Dimitrovski v Boland (No 3)

By its judgment delivered on 6 February 2025, the Court found it had not been established that the first plaintiff, Mr Dimitrovski, held 500,000 shares in Life Order Products Pty Ltd on trust for his late sister, Ms Vasil (Dimitrovski v Boland (No 2) [2025] NSWSC 17 (separate question judgment)). The procedural history of this matter was set out in that judgment from [9] to [25]. These reasons should be read, and assume familiarity, with the separate question judgment. Defined terms in that judgment have the same meaning in these reasons. The Court notes that by order made in chambers on 27 October 2025 the proceedings continue by Mr Dimitrovski alone on behalf of the estate, Ms Boceska (his co-administrator of Ms Vasil’s estate) having died while this judgment was reserved.

This judgment deals with the consequences of the separate question judgment. In particular, it deals with Mr Dimitrovski’s procedural response to the outcome of that judgment, which is to seek leave to file a sixth version of the pleading. Having failed to persuade the Court that he held the shares on trust for Ms Vasil in the hearing of the separate question, he now wishes to file a pleading which asserts the complete contrary, namely that at all material times he held the shares beneficially.

For the reasons which follow, the Court will not permit the proposed pleading to be filed. In summary, that is because to do so would be to permit an abuse of process. The overall outcome is that leave to file a further pleading will be refused and the proceedings will be dismissed. Mr Dimitrovski will be ordered to pay the defendants’ costs of the separate question hearing and (the proceedings generally on the indemnity basis.

In this latest round of these long-running proceedings, Mr Dimitrovski appeared for himself and the late Ms Boceska. Mr G McDonald of Counsel appeared for the defendants (excluding, for clarity, Mr Reid, who Mr Dimitrovski was seeking to re-join as a defendant by his amended pleading).

After a hearing on 2 April 2025, the Court made orders for further written submissions with the parties agreeing that the issues be determined on the papers without further hearing. That is what has happened. However, the plaintiffs’ submissions, in particular, were lengthy, discursive and contained irrelevant matter or sought to argue the merits of the dispute the plaintiffs (in practical reality, Mr Dimitrovski) consider they have with the defendants. These reasons are confined to those matters raised by the parties which, in my respectful opinion, were relevant to determine the issues arising from the separate question judgment.

What I described in the separate question judgment at [127] as “a moveable feast of allegations in relation to the alleged trust” is at the centre of the history of this litigation. Before turning to the specific issues raised by the parties in response to the separate question judgment, it is therefore useful to set out those allegations. What follows should be read with the procedural history recounted in the separate question judgment at [9] to [25].

The case began with the allegation that Mr Dimitrovski had invested $500,000 in Life Order in return for the shares, which were owned by Mr Dimitrovski and Ms Vasil, and that Ms Vasil’s interest (whatever it was and in respect of how many shares) was as a result of Mr Dimitrovski having made a declaration of trust in her favour. It was alleged the investment had been made by Mr Dimitrovski in reliance on a representation made to him by Mr Boland.

This first version of the case was dismissed by Lindsay J on 22 October 2021 because the property in the various actions alleged had vested in Mr Dimitrovski’s trustee in bankruptcy.

In the next version, the allegations became that the $500,000 investment was Ms Vasil’s and that (unchanged from the first version) the shares were owned by Mr Dimitrovski and Ms Vasil, and that Ms Vasil’s interest (whatever it was and in respect of how many shares) was as a result of Mr Dimitrovski having made a declaration of trust in her favour. The relevant representation by Mr Boland was now said to have been made to Mr Dimitrovski “for [Ms Vasil]”.

This pleading was struck out and leave granted to replead by Meek J in Vasil v Boland [2022] NSWSC 1534, who said at [120]:

The third pleading alleged that at all material times Mr Dimitrovski held the 500,000 shares in trust for Ms Vasil. This was the result of an initial oral declaration of trust (in the presence of and at the request of Kosta) by Mr Dimitrovski in relation to 250,000 shares. This was said to have occurred in August 2004. It was further alleged that in September 2005, Mr Dimitrovski orally declared that he held the other 250,000 shares in trust for Ms Vasil, such that thereafter he held 500,000 shares in trust for her. It was alleged that “[Mr Dimitrovski] as trustee and [Ms Vasil] as beneficiary invested” in Life Order by paying $500,000 to Life Order. The relevant representation was now said to have been made by “[Mr Boland] and/or [Mrs Boland] and/or [their company, the fourth defendant Avid Business Pty Limited] made orally to Mr Dimitrovski and Ms Vasil”.

