Re Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (All in Liq) (No 2)

[2021] NSWSC 1161

Supreme Court

New South Wales

Medium Neutral Citation:

In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) (No 2) [2021] NSWSC 1161

Hearing dates:

On the papers

Decision date:

15 September 2021

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

See schedule attached for final orders in proceedings

See [122] for costs orders

Catchwords:

COSTS — Party/Party — General rule that costs follow the event — Orders when proceedings involve multiple parties — Apportionment — Bases of quantification — Indemnity basis — Offer of compromise

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 98

Corporations Act 2001 (Cth), ss 556(1)(dd), 588FF, 1335(2)

Uniform Civil Procedure Rules 2005 (NSW), r 42.1

Cases Cited:

Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) (2006) 67 NSWLR 706; [2006] NSWCA 120

Bassett v Cameron (No 2) [2021] NSWSC 419

Bechara v Legal Services Commissioner (2010) 79 NSWLR 763; [2010] NSWCA 369

Becker v Queensland Investment Corp (No 2) [2009] ACTSC 147

Bell Group Ltd (in liq) v Westpac Banking Corporation (1997) 16 ACLC 65

Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304

Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107

Calderbank v Calderbank [1975] 3 All ER 333

Cat Media Pty Ltd v Allianz Australia Insurance Ltd [2006] NSWSC 790

Chief Commissioner of State Revenue v Platinum Investments Management Ltd (No 2) [2011] NSWCA 197

Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398

Commonwealth of Australia v Gretton [2008] NSWCA 117

Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1423

Currabubula Holdings Pty Ltd v State Bank of New South Wales [2000] NSWSC 232

Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261

Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373

Evans Shire Council v Richardson (No 2) [2006] NSWCA 61

Favotto Family Restaurants Pty Ltd v Chief Commissioner of State Revenue (No 2) [2020] NSWSC 519

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; [1988] FCA 364

George v Webb [2012] NSWSC 86

Hancock v Arnold (No 2) [2009] NSWCA 19

Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298

Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375

Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748

In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) [2021] NSWSC 966

Jones v Bradley (No 2) [2003] NSWCA 258

Leichhardt Municipal Council v Green [2004] NSWCA 341

Maclean v Rottnest Island Authority [2001] WASCA 323

Midcoast Petroleum Pty Ltd v Keldros Pty Ltd (No 2) [2019] NSWSC 1406

Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344

Olsen v Nodcad Pty Ltd (1990) 150 FLR 174; [1999] NSWSC 364

Re Wilson Lovatt & Sons Ltd [1977] 1 AII ER 274

Short v Crawley (No 40) [2008] NSWSC 1302

SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323

Tonna v Mendonca (No 2) [2020] NSWSC 306

Valmont Interiors Pty Ltd v Giorgio Armani Australia Pty Ltd (No 3) [2021] NSWCA 160

Waters v PC Henderson (Australia) Pty Ltd (1994) 254 ALR 328; [1994] NSWCA 338

Windsurfing International Inc v Petit (1987) AIPC 90-441

Category:

Costs

Parties:

Earth Civil Australia Proceeding (2016/00194955)
Mitchell Warren Ball in his capacity as liquidator of Earth Civil Australia Pty Ltd (in liq) (First Plaintiff)
Earth Civil Australia Pty Ltd (in liq) (Second Plaintiff)
Michael Abou-Antoun (First Defendant)
(see attached Schedule of Parties)

RCG CBD Proceeding (2016/00195008)
Mitchell Warren Ball in his capacity as liquidator of RCG CBD Pty Ltd (in liq) (First Plaintiff)
RCG CBD Pty Ltd (in liq) (Second Plaintiff)
Banq Accountants and Advisors Pty Ltd (First Defendant)
(see attached Schedule of Parties)

Bluemine Proceeding (2016/00256135)
Mitchell Warren Ball in his capacity as liquidator of Bluemine Pty Ltd (in liq) (First Plaintiff)
Bluemine Pty Ltd (in liq) Second Plaintiff)
Gino Cassaniti (Eleventh Defendant)
(see attached Schedule of Parties)

Diamondwish Proceeding (2016/00256272)
Mitchell Warren Ball in his capacity as liquidator of Diamondwish Pty Ltd (in liq) (First Plaintiff)
Diamondwish Pty Ltd (in liq) (Second Plaintiff)
Gino Cassaniti (Eighth Defendant)
(see attached Schedule of Parties)

Rackforce Proceeding (2016/00256503)
Mitchell Warren Ball in his capacity as liquidator of Rackforce Pty Ltd (in liq) (First Plaintiff)
Rackforce Pty Ltd (in liq) (Second Plaintiff)
Gino Cassaniti (Fifth Defendant)
(see attached Schedule of Parties)

Representation:

Counsel:
(see attached Schedule of Parties)

Solicitors:
(see attached Schedule of Parties)

File Number(s):

2016/00194955, 2016/00195008, 2016/00256135, 2016/00256272, 2016/00256503

Publication restriction:

Nil

Judgment

1. HER HONOUR: On 6 August 2021, I published reasons for judgment (In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) [2021] NSWSC 966) (the principal judgment) in five separate proceedings (which had been heard together) in which relief was sought against a large number of corporate and individual defendants arising out of alleged conduct engaged in by the second plaintiffs (the Insolvent Companies) on the advice or recommendation of an accounting firm (Banq), or principals of or persons employed by that firm, involving what were described as “carousel payments” or round robin transactions, effectively for the purpose of money laundering.

2. I do not propose here to set out the background to the respective Proceedings; nor to summarise the conclusions that I reached in those Proceedings. Those matters are set out in no little detail in the principal judgment. I here adopt the same definitions as there used.

3. At the time that I published my reasons I indicated the orders that I proposed to make and made directions for submissions as to any adjustment that should be made thereto. I also reserved the question of costs and directed that brief submissions be filed by the parties on that issue, with a view to determining the costs orders on the papers.

Final orders

4. I have received and reviewed detailed submissions by the plaintiffs as to the proposed orders. It is not necessary here to record in detail those submissions. I accept that the revised orders put forward by the plaintiffs appropriately reflect my principal reasons and will make those orders.

5. It is, however, relevant to record that the plaintiffs have adjusted the judgment amounts in each Proceeding to include interest (which in each instance has also been set out as a separate amount comprising the total judgment amount), the interest calculations for which were provided by the plaintiffs; and that credit has been provided and apportioned for the benefit received by the relevant plaintiffs for settlements from the dates on which such settlements occurred.

6. It is noted by the plaintiffs that in each of the Proceedings prejudgment interest has been calculated: only on transactions which were payments out of each Insolvent Company; from the date of each relevant payment to the date of the filing of the amended statement of claim; from the date of the amended statement of claim to 5 August 2021 being the day before the reasons were handed down; and accounting for all settlement payments received with respect to moneys paid out of the Insolvent Companies.

7. The plaintiffs have not claimed interest on costs and expenses of each of the windings up of the Insolvent Companies nor upon the proportion of compensation payable by a defendant that is based upon the respective Insolvent Companies’ taxation liability (which it is noted itself included interest).

8. The plaintiffs further note that the settlement sums in the proposed orders in the RCG CBD Proceeding have been increased to reflect the total amount received with respect to the settlements with HCC Commercial Cleaning (37^th defendant) and Nizar Haider (41^st defendant); and the plaintiffs provided an updated summary of settlements reflecting the increased settlement sum.

9. The plaintiffs have amended the liability summary table which was Schedule 3 to the plaintiffs’ closing submissions to reflect adjustments which have been made to the proposed orders and the basis of the amounts in the adjusted proposed orders. The plaintiffs have explained that the amendments to Schedule 3 (other than to correct typographical errors) are that: allowance has been made for additional settlements in the RCG CBD Proceeding; provision has been made for prejudgment interest in each Proceeding; it has been confirmed that the balance of the claims includes an allowance for settlements received where those settlements reduced the claims against a relevant defendant; and provision has been made for the liability of George Khalil as an accessory rather than a primary conspirator (as per the findings in the principal judgment).

10. The plaintiffs have made clear that they have not adjusted the quantum of the claims against the defendants with respect to the proportion of compensation payable by a defendant that is based upon the relevant Insolvent Company’s taxation liabilities where the plaintiffs were unsuccessful against any particular defendant, as this does not result in a change to the proportion of any other particular defendant’s liability.

Costs

11. I have received submissions from the plaintiffs and from various of the defendants as to costs, which I address below. I have also (pursuant to the slip rule), as requested by the Borg Parties (and consented to by the plaintiffs), amended an incorrect statement in the principal judgment (at [174]) as to the time at which a decision was made that Ms Borg would be made available for cross-examination (an error for which I apologise but not one on which anything turns in relation to the outcome of the determination of the respective Proceedings).

12. Broadly speaking, on the question of costs (and noting that the plaintiffs were successful as against many but not all of the defendants), the position of the plaintiffs, as regards the unsuccessful defendants, is that there are no circumstances warranting a departure from the general principle that costs follow the event and that the unsuccessful defendants in each proceeding should pay the plaintiffs’ costs of the proceeding, including any reserved costs. The position of the successful defendants is addressed in more detail below.

Plaintiffs’ submissions

Earth Civil Proceeding

13. The AKA Parties comprised the Abou-Antoun brothers and the companies associated with them. In the Earth Civil Proceeding, they were (see at [1532]) Michael Abou-Antoun, AKA Civil and AKA NSW (Earth Civil AKA Parties). In the Bluemine Proceeding, they were LAM Haulage, MAL Land Group, The Great Brothers, Andre Abou-Antoun, Michael Abou-Antoun, AKA Civil, and AKA NSW (Bluemine AKA Parties). All the AKA Parties had the same legal representation. Of the AKA Parties, only AKA Civil and AKA NSW were successful in their defence of the respective Proceedings (the other five were unsuccessful).

14. As to AKA Civil and AKA NSW, the plaintiffs point to the following matters in relation to their joinder as defendants in each of the Earth Civil and Bluemine Proceedings.

15. First, that the Proceedings were first commenced against Michael Abou-Antoun on 8 September 2016; whereas AKA Civil and AKA NSW were joined to the Proceedings on 3 July 2017.

16. Second, that Michael Abou-Antoun claimed privilege against self-incrimination at the pleading stage, resulting in him personally (and on behalf of entities of which he was a director) not being required to plead to certain paragraphs of the statements of claim in the Earth Civil Proceeding (principal judgment at [167]).

17. Third, that, of the five bases upon which the AKA Parties defended the proceeding, AKA Civil and AKA NSW were successful only on one discrete issue (attribution of knowledge) and failed on all other positive defences for which they contended.

18. The plaintiffs submit that, applying the rule of thumb method referred to in Currabubula Holdings Pty Ltd v State Bank of New South Wales [2000] NSWSC 232 (Currabubula Holdings) at [95] per Einstein J, the most to which AKA Civil and AKA NSW would be entitled would be 2/7^ths of the costs of the AKA Parties’ legal representation. His Honour there, having referred to various authorities, said:

95   These decisions reveal that the concern of the rule of thumb is to achieve substantial justice in the awarding of costs as between a partially successful plaintiff and variously successful and unsuccessful defendants. The rule operates upon the premise that defendants are proportionately responsible for and liable for the joint costs involved in mounting the defence. Thus, a successful defendant cannot claim from the plaintiff more than a proportionate share of the joint costs of the action in addition to any costs separately referable to that defendant. Conversely, the partially successful plaintiff is prevented from looking to each of the unsuccessful defendants for more than an equal proportionate share of the costs not solely referable to the plaintiff's case against one or other of the defendants individually, in addition to the costs which are so referable. In this way, the rule of thumb prevents both the unjust enrichment of the partially successful plaintiff or successful defendant and the casting of an unfair burden on the unsuccessful defendants. Where the premise is falsified or the rule does not achieve its intended effect, it finds no application.

19. The plaintiffs submit that the successful defendants’ ordinary entitlement to costs is subject to adjustment where they have the same legal representation, pointing to what was said by McClellan CJ at CL (with whom McColl and Young JJA agreed), albeit in a different context, in Bechara v Legal Services Commissioner (2010) 79 NSWLR 763; [2010] NSWCA 369 (Bechara) at [138]-[139]. In Bechara, the issue was as to the failure by the legal practitioner to apportion costs between three clients in the same proceeding (not as to the costs orders made by the Court in that proceeding). Relevantly, the principle there espoused was that there must be an apportionment (the precise mechanism of which would depend on the circumstances of the case) of time spent on matters common to two or more proceedings where the same solicitor was retained to act for multiple clients in proceedings that were heard together with evidence in one being evidence in the other (and the clients were being charged on a time-costed basis) (since one unit of time could not be charged more than once).

20. The plaintiffs here note that the respective Proceedings were conducted on the basis that evidence in one was evidence in the other; and say that the principle identified in Bechara applies such that there must be an apportionment of time spent on matters common to two or more of the Proceedings. Further, it is said that any orders for costs in favour of AKA Civil and AKA NSW as successful defendants should be limited to costs that were incurred by them and were solely referable to their defences in the Proceedings.

21. The plaintiffs go on to submit that AKA Civil and AKA NSW’s costs should be further discounted to reflect the fact that they did not plead to the knowing involvement allegations against them and succeeded on the most confined part of the five bases on which they defended the proceeding (the attribution of knowledge) (the plaintiffs pointing to the AKA Parties’ closing submissions of 13 July 2020 in which the attribution of knowledge was a minor part). In particular, the plaintiffs say that they were put to significant time and expense in successfully rebutting the AKA Parties’ “causation” and “release” defences and that any order for costs should be discounted to reflect their failure on those substantive issues.

RCG CBD Proceeding

22. The unsuccessful defendants in the RCG CBD Proceeding were: Scott Crabbe, the Borg Parties and Kamikaze Teppanyaki.

23. As to Scott Crabbe, against whom default judgment was entered, it is noted that he did not file a defence in the Proceeding, did not retain lawyers and took no active steps in the Proceeding. It is said that, though called as a witness, Scott Crabbe had no expense as a party and that there should therefore be no order as to costs in his favour.

24. As to the Borg Parties (see their submissions below), the plaintiffs say that the offer contained in their letter dated 28 January 2020 (incorporating a position paper dated 22 January 2020 (Position Paper)) did not fulfill the Calderbank requirements (see Calderbank v Calderbank [1975] 3 All ER 333) and does not justify a special order for costs for the following reasons.

25. First, insofar as the basis for the offer being a reasonable and genuine offer of compromise rests on the reasons put forward at [28]-[34] of the Position Paper as to why it was said that the Borg Parties were not liable as accessories or for knowing involvement in breaches of director’s duties, the plaintiffs point out that ultimately the reasons why the claims against the Borg Parties did not succeed (see at [1961]-[1964] of the principal judgment) did not encompass any of the bases on which the Borg Parties relied in their Position Paper of 22 January 2020.

26. Second, it is noted that the Calderbank letter was delivered within two weeks of a hearing that was set down for ten weeks; and provided the plaintiffs with three days to accept the offer. Reference is made to Maclean v Rottnest Island Authority [2001] WASCA 323 (Maclean v Rottnest Island) at [36] per Wallwork, McKechnie JJ and Einfeld AJ for the proposition that use of a Calderbank letter delivered shortly before trial (when the other party might reasonably be expected to have their minds on a number of matters) should not be encouraged. It is said that the use of such an offer “as an indiscriminately wielded tactical weapon” should be discouraged.

27. Pausing here, in Maclean v Rottnest Island, the relevant offer was made six days before the trial, and the Court of Appeal accepted that an offer made within that period could in appropriate cases have a bearing on costs (see at [34]), though it was held that the primary judge did not err in declining to accord the Calderbank letter much weight in that particular case ([37]). In the present case, it is relevant to note that the plaintiffs were considering (and in some cases accepting) settlement offers during the course of the hearing itself. Therefore, the fact that the 2020 Calderbank offer was made very close to the commencement of the hearing does not itself point against reliance by the plaintiffs on the Calderbank letter. More pertinent to my mind is the fact that it allowed only a limited time for acceptance thereof (see the discussion as to this offer in due course).

28. Third, it is said that the offer of $65,000 in the face of the claims against the Borg Parties was not a genuine offer of compromise and that failure to accept the offer contained in a nominal pre-trial Calderbank letter was not in the circumstances unreasonable.

29. Accordingly, the plaintiffs say that there should be no special order for the Borg Parties’ costs; and that any costs order in favour of the Borg Parties should be discounted to reflect their failure on the substantive issues of “trust” and “release”.

30. As to Kamikaze Teppanyaki, a company associated with Fred Khalil, it is noted that this company had the same legal representation as did Sivasli, Fred Khalil, George Khalil and George Said. The plaintiffs again invoke Bechara and Currabubula Holdings and submit that Kamikaze Teppanyaki’s order for costs should be confined to 1/5^th of the costs incurred with its common legal representatives, and in any event, should be limited to costs that were incurred by it and were solely referable to its defence of the Proceedings.

22. The plaintiffs submit that the 1/5^th proportion should be further discounted because Kamikaze Teppanyaki (unlike Fred Khalil) did not file an affidavit. It is noted that Fred Khalil read and relied on an affidavit and the submissions for him dealt substantially with the issue that Fred Khalil was a Primary Conspirator. It is submitted that it would be unjust to the plaintiffs to award Kamikaze 1/5^th of the costs of the common legal representation.

Bluemine Proceeding

32. In the Bluemine Proceeding, the unsuccessful parties were: the AKA Parties (in respect of whom the plaintiffs repeat their earlier submissions); the Borg Parties (in respect of whom, again, the plaintiffs repeat their submissions); Ivana Cassaniti; and Discobell.

33. As to Ivana Cassaniti, it is said that any orders for costs in favour of Ivana Cassaniti must account for the fact that she shared legal representation with Gino Cassaniti and Discobell until 24 January 2020 (and thereafter with Discobell until it retained separate counsel on 11 March 2020). It is noted that Ivana Cassaniti and Discobell retained the same solicitor after their joint representation with Gino Cassaniti ceased.

34. Again, the plaintiffs invoke the principles espoused in Bechara and Currabubula Holdings. The plaintiffs submit that Ivana Cassaniti’s order for costs until 24 January 2020 should be confined to half of the costs incurred with her common legal representatives; and that any costs should be limited to costs that were incurred by her and were solely referable to her defence in the proceeding. The plaintiffs point in this regard to the various unsuccessful interlocutory applications made for Gino Cassaniti alone and his intervention in support of the failed application by the AKA Parties for the appointment of a special purpose liquidator (although I note that the costs of that particular application were dealt with by Black J so have no bearing here).

35. The plaintiffs say that any award for costs in favour of Ivana Cassaniti should be further discounted to reflect her failure on the substantive “release” issue, which caused the plaintiffs to apply significant resources and time to defeat.

36. As to Discobell, it is submitted that any order for costs in favour of Discobell should be limited to costs that were incurred by it and were solely referable to its defence of the Proceeding.

37. Further, the plaintiffs submit that any proportion of its costs should be further discounted because Discobell (unlike Gino Cassaniti and Ivana Cassaniti) did not file an affidavit. The plaintiffs further point to the following in support of this submission: that Discobell was not a party to the various unsuccessful interlocutory applications by Gino Cassaniti; and that Gino Cassaniti and Ivana Cassaniti read and relied on various affidavits at the hearing.

38. The plaintiffs submit that it would be unjust to the plaintiffs to award Discobell 1/3^rd of the costs of the common legal representation (with Gino Cassaniti and Ivana Cassaniti) or 1/2 of the common legal representation with Ivana Cassaniti.

Diamondwish and Rackforce Proceedings

39. The successful defendant in these Proceedings was Ivana Cassaniti, in respect of whom the plaintiffs repeat their earlier submissions.

Successful defendants’ submissions

40. Addressing the various successful defendants’ submissions in turn, I note as follows.

AKA Parties’ submissions (Earth Civil and Bluemine Proceedings)

41. No submissions were received from the AKA Parties on costs.

Scott Crabbe

42. Not surprisingly, given that he took no active stance in the Proceedings, no submissions were received from Scott Crabbe.

Borg Parties’ submissions (RCG CBD and Bluemine Proceedings)

43. In the RCG CBD Proceeding, the Borg Parties seek an order that the plaintiffs pay the costs of Borg Family, Borg Civil, Tanya Borg and Michael Borg on the ordinary basis until 3 February 2020 and, thereafter, on the indemnity basis.

