Federal Court of Australia

Simmons v Giezekamp [2025] FCA 584

ORDERS

THE COURT ORDERS THAT:

1.    The applicants pay the third respondent’s costs of the proceeding from the time the third respondent received notice of the orders made on 2 April 2024, on the ordinary basis until and including 10 March 2025, and on the indemnity basis from and including 11 March 2025.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THAWLEY J:

1    The general background to these proceedings may be found in Simmons v Giezekamp [2024] FCA 334 (Halley J) (Simmons 1) and Simmons v Giezekamp [2024] FCA 649 (Thawley J) (Simmons 2). The former provides the Court’s reasons delivered on 2 April 2024 for making freezing orders against Mr Paul Jacque Giezekamp and U Money Australia Pty Ltd. The latter provides the Court’s reasons delivered on 7 June 2024 for continuing those freezing orders.

2    Relevantly for present purposes, two properties were affected by the freezing orders, one in Balmain and the other in Five Dock. These were owned by Mr Giezekamp and his mother, Mrs Astrida Giezekamp. The freezing orders were required to be served on Mrs Giezekamp by 3 April 2024 and it is assumed she received notice of the freezing orders either on 2 April 2024 or soon thereafter.

3    Whilst Mrs Giezekamp was not joined to the proceedings until 28 August 2024, she appeared on 5 and 7 June 2024 as an interested person and opposed the continuation of the freezing orders to the extent that those orders affected property co-owned by her, namely the Balmain Property and the Five Dock Property.

4    All aspects of the proceedings against Mrs Giezekamp have now resolved, except for a residual issue concerning costs. The applicants contend that there should be no order as to costs for reasons expanded upon below. Mrs Giezekamp seeks costs from the time that she received notice of the freezing orders. She seeks costs on an indemnity basis from 14 December 2024 or, alternatively, from 15 March 2025. In relation to Mrs Giezekamp’s claim for costs, it is relevant to note that the applicants’ undertakings, given in relation to the making of the freezing orders, included the following:

The applicants will pay the reasonable costs of anyone other than the first respondent which have been incurred as a result of this order, including the costs of finding out whether that person holds any of the first respondent’s assets.

5    The present case may be approached having regard to the following general propositions, the first four of which are taken from Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v Mukiza [2022] FCAFC 105 at [4] and the last three of which are taken from Chapman v Luminis Pty Ltd [2003] FCAFC 162 at [7]:

(a)    The Court’s power to make an award of costs is discretionary. The power must be exercised judicially, not arbitrarily or capriciously or on grounds unconnected with the litigation, having regard to relevant principles and the justice of the case in all the circumstances – see: s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act).

(b)    The power under s 43 of the FCA Act is not completely unfettered in that, where it applies, s 37N(4) requires the Court to take into account any failure to comply with the duties in s 37N(1) or (2) of the FCA Act, being duties derived from the requirement to act consistently with the overarching purpose described in s 37M(1).

(c)    Section 43(3)(e) of the FCA Act provides that an award of costs may be made in favour of, or against, a party whether or not that party is successful in the proceeding.

(d)    A weighty factor in favour of awarding costs to a party is the degree to which the party was successful. This is why, absent some reason justifying some other order, a costs order is ordinarily made in favour of the successful party after a judicial determination of the issues raised in the proceedings.

(e)    Where a matter does not proceed to final hearing such that there has not been a final determination of the merits, the Court should not resolve the issue of costs by engaging in an exercise akin to a hypothetical trial. If it were otherwise, it would effectively reintroduce costs and delay where the parties have agreed that the proceedings should not continue.

(f)    This does not mean that costs may never be ordered. A number of circumstances may provide an appropriate basis for ordering costs where a matter terminates without a final hearing on the merits, including: (i) the reasonableness of the conduct of the parties; and (ii) where it is sufficiently clear that “one party was almost certain to have succeeded if a matter had been fully tried”: Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622 at 625 (McHugh J).

(g)    It may be relevant to distinguish between a case where a party, after litigating for some time, effectively surrenders to the other, and a case where a supervening event or settlement so removes or modifies the subject of the dispute that, although no one side has simply won, no issue remains except costs. In the former case, there will often be no basis for exercising the Court’s discretion otherwise than by awarding costs to the successful party.

6    Having referred to those matters, it should be emphasised that the overriding principle is that costs are in the discretion of the Court, a proposition which “can also be expressed in terms of the negative proposition that no rule or principle should be applied mechanically in the determination of the question where costs should lie in any particular case”: Howards Storage World Pty Ltd v Haviv Holdings Pty Ltd [2010] FCAFC 5; 182 FCR 84 at [17] (Gray J, Lindgren J agreeing). 

7    A combination of circumstances are relevant to the resolution of costs in the present case.

8    As mentioned, Mrs Giezekamp appeared by her Counsel on 5 June 2024 as an interested person opposing the continuation of the freezing orders. Those orders had been obtained without notice to Mrs Giezekamp on 2 April 2024, on the basis of Mr Giezekamp’s alleged wrongful conduct. It was not contended that Mrs Giezekamp was in any way involved with the wrongdoing asserted against Mr Giezekamp.

