application. Neither his Honour nor Mr Korlevic and O’Hearn Lawyers could reasonably have anticipated the delays that would flow from Ms Kchevetskaia filing further motions and affidavits after February 2025 and from her determination to rely in the 2023 proceedings on material filed in family law proceedings between Mr Korlevic and his former wife. I accept that, as each such development occurred, Mr Korlevic and O’Hearn Lawyers reasonably endeavoured to respond in a way that would facilitate the hearing of Ms Kchevetskaia’s application to set aside the Deed. In the process of doing so, they informed Ms Kchevetskaia and the Court of their contention that the proceedings stood dismissed and of their intention to rely on that contention at the hearing of her application to set aside the Deed, without seeking to have her application dismissed summarily on that basis in circumstances where she did not have legal representation.

The cumulative effect of each such development initiated by Ms Kchevetskaia was to delay the hearing of her application to set aside the Deed and to increase the costs being incurred by Mr Korlevic and O’Hearn Lawyers. The evidence establishes that Ms Kchevetskaia was repeatedly informed about this by the solicitors acting for Mr Korlevic and O’Hearn Lawyers, and was warned that they would ultimately seek to recover those costs from her. The orders made by Kunc J in the 2023 proceedings on 7 February 2025 included a notation that Ms Kchevetskaia had been informed by the Court that, should her application to set aside the Deed of Release and Indemnity be unsuccessful, any costs of other parties which she may be ordered to pay were likely (subject to further argument) to be payable from the funds to which she is otherwise entitled that have been paid into court. Orders made by Brereton J in the 2023 proceedings on 7 May 2025 included an order that the funds held in court were to be held as security for Mr Korlevic’s costs of his motion filed on 21 November 2024 and his costs of Ms Kchevetskaia’s notice of motion filed on 4 February 2025. Orders made by McGrath J on 27 June 2025 in the 2023 proceedings included a notation that the Court had informed Ms Kchevetskaia that, by pressing her notice of motion, she was putting at risk her present entitlement to the funds held in court (subject to the claims of O’Hearn Lawyers and Mr Korlevic in relation to costs) to which she was entitled under the Deed of Release and Indemnity that she sought to set aside.

It was not until Ms Kchevetskaia filed her points of claim on 19 November 2025 that it became clear that she was alleging fraud on the part of Mr Korlevic –although without articulating the basis of the allegation in a manner that afforded him procedural fairness – and that she sought damages or equitable compensation against O’Hearn Lawyers without articulating a reasonable cause of action against them. At the next directions hearing on 13 February 2026, the cumulative effect of that development and all of the earlier problems that had emerged in the period since February 2025, including the fact that the proceedings had been dismissed and the stay of the dismissal order had not been extended, caused the Court to schedule the hearing that took place on 27 February 2026 to determine whether the Court had jurisdiction to hear any of Ms Kchevetskaia’s extant claims in her various notices of motion and, if so, how such a hearing could be facilitated in a manner that was just to all parties and without further delay.

For those reasons, I do not consider that the conduct of Mr Korlevic or O’Hearn Lawyers in continuing to seek to achieve a hearing of Ms Kchevetskaia’s application to set aside the Deed of Release and Indemnity (and O’Hearn Lawyers’ claim to enforce its lien) was unreasonable so as to disentitle them from an order for their costs or part of their costs of Ms Kchevetskaia’s motions and applications that were dismissed in the principal judgment following the hearing on 27 February 2026. It was the conduct of Ms Kchevetskaia, rather than the conduct of Mr Korlevic and O’Hearn Lawyers, that delayed the 2023 proceedings during the period after February 2025. [12]

O’Hearn Lawyers seeks an order that its costs of Ms Kchevetskaia’s notices of motion and applications that were dismissed on 5 March 2026 be paid in a specified gross sum of $113,780.48 (or $125,158.33 including GST) pursuant to s 98(4)(c) of the Civil Procedure Act, and an order that the specified sum be paid to O’Hearn Lawyers out of the funds held in court.

