Goulston v Bogasi Pty Ltd; Bogasi Pty Ltd v Sundell; Tamara Jane Goodwin as Administrator of the Estate of James Ralph Sundell v Bogasi Pty Ltd as Trustee for the James Ralph Sundell Trust (No 2)

Legislation Cited: Supreme Court Rules 1970 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited: Primary Securities Ltd v Willmott Forests Ltd (mgrs and recs apptd) (in liq) (2016) 50 VR 752; [2016] VSCA 309
Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698
Re Minister for Immigration & Ethnic Affairs of the Commonwealth of Australia; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6
Re Universal Distributing Company Ltd (in liq) (1933) 48 CLR 171; [1933] HCA 2
Stewart v ATCO Controls Pty Ltd (in liq) (2014) 252 CLR 307; [2014] HCA 15
Thackray v Gunns Plantation Ltd [2011] VSC 380; (2011) 85 ACSR 144
Torlonia v Wright (No 2) [2017] NSWSC 951
Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18

Texts Cited: D Heydon, M Leeming and PG Turner, Meagher, Gummow and Lehane’s Equity: Doctrine & Remedies (5th ed, 2014, Lexis Nexis Butterworths)
AG Neville and AW Ashe, Neville & Ashe: Equity Proceedings with Precedents (New South Wales) (1981, Butterworths)
Ritchies Uniform Civil Procedure (NSW), [r 46.8]

Category: Costs

Parties: Proceedings 2019/390407
Anne-Katrine Goulston (Plaintiff)
Bogasi Pty Ltd (Third Defendant)
Elmach Pty Ltd (Eighth Defendant)
Tamara Jayne Goodwin as Administrator of the Estate of the Late James Sundell (Ninth Defendant)
Proceedings 2019/390407 First Cross-Claim
Elmach Pty Ltd (Cross-Claimant)
Anne-Katrine Goulston (Cross-Defendant)
Proceedings 2019/390407 Second Cross-Claim
Kim Sundell (Cross-Claimant)
Anne-Katrine Goulston (First Cross-Defendant)
Tamara Jayne Goodwin as Administrator of the Estate of the Late James Sundell (Second Cross-Defendant)
Elmach Pty Ltd (Third Cross-Defendant)
Bogasi Pty Ltd (Fourth Cross-Defendant)
Three Crowns Investments Pty Ltd (Fifth Cross-Defendant)
Proceedings 2019/390407 Third Cross-Claim
Bogasi Pty Ltd (Cross-Claimant)
Kim Sundell (First Cross-Defendant)
Elmach Pty Ltd (Second-Cross Defendant)
Tamara Jayne Goodwin as Administrator of the Estate of the Late James Sundell (Third Cross-Defendant)
Three Crown Investments Pty Ltd (Fourth Cross-Defendant)
Proceedings 2022/96516
Bogasi Pty Ltd (Plaintiff)
Kim Sundell (Defendant)
Proceedings 2023/157660
Tamara Jayne Goodwin as Administrator of the Estate of the Late James Sundell (Plaintiff)
Bogasi Pty Ltd as Trustee for the James Ralph Sundell Trust (Defendant)
Proceedings 2023/157660 First Cross-Claim
Bogasi Pty Ltd (First Cross-Claimant)
Tamara Jayne Goodwin as Administrator of the Estate of the Late James Sundell (First Cross- Defendant)
Kim Sundell (Second Cross-Defendant)
Brett Sundell (Respondent to construction motions)

Representation: Counsel: A Byrne (Anne-Katrine Goulston)
S Chapple SC (Kim Sundell)
M Condon SC/A Bulley (Bogasi Pty Ltd/Bogasi Pty Ltd as Trustee for the James Ralph Sundell Trust)
P Jammy (Elmach Pty Ltd)
A Cheshire SC/T Catanzariti (Tamara Jayne Goodwin as Administrator of the Estate of the Late James Sundell)
CP Birtles (Brett Sundell)
Solicitors: MJM Lawyers (Anne-Katrine Goulston)
Brown Wright Stein (Kim Sundell)
Piper Alderman (Bogasi Pty Ltd/Bogasi Pty Ltd as Trustee for the James Ralph Sundell Trust)
Clayton Utz (Elmach Pty Ltd)
Ronayne Lawyers (Three Crown Investments Pty Ltd)
Bridges Lawyers (Brett Sundell)
Glass Goodwin (Tamara Jayne Goodwin as Administrator of the Estate of the Late James Sundell)

File Number(s): 2019/390407; 2022/96516; 2023/157660

EX TEMPORE JUDGMENTS (REVISED) AND RESERVED JUDGMENT

Introduction

1. The Court delivered its principal judgment on 29 August 2025: Goulston v Bogasi Pty Ltd; Bogasi Pty Ltd v Sundell; Tamara Jane Goodwin as Administrator of the Estate of James Ralph Sundell v Bogasi Pty Ltd as Trustee for the James Ralph Sundell Trust [2025] NSWSC 989. These reasons should be read, and assume familiarity, with the principal judgment. Defined terms in the principal judgment have the same meaning in these reasons.

2. Since the delivery of the principal judgment, the Court has made some orders to give effect to that judgment. That task continues. The Court made directions for a hearing to determine outstanding matters, in particular costs. This latter topic produced a further five volume court book and submissions of approximately 160 pages. The further costs hearing occupied a day and a half. The appearances for the parties were unchanged, with the exception of Mr Chapple SC being leading counsel for Kim after the appointment of Ms Needham SC (as her Honour then was) to the Federal Court of Australia.

3. The issues raised by the parties fell into three categories.

4. The first was several relatively straightforward or procedural issues which the Court resolved without reasons (and none were sought).

5. The second was several more substantive applications for which reasons were given ex tempore and are set out in what follows.

6. The third was an application by Bogasi on which the Court reserved its judgment, which is resolved in the final section of these reasons. Bogasi relied on the fact that its forensic efforts against Kim had resulted in the estate becoming entitled to the Elmach units. Its application was that it be indemnified by the Administrator for its costs against Kim, secured by an equitable lien over the Elmach units in the amount of those costs, relying on the decision of the High Court in Re Universal Distributing Company Ltd (in liq*)* (1933) 48 CLR 171; [1933] HCA 2. For the reasons set out below in [42] and following, the Court has determined that Bogasi should be indemnified from the estate as to 10% of its costs against Kim secured by an equitable charge on terms over the Elmach units.

Anne-Katrine’s application to have her costs paid by the estate

7. Anne-Katrine seeks her costs from the estate of the 2019 proceedings concerning her claim to 20% of the Beecroft property. The fundamental premise of that argument is that the source of that dispute was the invalid Nomination and the dispute over the ownership of the Elmach units. For the reasons advanced in their written submissions by both Mr Cheshire SC and Mr Condon SC, I accept their submission that there is no causative connection that can be made out between that dispute and the dispute between Anne-Katrine and Elmach.

8. In my respectful view, their dispute had its origins in Anne-Katrine’s desire, about which I make no adverse comment, to sell the Beecroft property and move somewhere else. Who was the ultimate controller of Elmach as a trustee at that point is irrelevant to the question of what would have then happened, because the trustee (whoever it was or by whomever it was controlled) would clearly have had a duty to protect the asset which was perceived to be an Elmach trust asset, namely the 20% interest in the Beecroft property.

9. As I do not accept the fundamental premise of Anne-Katrine’s submission as to why the estate should pay those costs, that application is refused. By way of further explanation, I have taken into account Mr Byrne’s submission that there is an analogy available in the oft-cited decision of Powell J (as his Honour then was) in Re Hodges*;* Shorter v Hodges (1988) 14 NSWLR 698 at 709 and the “exceptions” to the ordinary rule as to costs identified in that case in probate litigation. I describe them as “exceptions” for convenience. They are not in themselves general rules, but potential applications of the Court’s costs discretion in certain circumstances.

10. Mr Byrne candidly accepted that the first of those “exceptions”, namely that Jim was the cause of litigation, depended upon my acceptance of what I referred to as Anne-Katrine’s fundamental premise that the fight over the ownership of the Elmach units was the cause of the litigation between Anne-Katrine and Elmach. Because I do not accept that fundamental premise, even if I were otherwise disposed to the view that an analogy was available with the first “exception” in Hodges, it fails.

11. As a fallback, in support of an order that Anne-Katrine not be ordered to pay the costs of the Beecroft property proceedings, Mr Byrne also sought to invoke the second of the Hodges “exceptions”, being circumstances leading reasonably to an investigation in relation to the document propounded. I do not agree that somehow the debate over the Elmach units could be tied back in any way to the will. The only aspect of the will that was relevant to Anne-Katrine’s case, and upon which she was unsuccessful, was whether or not the provision in the will requiring the payout of mortgages was applicable to the 20% interest in the Beecroft property.

12. In those circumstances, I am unable to discern any basis upon which anything other than the usual consequences should follow in a case where Anne-Katrine has not succeeded in any of the relief which she sought and Elmach has succeeded in obtaining the relief which it sought in its cross-claim. In those circumstances, costs should follow the event and there will be an order that Anne-Katrine pay Elmach’s costs of the 2019 proceedings.

13. For the avoidance of doubt, and to the extent there is any issue, because of the fact that those proceedings were reconstituted to remove claims in relation to ownership of the Elmach units, the costs order which I make is confined to the dispute between Anne-Katrine and Elmach in relation to the Beecroft property and I make no order as to costs in those proceedings as to any of the matters that were excised from the pleading.

Elmach’s application for indemnity costs

14. Having made an order that Anne-Katrine should pay Elmach’s costs, the remaining issue is an application by Elmach that those costs be on the indemnity basis from 24 September 2020, being the date until which a Calderbank offer dated 18 September 2020 was open for acceptance.

15. After setting out the basis for Elmach’s contentions (which the Court accepts were almost completely upheld by the Court) the offer concludes:

“With a view to resolving the claim against Elmach with respect to its 20% interest in the Beecroft property, and our client’s cross-claim, Elmach offers to accept the sum of $600,000 for that 20% interest, plus $250,000 for costs. This letter is written on an open basis.

This offer is open for acceptance until 12.00pm on Thursday 24 September 2020. It may only be accepted in writing. In the event that the offer is not accepted, our client reserves the right to present this letter to the Court, and to seek its costs from the plaintiff on the indemnity basis.”

16. There are three reasons why the Court rejects Elmach’s application, bearing in mind the well-understood principles concerning Calderbank offers, which go to the Court’s discretion as to costs and do not have an automatic consequence.

17. The primary issue is whether Anne-Katrine’s failure to accept the offer was reasonable (or not unreasonable). The Court has concluded that it was reasonable (or not unreasonable) for two reasons.

18. First, as at September 2020, the proceedings were still in a relatively early stage. Pleadings may have closed, but there was a great deal of evidence yet to come. There was no hearing date. In those circumstances, the offer was only open for acceptance for four business days. In my view, that was too short.

19. Second, the offer included a sum of $250,000 for costs. I accept that there is no reason why a Calderbank offer should not be effective if it sets out a principal sum plus an amount for costs. However, the mere assertion of an amount for costs with nothing more would, in general terms, make it reasonable (or not unreasonable) for the recipient to reject the offer.

20. While there can be no general rule, in any case that I can think of it would be incumbent upon the offeror to provide some detail as to what costs it has incurred and how the amount it proposes has been determined. This is so that the offeree could come to an informed position about whether or not the amount for costs was reasonable and represented a compromise. For example, it was not apparent from the offer, and Anne-Katrine and her advisors would have had no idea, whether the $250,000 for costs was in effect a full indemnity or involved a substantial discount.

21. Either of the two matters to which I have referred is sufficient to render Anne-Katrine’s non-acceptance of the offer reasonable (or not unreasonable). The third reason for my conclusion is a more general, discretionary consideration.

22. As Mr Byrne pointed out in his submissions, as late as 15 September 2020, which was only shortly before the offer was sent, the evidence in the proceedings disclosed that Mr Wooldridge and Ms Francis undertook for Kim a detailed examination of the Sundell Group accounts in an endeavour to piece together how payment had in fact been made for the Beecroft property. While the ultimate outcome or the event was no different to that which was being sought in the 2019 First Cross-Claim at the time of the offer, the Court is very conscious that a great deal of evidence came on after this date. Had it been available at the time of the offer, it may have cast a significantly different forensic light on the litigation from Anne-Katrine’s point of view.

23. It seems to me that it would be quite unfair to visit the costs of the proceedings on an indemnity basis from 24 September 2020 on Anne-Katrine when so much more evidence came on after the date of the offer that had a real bearing on the outcome of the litigation in Elmach’s favour. For example, had she been aware of the detail of the case that was ultimately advanced by Elmach as to how the Beecroft property was paid for, a quite different risk assessment may have informed her decision.

24. For these reasons, I reject the application for indemnity costs. Elmach’s costs of the dispute in relation to the Beecroft property will be payable by Anne-Katrine on the ordinary basis.

Discount on Bogasi’s costs payable by Kim in the 2022 proceedings

25. Because the outcome of the 2022 proceedings was that the Court declared that it was not in a position to give judgment for a sum certain pending the resolution of set-offs and other issues, the costs for determination today are, for the avoidance of doubt, the costs of the 2022 proceedings up to and including today. There was no dispute that Kim should pay Bogasi’s costs of those proceedings. The issue was whether there should be a discount in relation to the outcome, given both the outcome and the way in which that outcome was achieved.

26. In my view, there should be a discount and I accept Mr Condon SC’s submission that if the Court were minded to make a discount, the appropriate discount would be 10%. The reasons for that are threefold. The first two are Mr Condon SC’s reasons, being to reflect Bogasi’s loss on the issues of set-off and interest.

27. More substantively, the third reason is that I consider that I should give some weight to, and reflect in the costs outcome, the fact that the parties sensibly resolved a significant issue in the proceedings. This involved an admission, albeit late, by Kim that he did owe a principal amount of some $13.9 million to Bogasi.

28. I put to the parties whether this was a case in which the principles in Re Minister for Immigration & Ethnic Affairs of the Commonwealth of Australia; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 should apply. I accept Mr Condon SC’s submission that those principles do not apply because there was in fact an event, and the Court has brought at least a significant part of the proceedings to an end by the declarations which I made earlier.

29. Nevertheless, it seems to me appropriate that by analogy with Lai Qin there be some reflection of the parties’ agreement, with the result that there would be no order as to their costs in respect of those matters that they ultimately resolved and upon which the Court did not have to adjudicate. In my opinion that outcome is also sufficiently represented by the discount of 10%. That is to say, Kim should not be required to pay 10% of Bogasi’s costs where, in addition to the matters on which Bogasi failed, some element of those costs is also attributable to the matter that was resolved.

30. For these reasons, Kim will be ordered to pay 90% of Bogasi’s costs of the 2022 proceedings.

Kim’s entitlement to claim just allowances

31. On 26 September 2025, the Court made this order:

“8. Subject to Order 15, order that Kim account to Jim’s legal personal representative for the profits derived by him from his purported ownership of the Elmach units, including assets held by Kim, into which such profits are traceable from 1 April 2013.”

32. Bogasi’s entitlement to that order is not in dispute. However, it submits that Kim should not be allowed to propound what it described as the “defence” of just allowances because Kim had failed to plead it. The Court accepts Kim’s written submissions in reply as to why Bogasi’s submission fails, but expresses its conclusion by reference to these propositions.

33. First, with respect, the submission has an air of unreality. An account of profits generally occurs after the entitlement to an account has been established at trial and an election for an account has been made (for example, instead of advancing a claim for equitable damages or compensation). Irrespective of the question of election, Bogasi made no submission at the substantive hearing as to the mechanism of an account or what profits might be the subject of such an order.

34. The conclusion of Bogasi’s 210-page final written submissions in chief is instructive. After setting out tables of the distributions made to Kim referable to the Elmach units from 2003 to 2023 totalling just under $41,000,000, those submissions say:

“805. Bogasi seeks an order that Kim account to Bogasi for these distributions, or alternatively an order for equitable compensation for the amounts Kim received. For the reasons advanced above - particularly his status as a volunteer - Kim is not entitled to retain the Elmach Units.”

35. There was no suggestion at that stage that any profits made on those distributions were also sought (as opposed to repayment of the distributions themselves), although the 2019 Third Cross-Claim includes “equitable compensation or an account of profits” among the relief sought and an account of profits is pleaded in various places. The entitlement to an account is denied in Kim’s defence to the 2019 Third Cross-Claim. I do not accept that Kim would, as a matter of pleading, have had an obligation to plead in the alternative that if there was such an entitlement to an account of profits, he would be claiming just allowances. Bogasi has not pointed to any pleading rule that would have that outcome. Nevertheless, it is incontrovertible that, in the events which have happened, Bogasi is entitled to an account of profits (for which, as with any return of the distributions and interest thereon, it would have to account to the estate).

36. Mr Condon SC has today clarified that the application for an account of profits is not intended to include the return to the Administrator of the distributions which Kim received in respect of the Elmach units, together with interest thereon. The precise amount which the Court will order in that regard will be the subject of further argument between the parties, because Kim has foreshadowed an argument that some equitable considerations would need to be brought to bear to reduce the amount that, on its face, Bogasi (or really the Administrator) is otherwise entitled to in respect of those distributions.

37. Second, the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) Pt 46 r 46.8 provides that, “In taking an account under a judgment, all just allowances must be made”. An example of just allowances being made in the case of a defaulting fiduciary in an account being taken by a judge (Brereton J as his Honour then was) is Torlonia v Wright (No 2) [2017] NSWSC 951 at [86].

38. Third, as the note to r 46.8 in Ritchie*’s Uniform Civil Procedure (NSW)* makes clear, “Claims for just allowances are usually left to be decided within the account-taking process”. Furthermore, the venerable, but nonetheless often still useful, AG Neville and AW Ashe, Neville & Ash**e Equity P**roceedings with Precedents *(*New South Wales) (1981, Butterworths), referring to the rule in identical terms under the Supreme Court R**ules 1970 (NSW), says:

“[Just allowances] are the reasonable expenses appropriate for the accounting party to be paid out of the subject property...It is not in the nature of a cross-claim: see notes to O 43 r 6 RSC 1965. It need not be specifically claimed.”

39. Fourth, to the extent it may be contended that an account of profits does not fall within Part 46 (a proposition I doubt – see r 46.1, and because an account of profits is no less an account), similar principles must necessarily apply in this case where Kim is a defaulting trustee or constructive trustee of funds to which he was never entitled: see the judgment of the plurality in Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18 at 561 to 562.

40. Fifth, it is at the taking of the account of profits that Bogasi will be able to rely on the various principles to which Mr Condon SC referred in address about just allowances, and which are conveniently set out in D Heydon, M Leeming and PG Turner, Meagher, Gummow and Lehane’s Equity: Doctrine & Remedies (5th ed, 2014, Lexis Nexis Butterworths) at [5-280], starting with the proposition that the onus will be on Kim to establish his entitlement to any just allowances. In that regard, I do not overlook Mr Condon SC’s submission about whether I could hear evidence from Kim on the accounting in the light of the adverse credit findings I have made. That is a matter that can only be determined when the scope of any dispute and the evidence to be relied upon is known, including the extent to which Kim’s state of mind will be further explored, as opposed to submissions being made on the basis of the evidence adduced at trial, albeit informed by the Court’s findings of fact.

41. For these reasons, the Court rejects the submission that on any account of profits (properly understood) Kim would not be entitled to assert a claim for just allowances.

Bogasi’s claim for indemnity from the estate – contentions

42. The final issue was raised by Bogasi’s notice of motion filed on 10 October 2025 which sought:

1 An order pursuant to UCPR r 36.16(3A) and r 36.17 or the Court's inherent jurisdiction, that, nunc pro tunc, the third cross-claimant be, and be deemed to have been, authorised to prosecute the actions pleaded in the third cross-claim as the representative of the estate of the late James Ralph Sundell (Estate).

2 An order, including to the extent necessary, pursuant to UCPR r 36.16(3A), that the third cross-claimant be indemnified out of the Estate for all of its costs incurred with respect to the third cross-claim and the defence of the second cross-claim, secured by an equitable lien, and payable from the Estate in priority to all the other parties or, alternatively, the other beneficiaries.

3 An order, including to the extent necessary, pursuant to UCPR r 36.16(3A) and r 36.17 or the Court's inherent jurisdiction, that Tamara Jayne Goodwin as the administrator of the Estate is:

a. entitled to be indemnified out of the Estate for her cost of defending the third-cross claim and in respect of the cost of the various will construction motions (as identified in the reasons for decision in these proceedings published on 29 August 2025 [2025] NSWSC 989); and

b. is not otherwise to be indemnified out of the Estate.

43. The first prayer of the motion was ultimately not pressed.

44. As to the third prayer, the Court rejects that application. This is because there was no allegation of improper or unreasonable conduct on the part of the Administrator. To my observation, the Administrator played an entirely appropriate and carefully calibrated role throughout the proceedings. I assume that was necessitated, at least in part, by the fact that the Administrator was unfunded (a point made more than once during the hearing). In the absence of any specific challenge to particular conduct of the Administrator, the Court is satisfied that there is no basis on which to limit what is otherwise the Administrator’s entitlement to a full indemnity from the estate for her costs, charges and expenses, including her fees.

45. It was the second prayer of the motion to which most of the argument was directed.

46. Bogasi’s application, based either on the “salvage principle” set out in the decision of Dixon J (sitting alone hearing a reference to the High Court by the District Registrar at Canberra) in Universal Distributing or the general costs discretion of the Court, was that Bogasi be indemnified out of the estate for its costs in relation to the 2019 Third Cross-Claim and its defence of the 2019 Second Cross-Claim. This was put on the basis that, in relation to the Elmach units, Bogasi (as a residuary beneficiary) had sued on behalf of the estate and had succeeded in achieving a result where the Elmach units were held to be the property of the estate. The difference between the two bases advanced by Bogasi was that if Universal Distributing applied, Bogasi would be entitled to an equitable lien over the Elmach units securing its costs entitlement, and its interest would take precedence over all estate creditors including the Administrator. There was no question of a lien if the Court achieved a similar result in the exercise of its ordinary costs discretion.

47. On behalf of the Administrator, Mr Cheshire SC submitted that it was not correct to describe Bogasi as suing “on behalf of” the estate. This was not least because some of the allegations made by Bogasi were contrary to the interests of the estate. Furthermore, he argued that the Universal Distributing principle was confined to cases involving Court appointed officers such as liquidators or those appointed under contract such as receivers who had the task of realising property for the benefit of others. In the present case, Bogasi was primarily advancing its own case and, insofar as it contended for matters which benefitted the estate, it had done so at its own risk as to costs.

48. Most importantly, Mr Cheshire SC submitted that the result which Bogasi had obtained, being that the Elmach units were assets solely of the estate, was not an outcome for which Bogasi had contended. It was the result of the Court accepting one of the many arguments advanced by Bogasi, being as to the proper construction of the Declarations and the terms of the trust on which Kim held the Elmach units. Furthermore, insofar as Bogasi had asserted alternative trust arrangements in relation to the Elmach units, these were all in the context of urging the Court to accept that they were held in accordance with the Common Assumption, a matter on which Bogasi had failed.

49. These submissions were made good by analysis of Bogasi’s further amended statement of cross-claim in the 2019 Third Cross-Claim, by which it sought to establish that (references are to the paragraphs of that pleading):

(1) prior to the making of the Consent Orders, the Elmach units were held on trust for:

(a) Bogasi; or

(b) Jim’s Estate and Gunnar’s Estate, but on the basis that this was subject to a legal obligation to advance the Common Assumption or for the ultimate benefit of their families; or

(c) TCI;

([36]-[39], [77]);

(2) there was no nomination ([71]);

(3) if (contrary to its primary case) there was a nomination:

(a) any nomination was ineffective as it was not in writing ([77A]- [77C]);

(b) any nominee received the Elmach units subject to the trusts set out in [49(1)] above or bound by the Common Assumption and/or holding them for an entity in the Sundell Group and/or members of Jim’s and Gunnar’s families ([80]);

(c) any nomination was in breach of trust by Kim ([82]-[87]);

(d) Kim received the Elamch units as a volunteer with knowledge of the trusts set out in [49(1)] above such:

(i) that he continues to hold the Elmach units subject to those trusts; or

(ii) that it would be unconscionable for him to hold the Elmach units without being bound by those trusts or the Common Assumption ([89]-[92]);

(e) any nomination was in breach of a fiduciary duty by Jim (including on the basis that Jim did not act in good faith) and constituted a fraud on the power ([93]-[98]);

(f) Kim was estopped from denying that he holds the Elmach units to give effect to the Common Assumption ([99]-[106]); and

(g) any nomination could only be to an entity within the Sundell Group or someone else who would hold the benefit of the Elmach units on trust for an entity in the Sundell Group and/or members of Jim’s and Gunnar’s families ([79]).

50. In the course of argument, I raised with the parties that if the Court were to make an order of the kind sought by Bogasi, not all of Bogasi’s costs could properly be referrable to the outcome which it had in fact achieved (being an outcome which it had not specifically sought). I initially suggested an allowance of only one third of those costs and later a figure of 30%. Mr Condon SC submitted, if the Court adopted that line of reasoning, that an allowance of 50% would be appropriate. In supplementary written submissions in reply, and relying on the matters set out in [48] and [49] above, Mr Cheshire SC submitted only “in the region of” 10% should be allowed, but put further arguments as to why those costs should be seen as de minimis. He also drew attention to what he submitted were other inequities in the respective positions of Bogasi and the Administrator in relation to such costs, including that Bogasi already had a costs order against Kim, against whom the Administrator had no recourse in relation to the dispute over the Elmach units.

Bogasi’s claim for indemnity from the estate – legal principles

51. The starting point is Dixon J’s statement of the principle in Universal Distributing (at 174-175) (citations omitted):

‘…If a creditor whose debt is secured over the assets of the company come in and have his rights decided in the winding up, he is entitled to be paid principal and interest out of the fund produced by the assets encumbered by his debt after the deduction of the costs, charges and expenses incidental to the realization of such assets. The security is paramount to the general costs and expenses of the liquidation, but the expenses attendant upon the realization of the fund affected by the security must be borne by it. The debenture-holders are creditors who have a specific right to the property for the purpose of paying their debts. But if it is realized in the winding up, a proceeding to which they are thus parties, the proceeds must bear the cost of the realization just as if they had begun a suit for its realization or had themselves realized it without suit.

In applying this principle, only those expenses appear to have been thrown against the fund belonging to the debenture-holders which have been reasonably incurred in the care, preservation and realization of the property. In the present case the liquidator has employed a material part of his time and energies in recovering moneys, both uncalled capital and debts, which enure for the debenture-holder, and in so far as these services increase the remuneration which he receives, I see no reason why the burden should not be thrown upon the proceeds. The question is not whether moneys available for unsecured creditors should be relieved at the expense of the security. In such a case it may be said that the service of collecting enough to discharge the debenture must in any event be performed in order that a surplus may then arise in which the unsecured creditors may participate. The question in the present case is whether the liquidator can charge against the fund passing through his hands as between himself and the person to whom it is payable, so much of the remuneration fixed for work done in the winding up as is referable to the calling in and conversion of the assets producing the fund. I see no reason why remuneration for work done for the exclusive purpose of raising the fund should not be charged upon it.”

52. The High Court further considered Universal Distributing in Stewart v ATCO Controls Pty Ltd (in liq) (2014) 252 CLR 307; [2014] HCA 15. Of importance for the present case, the judgment of the Court includes (citations omitted):

“13 In Hewett v Court, Deane J explained that an equitable lien is a right against property which, although called a lien, is, in truth, a form of equitable charge over the subject property. It will be observed from the passage in Universal Distributing that the charge securing a liquidator's realisation costs will take priority over a secured creditor's charge.

…

15 Gibbs CJ observed in Hewett v Court that it is not possible to state “a general principle which would cover the diversity of cases in which an equitable lien has been held to be created”. However, equity has been able to develop and state a principle to be applied in or with respect to particular circumstances or relationships.

16 With respect to a vendor's lien for unpaid purchase money, Gibbs CJ said that such a lien is founded on the principle that “a person, having got the estate of another, shall not, as between them, keep it, and not pay the consideration”. The lien of a purchaser is based on a converse principle. In both cases, the lien is for money “justly due”. More closely analogous to the present case is the solicitor's particular lien (which may be distinguished from the general or retaining lien that entitles retention of documents until fees are paid), which arises over any property recovered or judgment obtained by a solicitor's work. In Guy v Churchill, Lindley LJ said that “[i]t is right that they who get the benefit of the recovery of money should bear the expense of recovering it”. A similar notion underlies the principle expressed in Universal Distributing. A secured creditor cannot lay claim to the benefit of realised assets without the costs of their realisation being met.

…

22 The principle in Universal Distributing is stated at some length, no doubt because Dixon J was concerned to identify its sources. It may be more shortly stated as: a secured creditor may not have the benefit of a fund created by a liquidator's efforts in the winding up without the liquidator's costs and expenses, including remuneration, of creating that fund being first met. To that end, equity will create a charge over the fund in priority to that of the secured creditor.

…

39 The other matter, to which the notice of contention directs attention, has regard to Dixon J's statement that “I see no reason why remuneration for work done for the exclusive purpose of raising the fund should not be charged upon it” (emphasis added). Atco seeks to rely upon a view expressed by Cavanough A-JA that the liquidator's work in bringing the proceedings was not done for the “exclusive purpose of raising the fund”. In his Honour's view, the principal purpose was to remove Atco's status as a creditor.

40 In Universal Distributing, Dixon J went on to fix the liquidator's remuneration and, in that process, excepted certain items from the liquidator's first-ranking charge. His Honour's reference to exclusivity of purpose is likely to have been intended to convey that only work done in connection with creating the fund was to be reimbursed. It most certainly does not imply that the subjective purpose of the liquidator is a relevant consideration.

41 The proper question that follows from what Dixon J said is whether, in a general sense, the costs and expenses claimed by the liquidator could be said to have been incurred in the realisation of the asset which created the fund. Whether the costs and expenses claimed were in fact so incurred is a matter to be determined when the liquidator verifies his accounts.”

53. The next authority is the decision of the Court of Appeal in the Supreme Court of Victoria in Primary Securities Ltd v Willmott Forests Ltd (mgrs and recs apptd) (In Liq*)* (2016) 50 VR 752; [2016] VSCA 309. That decision establishes that the Universal Distributors principle will apply to an asset that has been got in, as much as it will to a fund that has been realised. Whelan and Santamaria JJA (Maxwell P agreeing) said (citations omitted):

“124 In our view the authorities also make it clear that the principle may apply where the claimant has cared for or preserved an asset, and not simply where the claimant has realised it and created a fund. One circumstance where the principle may apply is where the claimant has acted as a kind of ‘stand in’, undertaking activities which the holder of the proprietary interest would have had to undertake itself had the claimant not done so. In essence, that is what happened in Pattison v Lockwood. On the other hand, if the claimant’s activities are properly characterised as unrelated to the interests or objectives of the holder of the proprietary interest then the claimant may have no entitlement to priority over that proprietary interest holder. It seems to us that that was the position in Dean-Willcocks.

125 In our view, when Dixon J referred to ‘care, preservation and realisation’ of an asset, the activities to which he referred are to be read disjunctively. Spigelman CJ in Dean-Willcocks was clearly of that view and, it seems to us, Beazley JA implicitly accepted it also. It was expressly accepted by the trial judges in both Thackray and Re S & D and implicitly accepted in 13 Coromandel Place. This conclusion is itself inconsistent with the applicant’s contention that the principle can only apply where the claimant has realised a fund. It can also apply where the claimant has cared for or preserved an asset without realising it.”

54. Finally, in Thackray v Gunns Plantation Ltd [2011] VSC 380; (2011) 85 ACSR 144, Davies J (in a case concerning a receivership) said (citations omitted):

“41 Many of the principal authorities which have developed and explored the Re Universal Distributing principle were the subject of close analysis by Robson J in Re S & D International Pty Ltd (in liq) (rec & mgr apptd). Robson J stated:

“From these authorities the following principles referable to a liquidator may be stated:

a. At equity, an equitable lien arises in favour of a liquidator over the funds realised from the sale of company property for the costs he incurs for the care, preservation and realisation of the property in priority to those otherwise interested in the fund. …

b. The costs include those that the liquidator fairly incurs in the discharge of his duty to care, preserve and realise the property. …

c. The lien may arise whether or not the ultimate sale is affected ([sic]) by the liquidator and entitles the liquidator to be paid in priority out of the fund whether or not he is in possession of the fund. …

d. The costs and expenses secured by the lien must be incurred exclusively for the care, preservation or realisation of the property and not otherwise expended in the general administration of the mortgagor. …

e. The costs and expenses include the liquidator's reasonable remuneration. … ”

His Honour also noted that in Re Universal Distributing:

“Dixon J speaks of the expenses as being ‘thrown against the fund.’ The equitable claim is against the fund irrespective of those claiming an interest in the fund. The expenses incurred must have contributed to the funds realization, care or preservation. Dixon J recognised that this right against the fund is independent of any conduct of others laying claim to the fund which might otherwise have given rise to some claim as between the parties.”

Although Robson J analysed the principles “referable to a liquidator”, the existence of the lien does not depend on the status of the person claiming it. The categories of persons to whom the principle may apply are not closed. For present purposes it is sufficient to note that the principle has been applied with respect to receivers and receivers and managers. The underlying principle in each case is that it would be inequitable for the person who has created or realised a valuable asset, in which others claim an interest, not to have his or her costs, expenses and fees incurred in producing the asset paid out of the fund or property created.

42 It is clear on the authorities that the equitable lien will extend only to the receivers' costs, expenses and remuneration incurred “exclusively” in the care, preservation and realization of the property and assets of the ten MIS in question. Furthermore, that those costs, expenses and that remuneration must be referrable to the particular scheme against which the claim is made. The lien will not extend to the general receivership costs or costs, expenses and remuneration referable to the care, preservation and realization of the property and assets of any other scheme or schemes.”

Bogasi’s claim for indemnity from the estate - consideration

55. In my respectful opinion, the relevant propositions which emerge from the authorities considered in [51] to [54] above are:

56. Equity intervenes by imposing a lien (or, more precisely, an equitable charge enforceable by judicial sale), to prevent the inequity that would arise if the person who has brought in or realised a valuable asset or fund to the benefit of another does not have his or her costs, expenses and fees in doing so paid out of the asset or fund that has been created by that effort;

57. The equitable charge will be for no more than the costs and expenses incurred “exclusively” in producing the asset or fund;

58. The charge will attach to either a fund or an asset; and

59. The class of persons entitled to the charge is not closed and is not limited to cases involving those exercising formal roles such as liquidators or receivers. Equity is not concerned with the identity of the beneficiary of the charge (or of the owner of the asset or fund charged), but rather to ensure that those who are entitled to the asset or fund do not act unconscientiously towards the person that got it in by claiming their interest without reimbursing that person from the asset or fund for their costs and expenses properly incurred in getting in or creating that asset or fund.

60. Applied to the case at bar, the Court accepts Mr Condon SC’s submission that the estate cannot take the benefit of the Elmach units without indemnifying Bogasi (including by equitable charge) for its costs and expenses of having realised the outcome which has resulted in the estate becoming entitled to the Elmach units. However, provided that the basic principle of preventing inequity identified in paragraph [55(1)] above is given effect, the traditional flexibility of equity enables it to mould the terms of any indemnity and equitable charge to reflect the circumstances of the particular case.

61. In this case, bearing in mind that the charge will only extend to expenses incurred “exclusively” in realising the Elmach units for the benefit of the estate, the Court accepts Mr Cheshire SC’s submissions that an allowance of only 10% is appropriate. Bogasi succeeded only insofar as the Court accepted that on the proper construction of the Declarations (and hence of the trust on which Kim held the Elmach units) any valid Nomination could only be to Gunnar or a company within the Sundell Group. The relevant evidence for that conclusion was confined to the period prior to the making of the Consent Orders and did not include the substantial amount of evidence called in relation to whether the Nomination occurred and subsequent events.

62. Furthermore, insofar as the “surrounding circumstances” relevant to the construction of the Declarations was concerned, it was confined to the evidence of Kim, Jim and Mr Wooldridge as to how the relevant trusts were created and the general practice of the businesses of the Sundell Group being operated for the equal benefit of Jim and Gunnar (and their respective families). The Court accepts Mr Cheshire SC’s submission that what can be “exclusively” attributed to the basis on which Bogasi achieved the result it did is only a relatively confined and uncontroversial subset of the evidence.

63. I also consider that the Court should mould any relief to reflect these matters:

64. Bogasi’s real battle was with Kim and it was against Kim that it incurred costs. The result which it obtained in relation to the Elmach units was not one for which it was contending as a matter of pleading or argument. Instead, that result was the consequence of the acceptance of particular arguments by the Court about the Elmach units and the Declarations out of the many that were advanced by Bogasi.

65. Closely connected to the preceding point, Bogasi has the benefit of a costs order against Kim in relation to the 2019 Second Cross-Claim and the 2019 Third Cross-Claim. The Administrator, on the other hand, has no recourse against Kim in relation to the dispute over the Elmach units.

66. As against the Administrator, Bogasi was proceeding at its own risk as to costs. For example, there is no evidence that at any stage it put the Administrator on notice that it might seek its costs if it achieved the outcome of the Elmach units being brought into the estate.

67. The Administrator is an independent professional appointed by the Court with no personal interest in the estate.

68. Taking into account all of the matters in [57] to [59] above, the Court has determined that there will be an order that the estate indemnify Bogasi for 10% of its costs of the 2019 Second Cross-Claim and the 2019 Third Cross-Claim to be secured by an equitable charge over the Elmach units upon the following terms:

69. The charge cannot be enforced unless and until Bogasi has exhausted its remedies to obtain payment of its costs from Kim or further order;

70. The charge can only be enforced to the extent that it does not result in Bogasi recovering more than the costs it has been awarded against Kim in relation to the 2019 Second Cross-Claim and the 2019 Third Cross-Claim (in other words, enforcing the charge against the Elmach units for 10% of its costs cannot result in Bogasi doing better than if it had completely recovered the costs it has been awarded from Kim); and

71. Conformably with the view I have taken about the Administrator’s rights (see [44] above), the charge in favour of Bogasi is intended to give it priority against all of the estate’s creditors (secured or unsecured) except as against the Administrator, who is to retain her priority for her costs and expenses from the estate, including her fees.

72. If I am wrong about the application of the Universal Distributors principle to the present case, I would have made the following orders in discretionary exercise of the Court’s general costs jurisdiction (with the result that Bogasi would be an ordinary unsecured creditor of the estate for its costs):

73. The Administrator is to pay 10% of Bogasi’s costs of the 2019 Second Cross-Claim and the 2019 Third Cross-Claim;

74. Bogasi cannot enforce the preceding order until it has exhausted its rights against Kim for Bogasi’s costs of the 2019 Second Cross-Claim and the 2019 Third Cross-Claim or further order; and

75. Bogasi can only enforce its costs order against the Administrator to the extent that it does not recover in total more than what it has been awarded of its costs against Kim of the 2019 Second Cross-Claim and the 2019 Third Cross-Claim.

76. Because Bogasi has enjoyed only limited success on the motion, it will be otherwise dismissed with no order as to costs. Any party wishing to be heard against this outcome should notify my Associate no later than 24 November 2025.

77. The parties will be given an opportunity to bring in further short minutes to give effect to these reasons.

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