9    On 4 June 2024, the day before what transpired to be only the first day of hearing in relation to whether to extend the freezing orders, Mrs Giezekamp’s solicitors filed submissions which included the submission that there was “no legal justification for any interlocutory order to be made which would limit, in any way, Astrida’s ability to deal with her interest in the” Balmain and Five Dock properties, including because no claim was made against her: at [44].

10    Early on 5 June 2024, the morning of the first day of the hearing, the applicants’ solicitors sent an email to the Court, attaching proposed orders and a proposed Second Further Amended Originating Application which would join Mrs Giezekamp to the proceedings in order to seek relief against her relying on s 37A of the Conveyancing Act 1919 (NSW). The proposed amendments relevantly included inserting new paragraphs as follows:

[13]    A declaration that the transaction whereby the Third Respondent acquired, or purportedly acquired, a one half interest in the property 238 Darling St, Balmain, NSW (“the Balmain Property”) is void against the Applicants pursuant to s.37A Conveyancing Act (NSW), 1919.

[14]    A declaration that the transaction whereby the Third Respondent acquired, or purportedly acquired, a one half interest in the property 29 Henley Marine Bay Drive, Five Dock, NSW (“the Five Dock Property”) is void against the Applicants pursuant to s.37A Conveyancing Act (NSW), 1919.

[15]    A declaration that the Third Respondent holds her interest in each of the Balmain Property and the Five Dock Property upon trust for the First Respondent.

11    At the commencement of the hearing, Counsel for the applicants stated that the application to amend did not need to be addressed immediately, but that the Court should be aware that it would have to be dealt with at some stage unless there was consent: T2.209 (5 June 2024). Counsel stated that he had raised the claim before Halley J and that about a week was needed to complete the amendments for the statement of claim because they relied on some evidence which had only just been produced: T3.3–18.

12    Mrs Giezekamp relied on an affidavit dated 3 May 2024. This included the statement (at [26]):

I do not understand there to be any allegation in these proceedings to the effect that I am not the legal and beneficial owner of my interest in the Five Dock Property, and accordingly it is not clear to me why order 7 of the orders made in these proceedings on 2 April 2024 (as extended on 5 April 2024) also includes the Five Dock Property as a restrained asset without any distinction being made between my interest and the interest of Paul.

13    The freezing orders were extended. The applicants’ position was that Mrs Giezekamp had no beneficial interest in the Balmain Property or the Five Dock Property: Simmons 2 at [141]. The applicants’ primary position was that Mrs Giezekamp held the properties on resulting trust or, alternatively, that Mr Giezekamp held some other beneficial interest in the property greater than his legal interest. Neither party suggested that the Court should determine the beneficial interest at the hearing.

14    The conclusion in relation to the Five Dock Property was expressed as follows (Simmons 2 at [144] and [145]):

It is convenient to deal first with the Five Dock Property. As mentioned, this was purchased for $2.825 million. The Bankwest loan was for $2.26 million. The evidence does not disclose how the deposit was funded or how stamp duty or other costs were funded. I am not satisfied that Mrs Giezekamp paid any part of any deposit for the Five Dock Property. Mrs Giezekamp is a joint borrower under the Bankwest facility, but the evidence did not establish that she made any repayments. On the evidence before the Court on this application, it appears more likely that Mr Giezekamp, or entities associated with him, have funded the whole of the acquisition costs of the Five Dock Property and funded relevant borrowings.

It follows that I consider there to be a real issue about beneficial ownership of the Five Dock Property. I cannot accept the assertion of beneficial ownership on the part of Mrs Giezekamp without further inquiry, and accordingly, do not determine that issue on this application. The point is only relevant to my conclusion that the freezing orders should not be varied in so far as they affect Mrs Giezekamp’s interest in the Five Dock Property. Unless there is a material change in circumstances, and assuming the main action is prosecuted diligently, the issue can await the outcome of the main action.

15    It now appears that documents which were available were not put before the Court on that occasion. In particular, there was a Westpac document titled “Local Telegraphic Transfer Details” dated 2 February 2023, which indicated that an amount of $300,000 was transferred by Mrs Giezekamp from her Westpac account to her Bankwest account: Exhibit BND1 at 18. Settlement of the Five Dock Property, which was funded by Bankwest, occurred on 6 February 2023. The transfer document was produced under a subpoena issued to Bankwest at the applicants’ request and filed on 15 May 2024: Exhibit BND1 at 1, 319. The document was available at the time of the hearing on 5 June 2024. The Court’s findings could not have been identical to those expressed above if this document had been drawn to the Court’s attention.

