Calokerinos, Executor of the Estate of the late George Sclavos v Yesilhat; Yesilhat v Calokerinos, Executor of the Estate of the late George Sclavos (No. 3)

[2019] NSWSC 1752

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Calokerinos, Executor of the Estate of the late George Sclavos v Yesilhat; Yesilhat v Calokerinos, Executor of the Estate of the late George Sclavos (No. 3) [2019] NSWSC 1752
Hearing dates:	16 July,14 August, 23 September & 25 October 2019
Date of orders:	13 December 2019
Decision date:	13 December 2019
Jurisdiction:	Equity
Before:	Slattery J
Decision:	Judgment for the second defendant. Directions made for the parties to provide clearer analysis in relation to the liability of Australia’s Best Tyres and Mr Okan Yesilhat.
Catchwords:	RELIEF HEARING – contest concerning consequential orders after a principal judgment and a second judgment – in the principal judgment the Court declined an application to revoke a grant of probate and dismissed a claim in related proceedings for provision out of the estate of a deceased person under Succession Act 2006, Chapter 3 – various monies ordered to be repaid to the deceased’s estate that had been advanced to the first defendant in the debt/trust proceedings, Mr Okan Yesilhat, before the deceased’s death – two issues are for determination in these reasons: (1) whether another defendant, Mr Gokan Yesilhat, has any liability to repay the estate for loan monies advanced to him; (2) whether another defendant, Australia’s Best Tyres Pty Ltd, has any liability to repay monies to the estate.
Legislation Cited:	Civil Procedure Act 2005, s 98(4)(c) Succession Act 2006, Chapter 3
Cases Cited:	Calokerinos, Executor of the Estate of the late George Sclavos v Yesilhat; Yesilhat v Calokerinos, Executor of the Estate of the late George Sclavos [2017] NSWSC 666 Calokerinos, Executor of the Estate of the late George Sclavos v Yesilhat; Yesilhat v Calokerinos, Executor of the Estate of the late George Sclavos (No. 2) [2019] NSWSC 584 King Network Group Pty Ltd v Club of the Club’s Pty Ltd (No 2) [2009] NSWCA 204
Category:	Consequential orders (other than Costs)
Parties:	2013/358168 Plaintiff: Cleopatra Sclavos Calokerinos, as executor of the estate of the late George Sclavos First Defendant: Okan Yesilhat Second Defendant: Gokan Yesilhat Third Defendant: Australia’s Best Tyres & Auto Pty Ltd ACN 151 629 131 2014/212466 Plaintiff: Okan Yesilhat Defendant: Cleopatra Sclavos Calokerinos, as executor of the estate of the late George Sclavos
Representation:	Counsel: Plaintiff/Cross-Defendant: M.B. Evans Defendants: V. Culkoff   Solicitors: Plaintiff: Angela Coombs, Aston Reid Lawyers Defendants: Salvatore Russo, Russo & Partners
File Number(s):	2013/358168; 2014/212466
Publication restriction:	No

Judgment

1. This is the Court’s third judgment in these proceedings. The Court’s first judgment was delivered on 9 June 2017: Calokerinos, Executor of the Estate of the late George Sclavos v Yesilhat; Yesilhat v Calokerinos, Executor of the Estate of the late George Sclavos [2017] NSWSC 666. The Court’s second judgment was delivered on 22 May 2019: Calokerinos, Executor of the Estate of the late George Sclavos v Yesilhat; Yesilhat v Calokerinos, Executor of the Estate of the late George Sclavos (No. 2) [2019] NSWSC 584.

2. Events, matters and things are referred to in this judgment in the same way as they are in the Court’s first and second judgments. This means that Mr Okan Yesilhat, as distinct from his brother Gokan, will also at times just be referred to as “Mr Yesilhat”. And from time to time the deceased will also be referred to as “George”. But the parties will also be referred to according to their roles in the debt recovery proceedings (2013/358168). As such, Ms Calokerinos is the plaintiff, Mr Okan Yesilhat is the first defendant, Mr Gokan Yesilhat is the second defendant, and Australia's Best Tyres is the third defendant.

3. This judgment deals with two issues, which were reserved by the Court on 25 October 2019 for consideration. Those issues are the following: (1) whether the second defendant, Mr Gokan Yesilhat has any liability to repay the estate in respect of advances before the deceased’s death; and (2) whether the third defendant, Australia’s Best Tyres Pty Ltd, has any liability to repay monies to the deceased’s estate in respect of advances before the deceased’s death.

