Kaloriziko Pty Ltd as trustee for Ryde Combined Unit Trust v Calibre Construction Group Pty Ltd (No 3)

1. [1]

   MITCHELMORE JA: I agree with Adamson JA.

2. [2]

   KIRK JA: I agree with Adamson JA.

3. [3]

   ADAMSON JA: On 5 December 2025, this Court made orders and published its reasons in this matter: Kaloriziko Pty Ltd as trustee for Ryde Combined Unit Trust v Calibre Construction Group Pty Ltd (No 2) [2025] NSWCA 259 (the principal judgment or PJ). Directions were made for the filing and service of submissions relating to the first appellant’s cross claim and to the costs of the proceedings in the Court below, if any party sought an order other than order (4), which was the usual order as to costs, that they follow the event: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.1. These reasons assume familiarity with the principal judgment.

4. [4]

   In these reasons, the parties will be referred to as they were in the principal judgment: Kaloriziko Pty Ltd as trustee for Ryde Combined Unit Trust as the developer and Calibre Construction Group Pty Ltd as the builder. The parties and their standing in the Court below and in this Court are set out below.

5. [5]

   As a result of the exchange of submissions, the parties have agreed on orders as to the judgment and interest which ought be made with respect to the developer’s cross claim. Had these orders been set out, as they ought to have been, in the notice of appeal, they could have been made on 5 December 2025.

6. [6]

   It is common ground that the builder ought be ordered to execute a discharge of the mortgage which was granted by the developer to the builder to obtain a vacation of the freezing order which had been made against the developer’s assets at an interlocutory stage of the proceedings in the Court below. However, there is an issue as to when the builder ought be obliged to execute the discharge. The builder submitted that it ought have until 2 January 2026, being 28 days from the date of the judgment, to allow for the possibility that an application for special leave and an application for a stay of execution may be filed. The developer submitted that the order should be made requiring the builder to execute a discharge “within 7 days, or such further time as the parties agree”.

7. [7]

   I prefer the developer’s formulation. Having regard to the time that has elapsed since this Court made orders on 5 December 2025, it is reasonable to expect that the builder has decided whether to take this matter further. It is also reasonable to expect that the parties will co-operate if a short extension is required to permit the builder to make a final decision on that matter.

Costs

1. [8]

   The principal issue between the parties is as to the costs of the proceedings in the Court below.

2. [9]

   The ultimate position of the developer and Mr Chanine, as expressed in their submissions in reply, incorporated some concessions in response to the builder’s submissions. They submitted that this Court ought make the following costs orders:

3. [10]

   The builder submitted that the developer ought pay the builder’s costs of the proceedings, without limitation, prior to 8 February 2024 and that the builder ought be liable for the developer’s and Mr Chanine’s costs on the ordinary basis thereafter.

4. [11]

   The significance of the date of 8 February 2024 is that it was the date on which the deed was executed whereby the builder released Mr Tran (the third defendant in the Court below) and Ninth Campsie (the fourth defendant in the Court below) in return for a transfer of the Arncliffe properties for the consideration of $5 million (the deed). This Court held in the principal judgment that because the benefit obtained by the builder under the deed exceeded the amount for which the developer was otherwise liable to the builder, the developer’s liability to the builder was discharged: see PJ [131]-[168].

5. [12]

   In support of the orders they propose, the developer and Mr Chanine relied on three offers they made to resolve the proceedings:

   1. (1)

      an offer of compromise served on (Wednesday) 25 September 2024 which was expressed to remain open until (Sunday) 29 September 2024 (the First Offer), in circumstances where the hearing was then listed to commence on Tuesday 1 October 2024;

   2. (2)

      an offer of compromise served on 8 October 2024 which was expressed to remain open until 5 November 2024 (the Second Offer); and

   3. (3)

      a Calderbank offer (after Calderbank v Calderbank [1975] 3 All ER 333) served on 9 May 2025, 10 days before the new hearing date of 19 May 2025 (the Third Offer).

6. [13]

   In the First Offer the developer offered to settle the builder’s claim and the developer’s cross claim as follows:

7. [14]

   The developer’s solicitors explained the forensic basis for the offer in their covering letter of the same date as follows:

8. [15]

   The footnotes to paragraph 2. of the letter read as follows:

9. [16]

   It was not disputed that the First Offer was in accordance with UCPR, r 20.26. The builder did not respond to the First Offer.