16    In relation to the Balmain Property, the conclusions included (Simmons 2 at [146] and [147]):

In relation to the Balmain Property, I am not satisfied on the evidence as it stands that Mrs Giezekamp funded the deposit of $275,000. I have earlier set out the facts as presently known. I accept that the funds for the deposit came from a Macquarie Bank facility in Mrs Giezekamp’s name. However, a number of significant and as yet unexplained transactions in that account raise a real question as to whether that account was used wholly for Mrs Giezekamp’s purposes and, therefore, specifically for her purposes in relation to this transaction, by which I mean the payment of the deposit of $275,000. I refer in this regard in particular to the large repayments made by U Money and Harry Giezekamp after the withdrawal for the deposit. I also accept that the Macquarie Bank facility was refinanced by borrowings made by Mrs Giezekamp from the CBA at the same time as the Balmain Property was purchased. As previously mentioned, some of the CBA borrowings were paid into an account held jointly with Mr Giezekamp. Ultimately, at least $900,000 of the proceeds from the sale of the Queensland Property were paid out by Mrs Giezekamp, $400,000 to U Money and $500,000, more likely than not, to an entity associated with Mr Giezekamp.

It may be that Mrs Giezekamp did fund the deposit of $275,000, but the applicants have adduced evidence which raises sufficient doubt on that issue to warrant not varying the freezing orders against Mr Giezekamp at this stage.

17    The evidence before the Court on that occasion included a text message from Mr Giezekamp to Mr Graham Leggate (the sixth applicant) to the effect that Mrs Giezekamp was on the title to the Balmain Property only to prevent a claim or future claim by Mr Giezekamp’s ex-wife: Simmons 2 at [69], [113]. There was also evidence of a conversation between Mr Giezekamp and Mr Brixen to similar effect: Brixen at [16]. The Balmain Property was settled on 29 June 2016. It is relevant to note also that, “[w]hilst an earlier valuation suggested a value of $18.35 million [for the Balmain Property], the Court was informed that the sale was expected to be at a substantially lower price”: Simmons 2 at [125]. The Court was informed that negotiations for the sale of the property were then occurring at around $13 million: T125.32 (5 June 2024); T144.29 (7 June 2024).

18    U Money entered into a creditor’s voluntary liquidation on 14 June 2024.

19    Mr Giezekamp was made bankrupt on his own petition on 22 June 2024. On 25 July 2024, a meeting of creditors resolved that the then trustee of the bankrupt estate of Paul Giezekamp should be removed and that Ms Fleur Evans and Mr David Sampson of BPS Recovery (the Trustees, being the fourth respondents) should be appointed in his place.

20    On 21 August 2024, Mrs Giezekamp’s solicitors wrote to the applicants’ solicitors, the Trustees and others: BND1 at 199. The applicants referred to the hearing on 5 and 7 June 2024 and observed that “counsel for the plaintiffs undertook to commence foreshadowed proceedings against our client pursuant to section 37A … expeditiously”. It noted that 10 weeks had elapsed since that undertaking. The letter observed that Mrs Giezekamp “is 81 years of age and wishes to enjoy the benefit of her assets at this late stage of her life” and that “[s]he should be given the opportunity to contest any proceedings that may be brought against her at the earliest possible opportunity”.

21    The letter included:

Whilst we remain dubious as to the basis of any such claim being able to be properly maintained as against our client having regard to the available contemporaneous evidence, to the extent that such a claim continues to be considered by the plaintiffs, we draw your attention to the following excerpt from the decision in Zaravinos v Houvardas [2004] NSWCA 421:

[44]     In the present case, if the Trustee in bankruptcy had taken steps pursuant to s 121 to avoid the three transfers any creditor would become powerless to interfere under s 37A of the Conveyancing Act …

Our client’s attached proposed orders would allow the Applicants and the Bankruptcy Trustees to liaise with each other to determine the appropriate party to bring claim such a claim (if any) and to ensure that no futile and duplicative proceedings are commenced in light of the aforementioned authority. We reserve all of our client’s rights in this respect.

22    From at least 28 August 2024, the applicants were aware that the Trustees were considering the availability of any action pursuant to s 120 or 121 of the Bankruptcy Act 1966 (Cth) as against Mrs Giezekamp.

23    On 5 September 2024, the applicants filed a Further Amended Statement of Claim (FASOC) and a Second Further Amended Originating Application which made s 37A claims in respect of Mrs Giezekamp’s interests in the Balmain Property and the Five Dock Property.

24    The applicants sought an order that the whole of the Five Dock Property be vested in a trustee and sold by them for the benefit of creditors in Mr Giezekamp’s Bankrupt Estate.

25    The FASOC pleaded at [296] that “Mrs Giezekamp did not provide any moneys towards the purchase of the Five Dock Property”. It pleaded that “[a]t completion, Mr Giezekamp arranged for him and Mrs Giezekamp to become registered proprietors of the Five Dock Property as joint tenants”: at [297]. The FASOC referred to s 37A at [298] and then pleaded:

[299]    At the time of entering into the aforesaid Agreement for Sale of Land to purchase the Five Dock Property on 12 November 2022, Mr Giezekamp had formed the intention of putting a one half interest in the Five Dock Property in Mrs Giezekamp’s name so as to put that interest beyond the reach of his creditors.

Particulars

Text from Mr Giezekamp to Grahame Leggate dated 27 June 2023.