4. Mr M. Evans of counsel continued to appear for the plaintiff, instructed by Aston Reid Lawyers. Ms V. Culkoff of counsel continued appear for the defendants, instructed by Russo & Partners. 

Preliminary Matters

5. Some preliminary matters arise before these two further issues are decided. The Court made observations in the second judgment about whether an award of damages should be made in favour of the estate. The Court observed in the second judgment that such a damages claim faced difficulties, as indeed did the defence to that claim: second judgment, at [189] – [207]. After that discussion the Court observed at [208] - [209]:

“[208]   In summary, the damages claim contains considerable scope for further contention. It is hoped that the parties may be able to reach some measure of agreement on it without further occupying the Court’s time. If not, directions will need to be made for a damages hearing.

[209]   This is especially important given the damages claim is small compared with the further costs to be incurred at such a hearing. The Court must have regard to proportionality in the incurring of costs: Civil Procedure Act, s 60.”

6. The Court returned to this matter at the directions hearing held on 16 July 2019. After submissions that day, the executrix gave instructions in Court to withdraw the estate’s claim for damages, which was done.

7. The withdrawal of the claim still leaves the costs of the damages claim unresolved. The Court has raised the issues of whether or not each party should bear his or her own costs of this issue but as no agreement has been reached the matter will have to be determined.

8. Some other issues must also be dealt with later. The first of these is argument about costs of the proceedings after 9 June 2017, including whether there are any costs orders that should be made with respect to the withdrawal of the damages claim. Another is what legal costs should be ordered against Australia’s Best Tyres and Gokan Yesilhat. Finally, the Court must decide what interest is payable on any outstanding monies. But the Court’s immediate task is to deal with the issue of what liability arises in respect of monies received by Mr Gokan Yesilhat and Australia’s Best Tyres prior to George’s death. Although as will be seen only the first of these can now be decided.

9. The Court noted on 16 July 2019 that no claim was being made for monies being received by Australia’s Best Tyres or Mr Gokan Yesilhat after George’s death.

10. The parties were directed to put on written submissions about the issues for determination in these reasons. The matter was set down on 16 July 2019 for further argument on 14 August 2019.

(1) The Liability of Mr Gokan Yesilhat

11. The plaintiff seeks judgment against Mr Gokan Yesilhat, in the sum of $12,000. Whether or not judgment for that amount should be entered requires analysis of various bank accounts through which monies passed as they were transferred between George, Australia’s Best Tyres and Mr Gokan Yesilhat. The evidence does not demonstrate a direct transfer of any money from Mr Gokan Yesilhat to the deceased, nor any direct money transfer from the deceased to Mr Gokan Yesilhat.

12. Ms Calokerinos’ case against Mr Gokan Yesilhat is that a total of $24,000, sourced from George Sclavos’ bank account was advanced to Mr Gokan Yesilhat and that Mr Gokan Yesilhat repaid $12,000 of the amount advanced and that therefore a net amount of $12,000 is still owing to George’s estate. Ms Calokerinos’ case identifies three transactions relevant to Mr Gokan Yesilhat’s claimed liability. The first takes place on 31 May 2012. It is a transaction in which $12,000 is transferred from Mr Gokan Yesilhat to Australia’s Best Tyres, to Mr Okan Yesilhat and then to George. In the 31 May 2012 transfers, there is no reference to the word “loan” or any other reference to the purpose of the transfer, being for example, for “tyres”.

13. The next transaction takes place on 20 June 2012 and involves transfers in the other direction, to Mr Gokan Yesilhat. In this transaction $12,000 is transferred from George’s linked account on that day into an Australia’s Best Tyres account, then onto Mr Okan Yesilhat, then back to Australia’s Best Tyres, and then onto Mr Gokan Yesilhat. It is not necessary to mention the account numbers in these transfers. It is the sender and the recipient of the money transfers that are significant.

14. The final transaction takes place on 2 July 2013, about thirteen months after the last of the earlier transactions. This last transaction involves a transfer of $12,000 from George’s account to an Australia’s Best Tyres account. Then the same amount is transferred from Australia’s Best Tyres to Mr Gokan Yesilhat. The first 2 July 2013 transfer from George to Australia’s Best Tyres is marked “tyres”. The transfer from Australia’s Best Tyres to Mr Gokan Yesilhat is marked “com gee”. It is not in issue that “gee” is the name that Mr Okan Yesilhat used for his brother Gokan.