The Court’s discretion under s 98(4)(c) of the Civil Procedure Act to make an order that costs be paid in a specified gross sum rather than in an amount assessed is frequently exercised where the assessment of costs would be protracted and expensive. The principal purpose of a specified gross sum costs order is to avoid the expense, delay and aggravation likely to be involved in a contested costs assessment. [13]

The power to award a gross sum should only be exercised when the Court considers that it can do so fairly between the parties and where an appropriate sum can be determined from the available materials. [14]

If the Court considers it appropriate to make a gross sum order, the Court is entitled to take an impressionistic or “broad brush” approach to quantification and is not required to undertake a detailed examination of the kind that would be carried out in a costs assessment. The gross sum specified should nevertheless be based on an informed assessment of the actual costs having regard to the information before the Court. [15]

In order to present the Court with material on the basis of which the Court can fairly determine an appropriate gross sum, a party seeking a gross sum costs order typically adduces evidence from the solicitor on the record explaining the nature of the proceedings and the complexity of the issues in dispute, the nature of the work done, the manner in which the work was done (including identifying the fee earners who undertook work and deposing as to how work was allocated between fee earners according to the nature of the work and each fee earner’s level of experience), the hourly rates charged by each level of fee earner, the quantum of solicitors’ fees (by reference to invoices issued to the party seeking the gross sum costs order and time-charging narratives underlying those invoices), the identity, level of experience and the rates charged by any counsel briefed and the quantum of counsel’s fees (by reference to invoices issued by counsel), and any other significant category of disbursements. Ordinarily, evidence is adduced from the solicitor on the record that they have reviewed the charges as a whole and consider them to be fair and reasonable in all the circumstances of the case. [16]

It is not uncommon for a party seeking a gross sum costs order to also adduce expert evidence from a legal costs consultant setting out their opinion about the percentage discount that would likely be applied to that party’s actual costs if those costs were to be assessed, based on the expert’s review of evidence given by the solicitor on the record as to the history of the proceedings and the nature and complexity of the issues raised by the proceedings and the scope of the evidence adduced by each party, and the expert’s review of invoices issued by the party’s solicitors and the underlying narrative time records, together with records of disbursements including counsel’s fees. In reviewing that material, the expert identifies features of the particular case, including the nature of the work done, the manner in which the work was done, and the time spent doing the work, that the expert considers informs the percentage discount that would be likely to be applied on assessment. Such evidence is of assistance to the Court in determining what discount should be applied to the moving party’s actual costs when applying a broad brush approach in order to arrive at a quantum of the costs to be paid by the other party or parties that is just in the circumstances of the particular case.

The Court is entitled to take into account that the usual outcome of costs assessments where costs are assessed on the ordinary basis represents a proportion in the range of 60% to 85% of the actual costs incurred. A discount to reflect that reality should be applied as part of the impressionistic approach to a gross sum costs order. [17]

In support of its application for a gross sum costs order, O’Hearn Lawyers relies on an affidavit of Ms Lucy Williams affirmed on 12 March 2026. Ms Williams is a partner of K&L Gates, the solicitors on the record for O’Hearn Lawyers in the 2023 proceedings.

Ms Williams deposes that she has over 28 years’ experience as a solicitor specialising in commercial litigation, including acting in several matters in which the costs of a successful party have been assessed. I accept Ms Williams’ evidence that, if O’Hearn Lawyers’ costs of Ms Kchevetskaia’s motions and applications that were dismissed in the principal judgment were to proceed to assessment, the assessment process would take approximately ten months from the timing of filing a bill of costs, and would cost approximately $18,000. Indeed, the time frame of any assessment process could be longer than 10 months as there is a real risk based on her conduct to date that Ms Kchevetskaia would seek to re-agitate her complaints against O’Hearn Lawyers referred to at [28], [55] and [68] of the principal judgment in the context of the costs assessment.