Loan applications by Mr Giezekamp

[300]    By arranging for Mrs Giezekamp to become registered as proprietor of the Five Dock Property as joint tenant with himself as set out in paragraphs 260 to 265 above, Mr Giezekamp’s main purpose in arranging for Mrs Giezekamp to become registered as owner as joint tenant with him of the Five Dock Property was to prevent that interest from becoming divisible amongst his creditors or to hinder or delay the process of making his interest in the Five Dock Property available for division amongst his creditors, in circumstances where:

(a)    Mr Giezekamp was engaged in the hazardous business of property development;

(b)    Mr Giezekamp knew that there was a real risk that by reason of his hazardous business activities including property development, he was or would become insolvent;

(c)    Mr Giezekamp wished to conceal the extent of his true beneficial interest in and ownership of the whole of the Five Dock Property from his ex-wife and his creditors;

(d)    As at 12 November 2022 Mr Giezekamp had substantial creditors including the Applicants, and

(e)    Mrs Giezekamp had contributed no moneys towards the purchase of the Five Dock Property.

26    It is not clear what material justified the assertion that “Mrs Giezekamp did not provide any moneys towards the purchase of the Five Dock Property”. To the extent contemporaneous documents were available to the applicants, those documents tended to suggest that Mrs Giezekamp had provided moneys towards the purchase of the Five Dock Property – see: BND1 at 319. For example, it was known that Mrs Giezekamp had transferred $300,000 from her Westpac account to a Bankwest account immediately before purchase and that Bankwest funded the purchase. It was also known that Mrs Giezekamp had sold a property at Chant Street in 2022 before purchasing the Five Dock Property. It was not in dispute that Mrs Giezekamp had purchased Chant Street in 2002 and that it yielded proceeds to her of almost $1 million: T120.38; T122.17 (5 June 2024).

27    Counsel for the applicants submitted that the principle in Blatch v Archer (1774) 1 Cowp 63 (to which the Court referred in Simmons 2) was relevant in analysing the reasonableness of the decision to commence the proceedings against Mrs Giezekamp. The principle is that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted. The applicants referred to the observation of Cheeseman and McEvoy JJ in CEG Direct Securities Pty Ltd v Cooper as liquidator of Runtong Investment and Development Pty Ltd (in liq) [2025] FCAFC 47 at [151] (citations omitted):

The Blatch v Archer principle bears upon the appropriateness of deciding whether a fact has been proved when only limited evidence is available. Where material evidence is peculiarly within a party’s knowledge, it may be sufficient for the opposing party to adduce slight evidence of a matter in issue.

28    The decision in Blatch v Archer was relevant to the assessment of the evidence that had been adduced in respect of the hearing for continuation of the freezing orders – see: Simmons 2 at [151]. It was also relevant to the applicants’ consideration of its prospects of success in the event it elected to commence proceedings against Mrs Giezekamp. Whilst the Court does not make a finding that there was insufficient material to plead the case the applicants pleaded against Mrs Giezekamp, it should be made clear that the principle in Blatch v Archer does not authorise a legal practitioner to plead a material fact without a sufficient basis. On occasions, the applicants’ submissions tended to suggest that Mrs Giezekamp should have adduced more evidence as an interested party. This misses the point that the applicants elected to join Mrs Giezekamp to the proceedings and to bring a case that Mrs Giezekamp’s interest in the Five Dock Property was acquired as a result of an alienation of property made with an intent to defraud creditors. It also misses the point that, until the morning of the hearing on 5 June 2024, no allegation had been made against Mrs Giezekamp that she did not hold a beneficial interest in the Five Dock Property or that there was a s 37A claim available in relation to her interest in that property. Counsel for the applicants stated that he raised the potential s 37A claim before Halley J in obtaining the freezing orders, but the transcript of that hearing suggests that such a claim was foreshadowed only in respect of the Balmain Property. It is doubtful that the transcript is incorrect in this respect given the likely absence of material available on 2 April 2024 suggesting the availability of such a claim in relation to the Five Dock Property.

29    The text message from Mr Giezekamp to Mr Leggate referred to at [299] of the FASOC related to the purchase of the Balmain Property in 2016, many years before the purchase of the Five Dock Property in 2022. It suggested that the Balmain Property was put into Mrs Giezekamp’s name in the context of a separation. This was of dubious probative value in a s 37A fraud case in relation to Mrs Giezekamp’s purchase with Mr Giezekamp of the Five Dock Property, in which Mrs Giezekamp was to reside.

30    On 19 September 2024, Mrs Giezekamp’s solicitors responded to a notice issued by the Trustees to Mrs Giezekamp under s 77A of the Bankruptcy Act, providing partial production of documents and noting that further documents were being sought: BND1 at 245. The documents related to Mrs Giezekamp’s interest in the Balmain Property and the Five Dock Property.

31    On 6 December 2024, the solicitors for the Trustees wrote to the solicitors for the applicants, indicating that they were “not in a position to consent to your clients’ application for leave to proceed against the bankrupt at the present time”: BND1 at 252. The letter stated in relation to the Balmain Property that “based on current market interest, there may be insufficient funds to payout the first ranking secured creditor”. It stated that, if the Five Dock Property sold favourably, there might be $500,000 for the benefit of creditors. The letter noted that it was difficult to see how the applicants’ s 37A claim in relation to the Balmain Property could succeed:

Whilst our clients have not been directed to give their position on the proposed proceedings by the applicants against Mrs Astrida Giezekamp under s 37A of the Conveyancing Act 1919 (NSW), we make the following further observations as to those proceedings.