44. In the Bluemine Proceeding, the Borg Parties seek an order that the plaintiffs pay the costs of Borg Family and Tanya Borg on the ordinary basis until: either 29 October 2018 or, alternatively, 3 February 2020; and, thereafter, on the indemnity basis.

45. As a starting point, the Borg Parties say that the plaintiffs are jointly and severally liable for their costs since the claims are to be dismissed against them in their entirety (r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR)). As adverted to above, the Borg Parties seek special costs orders in the respective Proceedings, which they submit reflect the terms of certain offers made by the defendants, in the context of claims alleging serious misconduct by them.

46. Reliance is placed on the summary of relevant principles set out in cases such as Midcoast Petroleum Pty Ltd v Keldros Pty Ltd (No 2) [2019] NSWSC 1406 at [17]-[20]; George v Webb [2012] NSWSC 86 at [59]-[62]; and Bassett v Cameron (No 2) [2021] NSWSC 419 at [22]-[25].

47. The Borg Parties rely on two offers that were made in the course of the Proceedings.

48. First, an offer made by the Borg Parties on 25 October 2018 to resolve the Bluemine Proceeding on the basis that Borg Civil pay the sum of $9,000 and Borg Family pay the sum of $1,000. It is noted that the claims against Borg Family concerned a payment of $15,000 (for a truck). The offer was made by reference to the Calderbank principles and foreshadowed reliance on it in relation to the question of costs. It is noted that the claims against Borg Civil and Michael Borg in the Bluemine Proceeding were settled in November 2018, but not the claims against Borg Family and Tanya Borg.

49. Second, an offer made shortly before the commencement of the hearing. In that regard, the Borg Parties have filed an affidavit of their solicitor (Ms Harchit Kaur) on the present application in which Ms Kaur deposes that on 7 January 2020, she invited the plaintiffs to a settlement conference, which conference took place on 23 January 2020; and that after that conference (on 28 January 2020) the Borg Parties made an offer that Borg Civil pay the plaintiffs (in both Proceedings) the sum of $65,000 in full and final satisfaction of their claims against the Borg Parties. It is noted that, in consideration of that payment, the Borg Parties sought, amongst other things, that the Proceedings be dismissed with no order as to costs, together with usual releases and other standard terms. The offer was open for acceptance until 5 pm on 31 January 2020 (a Friday), with the trial due to commence on the following Monday.

50. It is noted that the offer was accompanied by the Position Paper that it is said engaged substantively with the issues in the case but, in any event, the Borg Parties say that, given that the trial was due to commence, the plaintiffs must by then have been fully apprised of the potential strengths and weaknesses of their case. It is noted that the letter specifically referred to Calderbank and foreshadowed that it would be used in any application for indemnity costs.

51. The Borg Parties note that in the RCG CBD Proceeding, the claims against them concerned payments amounting to $580,000 (although the plaintiffs put their case in a number of different ways, including by reference to the extent to which each defendant caused loss to RCG CBD).

52. Ms Kaur has deposed that the plaintiffs did not respond to that offer and that, on 31 January 2020, the Borg Parties wrote an open letter to the plaintiffs, in which they set out a detailed response to the plaintiffs’ claims and invited them to discontinue the Proceedings against the Borg Parties on the basis that each party pays his, her or its costs of the Proceeding, foreshadowing that the Borg Parties would rely on the letter in any application for indemnity costs. That offer was expressed to be open until 10 am on the opening day of the trial.

53. As to the first of those offers, the Borg Parties say that, in relation to the Bluemine Proceeding, it was unreasonable for the plaintiffs to reject the offer made in 2018. It is said that the offer was a genuine compromise of that part of the claim pressed against Borg Family and Tanya Borg; that it did not invite capitulation where the upper limit of the claim (before interest and costs) was merely $15,000; and that, given the small amount involved, any offer by Borg Family to pay money could not be regarded as demanding capitulation. It is said that in circumstances where Borg Family (and Tanya Borg) agreed to forego costs, it is irrelevant that the offer was to pay $1,000 (or some multiple thereof) since its costs would have been far greater than that.

54. It is submitted that another indicium of the reasonableness of the 2018 Calderbank offer is that the parties in the Bluemine Proceeding were able to assess the strengths and weaknesses of their respective positions (pointing to the fact that the plaintiffs made a counter-offer and that the plaintiffs and Borg Civil shortly thereafter settled their dispute).

55. As to the offers made in January 2020, the Borg Parties say that: the offer made on 28 January 2020 involved a genuine compromise (in that the proposed payment was not insubstantial and the offerors were giving up any claim for costs, which on the eve of the trial would have been considerable); the offer explicitly stated that it was made by reference to Calderbank and foreshadowed the use to which it would be put; and that, although the offer was open only for a short period, the parties were “alive” to the issue of settlement given that the offer followed a settlement conference (and it is noted that the plaintiffs did not seek an extension of time for the offer).

56. Further, the Borg Parties note that the offer was accompanied by the detailed Position Paper, which they say highlighted the weaknesses in the plaintiffs’ case and which (though the plaintiffs cavil with this as adverted to above) they say “faithfully foreshadowed” matters which ultimately found favour in the ultimate decision. The Borg Parties say that they succeeded at trial on grounds that the plaintiffs had ample time to consider.

57. I have already referred to the plaintiffs’ response to the reliance here placed on the Position Paper by the Borg Parties. In reply submissions to the plaintiffs’ submissions the Borg Parties take issue with the suggestion that the basis on which the claims against the Borg Parties did not succeed did not encompass any of those relied upon in the Position Paper. The Borg Parties say, to the contrary, that the matters set out in the Position Paper were consistent with the findings at [1961] -[1964]. They point out that in the Position Paper it was contended that there was no evidence that Borg Family, of which Ms Borg was the director, had engaged in the alleged dishonest and fraudulent design or otherwise implemented the “Scheme Recommendation” (see [25] of the Position Paper). It is said that the fact that other contentions raised by the Borg Parties were not decided does not mean they were without merit.

58. As to the second offer, on 31 January 2020, in which the Borg Parties again agreed to bear their own costs, it is said that although the offer was only open over, in substance, the weekend, it can be inferred that the plaintiffs’ legal representatives were working over that weekend and it is noted that no extension was sought.

59. As to the time of making of the offers, the Borg Parties emphasise that the parties were actively discussing settlement at the time of the making of the offer; and it is contended that the offer was the product of a mutual attempt to settle “not an unexpected distraction”.

60. The Borg Parties say that these offers were made in the context of claims that Borg Family, Borg Civil and Tanya Borg were all identified as Scheme Participants; that the Scheme was alleged to constitute a conspiracy to defraud the Commonwealth; and that Borg Family and Borg Civil were alleged to have participated in dishonest and fraudulent conduct (see at [193] of the third further amended statement of claim).

61. Reference is made to Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; [1988] FCA 364 at 400-401 (Fountain), where Woodward J said that an order for indemnity costs could be made where a party makes an allegation of fraud which was ultimately proved to be unfounded; though adding that “in all the cases I have considered, there has been some further factor which has influenced the court’s discretion”. The Borg Parties submit that the making of reasonable offers (regardless of whether they would, of themselves, trigger an entitlement to indemnity costs) is such a factor. Pausing here, the further factors to which reference was made in Fountain included that the allegations of fraud had been made knowing them to be false or where they had been irrelevant to the issues between the parties (a very different situation from that in the present case).

Kamikaze Teppanyaki’s submissions (RCG CBD Proceeding)

62. For Kamikaze Teppanyaki it is submitted that costs should follow the event; that the plaintiffs did not succeed against it; and that, subject to the following, the plaintiffs in this matter should be jointly and severally liable to Kamikaze Teppanyaki for its costs of the Proceeding.

63. It is noted that Kamikaze Teppanyaki was one of a number of defendants with the same legal representation in the five Proceedings that were heard together. It is said that each of those defendants had different interests and was confronted by different claims.

64. Kamikaze Teppanyaki says that the two corporate defendants (Kamikaze Teppanyaki and Sivasli), although obliged to meet relatively similar allegations in the same Proceedings, were nevertheless required to take into consideration different pleaded facts and different matters of evidence and circumstances. This is said to be reflected in the different results.

65. Kamikaze Teppanyaki submits that it should have its costs up to the date of the hearing on the usual party/party (i.e., ordinary basis) and that thereafter it should have 1/5^th of its costs on the same party basis given the shared representation of the corporate defendants with the Khalil Parties during the hearing.

Ivana Cassaniti’s submissions (Bluemine, Diamondwish and Rackforce Proceedings)

66. On the basis that the proposed order in respect of Ivana Cassaniti in each of the Bluemine, Rackforce and Diamondwish Proceedings is that the claims against her be dismissed, Ivana Cassaniti relies on the ordinary rule that costs should follow the event (r 42.1 of the UCPR) and submits that there should be an order that each of the Insolvent Companies pay the costs of Ivana Cassaniti in each of those Proceedings.

67. It is noted that such a costs order would give rise to claims on behalf of Ivana Cassaniti in the administrations of the Insolvent Companies with priority under s 556(1)(dd) of the Corporations Act 2001 (Cth) (Corporations Act). However, Ivana Cassaniti has raised the uncertainty as to whether or not Ivana Cassaniti will recover her costs in the administration of those companies.

68. Noting that the liquidator (the first plaintiff in each of the Proceedings) has a deed of indemnity for adverse costs from the Australian Taxation Office (which has financed the Proceedings and which has a pecuniary interest in the outcome of the Proceedings), Ivana Cassaniti submits that, as a matter of justice, the discretion under s 1335(2) of the Corporations Act or s 98 of the Civil Procedure Act 2005 (NSW) should be exercised such that there be an order that the first plaintiff in each of the Proceedings is jointly and severally liable with the second plaintiffs (the Insolvent Companies) in each of the Proceedings to pay the costs of Ivana Cassaniti.

Discobell’s submissions (Bluemine Proceeding)

69. Discobell notes that the order proposed in relation to it was that the claims against it be dismissed; and it relies on the general rule that costs follow the event (r 42.1 of the UCPR) and seeks an order that the first and second plaintiffs be jointly and severally liable to pay the costs of Discobell. Discobell relies on the submissions by Ivana Cassaniti in this regard.