10. [17]

    The First Offer was made against the following forensic background.

11. [18]

    On 22 March 2024, the proceedings were listed for hearing in the Court below on Monday 1 October 2024 with an estimate of 3 days. On 10 and 17 September 2024, the matter was listed for return of subpoenas.

12. [19]

    On 20 September 2024, the Court below made the following orders:

13. [20]

    The documents discovered pursuant to the order included the deed, which was provided to the developer’s solicitors on Tuesday 24 September 2024, the day before the First Offer was served.

14. [21]

    On Tuesday 1 October 2024, which was to be the first day of the hearing in the Court below, the developer sought leave to amend its pleading to allege that the benefit obtained by the builder under the deed ought be deducted from any amount for which the developer was otherwise liable to the builder. On that day, the Court below granted leave to the developer to file its draft Further Amended Technology and Construction List Response, made directions requiring the builder to file any reply and made directions as to lay and expert evidence, limited to the issues raised by the amendments to the developer’s response. The matter was stood over for directions on 29 November 2024 for the purpose of being assigned a date for final hearing. On that day, the matter was fixed for hearing in the Court below for three days commencing on 19 May 2025. The usual order for hearing was made.

15. [22]

    On 8 October 2024, the developer’s solicitors served the Second Offer on the builder’s solicitors, on the same terms as the First Offer, apart from the period for which it was open for acceptance, which was “until 5pm on 5 November 2024”, a period of 28 days, which conformed with the time specified in UCPR, r 20.26(5)(a) (set out below). It was not disputed that the Second Offer was in accordance with UCPR r 20.26. The builder did not respond to the Second Offer.

16. [23]

    On 9 May 2025 (10 days before the commencement of the hearing), the developer served the Third Offer, which was a Calderbank offer. It was similar in terms to the First and Second Offers although, if accepted, it would have delivered a better result for the builder as it provided that Mr Chanine would pay the builder $200,000 on account of the builder’s costs. The offer was expressed to be: “[i]n full and final settlement of the dispute, and subject to the parties entering into a deed of settlement.”

17. [24]

    The builder did not respond to the Third Offer.

Consideration

1. [25]

   The builder submitted that:

   1. (1)

      it was entitled to its costs of the proceedings from their commencement on 5 July 2022 until 8 February 2024 against the developer and Mr Chanine as the proceedings were properly commenced and maintained and that, but for the deed, the builder would have succeeded and been entitled to substantial damages and costs;

   2. (2)

      although the builder should be liable for costs from 8 February 2024, its liability ought only be on the ordinary basis and not on the indemnity basis as the First Offer was only open for four days immediately prior to the first hearing date in circumstances where there was no expert evidence as to valuation of the Arncliffe properties and no party associated with the builder had been party to their purchase in 2020;

   3. (3)

      in the circumstances set out in (2), the closing date of the First Offer was not “reasonable in the circumstances”, as required by UCPR r 20.26(5);

   4. (4)

      the Second Offer was served before any expert valuation evidence was filed and therefore it was not unreasonable for the builder not to accept it;

   5. (5)

      the Third Offer was expressed to be subject to the parties entering a deed of settlement and was thus “incapable of acceptance”; and

   6. (6)

      it ought not be liable for the costs of the developer’s cross claim since its claim for liquidated damages amounted to “a short argument turning on the proper inferences to be drawn from a limited subset of documents” and that the appropriate order for costs on the cross claim ought be that there be no order for the costs.

2. [26]

   For the reasons which follow I consider that the developer and Mr Chanine are entitled to the costs which they seek.

3. [27]

   The builder’s claim against Mr Chanine was dismissed by the primary judge because his Honour found that there was no breach of trust by the developer (because there was no trust) and, therefore, there could be no knowing involvement by Mr Chanine in the developer’s breach of trust: Calibre Construction Group Pty Ltd v Kaloriziko Pty Ltd atf Ryde Combined Unit Trust; Kaloriziko Pty Ltd atf Ryde Combined Unit Trust v Calibre Construction Group Pty Ltd (No 2) [2025] NSWSC 593 at [32]. The deed had no effect on this position. Accordingly, Mr Chanine is entitled to his costs from the date of the commencement of the proceedings and not, as the builder contended, only from 8 February 2024.

