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JUDGMENT

Introduction

1. These reasons concern the costs of these proceedings, in which the principal judgment was delivered on 13 August 2026: Meoli v Romero [2026] NSWSC 973.

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. Andres (the defendant/cross-claimant) was the successful party in the proceedings. Although his challenge to the validity of the codicil failed, the Court accepted the construction of the codicil propounded by Andres (in the event that it was held to be valid) and rejected the construction propounded by Mr Meoli and Juan (the plaintiffs/cross-defendants and the executors named in the codicil) and their claim for rectification of the codicil. The outcome of the codicil being construed in the manner for which Andres contended is that Andres is the beneficiary of valuable parcels of shares under the last will of Gaby (the testator), and those parcels of shares do not form part of the share portfolio which the will requires to be distributed amongst seven named beneficiaries in specified proportions, including Mr Meoli (as to 20.67%) and Juan (as to 1.92%).

4. It is submitted on behalf of Andres that his costs should be paid on an indemnity basis by the plaintiffs, or alternatively out of the deceased’s estate, on the ground that the plaintiffs’ case had no chance of success and Mr Meoli and Juan unreasonably exposed him to the costs of defending that case.

5. Mr Meoli and Juan seek orders that their costs be paid out of the deceased’s estate on an indemnity basis and that Andres’ costs be paid out of the deceased’s estate on the ordinary basis.

Applicable principles

6. As counsel for Andres 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. As counsel for Andres submitted, there are certain circumstances that regularly arise in probate litigation which may result in the Court determining in a particular case that some order should be made other than an order that costs follow the event. [1] However, neither party submitted that such circumstances exist in the present case.

7. Repeating what I said in Bruce v Bruce, [2] costs payable to a person under an order of the Court are payable on the ordinary basis unless the Court orders otherwise. [3] 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. [4]

8. 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.

9. The reference to a trustee in r 42.25 includes an executor. [5]

10. In Nobarani v Mariconte (No 2), the High Court stated (citations omitted): [6]

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

11. The plaintiffs do not contend that the Court should depart from the general rule that costs follow the event. They accept that Andres should have an order for his costs of the proceedings. The question is whether those costs should be paid on an indemnity basis or on the ordinary basis, and whether they should be paid by the plaintiffs or out of the deceased’s estate.

12. I reject Andres’ submission that the plaintiffs’ case, when properly examined, had no chance of success and should not have been pursued. The codicil was poorly drafted. The parties’ competing contentions concerning its proper construction, and the plaintiffs’ claim for rectification of the codicil, were reasonably arguable. Andres’ submission to the contrary is infused with the benefit of hindsight and erroneously asserts that there was no challenge to Andres’ evidence about the deceased’s statements of intention. Those aspects of Andres’ evidence were challenged by the plaintiffs: see the principal judgment at [29]-[38]. As Andres submitted, the plaintiffs could have applied for judicial advice in relation to the proper construction of the will and codicil. However, neither the plaintiffs’ claim for rectification of the codicil, nor Andres’ cross-claim challenging the validity of the codicil, could have been determined in any judicial advice application. In my opinion, the plaintiffs acted reasonably in raising the arguments that they did concerning the construction of the will and codicil, in making the claim for rectification of the codicil, and in defending Andres’ cross-claim. Indeed, the plaintiffs succeeded in defending Andres’ challenge to the validity of the codicil. Andres’ submission that the plaintiffs commenced and pursued these proceedings needlessly is without merit, and I reject it. Andres’ submission that the plaintiffs “pursued an actively adversarial position in the proceedings” adds nothing to the obvious fact that they propounded contentions that were contrary to Andres’ contentions. Applying the principles referred to at [7] above, the proper exercise of the costs discretion in the present case is to make an order for the payment of Andres’ costs on the ordinary basis rather than on an indemnity basis.

13. As the plaintiffs acted reasonably, their own costs of the proceedings are payable from the deceased’s estate on an indemnity basis and they would be entitled to be indemnified out of the estate in respect of any costs order made against them personally in respect of Andres’ costs of the proceedings. [7] Each of the plaintiffs stood to benefit personally in their capacity as beneficiaries under the deceased’s will if the codicil was upheld and if the codicil was rectified in the manner for which they contended, or if the will and codicil were construed in the manner for which they contended. However, such an outcome would also have benefitted the other five beneficiaries of the “Balance of shares” under clause 3 of the deceased’s will. [8] Their conduct of the proceedings cannot fairly be characterised as being for their own benefit rather than consistent with their duties as executors to distribute the assets of the deceased’s estate in accordance with the will, notwithstanding that their reasonably arguable rectification and construction arguments were ultimately rejected. For those reasons, the costs discretion should be exercised by making orders that the plaintiffs’ costs of the proceedings be paid out of the deceased’s estate on an indemnity basis and that Andres’ costs be paid out of the deceased’s estate, rather than by the plaintiffs personally, on the ordinary basis.

14. The orders of the Court are as follows:

15. Order that the plaintiffs/cross-defendants’ costs of the proceedings be paid out of the estate of the late Gabriel Charles Balcone on an indemnity basis.

16. Order that the defendant/cross-claimant’s costs of the proceedings be paid out of the estate of the late Gabriel Charles Balcone on the ordinary basis.

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 at [11] (Nixon J); Bruce v Bruce [2026] NSWSC 977 at [7] (Williams J).

[2026] NSWSC 977 at [8]-[11].

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).

See [8]-[10] above.

See principal judgment at [7]-[9].