The fourth pleading was filed as a result of my decision in Dimitrovski v Boland [2023] NSWSC 1371 (Amendment Judgment). As I record in the separate question judgment at [21], this was a complete recasting of the claim as a derivative claim to be brought on behalf of Life Order and it was conceded by counsel then appearing for the plaintiffs that the case depended on the causes of action belonging to Ms Vasil’s estate through beneficial ownership of the shares. The pleading sought a declaration that at all material times Mr Dimitrovski held the 500,000 shares in trust for Ms Vasil.

The ownership of the shares was now said to have arisen in two steps. First, Kosta was to acquire 250,000 shares using his funds, being the proceeds of sale of a business he co-owned. However, instead of owning those shares beneficially, Kosta orally declared in August 2004 that Mr Dimitrovski would hold the 250,000 shares in trust for Ms Vasil. At the same time Mr Dimitrovski acquired 250,000 shares but the pleading is silent as to by whom and how these were paid for. The second step was said to be that due to a shortfall in the proceeds from the sale of Kosta’s business, in September 2005 Mr Dimitrovski made an oral declaration that he held his 250,000 shares in trust for Ms Vasil.

It was this version that on 26 October 2023 the Court ordered to be the subject of the separate question. The order was not opposed by the plaintiffs.

At a directions hearing in late January 2024, the plaintiffs indicated that while they did not oppose the hearing of the separate question, they wished again to file an amended pleading, described as the Fourth Further Amended Statement of Claim. This version was primarily directed to reintroducing claims against Mr Reid, against whom the plaintiffs had discontinued as part of being given leave to file the Third Further Amended Statement of Claim (see Amendment Judgment [8] – [11]). Without finally determining the question of the entire proposed amendments, the Court permitted only those amendments that were relevant to the separate question. This led to the filing on 17 May 2025 of a pleading entitled Revised Fourth Further Amended Statement of Claim. It was this document that was the subject of the separate question hearing.

This pleading maintained the claim that the 500,000 shares were held on trust by Mr Dimitrovski for Ms Vasil. However, it was now pleaded that Mr Dimitrovski had come to hold all of the shares on trust for her from August 2004, with Kosta saying to Ms Dimitrovski and Ms Vasil that all of the shares “were to be acquired” (the passive voice avoiding the issue of by whom they were to be acquired) and to be held in trust by Mr Dimitrovski for Ms Vasil. The shares would be purchased by Kosta with funds from the sale of shares owned by Kosta (what shares is no longer specified and the refence to sale of his business is deleted) as a gift to Ms Vasil, and Mr Dimitrovski would “be appointed” (presumably by Kosta) as trustee of the shares for her. The allegation that Mr Dimitrovksi declared himself a trustee for Ms Vasil of 250,000 shares previously held by him beneficially in September 2005 has also been abandoned.

In the proposed pleading, Mr Dimitrovski now describes himself as suing as the sole plaintiff in his personal right, that is to say all of the claims purported to be brought on behalf of Ms Vasil’s estate are abandoned. All of the allegations of the shares being held on trust are struck through and the claim is now that at all material times Mr Dimitrovski held the 500,000 shares beneficially. There is now no pleading as to by whom and how they were paid for, although it is particularised that 100,000 shares were issued as paid and the 400,000 balance as unpaid. The derivative claims on behalf of Life Order are maintained. Equitable and other claims against Mr Reid are reintroduced and claims under the Australian Consumer Law and the Corporations Law are newly pleaded against all defendants (including Mr Reid), including for personal damages to Mr Dimitrovski.

The separate question to be answered is whether the plaintiffs are entitled to a declaration that at all material times Mr Dimitrovski held the shares on trust for Ms Vasil.

No submissions were made by either party nor was there any dispute at the hearing as to the form of the answer to the separate question.

The separate question is therefore to be answered as follows: The plaintiffs are not entitled to the declaration sought in paragraph 4A of the Revised Fourth Further Amended Statement of Claim (see [151] of the separate question judgment).

The defendants’ position was that costs should follow the event, and further sought costs on an indemnity basis with respect to the separate hearing. This was based upon the principle outlined in NR Addlestone Pty Ltd v Henry and Kogan (No 2) [2021] NSWSC 1468 at [14]:

Mr McDonald submitted that had Mr Dimitrovski told the whole truth to his advisors, he would have been properly advised as to his prospects of success, which were characterised as hopeless and bound to fail. In making this submission, Mr McDonald drew on the findings of credit made against Mr Dimitrovski in the separate question judgment, particularly [128], to show that but for Mr Dimitrovski lying to his legal representatives and the Court, the proceedings would not have continued to this point.

Mr Dimitrovski opposed the making of a costs order, on the basis that the conduct of the defendants had both invited and unnecessarily protracted the litigation: Ritter v Godfrey [1920] 2 KB 47; [1918] All ER Rep 714; Lollis v Loulatzis (No 2) [2008] VSC 35 at [29].

In the alternative, Mr Dimitrovski submitted that costs on the separate proceedings should be reserved until the substantive claim has been determined, primarily on the basis that a costs order would be used by the defendants as leverage and would be an abuse of process.

The Court has the power to order costs under s 98 of the Civil Procedure Act 2005 (NSW) (CPA). A successful party may have a “reasonable expectation” of being awarded costs (Oshlack v Richmond River Council (1998) 193 CLR 72; (1998) 152 ALR 83; [1998] HCA 11 at [22], [134]). The ordinary course is that following a determination, costs should follow the event: Uniform Civil Procedure Rules 2005 (NSW) (UCPR) Pt 42 r 42.1.

No adequate reason to depart from the usual course has been made out by Mr Dimitrovski, and the plaintiffs will be ordered to pay the defendants’ costs of the separate question hearing.

The defendants also seek an order that their costs of the separate question hearing be paid on the indemnity basis. The Court accepts their submissions set out in [21] to [22] above.

The plaintiffs argued the separate question on a factual basis Mr Dimitrovski knew to be false. He was clearly the real protagonist in the case. Where a case has been brought on a fraudulent basis, that in and of itself may be sufficient to order the unsuccessful party that has propounded that basis to pay costs on the indemnity basis. The case at bar is an example of such a case. For example, such an order was made by Habersberger J in the Supreme Court of Victoria in Li v Xin (No 2) [2013] VSC 139. This extract from his Honour’s reasons demonstrates the remarkable similarity between the case before his Honour and the present proceedings:

It was the submission of the defendants that following from the answer to the separate question being in the negative, the current proceedings, meaning the Revised Fourth Further Amended Statement of Claim filed on 17 May 2024, should be dismissed.

The defendants relied upon r 28.4 of the UCPR which enables the Court to dismiss proceedings once a separate question has been determined. The defendants highlighted Supaphien v Chaiyabarn [2023] ACTSC 240 at [71] where Curtin AJ said:

Attention was also drawn to the decision of Campbell J in McGlashan v QBE Insurance (Australia) Ltd (No 3) [2014] NSWSC 716 at [18]:

Mr Dimitrovski submitted that when considering where proceedings should be dismissed, the Court needs to take the claim at its highest, and relying upon General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, the test requires the case to be hopeless.

It was also submitted that there is a fundamental requirement for procedural fairness, which includes a right to be heard, drawing on the High Court’s comments in Kioa v West (1985) 159 CLR 550.

Mr Dimitrovski argued that the Revised Fourth Further Amended Statement of Claim meets all of the criteria as set out in Kirby v Sanderson Motors Pty Ltd [2002] NSWCA 44 at [20]-[21] for a valid pleading, and the defendants have not raised any claim to the contrary. It was submitted that the application for dismissal of proceedings was made by the defendants, however no written submissions or evidence had been filed that would warrant that course.

In the event the Court rules the proceedings should be dismissed, Mr Dimitrovski sought leave to file a revised pleading. The basis upon which Mr Dimitrovski submitted orally in the hearing that leave should be granted was leave would facilitate the most just and quick resolution of the matter, and the prejudice he would otherwise face, particularly with respect to the cost of the filing fee. I return to the question of filing the 5FASOC in [37] and following below.

As was conceded by the plaintiffs’ counsel at the time of leave being granted for the Third Further Amended Statement of Claim to be filed (see [48] below), if the separate question was answered in the negative, that was the end of the claim. The same consequence applies to the Revised Fourth Further Amended Statement of Claim, which only introduced amendments relevant to the separate question. It follows that the Revised Fourth Further Amended Statement of Claim must be dismissed. This will be formally achieved by an order dismissing the proceedings if leave is not granted for the filing of the 5FASOC.

Mr Dimitrovski now contends that by the 5FASOC he wishes to sue on a cause of action derived from his beneficial ownership of the shares. The shares (and any related cause of action) are said to have revested in him following his discharge from bankruptcy under s 129AA of the Bankruptcy Act.

Section 129AA includes:

Mr Dimitrovski became bankrupt on 9 December 2013 and was discharged by operation of law from bankruptcy on 21 December 2016.

This argument depends upon the allegation in the 5FASOC that Mr Dimitrovski was at all material times the beneficial owner of the shares.

In their written submissions dated 13 May 2025, the plaintiffs (or more precisely now Mr Dimitrovski in his own right) also submitted that leave for the 5FASOC to be filed should be granted because it allowed for the former third defendant, Mr Reid to be reinstated in the proceedings, in accordance with the orders I made on 1 December 2023:

I interpose immediately that this submission misconstrues the effect of the order, which did no more than formalise Mr Reid as a respondent to the motion which sought leave to amend in a way that would bring him back into the proceedings. The order was procedural only and is not a basis for the 5FASOC to be filed.

It was then submitted that the statements made by the plaintiffs’ counsel, Mr Allan on 26 October 2024 when the proceedings against Mr Reid were discontinued, were a mistake. The plaintiffs argue that Mr Reid was integral to the fraud perpetuated by the defendants. As such, leave should be given because Mr Reid must be held accountable. Furthermore, a Notice of Discontinuance against Mr Reid had never been filed.

It was argued that Life Order was not insolvent from 11 June 2009, as evidenced by an ATO R&D Tax Refund for over $85,000 into the company’s bank account the following month, along with funds that come into the account at various further dates, all of which were reconciled by Mr Reid. The plaintiffs submit that at the 11 June 2009 meeting, the defendants engaged in conduct that was unconscionable and in contravention of s 1041H of the Corporations Act 2001 (Cth) in stripping the company of its assets. The defendants then engaged in ongoing conduct to conceal the fraud so that the full extent of the wrongdoing was not revealed until the deregistration of Life Order in 2016. The plaintiffs then make claims of oppressive conduct under ss 232 and 233 of the Corporations Act, breach of fiduciary duty, ancillary liability, and misleading and deceptive conduct against each of the defendants.

The 5FASOC also seeks to reinstate Life Order for the purpose of claiming redress for the value of its assets, including the cash monies that were allegedly stripped, and Mr Dimitrovski’s alleged $500,000 investment.

Much of the plaintiffs’ submissions are an expression of discontent with what the plaintiffs see as the lack of a defence provided by the defendants and a lack of a robust cross-examination of Mr Boland during the hearing of the separate question.

During the hearing, the defendants submitted that the application for leave to amend should be refused because it caused significant prejudice to the defendants by continuing such drawn out proceedings while causing no prejudice to the plaintiffs. It would be an abuse of process to allow the filing of the 5FASOC for reasons including that it inconsistent with the findings of the separate question judgment and was in any event futile on limitation grounds.

In their written submissions dated 22 April 2025, the defendants submitted that the separate question judgment is unequivocal in concluding the proceedings. It is argued that this result was foreshadowed to the plaintiffs:

The Defendant’s submit that the 5FASOC is contrary to the plaintiffs’ previously asserted position that he held the 500,000 shares on trust for Ms Vasil at all material times. The fundamental premise of the revesting argument was contrary to the separate question judgment and is an abuse of process, relying on s 91(2) of the Civil Procedure Act. Mr Dimitrovski was aware of the revesting argument, it was submitted, as evidenced particularly by the statement of Mr Allen during proceedings on 26 October 2023 (Tcpt, 26 October 2023, p 28 (4)):

This argument was subsequently abandoned. This knowledge and subsequent failure to raise the revesting argument is argued to create an estoppel in accordance with Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45.

The defendants submitted that any amendments would be statute barred under s 47(1)(e) of the Limitation Act 1969 (NSW). The 5FASOC states that fraud was occasioned by the defendants on 11 June 2009. It is argued that the revesting of the shares, if that even were the case, could only have occurred on 16 December 2022 which is six years after Mr Dimitrovski’s bankruptcy was discharged. The cause of action was statute barred as of 11 June 2021, which was more than a year prior to when the shares would have been revested in Mr Dimitrovski.

The defendants submitted that such a fundamental change of case would require them to defend anew a case that had been argued and resolved by the separate question judgment. They drew attention to the judgment of the plurality in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [104]:

The plurality found (at [105]) that the trial judge had erred by failing to recognise the extent of the new claims and their effect on the defendant.

The defendants argue that the proceedings against Mr Reid were discontinued with the consent of Mr Allan. They also submitted that the documents referred to by the plaintiffs in support of their claim against Mr Reid were an impermissible attempt by the plaintiffs to circumvent what is described, with respect inaptly, as the Court’s ruling on 26 October 2023:

The defendants refute the allegations of the asset stripping of Life Order which the plaintiffs allege occurred in 2009. However, the merits of this question are not relevant to the issues for determination.

The defendants submit that under s 65(2)(a) of the CPA, Mr Dimitrovski is not entitled to amend after the limitation date as he has never personally been a plaintiff to the proceedings. This section only applies where the party seeking to amend is entitled to bring and maintain proceedings in the capacity in which the proceedings were commenced.

Mr Dimitrovski submitted with respect to the Limitation Act, that Gerrace v Auzhair Supplies Pty Ltd [2014] NSWCA 181 applies by analogy, particularly at [35]:

Based on this, the plaintiffs argue that the twelve-year limitation period commences once a timeline of the concealment is proven. It was submitted that the limitation question should be answered at the final trial, once sufficient evidence has been heard for the court to determine the date of reasonable discovery on the part of the plaintiffs.

The plaintiffs highlighted the importance of procedural fairness in determining the issue of whether leave should be granted to amend. It is argued that the issue of estoppel raised by the defendants should be balanced against the procedural unfairness which the plaintiffs claim they would face. This was that the defendants have never answered the case against them and are simply trying to discredit Mr Dimitrovski. It was submitted that a new issue is being raised for determination as the separate question was focused on the standing of Ms Vail, while the 5FASOC pursues a claim in Mr Dimitrovski’s own right pursuant to s 129AA of the Bankruptcy Act. It was further submitted that pursuant to s 91(2) CPA, the separate question judgment does not dispose of the proceedings because it only went to the issue of standing.

The plaintiffs submit leave to file the 5FASOC would not transgress the dictates of justice because the defendants have always known the amendments form part of the plaintiffs’ case. As such, it is not a surprise to them.

While I consider there is much force in the defendants’ contentions concerning limitation periods, I do not propose to attempt to resolve them for two reasons. First, and foremost, there is a more fundamental reason why leave to amend by filing the 5FASOC should be refused. Second, it is well understood that save in the clearest cases, limitation questions should not be determined other than at a final hearing.

The fundamental reason is that to allow the filing of the 5FASOC would be to permit a serious abuse of process. Putting the proposition at an abstract level, if a party elects to present its case on the basis of X, where X is something that must be within the knowledge of that party, and fails, it is an abuse of process for that party to seek to amend to bring a new case on the basis of Y where Y is mutually inconsistent with X and the party knows that one of X or Y is false.

Turning to this case, the plaintiffs very clearly abandoned the claims in their earlier pleadings, and a fully contested hearing was held on the separate question, which was framed by reference to the Revised Fourth Further Amended Statement Claim. This put in unequivocal terms, by reference to evidence peculiarly within Mr Dimitrovski’s knowledge, that all 500,000 shares were held by him on trust for Ms Vasil. It would be an abuse of process if, following a negative response in the separate question judgment, the plaintiffs were allowed to amend and to argue the case on a completely inconsistent factual basis. This is particularly so in light of the long procedural history of these proceedings from June 2021 (see [6] to [16] above) and where some version of the trust allegation was part of the first five versions propounded by the plaintiffs.

While I have been unable to find an authority where the Court has been required to consider a post-judgment volte face of the magnitude of this case, the same point may be demonstrated by principles relating to pleading. The conclusion I have reached is consistent with the line of cases which affirm the principle that where one alternative is known to a party to be false, inconsistent cases cannot be pleaded. In In the matter of Brianine Pty Ltd [2022] NSWSC 203 at [29], Williams J held:

This principle was considered in Dridan v Stockyard Hill Wind Farm Pty Ltd [2024] VSC 91 where Daly AsJ stated at [53]:

In the separate question judgment at [127], the Court concluded that Mr Dimitrovski was prepared to lie to keep his battle with Mr Boland alive. The position was summarised in that judgment at [7]:

Applying Brianine, if Mr Dimitrovski had sought to plead the inconsistent propositions that he held the shares beneficially or he held them on trust for Ms Vasil, the pleading would have been struck out as an abuse of process because Mr Dimitrovski knew the allegation of trust to be false. It is no less an abuse of process where having knowingly gone to trial (that it was on a separate question makes no difference) on a particular false factual allegation and failed, a party seeks by amendment to run a new case on an inconsistent factual allegation.