I am therefore satisfied that an assessment of costs as between O’Hearn Lawyers and Ms Kchevetskaia would be protracted and expensive. I consider that Ms Williams’ evidence which I discuss below provides a level of detail about the costs incurred that provides a sufficient basis for the Court, after taking Ms Kchevetskaia’s submissions into account, to determine an appropriate sum for O’Hearn Lawyers’ costs in a manner that is fair to both O’Hearn Lawyers and Ms Kchevetskaia. For those reasons, it is appropriate to make a gross sum costs order in respect of O’Hearn Lawyers’ costs of Ms Kchevetskaia’s motions and applications that were dismissed in the principal judgment.

Ms Williams deposes that K&L Gates was instructed to act for O’Hearn Lawyers in the 2023 proceedings on 13 February 2025.

Ms Williams refers to the nature of the proceedings, and the history and nature of Ms Kchevetskaia’s motions and applications filed and made in the period from February 2025, as set out in the principal judgment.

It will be recalled that Ms Kchevetskaia’s notice of motion filed on 4 February 2025 – shortly before K&L Gates began acting for O’Hearn Lawyers – named O’Hearn Lawyers as a respondent and sought orders affecting O’Hearn Lawyers on grounds that were not clear from the notice of motion. [18] I accept that the challenge that this presented for O’Hearn Lawyers in addressing that notice of motion was compounded by Ms Kchevetskaia’s subsequent motions and applications, particularly the notice of motion filed on 2 July 2025 and the points of claim filed without leave on 19 November 2025. [19] I accept Ms Williams’ evidence that she and the team of lawyers working on the matter at K&L Gates reviewed and considered those materials as they were served by Ms Kchevetskaia in order to ascertain the substance of allegations against O’Hearn Lawyers and the extent to which those allegations duplicated or expanded on allegations previously made. I accept Ms Williams’ evidence that this contributed significantly to the costs incurred by O’Hearn Lawyers in the 2023 proceedings in the period from February 2025. I reject Ms Kchevetskaia’s submission that O’Hearn Lawyers was not justified in taking part in the 2023 proceedings except for the purpose of prosecuting their claim to payment out of the funds held in court by way of enforcement of their lien. O’Hearn Lawyers were justified in reviewing and considering the allegations that Ms Kchevetskaia made against them in her notices of motion filed on 4 February 2025 and 2 July 2025 and in her points of claim, and in taking steps towards preparing to defend those allegations given the procedural course that had been established at the directions hearing on 7 February 2025.

Ms Williams deposes that O’Hearn Lawyers incurred solicitors’ fees totalling $97,505.40, counsel’s fees totalling $30,757.50, and disbursements (search fees) of $143.39 in relation to Ms Kchevetskaia’s motions and applications that were dismissed in the principal judgment. Those amounts for solicitors’ fees and counsel’s fees include the estimated fees of the present application for a gross sum costs order, but exclude all fees for work that was done for the purpose of O’Hearn Lawyers’ application to enforce its lien. Ms Williams describes her approach to identifying from her review of the billing records the costs that were attributable to the enforcement of the lien and deducting them from the costs that O’Hearn Lawyers seeks to recover from Ms Kchevetskaia. In my opinion, Ms Williams’ approach is sound.

Ms Williams’ affidavit identifies that the solicitors who performed the work for which the solicitors’ fees were charged and the hourly rates charged by each solicitor. The hourly rates are $470 for a partner, $440 for a special counsel, $400 for a senior associate, $345 for a lawyer with four years’ experience, and $315 for a graduate or lawyer with one year’s experience. In my opinion, those rates are well within the range of hourly rates charged by solicitors in proceedings of this nature.

Ms Williams’ affidavit identifies that six solicitors worked on the matter: one partner (being Ms Williams), two special counsel, one lawyer with four years’ experience who subsequently became a senior associate, and two graduates, one of whom subsequently became a lawyer. Ms Williams deposes that it was necessary to have this number of solicitors work on the matter because one of them took parental leave, one resigned from K&L Gates, and there was one occasion where it was necessary to bring an additional solicitor onto the team for a particular hearing in this matter when the solicitor with day-to-day conduct of the matter was engaged on another matter at the relevant time.

