Zeaiter v Zeaiter (No 2)

[2025] NSWSC 156

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Zeaiter v Zeaiter (No 2) [2025] NSWSC 156

Hearing dates:

On the papers

Date of orders:

6 March 2025

Decision date:

06 March 2025

Jurisdiction:

Equity - Commercial List

Before:

Peden J

Decision:

(1) Vacate order 2 made on 19 February 2025.

(2) Plaintiffs to pay the defendants’ costs of the proceedings as agreed or assessed on an indemnity basis.

Catchwords:

COSTS — Party/Party — Exceptions to general rule that costs follow the event — Calderbank offer — Where plaintiff gave false evidence — Whether indemnity costs should be ordered

Legislation Cited:

Civil Procedure Act 2005 (NSW) s 98

Cases Cited:

Aneve Pty Ltd v Bank of Western Australia Ltd [2005] NSWCA 441

Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12

Brymount Pty Ltd v Cummins (No 2) [2005] NSWCA 69

Calderbank v Calderbank [1975] 3 All ER 333

Della Franca v Lorenzato (No 2) [2022] NSWCA 53

El Assaad v Al Haje (No 2) [2025] NSWCA 17

Zeaiter v Zeaiter [2025] NSWSC 60

Category:

Costs

Parties:

Anthony Zeaiter (First Plaintiff)
Newline Property Investments Pty Ltd (Second Plaintiff)
Charbel Zeaiter (First Defendant)
Newbuild Developments (Australia) Pty Ltd (Second Defendant)

Representation:

Counsel:
P Afshar and L McIntyre (Plaintiffs)
V Bedrossian SC and A Brown (Defendants)

Solicitors:
Lionheart Lawyers (Plaintiffs)
Assured Legal (Defendants)

File Number(s):

2020/313381

Publication restriction:

Nil

JUDGMENT

1. On 19 February 2025, I delivered judgment in the substantive proceedings, dismissing the plaintiffs’ further amended summons: Zeaiter v Zeaiter [2025] NSWSC 60 (Judgment). This judgment concerns the costs of those proceedings and ought to be read together with the Judgment.

2. In the Judgment at [222], I ordered that the plaintiffs pay the defendants’ costs as agreed or assessed. However, the orders provided for a regime for the determination of an alternative costs order on a party’s application.

3. The defendants made such an application and sought their costs on an indemnity basis for the entirety of the proceedings, because of the plaintiffs’ conduct in the proceedings, particularly Anthony’s lies when denying having signed the Deed, his denial being central to the merits of his claims. In the alternative, the defendants sought costs on an ordinary basis up to and including 23 October 2023, and on an indemnity basis thereafter, relying upon Anthony’s failure to accept a Calderbank offer, which Charbel bettered in the Judgment.

4. Anthony submitted that the application for indemnity costs ought be refused. If such an order is made, he submitted that indemnity costs should be limited to costs following the reopening of the Calderbank offer on 3 May 2024, given that there was further evidence served between the two offers, such that it was reasonable for Anthony not to accept the first offer.

5. For the reasons that follow, I consider that the defendants are entitled to indemnity costs for the entirety of the proceedings. However, I also consider that Anthony’s rejection of either of the Calderbank offers justifies the Court exercising its discretion to award indemnity costs.

Indemnity costs based on the plaintiffs’ conduct in the proceedings

6. This Court has the discretion to order that costs be awarded on an indemnity basis: Civil Procedure Act 2005 (NSW) s 98(1)(c). Such an order may be made where an action “has been commenced or continued in circumstances where the moving party, properly advised, should have known that it had no chance of success”: Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12 at [4] (Allsop P, Beazley and Campbell JJA agreeing).

7. Where a party’s case is based on their dishonest evidence, indemnity costs will be more readily issued: see eg Aneve Pty Ltd v Bank of Western Australia Ltd [2005] NSWCA 441 at [55] (Hodgson JA, Santow and Bryson JJA agreeing).

8. At the core of the substantive proceedings was whether Anthony signed the Deed. Not only did I find that he had, I also found that he gave dishonest evidence in denying having done so: Judgment at [103].

9. Further, until the first day of the hearing, Anthony had since September 2023 contended that a property at 5 Haven Crescent belonged to Newbuild and therefore ought to have been included in the calculation of the total assets for the purpose of the business split: Judgment at [105]. This was despite Anthony having personally attended the auction for the property, at which time he executed the contract in Charbel’s name: Judgment at [106]. This was pointed out to Anthony’s solicitors in a letter dated 23 October 2023, and yet, he still continued to agitate the point.

10. Had Anthony been truthful about having signed the Deed, his claims would have largely fallen away. To the extent that any claim remained, it would have been limited to the proper construction of the Deed, the Excess Payments, and New Line Plumbing Payment claims.

11. Anthony’s evidential basis for any claim in respect of the Excess Payments was lacking. It arose from an informal schedule sent by Charbel to Anthony via text message, detailing some transfers out of the brothers’ business. This document never amounted to a sufficient evidentiary foundation, upon which Anthony could feasibly bring a successful claim for further payments.

12. Similarly, in relation to the New Line Plumbing Payments, there was clear documentary evidence from the company books and records, and Charbel was not challenged on his evidence about those payments: Judgment at [134]-[141].

13. In relation to both types of payments, the informal schedule was never a complete universe of the payments that had been made for the benefit of the brothers: Judgment at [121]-[122]. For example, it omitted the payment of $712,500 to Anthony, a payment about which Anthony was also dishonest: Judgment at [104].

14. Anthony’s dishonesty about having signed the Deed went to the heart of his claim, with the result that lengthy litigation proceeded, when it ought never to have commenced: see eg Judgment at [116], [118]-[130] and [142]-[146].

15. In relation to the goodwill claim, that was a narrow issue based on the proper construction of the Deed, which Anthony had denied signing and therefore those issues were related. Further, the question of the proper construction of the Deed took up very little hearing time.

16. I do not accept Anthony’s submission that issues of estoppel were significant and separate from whether Anthony signed the Deed. Charbel’s pleaded case was that Anthony was bound by an estoppel by deed. However, such an estoppel only operates in an action on the deed, a claim not brought in these proceedings: Judgment at [189]. No meaningful issue of estoppel arose on the facts. Rather, the Deed amounted to an agreement between the brothers which rescinded any former agreement and upon which Charbel could rely: Judgment at [191]-[202]. Therefore, I do not accept that there was a real separate issue of estoppel as Anthony has suggested in order to resist indemnity costs.

17. If Anthony had been honest about having signed the Deed, and properly advised, he ought to have known that his claims would have had no chance of success. In these circumstances, it is appropriate that the plaintiffs pay the defendants’ costs on an indemnity basis, as agreed or assessed.

Plaintiffs’ failure to accept Calderbank offer

18. In the alternative, I consider whether indemnity costs should be awarded from 23 October 2023 onwards on the basis of Anthony’s failure to accept a Calderbank offer sent to his solicitors on that date, as submitted by Charbel.

19. On 23 October 2023, Charbel’s solicitors sent an offer marked “without prejudice save as to costs” to Anthony’s solicitors. The offer made reference to the principles established by Calderbank v Calderbank [1975] 3 All ER 333. Charbel offered to settle the proceedings through the payment of $600,000 to Anthony, plus costs as assessed on a party/party basis. The offer explained in some detail why Anthony’s claims and allegations would fail. That explanation included, inter alia, that it was “inescapable” that Anthony signed the Deed and there was “no plausible or legally-justifiable basis to depart from the binding effect of” the brothers’ agreement.

20. The principles relevant to Calderbank offers are well established and were recently summarised by Brereton JA (Basten JA agreeing) in Della Franca v Lorenzato (No 2) [2022] NSWCA 53 (Della Franca) at [47]:

1. Unlike a formal offer of compromise made under Part 42 Div 3 of the Uniform Civil Procedure Rules 2005 (NSW) which can have presumptive effect, an unaccepted Calderbank offer “is merely a relevant consideration in the exercise of the costs discretion”; and

2. A Calderbank offer may justify an indemnity costs order “if the final judgment is no more favourable than the offer, its rejection was unreasonable, and the offer sufficiently foreshadowed its use to support a special costs order”.

21. Factors to be considered when assessing whether it was unreasonable for a party to reject the Calderbank offer include the stage of the proceeding at which the offer was received, the time allowed to the offeree to consider the offer, the extent of the compromise offered, the clarity with which the terms of the offer were expressed, and whether the offer foreshadowed an application for an indemnity costs order in the event it was rejected: El Assaad v Al Haje (No 2) [2025] NSWCA 17 at [45] (Ward P, Ball JA and Price AJA).

22. Charbel bore the onus of persuading me that an indemnity costs order should be made on the basis of the Calderbank offer: Della Franca at [47].

23. The letter foreshadowed that if not accepted, Charbel “intend[ed] to rely upon the terms of [the] offer for the purpose of making [an] application for payment of their costs of the proceedings, including on an indemnity basis”. Therefore, Anthony was on notice that the letter would be relied upon on a costs application.

24. Charbel’s offer amounted to a genuine offer of compromise, pursuant to which he would pay a significant sum to settle the parties’ dispute. Further, there was the additional offer to pay Anthony’s costs of the proceedings, where the proceedings had been on foot for almost three years.

25. There is no question that the terms of the offer were more favourable to Anthony than the Judgment; the plaintiffs’ further amended summons was dismissed with costs: Judgment at [222].

26. The offer was open for 14 days, and no submission was made that this was an unreasonable time for Anthony to consider it: see eg Brymount Pty Ltd v Cummins (No 2) [2005] NSWCA 69 at [15] (Beazley JA, Ipp and McColl JJA agreeing).

27. Instead, Anthony submitted that his failure to accept the offer was not unreasonable in circumstances where he claimed he lacked adequate information to enable him to consider the offer. His counsel pointed to, inter alia, the fact that it was unknown until trial whether the defendants were adopting evidence to the effect that Anthony signed the Deed on 28 November 2017 or 4 December 2017. However, I reject the submission that this was a reasonable basis for not accepting the offer. The relevant question was whether the Deed was signed, a fact within Anthony’s knowledge. Further, the precise date on which it was signed did not alter its legal effect.

28. To the extent that Anthony might have had some claim for additional payments, something I have squarely rejected, the $600,000 offered was a genuine compromise and surpassed anything he could reasonably have expected to achieve through litigation.

29. For these reasons, Anthony’s failure to accept the offer was unreasonable in the circumstances. It ought to have been sufficiently clear to Anthony, at the time when he received the offer, that he lacked any reasonable prospect of succeeding in litigation beyond that which he was offered. As such, the defendants would alternatively be entitled to the recoup their costs on an indemnity basis from the date of 6 November 2023, being the last date upon which the Calderbank offer was open for acceptance.

Plaintiffs’ failure to accept the re-opened Calderbank offer

30. Anthony’s counsel submitted that, in the event indemnity costs are to be awarded, they ought to be limited to the period following 3 May 2024 after the reopening of the Calderbank offer.

31. On 3 May 2024, Charbel’s solicitors sent a further Calderbank offer on the same terms as the first offer, save that it remained open for 28 days. The offer was effectively superior the second time around, given that the offer to pay Anthony’s costs would have been more valuable, given the likely increase in costs between the two offers. Like the first offer, Anthony did not accept the 3 May offer.

32. Anthony’s counsel submitted that further evidence had been served in the period between the two offers, such that the decision not to accept the former offer was more reasonable than the second. That evidence included expert accounting evidence, an outline of anticipated evidence of Mr Bandpay, and various affidavits of lay witnesses.

33. However, most of this would not have materially altered Anthony’s position, had he been honest. For example, interim developments included Charbel having sworn evidence to the effect that 5 Haven Crescent was owned by Newbuild as trustee for various superannuation trusts controlled by Charbel. However, Anthony always knew that he attended the auction for the property and bought it for Charbel’s benefit, not Newbuild’s: Judgment at [106]. Accordingly, this further evidence would not have materially altered the position of an honest litigant.

34. Further served evidence included an affidavit of Mr Taylor, qualifying earlier evidence he gave regarding the circumstances in which Anthony signed the Deed. As previously articulated, the precise date on which Anthony signed the Deed, and the detailed circumstances in which he signed it, were immaterial. The fact was that Anthony did sign the Deed and he knew he signed it. Accordingly, the serving of such evidence further confirmed Charbel’s position and did not alter Anthony’s position and ability to consider the offer.

35. For the same reasons as above, I consider that Anthony’s failure to accept the subsequent Calderbank offer was unreasonable and would also have led to an indemnity costs order, had it been necessary to decide.

Orders

36. For those reasons, the appropriate orders are:

1. Vacate order 2 made on 19 February 2025.

2. Plaintiffs to pay the defendants’ costs of the proceedings as agreed or assessed on an indemnity basis.

Amendments

23 May 2025 - Add "(No 2)" to citation of [2022] NSWCA 53

Decision last updated: 23 May 2025