There are five other reasons for the conclusion I have reached that leave to amend should not be granted.

First, it would be inconsistent with the principle of finality of judgment. That is an important rule of public policy. It may yield, for example, where a party can demonstrate that it has come into possession of evidence that was not reasonably available to it at the time of hearing and which arguably would have led to a different outcome. However, that or similar exceptions do not apply to the case at bar. The relevant true facts were always known to Mr Dimitrovski.

Second, the plaintiffs are bound by the conduct and concessions made on their behalf by Mr Allan of Counsel.

Third, when they were again represented by Mr King of Counsel, there was no application to vacate the order for the hearing of the separate question. For example, it was not suggested that the separate question would be rendered inutile if the Fourth Amended Statement of Claim was allowed to be filed, such that the Court should first determine that application. On 11 March 2024 the Court directed that, at the next mention date, the plaintiffs were to inform the Court whether or not they proposed to move for the revocation of the separate question. On the next occasion the plaintiffs did not press to revoke the separate question, but instead co-operated in the preparation of the separate question for hearing.

Fourth, the plaintiffs have now had the opportunity to put their case over five different versions of the pleadings. The plaintiffs failed on a case based on the shares being held in trust. The 5FASOC is a transparent attempt to circumvent that loss. Having had a more than adequate opportunity to propound their case, the time has come for the plaintiffs’ case to be brought to an end.

Fifth, the relevant events took place between 2004 and 2009 and much of the evidence depends on the recollections of the individual protagonists. While there is some affidavit evidence from Ms Vasil, she is now dead. That, and the general passage of time, casts a real doubt over the reliability of the evidence in the interests of both parties, but in particular the defendants.

For these reasons, leave to file the 5FASOC will be refused.

As I have noted in [36] above, the Court will dismiss the Revised Fourth Further Amended Statement of Claim. This will bring the proceedings to an end, because the Court will not grant leave for the Fifth Further Amended Statement of Claim to be filed. All of this will be given effect by an order dismissing the proceedings. Having determined the costs of the separate hearing, it is next necessary to consider the costs of the balance of the proceedings (to the extent they are not already the subject of interlocutory costs orders), which were commenced by Statement of Claim filed on 4 June 2021.

The defendants seek the costs of the proceedings on the indemnity basis on two bases: the conduct of the plaintiffs, and the plaintiffs’ failure to accept an offer of compromise under UCPR Pt 20 r 20.26 made on 2 August 2021.

The defendants submit that the plaintiffs’ case was hopeless and bound to fail, which they would have known had Mr Dimitrovski been honest with his legal representatives (see Addlestone at [21] above).

The defendants further rely on the compromise, which was not accepted by the plaintiffs, according to UCPR r 42.15A, Langdon v Carnival PLC [2024] NSWCA 168 at [187]-[188], [193]-[194], and Ng v Chen [2019] NSWSC 280 at [46]-[47]. The compromise provided that the proceedings be dismissed with no order as to costs, and was open for acceptance for 28 days. It is submitted to meet the test of a result which is “no less favourable” than the offer in a situation where proceedings may be dismissed with costs to follow. The defendants also submitted that the principles in Calderbank v Calderbank [1975] 3 All ER 333; [1976] Fam 93 may also be applied to this walkaway offer, even if it did not operate under the rules.

One factual matter that is relevant to note at this point is that the evidence disclosed that while the defendants’ solicitor, Mr Phillip Tull, only formally came onto the record in these proceedings on 11 March 2024, he had been advising the defendants in relation to the litigation since 2022.

The plaintiffs submit that the usual rule as to costs has been displaced on account of disentitling conduct by the defendants, citing Oshlack v Richmond River Council (1998) 193 CLR 72. The disentitling conduct is said to be the deceptive conduct of the defendants in misleading the Court with the false impression that they were self-represented when in fact Mr Tull had been retained in April 2022. The plaintiffs argue this was a strategic ploy to disadvantage the plaintiffs, and this caused prejudice to them. Seventeen pages of the plaintiffs’ submissions are dedicated to outlining the extent of this alleged deceptive conduct by the defendants and Mr Tull, including many matters that, described most charitably, should be disregarded as irrelevant.