15. In the Court’s second judgment (at [229] and [230]), the Court rejected Ms Calokerinos’ existing case that George had loaned money to Mr Gokan Yesilhat. The Court found that George had loaned the money out to Mr Okan Yesilhat or Australia’s Best Tyres. But Ms Calokerinos has sought to advance these transactions, as additional material not previously highlighted in submissions, that there was one loan made by George to Mr Gokan Yesilhat, even if only for a small amount of money.

16. In my view, the further material which Ms Calokerinos advances is not a basis for the Court to displace its existing tentative conclusion. This material was not advanced to the Court before the Court gave its second judgment on 22 May 2019, in which the Court doubted the case against Mr Gokan Yesilhat. But even if it had been advanced before that, it would not have made any difference. The transfer of this $24,000 from George to Mr Gokan Yesilhat and the transfer back of $12,000 is at several levels unlikely to reflect a loan made by George to Mr Gokan Yesilhat.

17. First, the question must be asked why, if this $24,000 advance really was a loan from George to Mr Gokan Yesilhat, the funds were not just paid directly to Mr Gokan Yesilhat by cheque or some other means. Instead, both payments to Mr Gokan Yesilhat go either, via Australia’s Best Tyres, or via Australia’s Best Tyres and Mr Yesilhat; routes that are barely consistent with a loan directly from George to Mr Gokan Yesilhat.

18. Secondly, there is no mention of "loan", or the purpose of the transfers in George's accounts, as indicating at the time the money left George's accounts that they were destined for Mr Gokan Yesilhat, earmarking them as a loan for him. The evidence that George was prepared to lend money to Mr Gokan Yesilhat for his own purposes unconnected with the Australia’s Best Tyres business is not strong. The absence of any special earmarking of the transfers from George’s accounts does not assist Ms Calokerinos’ case.

19. Thirdly, in each case where $12,000 is transferred to Mr Gokan Yesilhat on 20 June 2012 and 2 July 2013, it goes via Australia's Best Tyres and in the case of the earlier of these two transfers, it also goes out to Mr Yesilhat and back to Australia’s Best Tyres before going to Mr Gokan Yesilhat. These transfers are equally consistent with an inter-sibling loan that the Court indicated in its second judgment (at [229]), was the probable inference here. The inter-sibling loan may have been effected by Mr Okan Yesilhat giving permission for Australia’s Best Tyres to advance the money to Mr Gokan Yesilhat. It is also consistent with Mr Gokan Yesilhat operating a loan account with Australia’s Best Tyres. The structure of these advances does not obviously point to a loan from George to Mr Gokan Yesilhat.

20. Fourthly, the transactions occur in an order which does not obviously indicate a loan from George to Mr Gokan Yesilhat. The first of three of the transactions in question is on 31 May 2012, a transfer from Mr Gokan Yesilhat, ultimately to George. It goes via Australia’s Best Tyres and Mr Okan Yesilhat. This first transaction is not explained by any witness in any detail. It is on is face consistent with being an advance from Mr Gokan Yesilhat to George. And the transaction that shortly followed it, about a month later on 20 June 2012, is consistent with being a repayment of that advance. Then the transaction some 13 months later on 2 July 2013, really stands alone. And its reference to "com gee" in the final transfer from Australia’s Best Tyres to Mr Gokan Yesilhat, tends to indicate, if anything, that this was a loan advance from Australia’s Best Tyres to Mr Gokan Yesilhat.

21. None of the material that Ms Calokerinos has identified would cause the Court to reach any conclusion other than that indicated in the second judgment (at [229] and [230]). There is no basis to enter judgment against Mr Gokan Yesihat. The Court declines to do so. This issue has now been exhausted. The Court will enter judgment in favour of Mr Gokan Yesilhat. This raises the question of Mr Gokan Yesilhat’s costs on which the Court will invite the parties to make submissions.

22. Mr Gokan Yesilhat’s costs is an issue which has already generated much argument in this matter. In anticipation of that being repeated the Court here lays out a prima facie approach to how Mr Gokan Yesilhat’s costs could be determined. It is not uncommon in such situations for the Court to make a costs order structured so that the successful defendant should recover a proportionate share of the “common” costs referable to the claim pressed against each defendant. This rule of thumb is said to be convenient for the “ordinary case” but is not to be automatically applied in every case: King Network Group Pty Ltd v Club of the Club’s Pty Ltd (No 2) [2009] NSWCA 204, at [25] – [35]), (per Young JA, Hodgson and Campbell JJA agreeing) (“King Network Group”).