Ms Williams’ affidavit provides a breakdown of work and fees between the different levels of fee earners, which discloses that the majority of the work was performed by the senior lawyer who was promoted to senior associate during the course of the matter, with assistance from the two graduates (one of whom became a lawyer during the course of the matter), and supervision by Ms Williams as the partner. Ms Williams performed approximately 15% of the work, while the senior lawyer/senior associate performed approximately 61% and the graduates/lawyer performed approximately 21% of the work. Special counsel performed just under 3% of the work. This breakdown of work is suggestive of an appropriate delegation of work between solicitors of different levels of experience so as to reduce overall costs. That is confirmed by the time records annexed to Ms Williams’ affidavit which I have reviewed in a broad way without undertaking a line-by-line assessment of the entries. My impression based on that review is that tasks were allocated to solicitors appropriately according to their level of experience.

My review of those time records did not reveal any pattern of duplication of tasks between different fee earners. However, I consider that inefficiencies would have inevitably flowed from the need to involve additional solicitors in the matter for the reasons referred at [53] above, resulting in some increase in costs. Those inefficiencies are of a kind that is not discernible from time records without a line-by-line review of those records.

The other matter that emerged from my review of the time records is that O’Hearn Lawyers spent time undertaking work relating to issues that arose out of Ms Kchevetskaia’s applications in the Korlevic family law proceedings referred to in the principal judgment at [41]-[46] and [57]. It is not apparent to me what interest O’Hearn Lawyers had in those applications or why it was necessary for K & L Gates to perform that work in order to represent the interests of O’Hearn Lawyers in relation to Ms Kchevetskaia’s motions and applications in the 2023 proceedings.

Ms Williams deposes that she expects that approximately 85% of the solicitors’ fees would be recovered if O’Hearn Lawyers’ costs were assessed. That is at the highest end of the range of recovery referred to at [44] above. Having regard to the matters referred to at [55]-[56] above, taking into account considerations of proportionality in circumstances where Ms Kchevetskaia’s motions and applications resulted in numerous directions hearings but did not proceed to a substantive hearing, and applying a broad brush, I consider that only 60% of the solicitors’ fees should be included in the gross sum fixed for O’Hearn Lawyers costs under s 98(4)(c) of the Civil Procedure Act.

Ms Williams deposes that she expects that 100% of counsel’s fees would be recovered if O’Hearn Lawyers’ costs were assessed. Only one counsel was briefed in the matter. In my opinion, K & L Gates briefed counsel with an appropriate level of experience for this matter and counsel’s hourly rate of $480 is well within the range of rates charged by counsel of that level of experience in proceedings of this kind. My review of K & L Gates’ time records and counsel’s invoices did not identify any duplication of work between counsel and solicitors. However, counsel’s itemised invoices do disclose that counsel charged fees of $6,960 in July 2025, approximately half of which appears to be for work relating to the Korlevic family law proceedings. Appropriately, counsel appears to have charged no fees during the period after July 2025 until November 2025 when Ms Kchevetskaia’s motions and applications in the 2023 proceedings were effectively stalled pending the outcome of her application in the Korlevic family law proceedings. Counsel’s fees charged in November 2025 for reviewing Ms Kchevetskaia’s points of claim and in February 2026 for the hearings before me on 13 and 27 February 2026 appear to me from the itemised invoices to be reasonable both in terms of the work done and the fees charged. I consider that 90% of counsel’s fees should be included in the gross sum fixed for O’Hearn Lawyers costs under s 98(4)(c) of the Civil Procedure Act so as to exclude fees charged in July 2025 relating to the family law proceedings.

I see no reason why O’Hearn Lawyers should not recover 100% of the search fees of $143.39.

For all of those reasons, and for the further reasons at [62] below, O’Hearn Lawyers’ costs of Ms Kchevetskaia’s notices of motion and applications referred to in orders 2 and 3 made on 5 March 2026 will be payable by Ms Kchevetskaia forthwith in the sum of $94,961.22 (being 60% of the solicitors’ fees totalling $97,505.40 [20] , 90% of counsel’s fees totalling $30,757.50, [21] and 100% of the search fees of $143.39, plus 10% GST on the resulting total [22] ).

Consistently with the judicial warnings given to Ms Kchevetskaia throughout the course of the 2023 proceedings, [23] that gross sum should be paid out of the funds held in court.

In determining that the costs should be payable forthwith, I have considered Ms Kchevetskaia’s submission that the Court should instead preserve all of the funds on the basis that the entitlement to the funds is disputed, that dispute raises a serious question to be tried, and that an order for payment of O’Hearn Lawyers’ costs out of the funds in court will irreparably prejudice Ms Kchevetskaia because any judgment may be rendered nugatory. I reject that submission. As things presently stand, Ms Kchevetskaia is entitled to the funds held in court under the Deed of Release and Indemnity (subject to O’Hearn Lawyers’ lien), and she is obliged by that Deed to consent to the dismissal of the 2023 proceedings. Ms Kchevetskaia’s contention that the Deed of Release and Indemnity should be set aside does not presently raise a serious question to be tried because her motions seeking to set aside the Deed have been dismissed as an abuse of process and she is yet to commence any fresh proceeding seeking to set aside the Deed. Only if and when the Deed is set aside in any such fresh proceeding will it be open to Ms Kchevetskaia to press her claim made in the 2023 proceedings to have been entitled to the whole of the net sale proceeds of the property independently of the Deed and before it was entered into. Ms Kchevetskaia has a present obligation to pay O’Hearn Lawyers’ costs of her motions and applications that were dismissed on 5 March 2026 in the gross sum that I have determined. That obligation will be discharged by an order for payment of the gross sum that I have determined to O’Hearn Lawyers out of the funds held in court. Ms Kchevetskaia cannot avoid discharging that obligation by protesting that she should first have an opportunity to establish her entitlement to the funds in court on the basis that she propounds. If Ms Kchevetskaia ultimately succeeds in establishing her entitlement to the funds on that basis, such a judgment in her favour will not be rendered nugatory by the funds having been depleted by payments made to discharge Ms Kchevetskaia’s liability for costs in the 2023 proceedings.

Relying on clause 3.2 of the Deed of Release and Indemnity, Mr Korlevic submits that the costs order in his favour in respect of Ms Kchevetskaia’s notices of motion and applications should be on an indemnity basis rather than on the ordinary basis.

Clause 3.2 provides:

The Deed of Release and Indemnity remains on foot unless and until it is set aside. For the reasons explained above, Mr Korlevic has a contractual right of indemnity under clause 3.2.2 of the Deed in respect of his costs of Ms Kchevetskaia’s notices of motion and applications that were dismissed in the principal judgment. The Court should ordinarily exercise its costs discretion in a manner that reflects a successful party’s contractual right of indemnity, although it is not bound to do so. [32] In the present circumstances, having regard to the long history of the steps taken by Ms Kchevetskaia in the 2023 proceedings to set aside the Deed of Release and Indemnity, I do not consider the possibility that Ms Kchevetskaia may commence fresh proceedings disclosing a reasonable cause of action to set aside the Deed to be a sound reason to decline to exercise the costs discretion in a manner that does not reflect the contractual indemnity in clause 3.2.2.

It is not necessary to address the alternative basis of Mr Korlevic’s claim for his costs to be paid on an indemnity basis.

I now turn to Mr Korlevic’s application for an order that his costs be paid in a specified gross sum pursuant to s 98(4)(c) of the Civil Procedure Act, and an order that the specified sum be paid to him out of the funds held in court.

I have summarised the applicable legal principles and explained the nature of the evidence that is ordinarily presented to the Court by an applicant for a gross sum costs order at [39]-[44] above.