Plaintiffs’ reply submissions

70. In brief reply submissions in relation to the Borg Parties’ reliance on the respective offers, the plaintiffs say that the offer of 25 October 2018 was on behalf of the Borg Parties as a whole; and, as such, the offer was “all or nothing” on behalf of all of those parties. In those circumstances, it is submitted that the reasoning and reasonableness of the offer cannot be dissected where there was a subsequent settlement with one of those parties regarding whom the court made no final determinations.

71. The plaintiffs say that, insofar as the offer made by the Borg Parties (as a whole) was to resolve the Bluemine Proceeding on the basis that Borg Civil pay $9,000 and Borg Family pay $1,000, the plaintiffs were not offered the ability to accept on behalf of Borg Family only. Further, the plaintiffs say that an offer to forego costs (no matter what amount) does not transform an otherwise uncompromising offer of $1,000 (or 1/15^th of the claim), into a genuine compromise.

Borg Parties’ further response thereto

72. The Borg Parties take issue with the plaintiffs’ reply costs submissions. In particular, in reply submissions to the plaintiffs’ reply submissions, the Borg Parties cavil with the suggestion that the 25 October 2018 offer was a single composite offer on behalf of all of them, pointing to the wording of the offers contained in the letter and maintaining that there were two separate offers “both” open for acceptance until the nominated date. It is noted that the email concluded with the statement that if “either offer is not accepted then in respect of any offer not accepted” an order for indemnity costs would be sought by “that client”.

73. Further, it is said that if there was any ambiguity about the terms of the offer it was open to the plaintiffs to seek clarification thereof (citing Valmont Interiors Pty Ltd v Giorgio Armani Australia Pty Ltd (No 3) [2021] NSWCA 160 (Valmont Interiors) at [29] per Bell P, Macfarlan and Leeming JJA).

74. As to the quantum of the offer made by Borg Family ($1,000, inclusive of interest and costs), the Borg Parties reiterate that the quantum of the claim against Borg Family in the Bluemine Proceeding (as a “Paying Participant”) was unclear (referring to the pleading at [130]). The Borg Parties say that, on one view, the monetary amount claimed against it in relation to the $15,000 payment was Bluemine’s alleged taxation liability to the ATO on that payment (which they calculate would be approximately $4,500 at a 30% rate of corporate taxation).

75. However, the Borg Parties say that the question of costs should not here be determined on whether the offer represented about 1/5^th or 1/15^th of the amount claimed. The Borg Parties say that the rationale underlying Calderbank offers is influenced by the related public policy of discouraging wasteful and unreasonable behaviour by litigants (again citing Valmont Interiors at [20]. In emotive terms it is said that the relevant claim against Borg Family “was petite in its own terms but nanoscopic having regard to the costs it generated”; and that Borg Family was offering to give up its claim as to costs in a sensible effort to resolve wasteful litigation.

76. Finally, the Borg Parties submit that there ought not to be a discount in relation to the costs orders in favour of the Borg Parties as sought by the plaintiffs. The Borg Parties say that neither of the two identified issues on which the defendants failed was a dominant and separable issue. The Borg Parties rely upon the proposition that, unless a particular issue or group of issues is clearly dominant or separable, it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed (citing Waters v PC Henderson (Australia) Pty Ltd (1994) 254 ALR 328; [1994] NSWCA 338 (Waters v PC Henderson) and Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304).

Determination

77. As to the defendants against whom the plaintiffs were successful, there is no suggestion that there should not be a costs order in favour of the plaintiffs on the basis that costs follow the event.

78. As to the successful defendants, it is not disputed that the general rule would lead to a costs order in their favour. However, the position is not uncomplicated in circumstances where there has been common representation of various of the defendants; and a mixed outcome on the issues in the Proceedings (not to mention the import of the costs offers made by the Borg Parties and whether the liquidator should be jointly and severally liable for those orders).

79. I consider the position of the various successful defendants in turn.

80. As to Scott Crabbe, as noted by the plaintiffs, he took no active role in the proceedings; and he made no submissions as to costs. There is, therefore, no reason to make any costs order in his favour.

81. As to Kamikaze Teppanyaki, an entity associated with Fred Khalil, in respect of whom no separate affidavit evidence was filed, I consider the appropriate order is that there be an order in its favour limited to the separate costs (if any) that were solely referable to its defence of the Proceedings (capped at 1/5^th of the costs of the joint representation of the Khalil defendants). In saying this, I do not suggest that the proportion of 1/5^th is likely to reflect the costs solely referable to Kamikaze Teppanyaki’s defence of the Proceedings. In my opinion, the bulk of the costs referable to the defence of the Khalil defendants is likely to be referable to the defence of the claims against Fred and George Khalil (who were alleged to be Primary Conspirators). Kamikaze Teppanyaki was controlled at the relevant times by Fred Khalil. It is not credible to suggest that the Khalil defendants’ costs were not largely referable to the claims made against those individual defendants.

82. Similarly, as to Discobell, I would limit the order in favour of its costs to those solely referable to it and capped at an amount of 1/3^rd of the legal costs for the period that it was represented with Ivana Cassaniti and Gino Cassaniti; and capped at ½ for the period that it was represented with Ivana Cassaniti alone.

83. Turning then to the principal protoganists within the overall group of successful defendants (Ivana Cassaniti, the AKA corporate entities, and the Borg Parties), an issue arises as to the costs orders to be made where there are multiple issues in proceedings and mixed success on those issues. Costs may be apportioned where there has been a mixed outcome in the issues in proceedings (see Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1423 at [30], where Hammerschlag J referred to the authorities collated by White J, as his Honour then was, in Short v Crawley (No 40) [2008] NSWSC 1302 at [25]-[32]).

84. Relevantly, the circumstances in which apportionment of costs as between different issues may be appropriate include: where, in respect of one or more issues, the successful party has “unfairly, improperly, or unnecessarily increased the costs” (Waddell J, as his Honour then was, in Windsurfing International Inc v Petit (1987) AIPC 90-441); where the bulk of the time has been taken on an issue on which the unsuccessful party had succeeded (see, for example, Waters v PC Henderson at 5 per Mahoney JA; Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748 per Toohey J); or where a particular issue or group of issues is clearly dominant or separable (see, for example, Waters v PC Henderson at 5 per Mahoney JA; Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [6] per Beazley JA, as Her Excellency then was, McColl and Basten JJA).

85. Where the apportionment of the costs attributable to such issues is considered appropriate, the question of apportionment is recognised to be a matter of discretion, the exercise of which “will often depend upon matters of impression and evaluation” (Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272 per Gummow, French and Hill JJ).

86. Ultimately, fairness should dictate how the costs discretion should be exercised (see, for example, Commonwealth of Australia v Gretton [2008] NSWCA 117 at [85], [121] per Studdert J; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [5] per Finkelstein and Gordon JJ cited in Tonna v Mendonca (No 2) [2020] NSWSC 306 at [176]).

87. In my opinion, in the present case there were discrete and clearly separable issues in respect of which costs were incurred and on which the plaintiffs were ultimately successful. Principally, those discrete issues were the defences concerning the effect of releases given to other defendants and the belatedly raised causation defences (albeit that I do not suggest that this was blameworthy on the part of at least the AKA Parties given the orders that had been made by Rees J). There is no doubt that the raising of these defences caused delay in the Proceedings (as evidenced by the fact that there was argument – and further evidence – as to the applications for leave to amend the defences, a hearing on that issue, and separate submissions were required which extended the time for the hearing and, no doubt, additional costs to be incurred by the plaintiffs). Those separate costs should be readily identifiable in terms of the preparation of the amended pleadings, response thereto and evidence in relation thereto. As to the causation defences, the submissions made (particularly by the AKA Parties) were extensive and required careful consideration in the written submissions (particularly as to the issue of the prospect of a successful taxation objection). On those issues, there was broad commonality in the amended defences and a broadbrush adoption by the various defendants of submissions on those issues made by others. On those issues the defendants were singularly unsuccessful. They should bear the costs of those issues and should pay the plaintiffs’ costs of those issues, on the basis that they were clearly severable issues on which discrete costs were incurred and it would not be fair in my opinion that the plaintiffs not be compensated for those costs.

88. As to the AKA Parties, apart from a carve-out for the costs of the causation and release defences, the plaintiffs seek to have the costs orders in favour of AKA Civil and AKA NSW discounted by reference to those other positive defences on which those parties also failed. In my opinion, apart from the causation/release defences, it is not appropriate to apportion costs as between arguments or defences on which those parties did not succeed and those on which they did.

89. Therefore, in respect of all of the successful defendants (other than Scott Crabbe), I will order that they bear their own costs of the unsuccessful (and discrete) issues raised by reference to the causation and joint release defences, and that they pay the costs of the plaintiffs on those issues; but that otherwise there will be an order for costs in favour of those defendants. I will also order that the costs payable to the corporate defendants be limited to costs solely and separately referable to those defendants (as opposed to costs jointly incurred by groups of defendants with the same representation and in the same interest – since it is reasonable to conclude that those costs would have been incurred come what may).

90. As to Ivana Cassaniti, an issue raised by her is whether there should be an order that the liquidator be jointly and severally liable for the costs (in an attempt to have recourse to the deed of indemnity with the ATO). In this regard, I note that this appears to be due to a concern as to whether there will be sufficient funds in the administration of the winding up to pay the costs for which the respective Insolvent Companies are liable, which does not necessarily take into account the judgments and favourable costs orders in relation to the claims made against the unsuccessful defendants (though I am not in a position to assess the likelihood of recovery against them).

91. Regardless, the liquidator is the first-named plaintiff in each of the Proceedings. This is presumably referable to the fact that the plaintiffs sought relief, inter alia, under s 588FF of the Corporations Act which requires an “application of a company’s liquidator”, meaning that the application could not be brought by the relevant Insolvent Company alone (see Olsen v Nodcad Pty Ltd (1990) 150 FLR 174; [1999] NSWSC 364 at [7] per Austin J). A liquidator that institutes proceedings in his or her own name is personally liable for any adverse costs order against him or her (see Re Wilson Lovatt & Sons Ltd [1977] 1 AII ER 274; Bell Group Ltd (in liq) v Westpac Banking Corporation (1997) 16 ACLC 65 per Templeman J). Therefore, the liquidator is jointly and severally liable to pay the costs awarded to the successful defendants in the respective Proceedings.

92. Finally, as to the special costs orders sought by the Borg Parties, I note as follows.

93. The principles in relation to special costs orders are well-known (see, for example, Jones v Bradley (No 2) [2003] NSWCA 258 at [8]-[9], the Court of Appeal there approving what had been said by Giles JA in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37]). Relevantly, while the rejection or non-acceptance of a Calderbank offer (in circumstances where it later transpires that the final result in the proceeding is less favourable to the offeree) enlivens the discretion to award indemnity costs, it does not create a prima facie right to such an order (see Favotto Family Restaurants Pty Ltd v Chief Commissioner of State Revenue (No 2) [2020] NSWSC 519 (Favotto) at [28]; Chief Commissioner of State Revenue v Platinum Investments Management Ltd (No 2) [2011] NSWCA 197 at [9] per Campbell, Macfarlan JJA and Handley AJA). Where the offer is a Calderbank offer, the onus to demonstrate that it was unreasonable to reject it is on the party seeking to rely on the making of the offer (see Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26] per Giles, Ipp and Tobias JJA).

94. In order to warrant the making of a special costs order, the offer must constitute a genuine offer of compromise that was unreasonably rejected (see Herningv GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [4] per Handley, Basten and Beazley JJA; see also Hancock v Arnold (No 2) [2009] NSWCA 19 at [23] per Ipp, McColl and Basten JJA; Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) (2006) 67 NSWLR 706; [2006] NSWCA 120 at [8] per Basten JA (with whom Santow JA and Young CJ in Eq, as his Honour then was, agreed); Leichhardt Municipal Council v Green [2004] NSWCA 341 (Leichardt Municipal Council) at [23] per Santow JA (with whom Bryson JA and Stein AJA agreed)).

95. As to what may constitute a genuine compromise, in Leichhardt Municipal Council (where no monetary offer was made but, rather, the offer was that a verdict be entered in favour of the appellant and that each party bear its own costs), Santow JA (with whom Bryson JA and Stein AJA agreed) said at [37]:

In some cases a plaintiff’s offer which allows only a small discount from 100% success on the claim can be genuine and realistic always depending upon the circumstances. The same is true of defendant’s offers: in some cases it will not be necessary to offer any monetary proportion (however slight) of the plaintiff’s claim.

96. In the same case (at [59]), Bryson JA said as to the reasonableness of the respondent’s rejection of the offer:

The respondent’s case did not succeed, but it was not a case which could not reasonably be argued and it succeeded at first instance. The only element of compromise in the offer was as to costs: otherwise it was a call on the respondent to capitulate and give up: the element of compromise was slight, and the respondent’s ultimate lack of success does not to my mind demonstrate that the reasonable course for the respondent was to capitulate, nor does anything show that the respondent was delinquent in going on with the trial or in resisting the appeal.

97. See also Cat Media Pty Ltd v Allianz Australia Insurance Ltd [2006] NSWSC 790 at [11]-[15] per Bergin J, as her Honour then was, in this regard. There the plaintiffs’ claim was $2.5 million and the defendants’ offer was for $100,000. Her Honour said (at [15]):

15    An offer to pay only a portion of the plaintiff’s costs at such a late stage of the proceedings may well present as equivalent to a requirement that the plaintiff capitulate. I am of the view that it is a borderline case but on balance, the fact that the defendant was willing at that time to give up – or compromise – what it saw as its strong position and pay $100,000 to the plaintiff persuades me that the offer was a genuine offer of compromise.

98. The factors relevant to take into consideration when considering whether the rejection or non-acceptance of the offer was unreasonable (as summarised in Favotto at [20]-[30]) include: (i) the stage of the proceeding at which the offer was received; (ii) the time allowed to the offeree to consider the offer; (iii) the extent of the compromise offered; (iv) the offeree’s prospects of success assessed as at the date of the offer; (v) the clarity with which the terms of the offer were expressed; and (vi) whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it (see Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 at [25] per Warren CJ, Maxwell P and Harper AJA; Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398 at [8] per Buchanan and Tate JJA and Sifris AJA; Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [12] per Basten JA (with whom McColl and Campbell JJA agreed).

99. Where a Calderbank offer is unreasonably rejected, and the offeror succeeds in litigation, costs may be made on an indemnity basis at least from the date of the offer or thereabouts. Whether such an order will be made will be determined in the exercise of the Court’s discretion (see Becker v Queensland Investment Corp (No 2) [2009] ACTSC 147 at [12] per Refshauge J).

100. In the present case, I am prepared to accept that the respective Calderbank offers had a genuine element of compromise (albeit that, at least in the case of the first of the offers, the amount offered to be paid was relatively small) because of the willingness of the offeror to bear its or their costs.

101. Turning first to the 2018 offer, it was, in my opinion, a misnomer on the part of the Borg Parties’ then solicitors to refer to this as an “offer” in the singular (the letter commencing with “the following offer of settlement”) when in its terms it comprised two offers and the fact that they were separate offers is evinced by the statement that “both” offers were open until close of business on 29 October 2018 and the letter contemplated that there might be a position where one (only) of the two offers was not accepted (insofar as it contemplated reliance on the letter for costs purposes “if either” offer were not accepted). Therefore, though misleadingly termed an “offer”, I accept that the letter in fact conveyed two separate offers of settlement, each of which was capable of acceptance on its own.

102. It is relevant to consider the context in which that 25 October 2018 offer was made. The October 2018 offer was made with respect to the Bluemine Proceeding, to which each of the Borg Parties was joined as a defendant and the relevant pleading was the further amended statement of claim filed on 12 July 2018. The claim against Borg Family at that stage related to an amount of $15,000. The claim against Borg Civil was by reference to a transaction of around $25,000.

103. The 25 October 2018 Calderbank letter, as noted above, contained an offer by Borg Civil to pay a sum of $9,000 inclusive of costs and interest in respect of all claims against it; and the offer by Borg Family was to pay a sum of $1,000 (again inclusive of costs and interest) in respect of all claims against it. The offer was open in effect for some four and a half days (since it was made by email sent at 1.08pm on 25 October 2018 and expired on 29 October 2018. (Pausing here, it is not apparent why such a short time frame was stipulated for acceptance of the offer and it may be noted that the analogous offer of compromise regime requires a 28 day period for acceptance of offers made in advance of a hearing.)

104. The 25 October 2018 letter made clear the difficulty perceived by the Borg Parties in that the defence of the case was likely to cost much more than the claims that had been made against them. The letter took issue with the allegation in the pleading of lack of genuine commercial documentation (and that the liquidator had not challenged the ATO tax assessment – a complaint reiterated more than once by the Borg Parties and the subject of the unsuccessful causation defences at the trial).

105. Relevantly, the without prejudice counter-offer by the plaintiffs’ solicitors on 16 November 2018 (i.e., after the 25 October 2018 offers had expired) provides an indication as to the reasonableness of the settlement sums that had been offered by the Borg Parties (or at least suggests that those sums were “in the ballpark”), insofar as the plaintiffs’ counter-offer was to accept $19,000 from Borg Civil (i.e., as opposed to the $9,000 that had been offered by it) and that Borg Family pay the sum of $11,000 (i.e., as opposed to the $1,000 that had been offered by it). The counter-offer provided that if the offer was accepted there would be discontinuance of the proceeding against the offerees and a deed of settlement and release.

106. Clarification was then sought by the Borg Parties (and obtained from the plaintiffs) that each offer was a standalone offer capable of acceptance independent of the other (an interesting query since the 25 October 2018 offer itself had not expressly stated this); and that if the claim against either of the parties was resolved then the case against its director would also be resolved.

107. The upshot of this was that, on 27 November 2018, Borg Civil and its director, Michael Borg, accepted the offer of settlement to pay $19,000 in full and final settlement of the claims made against them in the Bluemine Proceeding.

108. Pausing here, as at late 2018 in the Bluemine Proceeding, that left (in relation to Borg Family) only the claims in respect of which the range of settlement offers as revealed by the without prejudice offers was between $1,000 and $11,000. To my mind it is almost inconceivable that the matter could not then have been resolved at least vis a vis Borg Family (and, having regard to the settlement that was reached with Borg Civil, it might have been expected that this would also lead to a resolution of the proceeding against Tanya Borg – though this was not an expressed part of the 25 October 2018 offer). Even if one resorted to the reputed common law “split the difference” negotiation tactic, that would have represented a settlement by payment of a sum that must have been substantially below the costs likely to be incurred if the matter proceeded to a contested hearing (as it did).

109. By the time of the final hearing, the claims made against Borg Family and Tanya Borg in the Bluemine Proceeding were still referable to the $15,000 payment.

110. By the time of the second offer, which was made in the context of both the Bluemine and RCG CBD Proceedings, the claims against the Borg Parties included (in the latter Proceeding): payments totalling $585,070.00 made by Borg Family to RCG CBD and payments totalling $580,000.00 made by RCG CBD to Borg Civil in the period from 25 September 2012 to 10 October 2012; and a payment of $33,000 made by Borg Civil to RCG CBD on 24 May 2013.

98. Turning then to the first offer (the 25 October 2018 offer) made by Borg Family, having already concluded that it contained a genuine element of compromise (notwithstanding the seemingly derisory amount offered), it is necessary to consider whether it was unreasonable of the plaintiffs to reject that offer applicable to Borg Family and Tanya Borg in the Bluemine Proceeding.

99. In that regard, there is no doubt that the sum of money was almost nominal (almost a walkaway offer), the value of the offer being in the willingness of Borg Family to forego its costs to date; and it was open for a short period of time.

100. As to the former, the plaintiffs here say that a willingness to forego costs does not transform an otherwise uncompromising offer (of $1,000 or 1/15^th of the claim) into a genuine compromise. However, it is recognised that a walkaway offer can in some circumstances amount to a genuine offer of compromise and, here, the offer did include a monetary sum (albeit small). Moreover, and I attach some weight to this, the plaintiffs’ own counter-offer seems to have recognised that this was a small claim in the first place.

101. As to the latter, although only a short time was allowed in which to assess the offer, there is no suggestion that the plaintiffs were not at that stage able relatively quickly to assess the reasonableness of the offer balanced against their perception as to their prospects of success. The fact that it took until 16 November 2018 to respond to that offer might perhaps indicate a difficulty of obtaining instructions in a more timely period but there was nothing to stop the plaintiffs seeking an extension of the time in which the offer was to be open for acceptance.