23. This King Network Group combined approach to making an award of costs against two defendants achieving different trial outcomes is also supported by another consideration: that the Court should be mindful of minimising inconvenience to the parties in the later assessment of costs. Attempting to separate out the respective legal costs incurred by Mr Gokan Yesilhat from other costs has already generated too much disputation. Any costs assessment after that a separate order for costs in favour of Mr Gokan Yesilhat is likely to be a difficult, time-consuming, artificial and conflict-prone exercise.

(2) The Liability of Australia’s Best Tyres

24. Substantial amounts of money sourced from George’s accounts passed through the accounts of Australia’s Best Tyres prior to George’s death. Some of those monies were deployed within its business. Other monies were repaid to George. Yet other money was transferred on to Mr Okan Yesilhat. The transfers of these funds sheds some light upon the nature of the obligations that arose at the time that these monies were first transferred from George’s accounts to Australia’s Best Tyres.

25. The Court has not been provided with a level of assistance that it wishes in order to decide the quantum of the liability of Mr Gokan Yesilhat and Australia’s Best Tyres. The Court clearly indicated in the second judgment (at [235] – [237]) how it wanted calculations done in respect of the liability of Australia’s Best Tyres. The Court questioned counsel for the plaintiff at the hearing on 14 August 2019 as to what was required (Transcript pages 16-18) and thought there was a clear understanding of what is required. But unfortunately the material that has been supplied is impossible to follow without the Court doing its own audit of individual transactions, which the Court should not have to do. This is the kind of matter which would be referred out to a referee if it cannot be resolved.

26. Ms Calokerinos claims $181,355 plus interest in the debt/trust proceedings from Australia’s Best Tyres and $25,000 plus interest from Mr Okan Yesilhat. The defendants to the debt/trust proceedings appear to concede that Mr Okan Yesilhat owes $173,600 and Australia’s Best Tyres owes $45,355. Other subsidiary issues exist about the effect of orders that were made on 18 June 2018.

27. But the parties’ submissions are left in generalities and do not assist the Court. It is plain that there should be a judgment of some kind against each of Mr Okan Yesilhat and Australia’s Best Tyres. But the parties’ submissions do not allow the Court to calculate what these respective figures should be.

28. The Court wants the parties to isolate, so far as Australia’s Best Tyres is concerned, the amount that was directly advanced to Australia’s Best Tyres, the amount which it is said was indirectly advanced to Australia’s Best Tyres and then which of those amounts are disputed and why. And then the amounts which have been repaid by Australia’s Best Tyres should be able to identified. The material which has been supplied is simply not comprehensible by the Court.

Conclusion and Orders

29. The Court makes the following orders and directions:

1. Judgment for the second defendant, Mr Gokan Yesilhat, against the plaintiff in the debt/trust proceedings.

2. Direct each party to attend to the Court’s existing directions and to provide clearer analysis of the liability of Mr Okan Yesilhat and Australia’s Best Tyres that is claimed and is disputed in the debt/trust proceedings.

3. The Court notes that if the parties do not provide the clearer analysis the Court has requested, the determination of the quantum of the liability of Australia’s Best Tyres may be referred out to a referee.

4. List the proceedings for short further argument on Friday, 14 February 2020 at 9.30am.

**********

Amendments

16 December 2019 - [4] instructing solicitors corrected.

23 November 2020 - Decision: "third" to "second" defendant

[2] Insert last sentence: "But the parties will also be referred to according to their roles in the debt recovery proceedings (2013/358168). As such, Ms Calokerinos is the plaintiff, Mr Okan Yesilhat is the first defendant, Mr Gokan Yesilhat is the second defendant, and Australia’s Best Tyres is the third defendant."

[3] third line, "third" to "second", third last line, "second" to "third"

[4] insert first line, and delete from last line "Mr M. Evans of counsel continued to appear for the plaintiff, instructed by Aston Reid Lawyers.", and third line, change "plaintiff" to "defendant"

[24] "Gokan" to "Okan"

[29] (1), "third" to "second"

Decision last updated: 23 November 2020