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File Number(s): 2024/460832
2024/460951

Publication restriction: N/A

Judgment

Introduction

1. These reasons concern the costs of these proceedings, in which the principal judgment was delivered on 30 July 2026: Bruce v Bruce [2026] NSWSC 900.

2. Familiarity with the principal judgment is assumed. Naming conventions and defined terms used in the principal judgment are also used in these reasons.

3. Paula was successful, and Robert was unsuccessful, in the two proceedings referred to at [12]-[13] of the principal judgment.

4. Paula seeks an order that Robert pay the whole of her costs of both proceedings on an indemnity basis. Alternatively, Paula seeks an order that Robert pay 90% of her costs of both proceedings on an indemnity basis up to 11 May 2026 (the date of a Calderbank offer made by Paula) or 14 May 2026 (the date of offers of compromise made by Paula in each proceeding) and 100% of her costs of both proceedings on an indemnity basis thereafter. Paula submits that her costs of the proceedings, to the extent they are not paid by Robert, should be paid out of the deceased’s estate on an indemnity basis in satisfaction of her right of indemnity as an executor. Paula submits that Robert should pay all of his own costs of the proceedings.

5. Robert seeks an order that his and Paula’s costs of both proceedings be paid out the deceased’s estate on an indemnity basis. Alternatively, Robert seeks an order that there be no order as to costs, with the intention that he and Paula each pay their own costs of both proceedings.

Applicable principles

6. As both parties submitted, the Court has a broad discretion in relation to costs under s 98 of the Civil Procedure Act 2005 (NSW). By reason of r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (the UCPR), costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs.

7. There are two circumstances that regularly arise in probate litigation which might result in the Court determining in a particular case that some order should be made other than an order that costs follow the event. The first is where the testator, or others interested in the estate, have caused the litigation in which the plaintiff challenged the will. Where the plaintiff is unsuccessful in such a case, their costs may be paid out of the estate. The second is where there were circumstances that reasonably called for an investigation of the will. Where the plaintiff’s challenge to the will is unsuccessful in such a case, the costs may be left to be borne by those who incurred them. [1]

8. Unless the Court otherwise orders, costs payable to a person under an order of the Court are payable on the ordinary basis. [2] The Court may order an unsuccessful party to pay the successful party’s costs on an indemnity basis rather than on the ordinary basis where the unsuccessful party has conducted the case in a manner that has unreasonably subjected the successful party to costs. Examples of such cases include where the unsuccessful party, properly advised, should have known that they had no chance of success, or where the unsuccessful party prolonged the litigation after they knew that their claim or defence had no reasonable prospects of success. However, it is important in such cases to be wary of reasoning with the benefit of hindsight. Further, an indemnity costs order is made, not to punish the unsuccessful party for their conduct, but to fully compensate the successful party for the costs that they incurred. [3]

9. Rule 42.25 of the UCPR provides:

(1) Subject to subrule (2), a person who is or has been a party to any proceedings in the capacity of trustee or mortgagee is entitled to be paid his or her costs in the proceedings, in so far as they are not paid by any other person, out of the fund held by the trustee or out of the mortgaged property, as the case may be.

(2) The court may order that the person’s costs not be so paid if —

(a) the trustee or mortgagee has acted unreasonably, or

(b) in the case of a trustee, the trustee has in substance acted for his or her own benefit rather than for the benefit of the fund.

10. The reference to a trustee in r 42.25 includes an executor. [4]

11. In Nobarani v Mariconte (No 2), the High Court stated (citations omitted): [5]

The general rule concerning executors, like that concerning trustees, is that costs properly and reasonably incurred by the executor in connection with the administration of the estate are payable from the estate . These costs can include litigation expenses. Some examples of recoverable litigation expenses are: where an executor has a reasonable and bona fide belief in the validity of the will albeit one that is found to be incorrect; where an executor is unsuccessful in reasonably defending an action brought by legatees; or where an executor unsuccessfully, but reasonably, seeks to uphold a grant of probate on appeal.

Consideration and determination

12. As recorded in the principal judgment, Robert claimed that the 2015 Will was invalid and sought a grant of probate in respect of the 2010 Will on the grounds that the deceased lacked testamentary capacity at the time she executed the 2015 Will, that there were suspicious circumstances surrounding the preparation and execution of the 2015 Will, and that the deceased executed the 2015 Will under the undue influence of Paula. In the event that the 2015 Will was upheld, Robert pressed a claim to be entitled to the deceased’s principal asset pursuant to an alleged testamentary contract or by operation of the doctrine of proprietary estoppel. Paula defended Robert’s claims and sought a grant of probate in respect of the 2015 Will. Robert’s claims were the substance of his defence to Paula’s claim. Thus, the two proceedings raised the same issues for determination, and were heard together with evidence in one being evidence in the other. Any costs orders made should apply to both proceedings.

13. I reject Robert’s submission that the whole of his case was caused by the deceased and/or by Paula, or that it arose out of circumstances which reasonably called for an investigation of the 2015 Will.

14. I accept that Paula’s involvement in the arrangements made for the preparation and execution of the 2015 Will after previously ceasing contact with the deceased for an extended period following Paula’s protests against the unfairness (in her view) of the 2010 Will, and Paula’s presence on the occasion when the 2015 Will was written and executed notwithstanding that she expected to be a beneficiary under the 2015 Will and did in fact benefit to a materially greater extent than under the 2010 Will, [6] reasonably called for an investigation into whether the deceased knew and approved the 2015 Will and whether the deceased executed the 2015 Will under the undue influence of Paula.

15. However, those matters did not call for Robert to mount the case that the benefits received by Paula under the 2015 Will were themselves a suspicious circumstance on the basis of his contentions that Paula had already received substantial benefits from 9 Berwick Street and that those benefits likely explained the terms of the 2010 Will. Those contentions were founded on an unmeritorious attempt to re-cast the substance and effect of the 1993 transaction in a manner that was inherently implausible and inconsistent with Robert’s own contemporaneous notes. It was, in substance, an allegation that the 1993 transaction documents were a sham. [7] This accounted for a material proportion of the costs of the proceedings, as both parties adduced extensive evidence about the 1993 transaction and subsequent dealings with 9 Berwick Street and alleged conversations about those dealings over many years. [8] Based on my review of the evidence and my observation as to the time spent on different topics in the cross-examination of witnesses and in submissions during the hearing, I estimate that Robert’s unmeritorious contentions, and Paula’s responses to them, accounted for approximately 60% of the costs of Robert’s challenge to the validity of the 2015 Will on the grounds of suspicious circumstances and undue influence. That is to say, I consider that about 40% of the parties’ costs of Robert’s suspicious circumstances case, together with their costs of his undue influence case, can be attributed to Paula’s conduct which created circumstances that reasonably called for an investigation of the 2015 Will. Robert, as a co-executor of the deceased’s estate with Paula, did not act unreasonably in causing those costs to be incurred. Paula, who successfully defended those claims, should be compensated for her costs in doing so. I estimate that 40% of the parties’ costs of Robert’s suspicious circumstances case, together with their costs of his undue influence claim, equates to approximately 30% of their total costs of the proceedings. Again, that estimate is based on my review of the evidence and my observation as to the time spent on different topics in the cross-examination of witnesses and in submissions during the hearing.

16. Robert’s case that the deceased lacked testamentary capacity when she made the 2015 Will – which he abandoned in closing submissions – was not caused by the deceased or by Paula. The circumstances that called for an investigation of the 2015 Will did not raise doubts about the deceased’s testamentary capacity when the 2015 Will was executed on 22 March 2015. Robert bears responsibility for his decision to prosecute that claim until closing submissions on the basis of his evidence which was inconsistent with his own bank statements and with the deceased’s contemporaneous medical records that were produced on subpoena in these proceedings in May 2025. [9]

17. Robert’s testamentary contract and proprietary estoppel claims were not caused by the deceased or by Paula and had nothing to do with the circumstances that called for an investigation of the 2015 Will. Robert advanced those claims for his own benefit and in an adversarial manner on the basis of evidence that was inherently unreliable due to the passage of time since the alleged promises were said to have been made and that was inconsistent with wills made by his parents. The claims were inconsistent with Robert’s principal case theory underpinning his challenges to the validity of the 2015 Will. [10]

18. For all of the reasons explained above, and subject to the Calderbank offer and the offers of compromise to which I refer below, the appropriate exercise of the Court’s discretion in respect of costs in this case is to order that 30% of the parties’ costs of the proceedings be paid out of the deceased’s estate on an indemnity basis, and that costs otherwise follow the event so that Robert pays 70% of Paula’s costs on the ordinary basis. To the extent that Paula’s costs are not recoverable under those two orders, there will be an order pursuant to r 42.25 of the UCPR that her costs be paid out of the deceased’s estate on the indemnity basis because Paula incurred those costs acting reasonably as an executor in defending Robert’s testamentary contract and proprietary estoppel claims, his unmeritorious contentions concerning 9 Berwick Street, and his abandoned contention that the deceased lacked testamentary capacity, and in seeking to uphold the deceased’s 2015 Will. In prosecuting those claims and propounding those contentions, Robert was acting for his own benefit and in an adversarial manner. Consistently with r 42.25(2)(b), it is appropriate to order that Robert pay his own costs of the proceedings save for the 30% that is to be paid out of the estate on an indemnity basis in respect of his suspicious circumstances and undue influence claims.

19. The 70% of Paula’s costs that are payable by Robert are to be paid on the ordinary basis, and not on the indemnity basis. Robert’s testamentary contract and proprietary estoppel claims, and his abandoned contention that the deceased lacked testamentary capacity, were weak for the reasons explained above and failed for the reasons explained in the principal judgment. Robert’s contentions in relation to 9 Berwick Street and the 1993 transaction which infected his challenges to the 2015 Will were unmeritorious for the reasons explained above and were rejected for the reasons explained in the principal judgment. However, it was not put to Robert that he lied when giving evidence in support of those claims and contentions, and I do not think that it can be said without the benefit of hindsight that he should have known that those claims had no chance or no reasonable prospect of success and that those contentions would be rejected. I infer that Paula herself did not form that assessment at the time, as she went to the trouble of responding in great detail to all of Robert’s evidence concerning historical family relationships and property transactions dating back to the 1970s.

20. It remains to consider whether the 70% of Paula’s costs that are payable by Robert should be payable on an indemnity basis from 11 May 2026 by reason of Robert’s failure to accept a Calderbank offer made by Paula on that date, or from 14 May 2026 by reason of Robert’s failure to accept offers of compromise made by Paula under r 20.26 of the UCPR on that date.

21. The 11 May 2026 offer was a Calderbank offer to resolve both proceedings on terms that probate of the 2015 Will be granted to Paula and Robert in solemn form, that Robert receives $200,000 from Paula’s share of the deceased’s estate in addition to his entitlements under the 2015 Will, and that each party’s costs of the proceedings be paid out of the estate on an indemnity basis.

22. The 14 May 2026 offers made under r 20.26 comprised:

23. an offer to compromise the proceedings commenced by Robert on terms that the proceedings be dismissed and that each party’s costs of the proceedings be paid out of the deceased’s estate on an indemnity basis; and

24. an offer to compromise the proceedings commenced by Paula on terms that probate of the 2015 Will be granted to Paula and Robert in solemn form, that Robert receives $200,000 from Paula’s share of the deceased’s estate in addition to his entitlements under the 2015 Will, and that each party’s costs of the proceedings be paid out of the estate on an indemnity basis.

25. If Robert had accepted the Calderbank offer or the offers of compromise, he would have achieved a more favourable outcome than he achieved at trial. However, I accept his submission that he did not act unreasonably in failing to accept the Calderbank offer. As at the date of the offer, putting to one side Robert’s contention that the benefits received by Paula under the 2015 Will were a suspicious circumstance, he had reasonable prospects of success in challenging the validity of the 2015 Will on the grounds of the other alleged suspicious circumstances and/or undue influence. Much would depend on the cross-examination of Paula and Oliver. If the 2015 Will was not upheld, there would be a grant of probate in respect of the 2010 Will. That would benefit not only Robert, but also the deceased’s grandchildren who were named as beneficiaries under the 2010 Will. In those circumstances, it was not unreasonable in my opinion for Robert to choose to have those claims determined by the Court rather than accepting the Calderbank offer. [11]

26. I accept Robert’s submission that those circumstances are a reason for the Court to “otherwise order” in respect of the offers of compromise so that Robert’s failure to accept those offers does not have the presumptive consequences provided for in r 42.14 and 42.15 of the UCPR.

27. For those reasons, the 70% of Paula’s costs that are to be paid by Robert are to be paid on the ordinary basis, and not on an indemnity basis from 11 or 14 May 2026.

Conclusion and orders

26. For all of the foregoing reasons, the orders of the Court are as follows in proceedings 2024/460832 and 2024/460951:

27. Order that thirty per cent of each party’s costs are to be paid out of the estate of the late Agnes Bruce (the estate) on an indemnity basis.

28. Order that Robert Colin Bruce (the plaintiff in proceeding 2024/460832 and the defendant in 2024/460951) is to pay seventy per cent of the costs of Paula Margaret Bruce (the defendant in proceeding 2024/460832 and the plaintiff in 2024/460951) on the ordinary basis.

29. Order that the costs of Paula Margaret Bruce that are not recoverable under orders 1 and 2 above are to be paid out of the estate on an indemnity basis.

30. Order that Robert Colin Bruce is to pay his own costs, save for those costs that are to be paid out of the estate pursuant to order 1 above.

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Endnotes

Alexakis v Masters (No 3) [2023] NSWSC 694 at [7]-[14] (Henry J) and the authorities there referred to; Kemp v Findlay [2025] NSWCA 46 at [220]-[230] (Ward P, Leeming and Ball JJA agreeing); Farah v Farah (No 2) [2026] NSWSC 631 (Farah v Farah) at [11] (Nixon J).

UCPR, r 42.2.

Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12 at [4] (Allsop P, Beazley and Campbell JJA agreeing); Bookarelli Pty Ltd v Katanga Developments Pty Ltd (No 2) [2017] NSWCA 94 at [8]-[12] (Macfarlan, Payne JJA and Sackville AJA).

Farah v Farah at [14] (Nixon J), referring to Photios v Photios (2019) 372 ALR 264; [2019] NSWCA 158 at [86] and [88] (Bell P, as the Chief Justice then was, Gleeson and Leeming JJA agreeing).

(2018) 360 ALR 390; [2018] HCA 49 at [2] (Kiefel CJ, Gageler, Nettle, Gordon and Edelman JJ).

Principal judgment at [144]-[179], [189]-[207], [222], and [227]-[228].

Principal judgment at [56], [58]-[84], [222].

Principal judgment at [85]-[88], [91]-[104], [109]-[129].

Principal judgment at [180]-[181].

Principal judgment at [42]-[43] and [54]-[56].

Miwa Pty Ltd v Siatan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [12] (Basten JA, McColl and Campbell JJA agreeing).