We are instructed that the trustees have undertaken further investigations into the acquisition of the Balmain property. Those investigations seem to suggest the Mrs Astrida Giezekamp contributed the sum of $1,673,205.26 from her own financial resources to the purchase price of that property. The source of the majority of those funds was from several inheritances, together with sale proceeds of numerous other properties owned by her, and a gift from her former husband of $432,000.00. However, there are some funds which are still the subject of our clients’ investigations, and our clients are currently issuing further notices under the Bankruptcy Act for the production of further documents, which may assist in establishing the source of these other funds. The purchase of that property settled on 9 June 2016. The earliest alleged claim by your client appears to arise in around July 2018 (see FASOC, [24]), which is more than two years after Mrs Astrida Giezekamp purchased the property.

It further appears that the bankrupt’s only contribution to the purchase of the Balmain property was as a joint borrower in respect of the loan of $3,850,000.00 that he and Mrs Giezekamp obtained from the CBA to complete the purchase. The actual contributions to the mortgage repayments are yet to be assessed, but it appears possible that Mrs Astrida Giezekamp may have valid claims for contribution from the estate.

If that is the true position, and we note that the trustees’ investigations are ongoing, then it is difficult to see how the applicants will establish that the transfer of the Balmain property was undertaken with the necessary intent requirement of s 37A(1). Again, if your clients have further or other information that may assist the trustees in their investigations, then kindly send that on for our clients’ consideration.

32    On 11 December 2024, Mrs Giezekamp’s solicitors wrote to the applicants’ solicitors making a Calderbank offer which identified the costs incurred to date, estimated the future costs if the matter progressed to hearing, and offered to resolve the proceedings on the basis that the proceedings against Mrs Giezekamp be dismissed, the freezing order be discharged and the applicants pay Mrs Giezekamp’s costs as agreed or assessed: BND1 at 248. The offer was open for 14 days.

33    On 13 December 2024, the applicants’ solicitors rejected Mrs Giezekamp’s offer: BND1 at 256. The letter noted that it appeared unlikely that there would be any equity resulting from the sale of the Balmain Property and, in that regard, the principles in Ex parte Lai Qin should apply. It continued:

In relation to the Five Dock property we note that your client has yet to file any evidence as to the provision of any amounts by her toward its purchase in 2023 or how she came to be registered on the title to that property.

In the above circumstances it is not reasonable for your clients to require our clients effectively [to] capitulate and it is reasonable for our clients to reject your clients’ offer.

34    On 13 December 2024, the Trustees indicated that they did not intend to seek any relief pursuant to the Bankruptcy Act against Mrs Giezekamp.

35    On 24 February 2025, Mrs Giezekamp’s solicitors sent a letter to the applicants’ solicitors: Exhibit BND1 at 258. The letter explained in detail why the s 37A claim concerning the Balmain Property had “real difficulties”, including that it was substantially based only on a text message which was “no more than evidence of a desperate attempt by Mr Giezekamp to delay being pursued by one of” the applicants.

36    In relation to the Five Dock Property, the letter: (a) provided documents evidencing the source of funds used to acquire the property (which had also been provided to the Trustees in the course of their investigations); (b) adverted to the “dire” state of the applicants’ evidence in respect of its s 37A claim; and (c) indicated that, given the position adopted by the Trustees as a result of their investigations, there did not appear to be a proper basis to maintain the s 37A claim in respect of the Five Dock Property. The letter attached the letter which had been written to the Trustees on 4 February 2025, together with all of the documents which had been sent to them. It stated:

In particular, we draw your attention to:

(a)     the fact of the sale of our client’s former property sale of 5 Chant Street, Broadbeach Waters, Queensland (5 Chant Street Property) on 3 May 2022 (which she had acquired and owned in her own right, having purchased it on 6 June 2002);

(b)     the sale of the 5 Chant Street Property resulted in a surplus of $989,199.43 being received into our client’s bank account ending in numbers 4063. Shortly thereafter, our client transferred the sum of $500,000 into her bank account ending in numbers 1126; and

(c)     later, on 2 February 2023, the sum of $251,000 was drawn from the account ending in numbers 1126 and paid to account ending 4063, with those funds being utilised to pay a portion of the deposit payable on the Five Dock Property.

37    The letter continued:

Indeed, you will note that we have invited the Trustees to identify what, if any, contributions Mr Giezekamp has made to the purchase of the Five Dock Property other than to be a co-borrower on the loan advanced to assist in paying the balance of the purchase price payable on the Five Dock Property.

… [Y]our clients have identified no evidence whatsoever that directly identifies any intention that our clients’ acquisition as joint tenant with Mr Giezekamp of the Five Dock Property was done to defeat creditors… All of the contemporaneous documents (settlement statements, bank statements, loan documents) are direct evidence against your clients' claim.