Mr Korlevic relied on affidavits sworn by his solicitor, Ms Amanda Johnstone, on 11 March 2026, 27 March 2026 and 22 April 2026. Ms Johnstone deposes that she has approximately 24 years’ experience as a solicitor conducting litigation in all courts in New South Wales and in federal courts, and that she has experience in estimating costs and in costs assessments. Ms Johnstone has deposed that Mr Korlevic has incurred costs totalling $163,474.20 including GST in respect of Ms Kchevetskaia’s notices of motion and applications that were dismissed in the principal judgment (comprising total solicitors’ fees of $108,999 including GST plus disbursements including counsel’s fees of $54,475.20 including GST). Ms Johnstone’s affidavits state those total amounts and exhibit her firm’s time records and counsel’s invoices.

Although Ms Johnstone did not give evidence estimating the duration and cost of any costs assessment process, I am satisfied that an assessment would be protracted and expensive to the extent indicated in Ms Williams’ evidence for the reasons explained at [46] above.

Ms Johnstone’s affidavits do not provide a sufficient basis for the Court to determine an appropriate sum for Mr Korlevic’s costs. It was not necessary for Ms Johnstone to set out a great deal of detail about the procedural history of the matter in light of the history set out in the principal judgment. However, Ms Johnstone’s evidence does not address any of the other matters referred to at [42] above. A brief perusal of the time records exhibited to Ms Johnstone’s affidavit discloses that all of the work performed by solicitors was performed by Ms Johnstone herself. As a partner of her firm, Ms Johnstone charges at an hourly rate of $550.00. I consider that to be within the range of rates charged by solicitors of that level of experience on matters of this nature, but it is highly unusual for all work to be done by the partner at that rate, with no work delegated to more junior lawyers so as to reduce the overall costs to the client. Ms Johnstone’s evidence offers no explanation for performing all of the work personally and charging for all of the work at the rate of $550 per hour, and counsel for Mr Korlevic was unable to offer any meaningful explanation for this when I raised the question during the hearing on 23 April 2026. Counsel initially suggested that junior positions may not exist within Ms Johnstone’s firm because it was a very small firm. However, counsel later informed the Court that he was instructed at the hearing that day by a junior solicitor of two years’ experience. In addition, my broad review of the time records against counsel’s invoices identified what appears to be frequent duplication of work being done by Ms Johnstone and counsel, or involvement of Ms Johnstone in work for which counsel is ordinarily solely responsible and for which counsel did charge fees in this case (for example, objections to evidence).

For those reasons, Ms Johnstone’s evidence does not provide a sufficient basis for the Court to determine an appropriate sum fairly between the parties, applying the broad brush approach. The Court would be required to undertake a detailed, line by line review of Ms Johnstone’s time records alongside counsel’s invoices in order to make an appropriate adjustment for unnecessary duplication. Even if the Court were to undertake that exercise, which it is not required to do, there is no evidence that would inform a principled approach to an adjustment to the costs to account for all of the work having been performed by Ms Johnstone (which is unreasonable, at least in the absence of any explanation for it). If the Court had been able to make adjustments for duplication and non-delegation of work, it would have then been necessary to consider the proportionality of the resulting total amount of costs bearing in mind that Ms Kchevetskaia’s notices of motion and applications were dismissed without having reached a substantive hearing, but bearing in mind the procedural history set out in the principal judgment.

It follows that Mr Korlevic’s application for a gross sum costs order in prayer 5 of his notice of motion filed in the 2023 proceedings on 18 March 2026 must be dismissed. There will be an order that Ms Kchevetskaia pay his costs of her notices of motion and applications that were dismissed in the principal judgment on an indemnity basis in such amount as may be agreed or assessed.

Consistently with the judicial warnings given to Ms Kchevetskaia throughout the course of the 2023 proceedings and the order for security made by Brereton J on 7 May 2025, [33] those costs should be paid out of the funds held in court once the quantum has been agreed or assessed.

For the avoidance of doubt, Mr Korlevic’s costs of his unsuccessful application for a gross sum costs order, and the costs of his notice of motion filed in the 2023 proceedings on 18 March 2026 and referred to at [85] above and [88]-[91] below, will be excluded from the scope of the indemnity costs order in his favour.