102. While this offer can readily be seen to be a trifling amount in monetary terms, its value, when interest and costs are factored in, must have been much more. It seems safe to assume that even if the Borg Parties had been extremely economical in the defence of the Bluemine Proceeding to that time, the costs Borg Family had incurred by then would have dwarfed the amount claimed against it. In passing, I note that the 2018 letter also referred to the wish to vindicate the Borg Parties’ reputations in the face of very serious allegations made against them. It will be remembered that at that stage Tanya Borg (the director of Borg Family) was studying accounting and it may well be (though this is speculation on my part) that there was a concern on her part that her reputation and ethics not be besmirched in advance of her professional career as an accountant.

103. Ultimately, and placing weight on the public policy underlying special costs offers, including the discouragement of wasted costs, I have (with some hesitation) concluded that it was unreasonable for the plaintiffs not to accept Borg Family’s offer of $1,000 inclusive of costs and interest, to settle the Bluemine Proceeding against it. I note that the offer was not made in terms by Tanya Borg, and the Borg Parties were presumably alive to the question of claims against directors having regard to the clarification sought and obtained by them in relation to the plaintiff’s November 2018 counter-offer.

104. In those circumstances, and again having regard to the public policy rationale for such offers, I consider that the discretion enlivened by rejection of the said offer should be exercised in favour of the making of a special costs order (as set out below) as to costs of the Bluemine Proceeding from 29 October 2018 but only in favour of Borg Family and only insofar as separately referable to Borg Family’s defence of that proceeding.

105. As to the offer made on 28 January 2020, the real issue as I see it is the relatively short time frame in which that offer was open for acceptance, being four days with the hearing due to start on the following business day. While I accept that the offer of $65,000 (and that each party pay their own costs) was a genuine compromise, that offer was with respect to all of the remaining claims made against the Borg Parties totalling around $1.5 million (including the costs of liquidation) that were referable to transactions amounting to $600,000. Moreover, I consider that the plaintiffs had a reasonable basis for the suspicions held (and allegations made) as to the involvement of the Borg Parties in the alleged Scheme.

106. At that stage of the hearing and in all the circumstances, I do not consider that it was unreasonable to reject an offer that constituted such a small proportion of the plaintiffs’ claim against the Borg Parties. The offer made on 31 January 2020 in an open letter must fail for the same reasons. I note, in particular, that it was made on a Friday and open until 10 am on the Monday (i.e., until the commencement of the hearing), leaving an unreasonable amount of time (particularly at such a late stage) for such an offer to be considered. In the present case, I am not persuaded that the discretion as to indemnity costs should be ordered.

107. In saying that, I should make clear that I do not base my conclusion on whether or not the arguments advanced in the Position Paper did or did not align with the overall conclusions I reached in the Proceedings. The relevance of the Position Paper, it seems to me, is that it advanced a considered position for the proposition that the Borg Parties would succeed in the litigation. However, it was not unreasonable for the plaintiffs to consider that against their own advice as to the prospects of the Proceedings.

108. Accordingly, the costs orders in favour of the Borg Parties (excluding costs referable to the joint release/causation defence issues) will be on an ordinary basis other than the costs of Borg Family in the Bluemine Proceeding from October 2018.

Orders

122. Accordingly, I make orders in accordance with the Schedule attached in respect of the final orders of the Proceedings. As to costs, for the above reasons, I make the following costs orders:

Earth Civil Proceeding (2016/00194955)

1. Order that Gino Cassaniti (2^nd defendant), Michael Abou-Antoun (1^st defendant), Fred Khalil (4^th defendant), George Khalil (5^th defendant) and Peter Abboud (6^th defendant) pay the plaintiffs’ costs of the proceeding including any reserved costs.

2. Order that AKA Civil (7^th defendant) and AKA NSW (9^th defendant) bear their own costs of the causation and joint release defences and pay the plaintiffs’ costs referable to those defences.

3. Other than as ordered in Order 2 above, order that the plaintiffs otherwise pay the costs of AKA Civil (7^th defendant) and AKA NSW (9^th defendant) limited to the costs specifically and separately referable to those defendants (and in any event capped at no more than 2/7^ths of the overall costs incurred by the AKA Parties excluding the costs of the causation and joint release defendants).

RCG CBD Proceeding (2016/00195008)

1. Order that Gino Cassaniti (11^th defendant), Fred Khalil (12^th defendant), George Khalil (13^th defendant), Peter Abboud (14^th defendant), Sivasli (5^th defendant), John Haddad (32^nd third defendant) and George Said (38^th defendant) pay the plaintiffs’ costs of the proceeding including any reserved costs.

2. Make no order as to the costs of Scott Crabbe (28^th defendant).

3. Order that the plaintiffs pay the costs of Kamikaze Teppanyaki (34^th defendant) limited to the costs specifically and separately referable to it (and in any event capped at no more than 1/5^th of the overall costs incurred by the Khalil defendants excluding the costs of the causation and joint release defences).

4. Order that Borg Family (29^th defendant), Tanya Borg (30^th defendant), Borg Civil (31^st defendant) and Michael Borg (32^nd defendant) bear their own costs of the causation and joint release defences and pay the plaintiffs’ costs referable to those defences.

5. Other than as ordered in Order 4 above, order that the plaintiffs pay the costs of Borg Family (29th defendant), Tanya Borg (30th defendant), Borg Civil (31st defendant) and Michael Borg (32nd defendant).

Bluemine Proceeding (2016/00256135)

1. Order that Gino Cassaniti (11^th defendant), Fred Khalil (12^th defendant), George Khalil (13^th defendant), Peter Abboud (14^th defendant), LAM Haulage (3^rd defendant), MAL Land Group (4^th defendant), The Great Brothers (5^th defendant), Andre Abou-Antoun (20^th defendant), Michael Abou-Antoun (21^st defendant), John Haddad (25^th defendant) and George Said (33^rd defendant) pay the plaintiffs’ costs of the proceedings including any reserved costs.

2. Order that AKA Civil (24^th defendant), AKA NSW (23^rd defendant), Ivana Cassaniti (35^th defendant), Borg Family (29^th defendant) and Tanya Borg (30^th defendant) bear their own costs of the causation and joint release defences and pay the plaintiffs’ costs referable to those defences.

3. Other than as ordered in Order 2 above, order that the plaintiffs pay the costs of AKA Civil (7^th defendant) and AKA NSW (9^th defendant) limited to the costs specifically and separately referable to those defendants (and in any event capped at no more than 2/7^ths of the costs incurred by the AKA Parties excluding the costs of the causation and joint release defences).

4. Other than as ordered in Order 2 above, order that the plaintiffs pay the costs of Borg Family (29^th defendant), Tanya Borg (30^th defendant) and Ivana Cassaniti (35^th defendant) excluding the costs of the causation and joint release defences.

5. Order that the costs payable by the plaintiffs in respect of the costs of Borg Family (29^th defendant) pursuant to order 4 above be assessed on the ordinary basis to 29 October 2018 and on the indemnity basis from 29 October 2018.

6. Order that the plaintiffs pay the costs of Discobell (34^th defendant) specifically and separately incurred by it in relation to its defence of the proceeding (and, in any event, capped at the proportionate amount of 1/3^rd for the period of time when it was jointly represented with Ivana Cassaniti and Gino Cassaniti; and at the proportionate amount of ½ for the period of time when it was jointly represented with Ivana Cassaniti).

Diamondwish Proceeding (2016/00256272)

1. Order that Gino Cassaniti (6^th defendant), Fred Khalil (9^th defendant) George Khalil (10^th defendant), and Peter Abboud (11^th defendant) pay the plaintiffs’ costs of the proceedings including any reserved costs.

2. Order that Ivana Cassaniti (27^th defendant) bear her costs of the causation and joint release defences and pay the plaintiffs’ costs referable to those defences.

3. Other than as ordered in Order 2, order that the plaintiffs pay the costs of Ivana Cassaniti (27^th defendant) excluding the costs of the causation and joint release defences.

Rackforce Proceeding (2016/00256503)

1. Order that Gino Cassaniti (8^th defendant), Fred Khalil (9^th defendant), George Khalil (10^th defendant), and Peter Abboud (11^th defendant) pay the plaintiffs’ costs of the proceedings including any reserved costs.

2. Order that Ivana Cassaniti (9^th defendant) bear her costs of the causation and joint release defences and pay the plaintiffs’ costs referable to those defences.

3. Otherwise than as ordered in Order 2, order that the plaintiffs otherwise pay the costs of Ivana Cassaniti (9^th defendant) excluding the costs of the causation and joint release defences.

123. For the avoidance of doubt, I note that the plaintiffs are jointly and severally liable for the costs orders against the plaintiffs.

**********

In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd

FINAL ORDERS

Earth Civil Proceeding

1. Declare that:

1. Gino Cassaniti (2^nd defendant) breached his fiduciary duties as a director to Earth Civil (2^nd plaintiff).

2. Michael Abou-Antoun (1^st defendant), Fred Khalil (4^th defendant), George Khalil (5^th defendant), Peter Abboud (6^th defendant) assisted, and were accessories to, Gino Cassaniti’s breaches identified in (a) above.

2. Determine that:

1. Gino Cassaniti (2^nd defendant) contravened ss 180, 181 and 182 of the Corporations Act 2001 (Cth).

2. Michael Abou-Antoun (1^st defendant), Fred Khalil (4^th defendant), George Khalil (5^th defendant), Peter Abboud (6^th defendant) were involved in the contraventions referred to in (a) above, contrary to ss 181(2) and 182(2) of the Corporations Act 2001 (Cth).

3. Judgment for Earth Civil in the sum of $2,631,202.88 against Gino Cassaniti (2^nd defendant) for breaches of fiduciary duty, and/or for breaches of the Corporations Act 2001 (Cth) comprising:

1. $965,000.00 for the Director Payments;

2. $1,122,680.34 for Earth Civil’s liability to the Commissioner of Taxation for GST and PAYG withheld, penalties and interest;

3. $82,652.39 for costs and expenses of winding up; and

4. interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $460,870.49.

4. Judgment for Earth Civil (2^nd plaintiff) in the sum of $2,631,202.88 against Fred Khalil (4^th defendant), Peter Abboud (6^th defendant) (as primary conspirators), George Khalil (5^th defendant) and Michael Abou-Antoun (1^st defendant) (director of AKA NSW, AKA Civil and Earth Civil) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth) and for interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $460,870.49.

5. Declare that:

1. each of the Director Payments is an insolvent transaction pursuant to s 588FC of the Corporations Act 2001 (Cth) and an uncommercial transaction pursuant to s 588FB(1) of the Corporations Act 2001 (Cth);

2. each of the Director Payments is an unreasonable Director- Related Transaction pursuant to s 588FDA(1) of the Corporations Act 2001 (Cth); and

3. the Director Payments are voidable pursuant to ss 588FE(3) and 588FE(6) of the Corporations Act 2001 (Cth);

6. Dismiss the claims brought against the remainder of the defendants, AKA Civil (7^th defendant) and AKA NSW (9^th defendant).

RCG CBD Proceeding

1. Declare that:

1. Gino Cassaniti (11^th defendant) breached his fiduciary duties to RCG CBD (2^nd plaintiff).

2. Fred Khalil (12^th defendant), George Khalil (13^th defendant), Peter Abboud (14^th defendant), Sivasli (5^th defendant), John Haddad (32^nd third defendant) and George Said (38^th defendant) assisted, and were accessories to, Gino Cassaniti’s breaches identified in (a) above.

2. Determine that:

1. Gino Cassaniti (11^th defendant) contravened ss 180, 181 and 182 of the Corporations Act 2001 (Cth).

2. Fred Khalil (12^th defendant), George Khalil (13^th defendant), Peter Abboud (14^th defendant), Sivasli (5^th defendant), John Haddad (32^nd third defendant) and George Said (38^th defendant) were involved in the contraventions referred to in (a) above, contrary to ss 181(2) and 182(2) of the Corporations Act 2001 (Cth).

3. Judgment for RCG CBD (2^nd plaintiff) in the sum of $16,202,561.83 against Gino Cassaniti (11^th defendant) for breaches of fiduciary duty, and/or for breaches of the Corporations Act 2001 (Cth) comprising:

1. $7,451,586.12 which includes the payments and transactions identified below, being the assets of RCG CBD paid away:

1. the Banq Payments;

2. the Wenman Brimak Payments;

3. the Statewide Payments;

4. the Sivasli Payments;

5. the Patsouris Payments;

6. the Kito Payments;

7. the Fox & Staniland Payment;

8. the JRC Kazzi Payments;

9. the Coolfind Payments;

10. the Tippett Payments;

11. the Borg Family Payments;

2. $6,209,097.72 for RCG CBD liabilities to the Commissioner of Taxation (Commissioner) for GST, PAYG withheld, SGC and income tax, penalties and interest;

3. $254,962.32 for costs and expenses of winding;

4. less sums received by way of settlements totalling $1,083,000.00; and

5. interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $3,369,915.67.

4. Judgment for RCG CBD in the sum of $16,202,561.83 against Fred Khalil (12^th defendant), Peter Abboud (14^th defendant), (primary conspirators), and George Khalil (13^th defendant) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth) and for interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $3,369,915.67.

5. Declare that:

1. each of the Sivasli Payments is an insolvent transaction pursuant to s 588FC of the Corporations Act 2001 (Cth) and an uncommercial transaction pursuant to s 588FB(1) of the Corporations Act 2001 (Cth); and

2. the Sivasli Payments are voidable pursuant to s 588FE(3) of the Corporations Act 2001 (Cth).

6. Judgment for RCG CBD in the sum of $551,287.64 against Sivasli (5^th defendant) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising:

1. moneys paid away;

2. the extent to which it caused RCG CBD’s liability to pay the Commissioner $6,209,097.72;

3. the costs and expenses of the winding up and

4. interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $95,325.32.

7. Judgment for RCG CBD in the sum of $1,030,726.01 against John Haddad (33^rd defendant) (personally and director of North Shore) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising:

1. the extent to which he caused RCG CBD’s liability to pay the Commissioner $6,209,097.72; and

2. the costs and expenses of the winding up.

8. Judgment for RCG CBD in the sum of $1,033,508.53 against George Said (38^th defendant) (director of Involved Recruitment) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising:

1. the extent to which he caused RCG CBD's liability to pay the Commissioner $6,209,097.72; and

2. the costs and expenses of the winding up.

9. Dismiss the claims brought against the remainder of the defendants, Scott Crabbe (28^th defendant), Borg Family (29^th defendant), Tanya Borg (30^th defendant), Borg Civil (31^st defendant), Michael Borg (32^nd defendant) and Kamikaze (34^th defendant).

Bluemine Proceeding

1. Declare that:

1. Gino Cassaniti (11^th defendant) breached his fiduciary duties to Bluemine (2^nd plaintiff).

2. Fred Khalil (12^th defendant), George Khalil (13^th defendant), Peter Abboud (14^th defendant), LAM Haulage (3^rd defendant), MAL Land Group (4^th defendant), The Great Brothers (5^th defendant), Andre Abou-Antoun (20^th defendant), Michael Abou-Antoun (21^st defendant), John Haddad (25^th defendant) and George Said (33^rd defendant), assisted, and were accessories to, Gino Cassaniti’s breaches identified in (a) above.

2. Determine that:

1. Gino Cassaniti (11^th defendant) contravened ss 180, 181 and 182 of the Corporations Act 2001 (Cth).

2. Fred Khalil (12^th defendant), George Khalil (13^th defendant), Peter Abboud (14^th defendant), LAM Haulage (3^rd defendant), MAL Land Group (4^th defendant), The Great Brothers (5^th defendant), Andre Abou-Antoun (20^th defendant), Michael Abou-Antoun (21^st defendant), John Haddad (25^th defendant) and George Said (33^rd defendant), were involved in the contraventions referred to in (a) above, contrary to ss 181(2) and 182(2) of the Corporations Act 2001 (Cth).

3. Judgment for Bluemine in the sum of $13,760,188.89 against Gino Cassaniti (11^th defendant) for breaches of fiduciary duty, and/or for breaches of the Corporations Act 2001 (Cth) comprising:

1. $6,167,594 which includes the payments and transactions identified below, being the assets of Bluemine paid away by Gino Cassaniti;

1. the Banq Payments;

2. the Wenman Payments;

3. the LAM Haulage Payments;

4. the MAL Land Group Payments;

5. the Great Brothers Payments;

6. the Eddy Haddad Payments;

7. the Monica Abboud Payments;

8. the Pierre Youssef Payments; and

9. the Jola transfer.

2. $5,138,203.36 for Bluemine’s liability to the Commissioner of Taxation (Commissioner) for GST and PAYG withheld, income tax and penalties and interest;

3. $235,611.62 for costs and expenses of winding up;

4. less sums received by way of settlements totalling $466,465.00; and

5. interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $2,685,244.91.

4. Judgment for Bluemine in the sum of $13,760,188.89 against Fred Khalil (12^th defendant), Peter Abboud (14^th defendant), (primary conspirators) and George Khalil (13^th defendant) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth) and for interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $2,685,244.91.

5. Declare that:

1. the LAM Haulage Payment ($261,105.00) is an insolvent transaction pursuant to s 588FC of the Corporations Act 2001 (Cth) and an uncommercial transaction pursuant to s 588FB(1) of the Corporations Act 2001 (Cth).

2. the LAM Haulage Payment ($261,105.00) is voidable pursuant to s 588FE(3) of the Corporations Act 2001 (Cth).

3. each of the MAL Land Group Payments ($1,624,005.00) is an insolvent transaction pursuant to s 588FC of the Corporations Act 2001 (Cth) and an uncommercial transaction pursuant to s 588FB(1) of the Corporations Act 2001 (Cth).

4. the MAL Land Group Payments ($1,624,005.00) are voidable pursuant to s 588FE(3) of the Corporations Act 2001 (Cth).

5. each of the Great Brothers Payments ($1,541,105.00) is an insolvent transaction pursuant to s 588FC of the Corporations Act 2001 (Cth) and an uncommercial transaction pursuant to s 588FB(1) of the Corporations Act 2001 (Cth).

6. the Great Brothers Payments ($1,541,105.00) are voidable pursuant to s 588FE(3) of the Corporations Act 2001 (Cth).

6. Judgment for Bluemine in the sum of $625,487.11 against LAM Haulage (3^rd defendant) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising:

1. moneys paid away;

2. the costs and expenses of the winding up; and

3. interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $128,770.49.

7. Judgment for Bluemine in the sum of $2,647,626.82 against MAL Land Group (4^th defendant) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising:

1. moneys paid away;

2. the costs and expenses of the winding up; and

3. interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $788,010.20.

8. Judgment for Bluemine in the sum of $2,558,485.07against the Great Brothers (5^th defendant) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising:

1. moneys paid away;

2. the costs and expenses of the winding up; and

3. interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $781,768.45.

9. Judgment for Bluemine in the sum of $2,948,360.55 against Andre Abou-Antoun (20^th defendant) (the director of LAM Haulage and The Great Brothers) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising:

1. moneys paid away;

2. the costs and expenses of the winding up; and

3. interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $910,538.94.

10. Judgment for Bluemine in the sum of $7,509,107.63 against Michael Abou-Antoun (21^st defendant) (the director of MAL Land, The Great Brothers, AKA NSW and AKA Civil) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising:

1. moneys paid away;

2. the extent to which he caused Bluemine’s liability to pay the Commissioner $5,138,203.36;

3. the costs and expenses of the winding up; and

4. interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $1,569,778.65.

11. Judgment for Bluemine in the sum of $1,407,654.52 against John Haddad (25^th defendant) (personally and the director of North Shore and Centerium Wholesalers) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising:

1. moneys paid away;

2. the extent to which he caused Bluemine’s liability to pay the Commissioner $5,138,203.36;

3. the costs and expenses of the winding up; and

4. interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $80,159.86.

12. Judgment for Bluemine in the sum of $317,291.23 against George Said (33^rd defendant) (as the director of Involved Recruitment) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising:

1. monies paid away;

2. the costs and expenses of the winding up; and

3. interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $26,089.61.

13. Dismiss the claims brought against the remainder of the defendants, AKA NSW (23^rd defendant), AKA Civil (24^th defendant), Borg Family (29^th defendant), Tanya Borg (30^th defendant), Discobell (34^th defendant), and Ivana Cassaniti (35^th defendant).

Diamondwish Proceeding

1. Declare that:

1. Frank Criniti breached his fiduciary duties to Diamondwish (2^nd plaintiff).

2. Gino Cassaniti (6^th defendant), Fred Khalil (9^th defendant) George Khalil (10^th defendant), and Peter Abboud (11^th defendant) assisted, and were accessories to, Frank Criniti’s breaches identified in (a) above.

2. Determine that:

1. Frank Criniti contravened ss 180, 181 and 182 of the Corporations Act 2001 (Cth).

2. Gino Cassaniti (6^th defendant), Fred Khalil (9^th defendant) and George Khalil (10^th defendant), Peter Abboud (11^th defendant) were involved in the contraventions referred to in (a) above, contrary to ss 181(2) and 182(2) of the Corporations Act 2001 (Cth).

3. Judgment for Diamondwish in the sum of $11,976,520.71 against Gino Cassaniti (6^th defendant), Fred Khalil (9^th defendant) and Peter Abboud (11^th defendant) (primary conspirators), and George Khalil (10^th defendant) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising:

1. $7,960,774.08 which includes the payments and transactions identified below, being assets of Diamondwish paid away by Frank Criniti:

1. the Givana Prestige Payments;

2. the Criniti’s Wood Fire Payments;

3. the Criniti Payments;

4. the Barikhan Payment;

5. the Silkred Payment;

6. the Karl Haidenbauer Payment;

7. the Setaro Payment;

8. the Banq Payments;

9. the Criniti’s Darling Harbour Payment;

10. the Darren and Keti Craus Payment;

11. the Australian Muscle Payment;

2. $1,439,573.61 for Diamondwish’s liability to the Commissioner of Taxation for GST and PAYG withheld, penalties, income tax and interest;

3. $241,882.98 for costs and expenses of the winding up; less sums received by way of settlements totalling $1,885,000.00; and

4. interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $4,219,290.04.

4. Dismiss the claims brought against Ivana Cassaniti (27^th defendant).

Rackforce

1. Declare that:

1. Frank Criniti breached his fiduciary duties to Rackforce (2^nd plaintiff).

2. Gino Cassaniti (8^th defendant), Fred Khalil (9^th defendant), George Khalil (10^th defendant), and Peter Abboud (11^th defendant) assisted, and were accessories to, Frank Criniti’s breaches identified in (i) above.

2. Determine that:

1. Frank Criniti contravened ss 180, 181 and 182 of the Corporations Act 2001 (Cth).

2. Gino Cassaniti (8^th defendant), Fred Khalil (9^th defendant), George Khalil (10^th defendant) and Peter Abboud (11^th defendant) were involved in the contraventions referred to in (a) above, contrary to ss 181(2) and 182(2) of the Corporations Act 2001 (Cth).

3. Judgment for Rackforce in the sum of $17,860,555.71 against Gino Cassaniti (8^th defendant), Fred Khalil (9^th defendant) and Peter Abboud (11^th defendant) (primary conspirators ), and George Khalil (10^th defendant) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising:

1. $10,926,471.64 which includes the payments and transactions identified below, being assets of Rackforce paid away by Frank Criniti:

1. the Givana Prestige Payments

2. the Frank Criniti Payments

3. the Criniti’s Wood Fire Pizza Payments;

4. the Artivita Payments;

5. the Banq Payments;

6. the Cosimo Foods Payments;

7. the Criniti’s Darling Harbour Payments;

8. the Criniti’s Wooloomooloo Payments; and

9. the Frank Criniti & Rima Criniti Payments;

2. $3,626,578.95 for Rackforce’s liability to the Commissioner of Taxation for GST, PAYG withheld, income tax and superannuation guarantee charge;

3. $201,474.32 for costs and expenses of winding up;

4. less sums received by way of settlements totalling $1,735,000.00; and

5. interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $4,841,030.80.

4. Dismiss the claims brought against Ivana Cassaniti (9^th defendant).

Schedule of Parties

Proceedings	Parties	Representation
In the matter of Earth Civil Australia Pty Ltd (2016/000194955)	1st Plaintiff: Mitchell Warren Ball in his capacity as liquidator of Earth Civil Pty Ltd 2nd Plaintiff: Earth Civil Australia Pty Ltd (in liq) 1st Defendant: Michael Abouantoun 2nd Defendant: Gino Cassaniti 3rd Defendant: Faouzi Khalil 4th Defendant: George Khalil 5th Defendant: Peter Abboud 6th Defendant: AKA (Civil) Pty Ltd 7th Defendant: AKA (NSW) Pty Ltd	Counsel: Plaintiffs: I Faulkner SC / S Shepherd 1st, 6th, 7th Defendants: R Seiden SC / R Johnson 2nd Defendant: D Feller SC / I Young / W Brewer 3rd, 4th Defendants: C Robinson Solicitors: Plaintiffs: Craddock Murray Neumann Lawyers 1st, 6th and 7th Defendants: Lionheart Lawyers 2nd Defendant: Paramount Lawyers 3rd, 4th Defendants: Cambridge Law/Raed Rahal 5th Defendant: Gupta Co Law
In the matter of RCG CBD Pty Ltd (2016/00195008)	1st Plaintiff: Mitchell Warren Ball in his capacity as liquidator of RCG CBD Pty Ltd 2nd Plaintiff: RCG CBD Pty Ltd 1st Defendant: Banq Accountants and Advisors Pty Ltd 5th Defendant: Sivasli Pty Ltd 11th Defendant: Gino Cassaniti 12th Defendant: Faouzi Khalil 13th Defendant: George Khalil 14th Defendant: Peter Abboud 28th Defendant: Scott Crabbe 29th Defendant: Borg Family Pty Ltd 30th Defendant: Tanya Borg 31st Defendant: Borg Civil Australia Pty Ltd 32nd Defendant: Michael Borg 34th Defendant: Kamikaze Teppanyaki (Darling Harbour) Pty Ltd 38th Defendant: George Said	Counsel: Plaintiffs: I Faulkner SC / S Shepherd 5th, 12th, 13th, 34th , 38th, Defendants: C Robinson 11th Defendant: D Feller SC / I Young / W Brewer 29th to 32nd Defendants: M Condon SC / P Afshar Solicitors: Plaintiffs: Craddock Murray Neumann Lawyers 5th, 12th, 13th, 34th, 38th Defendants: Cambridge Law/Raed Rahal 11th Defendant: Paramount Lawyers 14th Defendant: Gupta Co Law 29th to 32nd Defendants: MistryFallahi
In the matter of Bluemine Pty Ltd (2016/00256135)	1st Plaintiff: Mitchell Warren Ball in his capacity as liquidator of Bluemine Pty Ltd (in liq) 2nd Plaintiff: Bluemine Pty Ltd (in liq) 3rd Defendant: LAM Haulage Pty Ltd 4th Defendant: M.A.L. Land Group Pty Ltd 5th Defendant: The Great Brothers Pty Ltd 11th Defendant: Gino Cassaniti 12th Defendant: Faouzi Khalil 13th Defendant: George Khalil 14th Defendant: Peter Abboud 20th Defendant: Andre Abou-Antoun 21st Defendant: Michael Abou-Antoun 23rd Defendant: AKA (NSW) Pty Ltd 24th Defendant: AKA (Civil) Australia Pty Ltd 25th Defendant: John Haddad 29th Defendant: Borg Family Pty Ltd 30th Defendant: Tanya Borg 33rd Defendant: George Said 34th Defendant: Discobell Pty Ltd 35th Defendant: Ivana Cassaniti	Counsel: Plaintiffs: I Faulkner SC / S Shepherd 3rd, 4th, 5th, 20th, 21st, 23rd, 24th Defendants: R Seiden SC / R Johnson 11th Defendant: D Feller SC / I Young / W Brewer 12th, 13th, 33rd Defendants: C Robinson 29th, 30th Defendants: M Condon SC / P Afshar 34th Defendant: D Allen 35th Defendant: D Cook SC / A Katsoulas Solicitors: Plaintiffs: Craddock Murray Neumann Lawyers 3rd, 4th, 5th, 20th, 21st, 23rd, 24th Lionheart Lawyers 14th Defendant: Gupta Co Law 11th Defendant: Paramount Lawyers 12th, 13, 33rd Defendants: Cambridge Law/Raed Rahal 29th, 30th Defendants: MistryFallahi 34th and 35th Defendants: Kekatos Lawyers
In the matter of Diamondwish Pty Ltd (2016/00256272)	1st Plaintiff: Mitchell Warren Ball in his capacity as liquidator of Diamondwish Pty Ltd (in liq) 2nd Plaintiff: Diamondwish Pty Ltd (in liq) 8th Defendant: Gino Cassaniti 9th Defendant: Faouzi Khalil 10th Defendant: George Khalil 11th Defendant: Peter Abboud 27th Defendant: Ivana Cassaniti	Counsel: Plaintiffs: I Faulkner SC / S Shepherd 8th Defendant: D Feller SC / I Young / W Brewer 9th, 10th Defendants: C Robinson 28th Defendant: D Cook SC / A Katsoulas Solicitors: Plaintiffs: Craddock Murray Neumann Lawyers 8th Defendant: Paramount Lawyers 9th and 10th Defendants: Cambridge Law/Raed Rahal 11th Defendant: Gupta Co Law 28th Defendant: Kekatos Lawyers
In the matter of Rackforce Pty Ltd (2016/00256503)	1st Plaintiff: Mitchell Warren Ball in his capacity as liquidator of Rackforce Pty Ltd (in liq) 2nd Plaintiff: Rackforce Pty Ltd (in liq) 5th Defendant: Gino Cassaniti 6th Defendant: Faouzi Khalil 7th Defendant: George Khalil 8th Defendant: Peter Abboud 9th Defendant: Ivana Cassaniti	Counsel: Plaintiffs: I Faulkner SC / S Shepherd 5th Defendant: D Feller SC / I Young / W Brewer 6th and 7th Defendants: C Robinson 9th Defendant: D Cook SC / A Katsoulas Solicitors: Plaintiffs: Craddock Murray Neumann Lawyers 5th Defendant: Paramount Lawyers 6th, 7th Defendants: Cambridge Law/Raed Rahal 8th Defendant: Gupta Co Law 9th Defendant: Kekatos Lawyers

Decision last updated: 15 September 2021