The plaintiffs submit that under s 98 of the CPA the Court should exercise its discretion to disallow costs in the proceedings. It is submitted that no costs prior to or after Mr Tull formally being on the record should be awarded.

In the alternative, the plaintiffs submit that costs should be reserved until the proceedings and substantive issues have been heard and determined.

The issue of the costs order does not engage the plaintiffs’ complaints about Mr Tull’s retainer. There is clearly a period when he was “on the record” and there can be no doubt about the retainer of the defendants’ counsel. The plaintiffs’ complaints are best considered in relation to the final issue, being the defendants’ application for a gross sum costs order.

However, the Court immediately rejects the plaintiffs’ assertion of deceptive conduct for two reasons. First, it is irrelevant to the present issue. Second, as I noted in the course of argument, the defendants had told me more than once in the course of directions hearings that they had a legal adviser “in the background” (my expression). Litigants having legal assistance for advice and preparation but appearing for themselves is not uncommon in the Court’s experience.

While the compromise complies with the UCPR and is engaged because the Court will order the plaintiffs to pay the defendants’ costs of the proceedings, in my respectful opinion the defendants’ reliance on the compromise is not straightforward. That is because it is a walk-away offer made almost at the commencement of the proceedings.

In order for the compromise to attract an indemnity costs order, it must involve a "genuine offer of compromise" and not merely be made so as to trigger the costs consequences under the rules: Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 (at [16]) (Spigelman CJ; Beazley and McColl JJA). For such an offer to give rise to an indemnity costs order under the rules, "the claim or defence would have to approach something of the character of being frivolous or vexatious for that to be the case": Regency at [31].

Nor do I overlook that the Statement of Claim sought compensation and pleaded a loss of the $500,000 investment. This was not an example of a case where a giving up of costs was the only practicable offer that could be made.

Nevertheless, read without the benefit of hindsight as at the date it was filed, I am satisfied that the Statement of Claim when read as a whole may properly be described as having the character of being frivolous or vexatious. Therefore, and notwithstanding the absence of a monetary counteroffer, the Court finds in the circumstances of this case that the compromise was a genuine one and that r 42.14 applies such that the defendants are entitled to their costs of the proceedings on the ordinary basis from their commencement, and on the indemnity basis from 3 August 2021, being the day following the day on which the compromise was sent.

However, if this conclusion is wrong, two further issues arise.

First, the compromise cannot be relied upon as a Calderbank letter. This is because there is nothing in its covering letter (which was in evidence) or in any other evidence to establish that the plaintiffs were on notice that if the compromise did not comply with the rules, the compromise would also be relied upon as a Calderbank letter.

Second, and as an alternative conclusion (which gives the defendants indemnity costs from the commencement of the proceedings and is the order the Court will make), the Court accepts the submission that the entire litigation, and not just the separate question hearing, engages what might be termed the “fraudulent basis” reason set out in [28] above. The assertion of Ms Vasil having an interest in the shares by reason of a declaration of trust in her favour by Mr Dimitrovski is the first allegation in the Statement of Claim. In other words, what the Court has found was a false case knowingly advanced by Mr Dimitrovski has been present from the start of the proceedings. For this reason, the Court will order that the plaintiffs pay the defendants’ costs of the proceedings on the indemnity basis.

The defendants tendered their fee agreement and detailed invoices from Mr Tull (and less detailed material from an earlier retained solicitor), and counsel’s invoices. This evidence related to the entirety of the proceedings (including the separate question hearing) and proved a total figure of $285,699.95 (this and all following amounts are inclusive of GST). They submitted an appropriate discount if their costs were awarded on the indemnity basis was 10% (without distinction between costs and disbursements), with that figure being reduced by a further 15% because the task was being done in a broadbrush way to arrive at a gross sum. This gave a figure of $218,560.

The defendants submitted that a gross sum costs order pursuant to s 98(4)(c) of the CPA is appropriate in this case. They drew attention to how long the case had been running, Mr Dimitrovski’s litigious nature and what the evidence suggested was the plaintiffs’ lack of means.

The plaintiffs did not engage with the detail of the quantum sought by the defendants. The plaintiffs maintained the objections they had raised to an order for costs being made at all and raised matters such as whether Mr Tull was permitted to practice in NSW, whether he had a practising certificate or professional indemnity insurance, whether his practice was registered for GST and similar issues. All of these kinds of complaints were shown by the evidence to have no foundation. There was nothing in the evidence that could sustain the allegations of impropriety which the plaintiffs sought to raise against Mr Tull or against the defendants insofar as the way in which they had chosen to use Mr Tull’s services for the purposes of the proceedings is concerned.

The Court has the power to make a gross sum costs order under s 98(4)(c) of the CPA. The applicable principles were summarised in Gabrielle v Abood (No 4) [2023] NSWCA 100, at [6] where the Court (Bell CJ, Kirk and Adamson JJA) said:

I am more than satisfied, for the reasons advanced by the defendants (see [92] to [93] above) that in the exercise of its discretion the Court should make a gross sum costs order. The materials tendered by the defendants enable the Court to be confident that it can make a fair assessment as between the parties. The litigation should be brought to an end now, to eliminate the prospect of what the Court finds is the virtual certainty of further disputation by Mr Dimitrovski in any assessment process.

There is one matter of principle raised by the plaintiffs which should be dealt with. The plaintiffs contended that there could be no entitlement to a costs order against them in respects of the defendants’ costs for the period before Mr Tull formally appeared. The Court rejects that submission. The filing of a notice of appearance is not a necessary precondition for that solicitor’s costs to become the subject of a costs order. What is necessary is that the party in whose favour costs are ordered in fact has a liability to that party’s solicitors for services provided in connection with the litigation. That is a consequence of the costs indemnity rule: that an order is intended to indemnify (to some extent) that party for the costs they have been required to incur in prosecuting or defending the litigation (see Dal Pont, Law of Costs, (2021, 5th ed, Lexis Nexis) at 7.5).

The evidence discloses that by a fee agreement entered into on 24 June 2021 (recalling the Statement of Claim was filed on 4 June 2021), Mr Boland retained Hazan Hollander in relation to these proceedings. That firm’s trust account statement records that $10,000 was paid by the defendants (other than Mr Reid, whose name appears in error in the statement) on account of their costs on 29 June 2021 and was applied to those costs on 17 August 2021.

By a retainer agreement dated 21 April 2022, the defendants retained Mr Tull’s firm of P.A.T. Law & Associates Pty Ltd. While that entity apparently has been deregistered, a matter drawn to attention in submissions by the plaintiffs, I do not regard that fact alone (if it be such) as demonstrating the absence of a liability in the defendants to Mr Tull (or a successor entity). The Court finds that the defendants are liable to Mr Tull in accordance with his retainer agreement and invoices, and is also satisfied his charge out rate is reasonable.

Fully itemised invoices to Mr Tull for counsel’s fees were tendered, totalling $113,520. I have reviewed these and they are reasonable in every respect. Even on the ordinary basis they would generally be completely recoverable. On the indemnity basis they are fully recoverable save for anything unreasonable. On the face of the material there is nothing unreasonable.

Five invoices from Mr Tull were in evidence, four of them fully itemised. They total $162,179.95. The final invoice, for the period 19 July 2024 to 2 April 2025 for $56,737.89, is not itemised. The first billing period commences on 30 July 2021, although the fact that predates the date of the retainer is irrelevant for present purposes. Two of the invoices have some attendances relating to a Federal Court matter (which I infer is another dispute between the parties). I infer the 5 February 2025 date on four of the invoices reflects the date they were printed.

The Court accepts, given an indemnity costs order, that an initial deduction of 10% is appropriate. However, in the exercise of the Court’s discretion I propose to apply a further 20% general deduction for a gross sum order for these reasons:

A 30% deduction from the total costs figure of $285,699.95 gives a figure of $199,989.96, which I will round up to $200,000.

The defendants also sought various orders intended to prevent Mr Dimitrovski from commencing fresh proceedings about his dispute with them concerning Life Order. The Court declines to entertain that application on the basis that there is currently no evidence that would warrant such an order. This conclusion is without prejudice to the defendants (and Mr Reid’s) right to make an application to dismiss or restrain such proceedings should they be commenced.

While this judgment was reserved, Mr Dimitrovski provided my chambers with an unfiled motion which sought, among other things, an order that these reasons not be made public. Given the time of year, I will publish this judgment to the parties only and will list Mr Dimitrovski’s motion at the earliest opportunity in the first week of the new term. My intention is that any application for non-publication should be resolved than or as soon as possible thereafter.

The orders of the Court are: