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Category: Costs

Parties: Laila Maria Farah (First Plaintiff)
Elena Josephine Farry (Second Plaintiff)
Michael Francesco Farry (Defendant)

Representation: Counsel:
S Docker SC (Plaintiffs)
S Clarke (Defendant)
Solicitors:
Legal One Services Pty Limited (Plaintiffs)
Doyle Legal (Defendant)

File Number(s): 2024/00420461

Publication restriction: Nil

JUDGMENT

1. On 19 May 2026, I delivered reasons for judgment in this proceeding: Farah v Farry [2026] NSWSC 541 (Primary Judgment). These reasons assume familiarity with the Primary Judgment and adopt defined terms used therein.

2. In the Primary Judgment, I determined that the Plaintiffs should be granted the relief which they sought. In particular, I determined that the administration of the Estate had effectively stalled, due to disagreements between the Executors regarding the management and sale of the Property, and that, in order to ensure the due and proper administration of the Estate, and having regard to the interests of the parties beneficially entitled thereto, the Court should revoke the grant of probate and appoint an independent administrator.

3. At the Plaintiffs’ request, I provided the parties with an opportunity to make submissions as to costs after delivering the Primary Judgment. I made directions for the parties to provide their proposed form of orders, and any submissions in support, with the intent that the issue of costs be determined on the papers. The Plaintiffs served their submissions on 26 May 2026, and the Defendant served his submissions on 2 June 2026.

Competing forms of proposed costs orders

4. The Plaintiffs sought orders that:

5. the Defendant personally pay the Plaintiffs’ costs of the Amended Notice of Motion on the ordinary basis and, in the event that he does not pay their costs, those costs are to be deducted from the Defendant’s share of the Estate;

6. any difference between the Plaintiffs’ costs on the indemnity basis and their costs calculated on the ordinary basis is to be paid out of the Estate; and

7. the Defendant shall have no right of indemnity from the Estate in relation to the costs of order (1), or in relation to his own costs of the Amended Notice of Motion.

8. The Defendant sought:

9. as his primary position, that the costs of the Plaintiffs and the costs of the Defendant of the Amended Notice of Motion both be paid from the Estate on a trustee basis; or

10. alternatively, that there be no order as to costs; or

11. alternatively, that the Defendant’s costs be paid from the Estate and there be no order that he personally pay the Plaintiffs’ costs of the Amended Notice of Motion.

Relevant Principles

Rule 42.1

6. Rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides that if the Court makes any order as to costs, the Court is to order that 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. The “event” typically refers to the event of the claim or counter-claim, as the case may be, and may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] (Ward JA (as her Honour then was), Emmett and Gleeson JJA).

8. The only express carve out from the primary rule that costs follow the event is when “it appears to the court that some other order should be made”. There is no express carve out for probate matters or for any other type of matter: The Estate of Mimi Milka Jaksic (Berger) (Costs) [2025] NSWSC 332 at [15] (Hammerschlag CJ in Eq). Probate is not a no costs jurisdiction, even when it comes to parens patriae matters or matters having a public interest element: ibid at [16], referring to Re Kerry (No 2) (Costs) [2012] NSWCA 194 at [13] (Barrett JA) and Oshlack v Richmond River Council (1998) 193 CLR 72 at 106; [1998] HCA 11 (McHugh J).

9. In Re Estate of Paul Francis Hodges; Shorter v Hodges (1988) 14 NSWLR 698 at 709, Powell J referred to two recognised “exceptions” in probate litigation to the general principle that costs follow the event:

10. first, where the testator has been the cause of the litigation, the costs of the party unsuccessfully opposing probate may be ordered to be paid out of the estate; and

11. secondly, where the circumstances led reasonably to an investigation concerning the testator’s will, the costs may be left to be borne by those who incurred them.

(See also Kemp v Findlay [2025] NSWCA 46 at [220]-[221] per Ward P, with whom Leeming and Ball JJA agreed.)

10. The term “exception” may be thought to imply that the general rule in r 42.1 of the UCPR does not operate in particular circumstances, however this would clearly be wrong: “it is not for the courts to craft exceptions to a statutory rule” (Estate of Mimi Milka Jaksic at [17]-[18], quoting Basten AJ in Etherton v Mitchelmore [2024] NSWSC 170 at [69]).

11. The “recognised exceptions” are not a fetter on the Court’s wide discretion under r 42.1: Estate of Mimi Milka Jaksic at [19], referring to Alexakis v Masters (No 3) [2023] NSWSC 694 at [12] (Henry J) and Knox v Peacock (No 2) [2024] NSWSC 1372 at [39] (Hmelnitsky J). Rather, they are examples of circumstances which one might, because of the nature of the litigation, expect regularly to arise in probate matters, and where the Court might be satisfied that, as provided for by r 42.1, “some other order should be made”: ibid.

12. Examples of cases where the Court has ordered costs be paid by a defendant who unsuccessfully opposed a plaintiff’s application to revoke a grant of probate include Schaverien v Jones [2007] NSWSC 1429 at [105] (Bryson AJ) and Lester v Brown [2022] NSWSC 716 at [128] (Hallen J). These cases were referred to in the Primary Judgment (at paragraphs [93], [95]-[96], [98], [99] and [101]).

Rule 42.25

13. Rule 42.25 of the UCPR provides that:

(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.

14. The Plaintiffs acknowledged that, although subr 42.25(1) of the UCPR does not refer to an executor, the reference to a trustee in the rule includes an executor, and therefore the Defendant would prima facie be entitled to an indemnity in respect of both his costs and any costs which he is obliged to pay to the Plaintiffs: see Photios v Photios [2019] NSWCA 158 at [86] and [88] per Bell P (as his Honour then was), with whom Gleeson and Leeming JJA agreed.

15. However, subr 42.25(2) confers on the Court a discretion to order that an executor not be so indemnified if he or she either (a) has acted unreasonably, or (b) has in substance acted for his or her own benefit rather than for the benefit of the fund.

16. In Nobarani v Mariconte (No 2) [2018] HCA 49 at [2], the High Court (Kiefel CJ, Gageler, Nettle, Gordon and Edelman JJ) made the following observations (footnotes omitted):

“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 unsuccessfully, but reasonably, seeks to uphold a grant of probate on appeal.”

17. The High Court held that in the circumstances of that case – “where the respondent reasonably and properly sought and obtained a grant of probate in solemn form, and then reasonably and properly resisted appeals seeking to set aside that grant of probate” – the costs which the respondent had been ordered to pay to the appellant should be paid from the estate of the deceased and on a trustee basis (see at [3], [6]).

18. In Perpetual Trustee Company Ltd v Baker [1999] NSWCA 244 at [15] (Perpetual Trustee v Baker), Giles JA and Brownie AJA determined that, in circumstances where the respondent executor “was a necessary contradictor and can hardly be said to have acted unreasonably when possessed of a judicially sanctioned grant”, a proper exercise of discretion was that the costs of the appeal should be paid out of the estate of the deceased.

19. In Photios v Photios at [92]-[93], Bell P referred to this passage from Perpetual Trustee v Baker and determined that subr 42.25(2) did not apply because the executor was a necessary contradictor to the appellant’s application to amend his cross-claim to seek an order revoking the grant of probate, and it was not unreasonable for the executor to oppose this amendment application.

Determination

20. In the present case, the Plaintiffs successfully obtained all of the relief which they sought in the Amended Notice of Motion, in circumstances where the Defendant contested the application and opposed any of that relief being granted.

21. Further, the Plaintiffs acted reasonably in bringing their application, in circumstances where the administration of the Estate had effectively stalled, due to disagreements between the Executors regarding the management and sale of the Property, and the appointment of an independent administrator was necessary in order to ensure the due and proper administration of the Estate.

22. Having regard to those matters, orders should be made that:

23. the Defendant pay the Plaintiffs’ costs of the Amended Notice of Motion on the ordinary basis (applying the general rule in r 42.1 of the UCPR that costs follow the event); and

24. the Plaintiffs are entitled (pursuant to subr 42.25(1)) to indemnity from the Estate for the difference between their costs on the ordinary basis and their costs on an indemnity basis (noting that orders to similar effect were made in Lester v Brown at [128(13)] and Pye v Pye [2021] NSWSC 686 at [87(11)] (Hallen J)).

25. The Defendant contended that his own costs of the Amended Notice of Motion, as well as any costs liability to the Plaintiffs, should be met from the Estate, having regard to subr 42.25(1).

26. The Plaintiffs sought an order that the Defendant not be entitled to any such indemnity, on the basis that the Defendant had “acted unreasonably” and had acted “for his own benefit” rather than the benefit of the Estate (within the meaning of subr 42.25(2)).

27. The Plaintiffs referred to two main respects in which the Defendant’s conduct was alleged to have been “unreasonable”.

28. The first was that it was unreasonable for the Defendant to oppose the Plaintiffs’ application to revoke the grant of probate in circumstances where the Defendant was in a position of conflict between his duties as Executor and his personal interests.

29. I do not accept this submission. I noted in the Primary Judgment that the Plaintiffs had asserted that the Defendant was in a position of conflict by reason that he was liable to the Estate for the costs of remediating the contaminated landfill. I did not, however, make any finding that the Defendant was so liable or that he was in a position of conflict (see Primary Judgment, [10], [18]-[20], [28], [34], [38], [114]).

30. The second was that the Plaintiffs’ application arose from, and was necessitated by reason of, the Defendant’s unreasonable conduct.

31. I accept this submission, having regard to the following matters.

32. The Plaintiffs and the Defendant were obliged to comply with the Consent Orders, which required the Executors “to take such steps and to do such things as the Property Lawyers recommend in connection with any Contamination” (Primary Judgment, [22]-[23]).

33. The advice of the Property Lawyers included that:

(a) the Executors should arrange for a suitably qualified environmental consultant to test for contaminants, should follow any advice provided by that consultant, should prepare a remediation action plan, should notify all relevant authorities, and should ensure that any contaminated fill is disposed of lawfully (Primary Judgment, [26]); and (b) there were “two options” available to the Executors – namely, to carry out remediation of the Property prior to sale, or to list the Property for sale and provide disclosure to prospective purchasers of the contamination – and the Executors should “confer and advise what course they wish to take”, as the Property Lawyers could not proceed “until there is consensus” between the Executors (Primary Judgment, [56], [68]).

3. The Plaintiffs sought to co-operate with the Defendant to implement the Property Lawyers’ advice, including by seeking to confer and agree with the Defendant in relation to, among other things:

(a) the identity of a suitably qualified environmental consultant; (b) the scope of the testing to be undertaken by that consultant; (c) the question whether the Property should be sold prior to or after remediation; and (d) the scope of the remediation works, so as to ensure that any contaminated fill is disposed of lawfully.

(Primary Judgment, [27]-[28], [31], [49]-[50], [59], [64]-[65], [69], [71].)

4. However, the Defendant took unilateral steps in relation to the Property without the prior knowledge or consent of his fellow Executors, including engaging Rose Testing to test for contaminants at the Property and engaging Mr Farrugia to remove contaminated soil from the Property. Further, the Defendant did not provide the Plaintiffs with information requested by them regarding the scope of works being performed by either Rose Testing or Mr Farrugia, or whether their respective works were being conducted in accordance with relevant standards and requirements. In addition, the Defendant initially excluded the environmental consultant nominated by the Plaintiffs (EI Australia) from accessing the Property to test for contaminants and then, when access was obtained and a report was prepared by EI Australia, the Defendant simply ignored the report. He did not read or seek advice on the report or any of its recommendations. Nor did he provide Mr Farrugia with a copy of EI Australia’s advice regarding the steps necessary to complete the remediation works (see Primary Judgment, [30]-[32], [35], [60]-[62], [63], [65]-[67], [70], [72]-[77]).

5. Having regard to those matters, I determined that the Executors had been unable to reach consensus regarding the management and sale of the Property, and the administration of the Estate had effectively stalled, such that the relief sought by the Plaintiffs was necessary in order to ensure the due and proper administration of the Estate (Primary Judgment, [103]-[115], [129]).

6. This is not a case of the Executors simply having different views and being unable to reach consensus, such that they were in a position of deadlock. Instead, it is a case where the Plaintiffs were consistently trying to engage with, and reach consensus with, the Defendant in order to implement the Consent Orders, but where the Defendant proceeded to make decisions regarding the Property, and to implement works at the Property, without his fellow Executors’ prior knowledge or consent, in circumstances where he was aware that such steps were contrary to their expressed wishes.

7. For those reasons, I am satisfied that this is a case where the Plaintiffs’ application was made necessary as a result of the Defendant’s unreasonable conduct, such that it would not be reasonable for the Estate to bear all of the costs of the application: see Pye v Pye at [82] (Hallen J); Lester v Brown at [126]. Instead, the appropriate form of orders is that the Defendant is to personally bear the Plaintiffs’ costs of the Amended Notice of Motion on the ordinary basis, as agreed or assessed, and that the Defendant shall not be entitled to indemnity from the Estate for the costs he is ordered to pay the Plaintiffs or for his own costs. Further, I will order that, in the event that the Defendant does not pay those costs, such costs are to be deducted from the Defendant’s share of the Estate: see Pye v Pye at [87(10)].

ORDERS

32. Accordingly, I make the following orders:

33. The Defendant is to personally pay the Plaintiffs’ costs of the Notice of Motion filed 27 March 2026 (as amended) on the ordinary basis, as agreed or assessed and, in the event that the Defendant does not personally pay such costs, those costs are to be deducted from the Defendant’s share of the estate of the late Elda Farry, deceased (Estate).

34. Any difference between the Plaintiffs’ costs calculated on an indemnity basis and their costs calculated on the ordinary basis is to be paid out of the Estate.

35. The Defendant shall have no right of indemnity from the Estate in relation to the costs of Order (1), or in relation to his costs of the Plaintiffs’ Notice of Motion filed 27 March 2026 (as amended).

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