At its highest, your clients’ evidence of intention to defeat creditors required to maintain a Section 37A Claim in relation to the Five Dock Property appears to be an alleged inference to be drawn from the allegation that Mr Giezekamp was engaged in the hazardous business of property development (see paragraph 300(a) of the FASOC) which in turn is claimed to colour all acts with a cloak of impropriety. The claim is weak, at best, and will be assessed as unwinnable by any properly advised, objective person reviewing the available evidence.

Whilst we have previously attempted to explain the above matters to your office and your counsel on numerous occasions, their continued aggressive rebuttal of these simple propositions is confusing and perplexing. Indeed, it is our understanding that the independent Trustees (whom your clients selected and took steps to have appointed over Mr Giezekamp’s Bankrupt Estate in replacement of the former trustees) have themselves reviewed the documents and overall transactions the subject of your clients proceedings, taken independent legal advice and satisfied themselves that there is no proper basis to maintain the Section 37A Claims (or any equivalent action) against our client.

This fact alone should inform your clients that no objective person reviewing the available evidence would continue to see the sense or utility in continuing this claim against our client.

38    The letter dated 24 February 2025 contained a second Calderbank offer to resolve the proceedings on the basis that the proceedings against Mrs Giezekamp be dismissed, the freezing order be discharged and the applicants pay Mrs Giezekamp’s costs as agreed or assessed: BND1 at 261. The letter quantified the costs, including those likely to be incurred should the matter continue to a contested hearing. The offer was open for 14 days.

39    On 27 February 2025, the Court heard the applicants’ application for leave to continue proceedings against Mr Giezekamp (a bankrupt) and U Money (a company in liquidation). The liquidators for U Money did not take part in the proceedings. After lengthy argument, and before judgement was about to be delivered, the applicants requested that the Court adjourn the matter to facilitate a potential settlement. The application was listed for judgment at 4pm on 28 February 2025 to provide the parties the opportunity to resolve the matter before that time. The Court made orders at the request of the applicants and the Trustees dismissing the application for leave to continue on 28 February 2025.

40    On 28 February 2025, in response to a request for further documents made by the applicants on 27 February 2025, Mrs Giezekamp provided further documents to support the source of the funds used to acquire the Five Dock Property: BND1 at 297. The letter stated that the offer in the letter of 24 February 2025 remained open until 10 March 2025.

41    At a case management hearing on 3 March 2025, Counsel for the applicants stated that the proceedings concerning the Balmain Property were “appearing more and more inutile” because there would be no equity in the property: T3.24–6. Counsel sought an order that the applicants be permitted to file an amended statement of claim so that only the s 37A claim concerning the Five Dock Property would proceed to hearing: T4.1–6. Mrs Giezekamp’s solicitor sought “the usual order for costs thrown away”: T6.22. Counsel for the applicants submitted that there were no costs thrown away and that the order should not extend to costs in relation to the freezing order or the hearings that have already occurred, referring to Ex parte Lai Qin: T7.20–45.

42    The Court made an order for costs thrown away by reason of the amendment. In context, this should be understood as an order for any direct costs thrown away by the proposed amendments and not an order for the costs of the proceedings in so far as those proceedings concerned the s 37A claim against Mrs Giezekamp in relation to the Balmain Property. The intention was to address the costs of the proceedings more generally at the end of the proceedings, once there had been a determination of the remaining aspect of the claims, namely the s 37A claim concerning the Five Dock Property. The Court did not address the submissions made by the applicants based on Ex parte Lai Qin. In that respect, Counsel for the applicants had submitted that there would be a serious debate given that the Balmain Property was estimated to have a sale value of $18 to $22 million when the proceedings were commenced but was now only estimated to have a sale value of $5 or $6 million: T7.

43    On 7 March 2025, the applicants filed a Second Further Amended Statement of Claim (2FASOC) withdrawing their s 37A claims in relation to Mrs Giezekamp’s interest in the Balmain Property. The Court made various orders, including orders requiring Mrs Giezekamp to file her defence to the 2FASOC and evidence in chief by 28 March 2025, and setting the matter down for hearing of the s 37A case concerning the Five Dock Property on 2 and 3 June 2025.

44    The applicants met with the Trustees on 12 March 2025 and, it is to be inferred, obtained nothing which tended to support the applicants’ case against Mrs Giezekamp concerning the Fiver Dock Property. During argument on the hearing of this costs application, Counsel for the applicants accepted that, at this point in time, the applicants took the view that they could not succeed against Mrs Giezekamp on the material then available.

45    On 14 March 2025, the applicants’ solicitors made a Calderbank offer by email, proposing resolution of the proceedings on the basis that the proceedings against Mrs Giezekamp be dismissed with the parties bearing their own costs: BND1 at 313.

46    Also on 14 March 2025, the applicants’ solicitors sent a second email making the following observations about Mrs Giezekamp’s offer of 24 February 2024 (which had expired on 10 March 2025):

Your client’s offer is not a Calderbank offer as it requires complete capitulation by our clients, rather than a genuine compromise.

We further note the documents provided do not support the position purportedly maintained by your client.

47    On 20 March 2025, Mrs Giezekamp issued a request for further and better particulars in respect of the applicants’ s 37A claim and requested that the applicants identify the affidavit and documentary evidence supporting those claims: BND1 at 349. There was no response to those requests.

48    By a second letter dated 20 March 2025, Mrs Giezekamp (again) invited the applicants to consent to the dismissal of the proceedings: BND1 at 317. This letter set out in detail the information available to the applicants which ought to have shown the applicants that the case against her was “hopeless and cannot be maintained”. The letter also stated, in effect, that the applicants should have realised the case was hopeless from when it was commenced “because there is simply no evidence that your clients have or could point to which substantiates a claim pursuant to section 37A” against Mrs Giezekamp. The letter observed that the applicants had issued various subpoenas, including one dated 15 May 2024 to Bankwest, which resulted in the production of documents which corroborated the position of Mrs Giezekamp. Mrs Giezekamp’s solicitors went to some lengths to explain why that was so. The letter invited the applicants to consent to an order that the proceedings be dismissed forthwith. It contended that the proceedings should never have been commenced. The letter stated:

The reality, as demonstrated above, is that your clients had many of the documents (or the opportunity to obtain and review those documents) well prior to 7 June 2024 to satisfy themselves that the claims against our client were futile. In such circumstances, the appropriate order is that your clients should pay our client’s costs of the Proceedings, as agreed or assessed. We invite your clients to consent to such an order forthwith.

If we do not receive your written response to this letter by 4:00pm on Friday, 21 March 2025, we shall proceed on the basis that your client intends to force our client to run this matter to final hearing and we will proceed accordingly.

49    On 25 March 2025, the applicants agreed to the dismissal of the proceedings against Mrs Giezekamp, save as to costs.

50    The parties jointly approached the Court on 8 April 2025 to make orders by consent that the proceedings be dismissed, except for the issue of costs. Various directions were sought for determination of the costs issue. The Court made the orders, which included retaining 2 June 2025 for hearing argument on costs.

51    The proper characterisation with respect to the s 37A claim concerning the Five Dock Property is that the applicants capitulated, as they ultimately conceded during argument.

52    The applicants complain that neither a defence nor evidence was filed by Mrs Giezekamp in relation to the s 37A claim concerning the Five Dock Property. No criticism can be made in that respect. Agreement for the proceedings to be dismissed had been reached on 25 March 2025, three days before those documents were due to be filed. The fact that those documents were not filed at some earlier time is largely a result of the way the proceedings progressed, including the way in which the applicants conducted the proceedings. It is not something in respect of which Mrs Giezekamp can be criticised. Whilst there was no defence filed, Mrs Giezekamp’s position was at all times made tolerably clear. From the outset she claimed she had a beneficial interest in the properties. From when the s 37A claim was made, she made it clear that she denied it and provided supporting documentary evidence, and a series of explanations, in support of her position.

53    By contrast, other than asserting by [296] of the FASOC that Mrs Giezekamp did not contribute to the purchase of the Five Dock Property (a factual proposition the basis for which is obscure) and that Mr Giezekamp arranged for Mrs Giezekamp to become a registered proprietor to prevent that interest becoming divisible amongst creditors, the applicants did not clearly identify a cogent case against Mrs Giezekamp in relation to the Five Dock Property by reference to evidence or particulars.

54    It was not until oral argument on 2 June 2025 that the applicants accepted that they had capitulated. Up until that time, the applicants had asserted that the proceedings had been rendered inutile by other events and that the principle in Ex parte Lai Qin applied such that there should be no order as to costs.

55    In relation to the s 37A claim concerning the Balmain Property, Mrs Giezekamp submitted that:

(1)    it should be concluded in relation to the s 37A claim regarding the Balmain Property that the applicants capitulated rather than making a decision to abandon the proceedings because it had become clear that there was insufficient equity in the property to justify continuing the proceedings; and

(2)    the principles in Ex parte Lai Qin do not apply where the reason for settlement is a party’s assessment that recovery is unlikely.

56    It is convenient to address the second submission first.

57    If a party in a commercial case becomes aware that recovery is unlikely, it is responsible and consistent with the overarching purpose in s 37M of the FCA Act, not to pursue the proceedings. That circumstance is capable of constituting a supervening event weighing in favour of an order that there be no order as to costs when there is no judicial determination of the merits of the dispute – see, for example, the consideration of the facts in: Zhao v Ausin Group (Australia) Pty Ltd (No 2) [2023] FCA 498 at [28]–[33]; GH1 Pty Ltd (in Liquidation) v Commissioner of Taxation [2017] FCA 652 at [28]–[29]; and Travaglini v Raccuia [2012] FCA 620 at [28]–[32] (a case in which the possible lack of recovery was foreseeable when proceedings were commenced).

58    As to the first submission, the applicants must have known that the s 37A case concerning the Balmain Property was unlikely to succeed from at least 6 December 2024, having received the Trustees’ letter which indicated that the Trustees’ inquiries revealed that “Mrs Astrida Giezekamp contributed the sum of $1,673,205.26 from her own financial resources to the purchase price of that property”. The s 37A claim concerning the Balmain Property was always adventurous. It was pleaded in equivalent to terms to the claim concerning the Five Dock Property. The Balmain Property had been purchased in 2016, many years before any of the applicants had dealings with Mr Giezekamp. The central foundation of the claim, apart from an allegation that Mrs Giezekamp did not contribute to the purchase price, was the text message from Mr Giezekamp to Mr Legatte sent in circumstances where Mr Giezekamp was being pursued by Mr Leggatte for payment. The evidence did not improve from that point.

59    By at least 13 December 2024, when the applicants rejected Mrs Giezekamp’s settlement offer of 11 December 2024, the applicants took the view that there would be no equity in the Balmain Property sufficient for the applicants to recover any amount.

60    Notwithstanding this view, the applicants continued the proceedings. The applicants persisted with their applications under s 58(3) of the Bankruptcy Act and s 500(2) of the Corporations Act 2001 (Cth) for leave to continue the proceedings against Mr Giezekamp and U Money. They evidently also wanted to continue the proceedings against Mrs Giezekamp, notwithstanding the view that they held that there was insufficient equity in the Balmain Property for them to enjoy any recovery.

61    For two reasons, the better inference is that the lack of prospect of recovery played only a small part in the decision to abandon the s 37A claim in relation to the Balmain Property.

62    First, the applicants persisted with the claim for months after they must have been aware that the case was likely to fail, and that there would be insufficient equity in the property for any recovery. The applicants wanted to continue the proceedings against Mr Giezekamp and U Money and only desisted against Mrs Giezekamp when unsuccessful in obtaining leave to continue against those other parties.

63    Secondly, the applicants did not adduce any direct evidence on this application as to their beliefs concerning the value of, and likelihood of recovery from equity in, the Balmain Property when the proceedings were commenced or when and how those beliefs changed. The Court does not accept that the applicants considered the value of the Balmain Property to be $18 to $22 million when they sought an order for the freezing orders to be continued, less still when the proceedings against Mrs Giezekamp were commenced. As mentioned above, when the orders extending the freezing orders were sought, the Court was informed that negotiations for the sale of the property were then occurring at around $13 million. There is no evidence to suggest that the position improved by the time the decision was made to join Mrs Giezekamp to the proceedings in August 2024. The circumstances recounted above suggest that, if anything, the position deteriorated. The better inference is that the applicants elected to commence proceedings against Mrs Giezekamp in relation to the Balmain Property knowing that nothing might be recovered from the proceeds of sale of that property.

64    Taking all of the matters referred to above into account, and leaving aside the question of indemnity costs, the applicants should pay Mrs Giezekamp’s costs of the proceedings from the time she received notice of the freezing orders.

65    As mentioned, Mrs Giezekamp submitted that costs should be awarded on an indemnity basis from 14 December 2024 or, alternatively, from 15 March 2025.

66    Mrs Giezekamp’s solicitors made a number of efforts to resolve the dispute and did so by clearly articulating her position and the problems in the case brought against her. Significant costs were incurred in identifying relevant documents, many of which were obtained under subpoenas issued by the applicants, and explaining Mrs Giezekamp’s position. Mrs Giezekamp repeatedly sought to have careful and considered attention brought to bear by the applicants in relation to the case they had chosen to bring. On several occasions, the solicitors for Mrs Giezekamp explained that Mrs Giezekamp was elderly and sought for the proceedings to be dealt with expeditiously.

67    As the matters referred to earlier indicate, Mrs Giezekamp’s efforts to resolve the proceedings by reference to evidence and reason were not reciprocated, at least as expeditiously as they should have been, and that was so in circumstances where the case against Mrs Giezekamp had obvious difficulties.

68    There was nothing unusual about Mrs Giezekamp having a beneficial interest in the home in which she lived. There was a substantial amount of documentary evidence available at the hearing on 5 and 7 June 2024 which tended to indicate a likelihood that Mrs Giezekamp could have such an asset given her working history and personal circumstances. To this day, nothing clear has emerged which would suggest an alienation of an interest in the Five Dock Property to Mrs Giezekamp with an intent to defraud creditors. The freezing orders were continued on the basis that the proceedings would be conducted expeditiously by the applicants. Mrs Giezekamp has at all times sought to have the proceedings determined expeditiously, regularly raising concerns about delay.

69    Parties must conduct proceedings, “including negotiations for settlement of the dispute to which the proceeding relates”, in accordance with the overarching purpose, which includes an objective of disposing of proceedings in a timely manner and at a cost proportionate to the nature of the dispute: s 37M and s 37N. The applicants ought to have brought more careful consideration to resolution of the dispute so far as concerned Mrs Giezekamp earlier than they did, particularly given Mrs Giezekamp’s repeated efforts to resolve the matter and the material available to the applicants which tended to support Mrs Giezekamp’s position and provided no support for the applicants pleading that Mrs Giezekamp did not contribute to the purchase price of the Five Dock Property. If sufficient attention had been brought to bear, the dispute so far as it concerned Mrs Giezekamp should have terminated considerably earlier than it did, and significant expense would have been avoided.

70    Mrs Giezekamp should receive a full indemnity for her costs from 11 March 2025, the day after her offer of 24 February 2025 expired.

Associate:

Dated: 4 June 2025

SCHEDULE OF PARTIES