4. [28]

   The basis on which the costs ought be ordered (ordinary basis or indemnity) is addressed below as the offers made were made on behalf of both Mr Chanine and the developer.

5. [29]

   UCPR r 20.26(5) provides:

6. [30]

   It was common ground that, as the date set down for the hearing of the matter when the First Offer was made was 1 October 2024, UCPR r 20.25(5)(b) applied. The developer first received a copy of the deed on Tuesday 24 September 2024. The First Offer was sent on Wednesday 25 September 2024 and was open until 5pm on Sunday 29 September 2024. I accept the developer’s submissions that the closing date for acceptance of the First Offer was, in the circumstances, reasonable. There is no suggestion that the developer was aware of the terms of the deed prior to 24 September 2024 when it was produced. As the builder was party to the deed (since it released Ninth Campsie and Mr Tran from liability to it), which was dated 8 February 2024, it had been in a position since at least 8 February 2024 to assess the value of the benefit conferred on it by the deed.

7. [31]

   Further, as the developer’s solicitors explained in their covering letter to the First Offer, the benefit obtained by the builder under the deed was, in effect, at least $6.9 million (the combined purchase price for the Arncliffe properties in 2020, as established by the copies of the registered transfers attached to the covering letter for the First Offer) plus any capital gain in those properties in the period from 2020 to the date of the deed in 2024 minus $5 million (being the price paid for the properties by a company related to the builder). This information about the transaction was only available to the developer on 24 September 2024, but had been known and was available to the builder for over seven months before the First Offer was made.

8. [32]

   The significance of the consideration evident in the registered transfers ought not be underestimated. These documents showed that the vendors of the Arncliffe properties in 2020 were three apparently unrelated parties, giving rise to the inference that these were arms-length transactions. Further, it could reasonably be inferred that the purchaser acquired them in order to develop them and would not have paid materially more than their market value at that time. The builder was in a position to appreciate that there had been capital appreciation of residential properties in the Arncliffe area between 2020 and 2024. Indeed, it can be inferred that the builder wanted to acquire the Arncliffe properties for that very purpose. Thus, the suggestion that the builder needed expert evidence to assess the value of the Arncliffe properties for its own purposes is somewhat unreal.

9. [33]

   In any event, it is plain, with the benefit of hindsight, that the expert evidence made no difference to the builder’s forensic decision to dispute that it had received a benefit under the deed, since the builder maintained the position in the Court below and in this Court that the deed did not discharge the developer’s liability to it. It can therefore be inferred that the absence of expert evidence in the period during which the First Offer was open made no difference to the builder’s decision not to respond to it.

10. [34]

    Litigation is costly and is fraught with risk. When matters are litigated, public resources are used for the administration of justice. The purpose of the UCPR relating to offers of compromise is to provide an additional incentive to parties to litigation to resolve proceedings. The First Offer required the builder to relinquish its claim against the developer (which the deed had, as this Court found in the principal judgment, rendered worthless) and enabled it to avoid its liability for liquidated damages under the cross claim, its liability to the developer for the costs of proceedings and the need for it to fund its own costs. Had it accepted the First Offer, the builder would have been in a significantly better position. UCPR r 42.14 provides for the consequences for which the developer contended. I am not persuaded that this Court ought “otherwise” order to relieve the builder of the consequences of its non-acceptance of the First Offer, except to the extent to which the developer and Mr Chanine have made specific concessions which are incorporated in their proposed orders.

11. [35]

    The developer accepted that it ought be ordered to pay the builder’s costs of the proceedings up to 8 February 2024, before the benefit which accrued to the builder as a result of the deed discharged any liability which the developer would otherwise have had, but only in so far as they were limited to the claim for damages for breach of contract. This limitation is appropriate since there is no reason why the developer ought pay the costs incurred by the builder in prosecuting its claims against Mr Chanine, Mr Tran and Ninth Campsie, which were either dismissed (in the case of Mr Chanine) or resolved (in the case of Mr Tran and Ninth Campsie).

12. [36]

    For these reasons, I propose the following orders:

    1. (1)

       In addition to the orders made by this Court on 5 December 2025 in lieu of those made by Stevenson J on 20 June 2025, make the following orders:

    2. (2)

       Set aside order (4) made on 5 December 2025 and, in lieu thereof, make the following orders: