Mills v Dodds (No 2)

Medium Neutral Citation: Mills v Dodds (No 2) [2026] NSWSC 44

Hearing dates: 22 May 2025 (listing)
27 June 2025 (written submissions)

Date of orders: 10 February 2026

Decision date: 10 February 2026

Jurisdiction: Equity

Before: Meek J

Decision: Declaration as to plaintiff’s entitlement to 50% of the deceased’s net residuary estate, orders for costs in light of a successful offer of compromise by the plaintiff, specific orders as to which part of the residuary estate to bear the burden of the costs orders in light of the successful offer.

Catchwords: CONTRACTS — Testamentary contract — Finding of a testamentary contract for plaintiff to be given “half of my estate when I die” — Dispute as to whether plaintiff advanced the ‘estate’ claim as being the net residuary estate after administration or value of the estate as at the date of the deceased death Held plaintiff advanced claim on basis that she was entitled to the net residuary estate after administration
WORDS AND PHRASES — ‘Residue’
SUCCESSION — Testamentary contract — Nature of interest that a promisee has pursuant to a testamentary contract — The ‘beneficiary theory’ and the ‘creditor theory’ discussed — Prevailing High Court authority favours or is consistent with the ‘beneficiary theory’ — Submissions that the plaintiff is entitled to judgment as a creditor of the estate rejected
SUCCESSION — Testamentary contract — Claim to judgment sum and payment of pre-judgment interest to s 100 Civil Procedure Act 2005 (NSW) (“CPA”) on basis of a judgment debt entitlement rejected — However, interest permitted calculated at ‘legacy rates’ on the plaintiff’s quantified 50% share of net residue from the ‘distribution date’ of the estate
COSTS — Offers of compromise — Whether offer valid — Meaning of “must not include an amount for costs” in r 20.26(2)(c) UCPR — Whether infringed by term that “the plaintiff is to pay her own costs of and incidental to the proceedings” (held no infringement)
COSTS — Offers of compromise — UCPR r 42.14 — Principles discussed — Whether offers contained element of ‘real’ or ‘genuine’ compromise (Yes – as to the second offer) — Whether defendant acted reasonably in rejecting offers (No - as to the second offer) — Whether there are other factors beyond the defendant’s reasonableness capable of supporting an ‘otherwise’ order (No - as to the second offer)
COSTS — Specified gross sum costs order — belated claim by plaintiff for specified gross sum costs order — Declined on facts
SUCCESSION — Administration — Solvent estates — Ordinary order of application of assets to discharge of funeral testamentary and administrative expenses debts and liabilities
SUCCESSION — Administration — Whether a residuary beneficiary is entitled to interest on a share of residue — Discussion regarding ss 84 and 84A Probate and Administration Act 1898 (NSW) (“PAA”) permit interest on residue
SUCCESSION — Jurisdiction to make orders as to which part of the deceased’s estate bears the burden of costs orders — Interaction between the costs orders and statutory order under the Probate and Administration Act 1898 (NSW) (“PAA”) for payment of testamentary expenses — Court’s exercise of discretion under s 98 CPA permits allocation of costs burden to particular parts or shares of an estate and displaces (to the extent described in the costs order) the statutory order provisions of s 46C(2) PAA concerning how testamentary expenses are to be borne — The power to specify which shares or parts of the estate are to bear the burden of the legal costs of the proceedings is not dependent upon findings as to misconduct or unreasonableness on the part of an executor

Legislation Cited: Civil Procedure Act 2005 (NSW)
Probate and Administration Act 1898 (NSW)
Succession Act 2006 (NSW)
Trustee Act 1925 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited: Ahern v Aon Risk Service Australia Pty Ltd (No 2) [2022] NSWCA 39
Armstrong v Children’s Hospital at Westmead [2008] NSWSC 1315
Barns v Barns (2003) 214 CLR 169; [2003] HCA 9
Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333
Coverdale v Eastwood (1872) LR 15 Eq 121
Dalton v Ellis; Estate of Bristow (2005) 65 NSWLR 134; [2005] NSWSC 1252
Dillon v Public Trustee of New Zealand [1941] AC 294
E Group Security Pty Ltd v Chief Commissioner of State Revenue (No 2) [2021] NSWSC 1296
Evans Shire Council v Richardson (No 2) [2006] NSWCA 61
Gleeson v Fitzpatrick (1920) 29 CLR 29; [1920] HCA 81
Halkett v APG & Co Pty Ltd (No 2) [2023] NSWSC 1215
Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19
Horn v GA & RG Horn Pty Ltd (No 2) [2022] NSWSC 1747
In re Carless; Carless v Carless (1911) 11 SR (NSW) 368
Jojeni Investments Pty Ltd v Mosman Municipal Council (No 2) [2015] NSWCA 208
Kulczycki v Public Trustee [2013] ACTSC 230
Leach v Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391
Leichhardt Municipal Council v Green [2004] NSWCA 341
Meres v Meres (No 2) [2017] NSWSC 523
Mills v Dodds [2025] NSWSC 396
Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344
Morgan v Johnson (1998) 44 NSWLR 578
Murdocca v Murdocca (No2) [2002] NSWSC 505
Murdocca v Murdocca [2002] NSWCA 373
National Trustees Executors and Agency Company of Australasia Ltd v Barnes (1941) 64 CLR 268
Pethers v Pethers (No 2) [2025] NSWSC 561
Re Estate Late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311
Re Richardson's Estate (1935) 29 Tas LR 149
Reeves v Reeves (No 2) [2024] NSWSC 386
Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368
Schaefer v Schuhmann [1972] AC 572
Shellharbour City Council v Johnson (No 2) (2006) 67 NSWLR 308; [2006] NSWCA 114
South Eastern Sydney Area Health Service v King [2006] NSWCA 2
Stokes v Churchill; Estate of Fryer (1994) NSW ConvR 55-694
Walker v Harwood [2017] NSWCA 228
Ye v Chen [2022] NSWSC 494

Texts Cited: Cassidy, Julie, "Life (or More So Death) After Barns v Barns" [2006] UTasLawRw 3; (2006) 25(1) University of Tasmania Law Review 61
Certoma, G L, The Law of Succession in New South Wales (4th ed, 2010)
Croucher, Rosalind, "Contracts to Leave Property by Will and Family Provision After Barns v Barns [2003] HCA 9" [2005] SydLawRw 12; (2005) 27(2) Sydney Law Review 263
Dal Pont, G E, Law of Succession (3rd ed, 2021, LexisNexis)
Hardingham, Ian “Schaefer v Schuhmann: Promisee v Dependant” (1972) 10 University of Western Australia Law Review 115
Macquarie Dictionary, online ed.
New South Wales Law Reform Commission, Report 28 (1977) – Testator’s Family Maintenance and Guardianship of Infants Act, 1916 (June 1977)
Ritchie’s Uniform Civil Procedure NSW
Sundberg, Ross A, “The Problem in Schaefer v Schuhmann — A Simple Answer” (1975) 49 Australian Law Journal 223
Thomas, Susan Barkehall ‘Proprietary estoppel and family provision: Competing moral obligations’ (2017) 26 APLJ 24
Villios, Sylvia and Jay, Olivia, ‘Competing policies and claims when enforcing testamentary business succession promises’ (2022) 16 J Eq 262

Category: Consequential orders

Parties: Jennine Catherine Mills (Plaintiff / Cross-Defendant)
Karen Ann Dodds (Defendant / Cross-Claimant)

Representation: Counsel:
M Maconachie (Plaintiff / Cross-Defendant)
D Yazdani (Defendant / Cross-Claimant)
Solicitors:
Priest Legal (Plaintiff / Cross-Defendant)
Donovan Oates Hannaford (Defendant / Cross-Claimant)

File Number(s): 2023/00256033

JUDGMENT

Introduction

1. HIS HONOUR: Starkly opposed case theories (revenge “served cold”, by a duplicitous manipulating sister v. a reconstructed memory contorting a mere expression of goodwill into a hoped for inheritance) [1] were portents of polemical litigation between the plaintiff and the executor of her deceased sister’s estate in respect of a testamentary promise.

2. On 28 April 2025, I delivered reasons for judgment upholding the plaintiff's contention that the deceased had, pursuant to an effective testamentary contract promised to leave her half of her estate and that the deceased relevantly authorised the plaintiff to access her bank account such that the withdrawals the subject of the cross-claim are not liable to be repaid by the plaintiff. [2] I directed the parties to bring in short minutes of order to give effect to the reasons for judgment and provide submissions including addressing the costs of the proceedings. [3]

3. Provisionally, I assumed that my reasons would quell the controversy between the parties. That (alas) has been a vain hope. Unquenched, flickering embers of discord have enlivened, igniting one latent issue and other new issues, with the result that the parties have sharply conflicting perspectives regarding what orders are appropriate to finalise the matter.

4. Subsequently, counsel have addressed various disputes regarding the making of final orders. Regrettably, the volume of disputes and submissions (including 45 pages from defendant’s counsel), the complexity of some issues and disconnect between the parties on them has contributed to delay in the making of final orders.

5. The process of analysing the submissions has revealed that there is staunch dispute regarding a number of matters including whether the plaintiff is a creditor or beneficiary of the estate and what part of the deceased’s estate ought to bear the burden of any costs awarded.

6. In summary I have determined that:

(a) the hearing was conducted on the basis that the plaintiff’s claim was to 50% of the net residuary estate after administration of the value of the estate, not as at the date of the deceased death; (b) the plaintiff’s rights take effect as a beneficiary of the estate and not a creditor; and (c) overall, the just outcome in the context of a successful offer of compromise is that the plaintiff’s share of the residuary estate should not be burdened by costs incurred after the date of a second successful costs offer.

7. I set out my reasons for that determination. The reasons make reference to the principal judgment and will adopt its nomenclature and abbreviations. I will cite the material in the proceedings by reference to the abbreviations I have given to the affidavits, exhibits, submissions and transcript (T), and the parties post PJ written submissions addressing final orders and costs being, plaintiff’s submissions dated 19 May 2025 (subsequently superseded) [4] , defendant’s submissions dated 19 May 2025 (DFOS****1), plaintiff’s submissions dated 27 June 2025 (PFOS), and defendant’s submissions dated 27 June 2025 (DFOS****2).

Competing proposed final orders

8. The plaintiff’s proposed final orders were [5] :

1 Judgment for the plaintiff on the statement of claim equivalent to the value of 50% of the net residuary estate (excluding the costs of these proceedings) of the late Lynette Rose Paton (Deceased) in lieu of the monetary gift in clause 8 of the will of the Deceased admitted to probate on 15 February 2022 (Damages).

2 Interest on Damages pursuant to section 100 of the Civil Procedure Act 2005, calculated from 6 September 2022.

3 Cross claim dismissed.

4 Each of the parties’ costs be paid from the balance of the Deceased’s estate after payment of Damages including interest thereon, on an indemnity basis.

5 In the event that the assets of the estate are not sufficient to meet order 4 above, any shortfall be borne by the defendant.

9. The defendant’s proposed final orders [6]

1 A declaration that the Plaintiff is entitled to damages equating to 50% of the nett residuary estate of the deceased in lieu of the pecuniary legacy in clause 8 of the will of the deceased dated 26 October 2020, after payment of costs in accordance with paragraphs 4 and 5.

2 An order that no interest be paid on the entitlement of the Plaintiff to 50% of the nett residuary estate if it is paid within 28 days of the date of the making of these orders and notations; and if not so paid interest is to be paid on any unpaid part thereof, calculated at the rate prescribed by s. 84A(3) of the Probate and Administration Act 1898 (NSW), from the 29th day from the date of the making of these orders and notations until the date of payment in full.

3 An order that the Statement of Cross-Claim filed on 15 September 2023 be dismissed.

4 An order that the Plaintiff’s costs of these proceedings be paid out of the estate of the deceased on the ordinary basis as agreed or assessed.

5 An order that the Defendant’s costs of these proceedings be paid out of the estate of the deceased on the indemnity basis.

Issues

10. The parties were agreed that the cross-claim should be dismissed.

11. The issues that divide the parties regarding the making of final orders are as follows:

12. Was the hearing conducted on the basis that the plaintiff’s claim was to 50% of the net residuary estate after administration or value of the estate as at the date of the deceased death?

13. Are the plaintiff’s rights as a promisee under a testamentary contract properly characterised as a residuary beneficiary or as a creditor of the estate?

14. Should there be a declaration regarding the plaintiff’s successful relief or an order for judgment?

15. What is the proper date for calculating damages?

16. Is the plaintiff entitled to an award of interest or is there any basis on which interest may be appropriately awarded as part of the plaintiff’s relief?

17. In light of the plaintiff’s costs offers, should the plaintiff have an award of indemnity costs?

18. Is it appropriate to make a specified gross sum costs order in respect of the plaintiff’s costs?

19. Does the Court have power to alter the part of the deceased’s estate which would ordinarily bear the burden of the costs of the proceedings, and if so, should it exercise that power to burden a specified part of the residuary estate?

Evidence

12. In support of the final orders, the plaintiff relied upon 2 affidavits of Jeremy Brigden affirmed 19 May 2025 (JB1) and 27 June 2025 (JB2) and the defendant relied upon an affidavit of Haydn Oriti sworn 26 June 2025 (HO). Mr Oriti deposed that annexure ‘B’ to HO is a “Further Updated Statement of Levido Law & Property consisting of 42 pages which sets out the liabilities, distributions and expenses of the estate paid out of the estate and provisioned as at 19 June 2025”. That annexure in fact is a 3-page summary of the trust account statement which in turn references and annexes various invoices rendered by Levido Law & Property (LPP) on the one hand and the legal representatives (solicitors and counsel) for the defendant referable to these proceedings.

Post principal judgment directions and submissions

13. Upon delivering judgment Mr Maconachie alerted me to the fact that there was likely to be an application for a special costs order and suggested the parties should confer about that. In that context, I made the following order

1. Directs the parties by 4pm on Monday, 5 May 2025 to provide proposed orders setting out a timing regime to address the final orders to be made and the question of costs.

14. The parties did confer and agreed on proposed directions. Their agreement did not address the substantive orders.

15. On 5 May 2025, to make it clear that what was required was not merely submissions as to costs but also ultimate relief orders to give effect to the reasons for judgment, I made the following orders:

1 Orders that the parties endeavour to agree to proposed orders as to the statement of claim and cross-claim including costs by no later than 4:00pm on 12 May 2025, and in the event that an agreed position is reached to provide such agreed proposed orders by email to the Associate to Meek J by that time for his Honour's consideration to finalise orders in the matter.

2 Orders that in the event that the parties are unable to agree to orders, that each party provide to the Chambers of Meek J by no later than 4:00pm on 19 May 2029:

a. proposed short minutes of order; and

b. written submissions not exceeding 5 pages,

3 Notes that consequent upon the provision of materials pursuant to Order 2 his Honour will make a determination as to the appropriate orders on the papers.

16. On 19 May 2025, the parties proposed their respective final orders and submissions.

17. In circumstances in which the parties were still at odds regarding orders, I listed the matter on 22 May 2025.

18. The debate during that listing reinforced the extent of the gap between the parties as to appropriate final orders. Following the listing I made notations as to the approximate amount of each of the parties’ costs and in particular made directions to facilitate determinations on the contested issues regarding final orders. The directions were as follows [7] :

Directs the parties to provide by email to the Associate to Meek J written submissions and calculations (including any relevant references to the deceased’s Will, legislation, caselaw and or legal or other principle) by 4pm on 27 June 2025 addressing:

a. in respect of the deceased’s estate:

i. what are the assets (capital and any income) or the estate (assets);

ii. what debts, funeral and testamentary expenses, legal costs or other charges have been paid from or provisioned for in the administration of the estate (liabilities);

b. what date is the correct or appropriate date for the calculation of the damages of the deceased’s breach of contract;

c. what mandates or principles inform the priority of order of payment of the liabilities from the assets and whether the Court has any power and/or discretion, and if so what power and/or discretion to alter the order of payment of liabilities from the assets of the deceased estate, that would otherwise operate under such mandates or principles;

d. what liabilities of the estate are contended to be payable out of the estate prior to the calculation of and payment of the amount of damages for the deceased's breach of the testamentary contract the subject of the findings in the proceedings (damages amount);

e. (to the extent not otherwise covered by the submissions in 3d) the basis for the asserted priority of any liability before calculation of and payment of the damages amount and any interest thereon;

f. a figure for the damages amount (and if the parties differ in respect of the damages amount payable, the damages amount each party contends for, and the reasons supporting that contention);

g. calculation(s) of interest up to judgment on the amount(s) in 3f by reference to the date in 3b; and

h. in respect of the plaintiff's costs:

i. the total costs calculated on the ordinary basis; and

ii. the costs calculated on the ordinary basis up to and including each relevant costs offer and costs calculated on the indemnity basis from the relevant time of such offer.

19. On 27 June 2025, the parties provided the submissions and evidence which I have referenced above.

Costs

20. The plaintiff’s legal costs as at 27 June 2025 have been summarised by Mr Brigden as follows [8]

| Solicitor professional fees - including applicable GST | Indemnity (solicitor/ client) | Ordinary | | Incurred from inception to 11 April 2023 (first offer) | $4,566.10 | $3,424.57 | | Incurred from 12 April 2023 (day after first offer) to 14 December 2025 (second offer) | $30,677.90 | $23,008.00 | | Incurred from 15 December 2023 (day after second offer) to 28 April 2025 (being the date of decision in Mills v Dodds [2025] NSWSC 396) | $47,011.80 | $35,258.85 | | Incurred since 28 April 2025 | $12,969.00 | $9,726.75 | | SUB-TOTAL | $95,224*.80 | $71 417.32 | | Counsel fees - including applicable GST | Indemnity | Ordinary | | Incurred from inception to 11 April 2023 | $0 | $0 | | Incurred from 12 April 2023 to 14 December 2023 | $16,623.75 | $12,467.81 | | Incurred from 15 December 2023 to 28 April 2025 | $48,645.00 | $36,483.75 | | Incurred since 28 April 2025 | $6,476.25 | $4,857.18 | | SUB-TOTAL | $71,745.00 | $53,808.*74 | | Disbursements [ex Counsel fees]- including applicable GST | Indemnity | Ordinary | | filing fee, hearing allocation fee, transcript fees, solicitor travel (PMQ-SYD), solicitor accommodation (SYD), solicitor sustenance (SYD), transcript fees, printing, scanning, telephone, postage, sundry disbursements. | $9,251.48 | $7,162.88 | | SUB-TOTAL | $9,251.48 | $7,162.88 | | TOTALS | $176,205.28 indemnity basis | $132 | | |

21. I note that in this table, the date of the second offer is stated to be 14 December 2023. The correct date is 15 December 2023. Accordingly, the date identified as the day after the offer (15 December 2023) is also incorrect and should be 16 December 2023.

22. The invoices relating to the defendant’s legal costs have been adduced. The following payments totalling the $69,557.04 [9] were paid on the following dates:

| Date | Amount | | 20 September 2023 | $7,713.60 | | 1 December 2023 | $1,872.85 | | 21 December 2023 | $10,126.60 and $6,279.17 | | 23 March 2024 | $4,001.80 | | 3 September 2024 | $39,263.02 | | 29 May 2025 | $3,300.00 | | 20 September 2023 | $69,557.04 | | TOTAL | $69,557.04 |

23. Mr Maconachie in PFOS included as part of the defendant’s legal costs and disbursements a payment of reimbursement money to the defendant on 19 June 2025 of $1,804.68 [10] . It is not obvious to me that, that reimbursement is properly described as a legal cost.

Estate

Solvent estates - ordinary order of application of assets to discharge of funeral testamentary and administrative expenses, debts and liabilities

24. Conveniently, it may be noted at this point that where a deceased’s estate is solvent (subject to any statutory provisions regarding charges on the deceased’s property and the provisions if any contained in the deceased’s Will), the discharge of the funeral, testamentary and administrative expenses, debts and liabilities of the estate are payable in the order mentioned in Part 2 of the Third Schedule of the Probate and Administration Act 1898 (NSW) (PAA) [11] . ‘Solvent’ means sufficient for the payment in full of the debts and liabilities of the deceased [12] . Part 2 of the Third Schedule (Order of application of assets where the estate is solvent) (PAA Schedule) is in the following terms:

1 Assets undisposed of by will, subject to the retention thereout of a fund sufficient to meet any pecuniary legacies.

2 Assets not specifically disposed of by will but included (either by a specific or general description) in a residuary gift, subject to the retention out of such property of a fund sufficient to meet any pecuniary legacies, so far as not provided for as aforesaid.

3 Assets specifically appropriated or disposed of by will (either by a specific or general description) for the payment of debts.

4 Assets charged with or disposed of by will (either by a specific or general description) subject to a charge for the payment of debts.

5 The fund, if any, retained to meet pecuniary legacies.

6 Assets specifically disposed of by will, rateably according to value.

25. There is no suggestion in this case that the deceased’s Will failed to dispose of such assets as she had. Thus, there are no assets within class or category 1. Class or category 2 includes assets falling into residue [13] .

‘Residue’

26. What is meant by the ‘residue’ of an estate or a ‘residuary estate’ is ultimately a matter of construction [14] .

27. Frequently, Wills self-define residue by making certain specific gifts and then providing that the balance of the estate is to be given to a designated beneficiary “after payment of my just debts, funeral and testamentary expenses” or like wording.

28. In ordinary parlance, ‘residue’ constitutes “that which remains after a party is taken, disposed of, or gone; remainder; rest” [15] . This is also the ordinary meaning, subject to text and context, of residue in a Will [16] . The Macquarie Dictionary indicates that in law, ‘residuary estate’ means “that which remains of a deceased person’s estate when all liabilities have been discharged” [17] .

29. The fact that ordinarily, payment of debts, liabilities and other devises or legacies are discharged from the assets of an estate prior to ascertaining residue, even in the absence of an express provision in the Will, can hardly be doubted and has been confirmed by texts [18] .

30. The concept of what is comprised by residue is closely aligned with due administration of an estate. Conceptually, it is possible that a testator might specifically define residue as constituting a balance at a specific point of time including for example as at the date of death. However, the ‘residue’ of an estate is not generally ascertained until the estate is administered when all the known assets have been collected and liabilities have been paid, or those items have at the least been accounted or provisioned for (including in light of any contingencies); such that a balance either exists or is capable of being known with some precision.

31. The question of what suffices to complete executorial duties such that executors hold assets of an estate as trustees, is often vexed and has been discussed in various cases [19] . There is no need to dwell upon it for the purpose of this case.

32. During the course of administration, there may be forms of interim distribution of either specific gifts or legacies or, potentially some provisional distribution on account of residue. However, leaving aside instances of interim distribution, essentially, a point of time is arrived at which the estate is duly administered, a residue is known, and the residue may be finally distributed.

33. Consistent with that notion, residue may include property not merely existing at the date of the deceased’s death but also encompass after-acquired property [20] .

Probate and progress of administration

34. The deceased died on 5 September 2021. The defendant obtained probate of the deceased’s Will on 15 February 2022.

35. Based on the inventory of property, the deceased’s estate at the date of her death comprised the following assets [21] :

| Asset | Value | | the Villa | $540,000 (est) | | monies in two Commonwealth Bank (CBA) accounts (Smart Access Account and a NetBank Saver Account) | $71,665.44 | | AHM health insurance death benefit | $1,500 and a $72.10 refund of recalculated paid health premiums | | superannuation | $536,527.15 (est) | | 2017 model Volkswagen Tiguan motor vehicle | $26,350 (est) | | furniture and personal effects | $5,000 (est total) | | Total | $1,181,114.69 |

36. The plaintiff made no claim on and did not wish to interfere with the specific bequests in clauses 6, 7 and 9 of the Will. [22]

37. Leaving aside the specific bequests of personal items, proceeds of the other estate assets had been received into Mr Levido’s trust account, including the net proceeds of the sale of the Villa by 25 February 2022, CBA proceeds by 16 March 2022, and the superannuation by 31 December 2022. [23] The legacies of $20,000 were paid shortly thereafter to each of Tanya (17 January 2023), and Freya and Gene (6 February 2023) [24] .

38. The proceedings were commenced by the statement of claim filed on 11 August 2023. On 20 September 2023, Mr Levido transferred a sum of $1,020,000 into a controlled monies account, being a term deposit account with the CBA for 3 months [25] . Thereafter various amounts were transferred from the CBA term deposit account to Mr Levido’s trust account and from time to time, the balance of the term deposit was reinvested [26] .

39. On 15 September 2023, the defence and cross-claim were filed. On 15 November 2023, a defence to the cross-claim was filed.

40. Details regarding the assets of the estate (capital and income) and liabilities (debts, funeral and testamentary expenses legal and other costs paid, incurred or provision for) are summarised in a form of updated distribution statement (UDS) annexed to HO [27] .

41. The position as at 19 June 2025 was that the assets of the estate received ($1,154,789.24) and interest income earned on the term deposits ($31,802.55) totalled $1,186,591.89 [28] .

42. The total of all liabilities, distributions and expenses paid, provisioned and incurred (including legal costs of these proceedings costs) amounted to $195,665 [29] , being the total of the following amounts:

43. legacies paid $60,000 [30] ;

44. administration costs and other liabilities paid and provisioned totalled $51,941.51 [31] ; and

45. the defendant’s legal costs of the proceedings (solicitors and counsel) paid ($69,557.04) and incurred ($14,166.45) totalled $83,723.49 [32] .

46. Excluding defendant’s legal costs incurred but unpaid ($14,166.45), the UDS totals the liabilities as being $181,498.55 [33] .

47. The UDS thus provided that the amount then held “in trust” was $1,005,093.34 [34] .

48. Mr Oriti stated that the net residuary estate (26 June 2025) after deduction of the liabilities, including incurred but unpaid legal costs, being $195,665 (but before any deduction for any costs awarded in favour of the plaintiff) is the sum of $990,926.89. [35]

49. Mr Maconachie made submissions as to the precise amount of the estate as at the date of the deceased’s death [36] and the precise amount of ‘damages’ to which the plaintiff is entitled [37] . In relation to costs, Mr Maconachie sought a specific gross sum [38] . However, Mr Yazdani contended that unless a specific gross sum were awarded for costs, that it was not possible to work out what amount constituted the ultimate net residuary estate [39] .

Costs offers

47. No evidence has been adduced of any offers made by the defendant.

48. The plaintiff made 2 costs offers.

49. First, an offer was contained in a letter from Priest Legal (Mr Brigden) to LPP dated 12 April 2023 which referenced earlier communications, recited the (contended) agreement, its alleged performance and called upon performance of the agreement demanding payment equivalent to 50% of the net residuary estate. Despite references to the letter being sent on a “without prejudice basis” and the fact that there was reservation of a right to tender the letter in respect of any application regarding the plaintiff’s costs of the proceedings, the letter was included in the Court Book for the purposes of the main hearing without any objection by either party [40] .

50. The essence of the offer (first offer) is contained in the following paragraphs [41] :

Our client hereby calls upon performance of the Agreement, and demands payment equivalent to 50% of the nett residual estate.

Should our client's demand be met, in practical terms we would suggest that this could be achieved by either a Deed varying the trusts created by the will to reflect the Agreement, or should your client require it, consent orders.

We confirm that, in anticipation of this claim, our client hitherto renounced her executorship. We further confirm that our client has previously agreed and consented to the payment of the specific monetary bequests (which we note have been made), and that our client will limit her claim to 50% of the rest and residue of the estate.

We also refer to our letter of 13 December 2021 detailing various transactions. On a without prejudice basis, our client will also accept the $39,999 already received by her in the form of the inter vivos gifts received by her [as referred to items (c) and (d) of our letter of 21 December 2021] as forming part of her entitlement under the Agreement, and not in addition to it, however should the matter proceed all rights are expressly reserved in this regard . Further, and again on a without prejudice basis, our client will agree that her entitlement under the Agreement is in lieu of, and not in addition to, the $20,000 legacy made to her under the deceased's last will. Likewise, however, should the matter proceed all rights are expressly reserved in this regard. These concessions are made on a without prejudice basis in a genuine and reasonable attempt to resolve the claim at a very early stage.

No doubt your client will see fit to obtain the consent of the beneficiaries. With a view to enabling that process to occur, and mindful of the fact that the competing beneficiaries are organisations, we request your response to this demand within 60 days. Should the process require longer, our client will accommodate. You may also provide this correspondence to those competing beneficiaries (or their representatives as the case may be).

In the event our client's demand is not met, proceedings will be instituted against your client seeking damages (against the estate) for an amount equivalent to 50% of the nett residual estate alleging breach of contract. Sworn or affirmed evidence of our client, and from multiple corroborative witnesses will be furnished. To the extent the claim is opposed by your client, either of her own volition or on instructions from one or more beneficiaries, then we reserve the right to tender this letter in support of any application that our client's costs of such proceedings be paid out of the estate, including any application for costs to be paid on the indemnity basis.

51. Second, in a letter from Priest Legal to Donovan Oates Hannaford (DOH) dated 15 December 2023 headed “Without prejudice save as to costs” a further offer was made [42] . The letter (which in part recounted a rationale for the offer) set out the terms of the offer relevantly as follows (second offer):

We are instructed to put the following offer to your client to resolve all issues as between our respective clients by way of orders to the following effect:

1. Statement of claim be dismissed on terms that the plaintiff is prevented from bringing fresh proceedings or claiming the same relief in fresh proceedings.

2. Cross-Claim be dismissed on terms that the cross-claimant is prevented from bringing fresh proceedings or claiming the same relief in fresh proceedings.

3. The costs of the defendant/cross-claimant be paid out of the estate on an indemnity basis.

4. The plaintiff/cross-defendant is to pay her own costs of and incidental to the proceedings.

5. The plaintiff to pay the defendant the sum of $81,799 within 28 days of the entry of orders.

6. The defendant, in her capacity as executor of the estate of the late Lynette Rose Paton, pay the plaintiff a sum equivalent to 33.33% of the net residue of the estate, after payment of funeral costs, estate administration costs, and the defendant's costs of the proceedings, but before any other distribution under the will. Such payment to be on the basis that the $20,000 legacy to the plaintiff in the deceased's will be taken to be included in the payment referred to in this clause.

..

The above offer is made on the basis that the plaintiff will bear her own legal costs, and that the estate's legal costs may be accounted for prior to calculation of the percentage payable to the plaintiff. If the matter falls to be determined by the Court, the plaintiffs case will be that the residue of which she is entitled to half, be calculated after only funeral and standard administrative costs are deducted. The plaintiff will also press for her costs to be borne by either the estate, or the defendant.

…

This offer is open for 28 days from the date of this letter.

This offer of compromise is made in accordance with the Uniform Civil Procedure Rules 2005.

This letter may be relied upon on any question of costs, including an application by the plaintiff for the defendant to pay her costs on an indemnity basis.

In addition to operating in accordance with the UCPR, or alternatively, this offer is made in accordance with the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333.

Issue 1 – On what claim for relief did the plaintiff conduct the hearing?

52. Resolution of several of the issues on which the parties are at odds is informed by clarifying the basis on which the hearing was conducted.

Submissions

53. Mr Maconachie contented that the plaintiff was entitled to damages of half of the deceased’s estate as at the date of her death, which he stated involved a “relatively simple exercise of determining the value of the estate as at the date of the deceased death… and subtracting from that figure debts accrued but not paid as at that date” [43] .

54. That appeared to involve a shift of position from the basis on which the case had been conducted. I take it that Mr Maconachie was cognisant of that because he prefaced his submissions with the acknowledgement that [44]

In the process of working through the issues addressed in these submissions, some minor changes in approach have been adopted on behalf of the plaintiff.

55. Whilst the parties’ ultimate submissions were simultaneous and thus did not respond to the other side’s ultimate submission, Mr Yazdani contended that the plaintiff conducted her case on the basis that she was entitled to “half the nett residuary estate, not to a specific legacy or asset of the estate of half the gross estate generally” [45] .

Finding

56. From the time of pre-trial correspondence at each relevant step of the way, the plaintiff’s claim was enunciated as a claim for half or 50% of the residuary estate or net residuary estate, and subject to one matter I will come to, the case was conducted upon that basis. This appears from the pre-action offer [46] , the Statement of Claim [47] , the pre-hearing agreed list of issues [48] , the POS [49] , the DOS [50] , discussion between myself and counsel which occurred at the commencement of the hearing [51] , and in the plaintiff’s initial post hearing proposal of orders to give effect to the reasons for judgment [52] .

57. Whilst reference was made to the residuary estate or net residuary estate, what is not clear, and what I sought to clarify at the commencement of the hearing, was the extent to which the residuary estate would be denuded by the defendant’s legal costs. At the very least, my understanding at the commencement of the hearing was that Mr Yazdani accepted that there was a live argument or issue as to the extent to which, if the plaintiff were successful (which occurred), her half of the net estate would be reduced by legal costs of the proceedings. [53]

Issue 2 – What is the proper characterisation of the plaintiff’s rights as promisee under a testamentary contract?

58. The proper analysis of the nature of plaintiff’s rights under a testamentary contract and specifically whether the plaintiff is a beneficiary or creditor of the deceased’s estate was a latent issue at the main hearing. Neither counsel addressed submissions on the point at that stage.

Plaintiff’s Submissions

59. Mr Maconachie contends that the plaintiff’s claim for breach of a testamentary contract gives rise to a claim for damages in an amount which constitutes a debt or liability of the estate [54] and that she is thus a creditor of the estate [55] . Mr Maconachie did not provide reference to caselaw nor further analyse the position.

Defendant’s submissions

60. Mr Yazdani advanced detailed propositions quoting extensively from caselaw. It suffices to summarise his contentions as follows:

61. a contract to leave a share of residue (as distinct from a promise to leave by will a specific sum or asset) entitles the promisee to only so much of the share of net residuary estate (here the plaintiff as to 50% [56] ) as remains after all debts and liabilities of the estate have been satisfied [57] ; and

62. a promisee under a testamentary contract is not properly characterised as a creditor of the estate but rather as a residuary beneficiary with the entitlement being subject to the ordinary rules of testamentary succession and estate administration - principally this was said to arise from a majority of the High Court decision in Barns [58] .

Determination

61. The proper analysis of the rights of a promisee under a testamentary contract for a share or proportion of the residue of the deceased’s estate has been a vexing question in law with authorities at the apex of the judicial hierarchy ‘oscillating’ over time as to the correct analysis [59] .

62. Ultimately, the legal character and operation of any such ‘testamentary contract’ will depend upon various factors including its terms [60] .

63. Nonetheless, the debate as to the nature of a promisee’s interest pursuant to a testamentary contract has principally distilled into 2 competing theories - a ‘beneficiary theory’ and a ‘creditor theory’ [61] .

64. Under the ‘beneficiary theory’, the promisee “has nothing more than a right to be named as a beneficiary in the promisor’s will” [62] .

65. Under the ‘creditor theory’, “the promisee receives more than a mere right to be named as a beneficiary; they receive a right to an effective transfer of the relevant asset. As the promisee is treated as having contractual rights to the nominated benefit which arise independently of the will, they are effectively placed in the position of a creditor, and their claim is satisfied before those of family provision claimants” [63] . The relevant asset is removed from the assets available for beneficiaries and the claim of the promisee is dealt with as a debt [64] .

66. Practically, the key difference between the theories “bites” at the point of priority of claims in the administration of an estate [65] .

67. In 1977, the NSW Law Reform Commission in its review of the Testator’s Family Maintenance and Guardianship of Infants Act 1916 (NSW) as a precursor to the introduction of the Family Provision Act 1982 (NSW), recommended overruling Schaefer v Schumann, the details of which recommendation are summarised in the following terms (omitting footnotes) [66]

Ninthly. We recommend that Schaefer v. Schumann be overruled: that where, in accordance with a promise made in his lifetime, a deceased person, by his will, provides for property to pass from his estate to another person, the Court may place the burden of any provision made for an eligible person on that property. We further recommend that where, in breach of such a promise, a deceased person does not, by his will, provide for property to pass from his estate to another person, the Court may bar or limit any action arising out of that breach.

68. In Barns, the High Court, in the context of considering a testamentary deed and its effect in light of a claim under South Australian family provision legislation, had reason to consider the Privy Council decisions in both Schaefer and Dillon. Because of the procedural background to the appeals in Barns, the substantial merits of the case were not litigated. Rather the only facts proved in evidence were those that were regarded by the parties as material to certain legal issues raised for ‘preliminary decision’ regarding the validity of the (mutual wills) deed in question [67] .

69. In the case of a testamentary contract where the promisor makes a Will and in that respect the promisor as testator discharges his contractual obligations by making the Will, the promisee’s rights are drawn through the Will [68] . In such a case, it is easy to see how the promisee’s rights are rights as a residuary beneficiary rather than a creditor. However, in a case where the promisor does not make a Will in accordance with the promise, there has been conflicting caselaw as to the promisee’s rights (beneficiary or creditor). However, whilst in Barns the contract was performed, Gleeson CJ (and) Gummow and Hayne JJ rejected the notion that the proper characterisation of the promisee’s rights should depend upon whether the contract has been performed or breached [69] .

70. By majority, the Court preferred reliance on the authority in Dillon, to the effect that the operation of the contract, whether the contract was fulfilled or whether it was broken, took effect subject to the potential operation of the family provision legislation [70] .

71. Though not actually using the terminology of beneficiary theory and creditor theory, it is evident that Gleeson CJ, in citing [71] remarks of each of Nicholls CJ in Re Richardson's Estate (1935) 29 Tas LR 149 at 155, and Lord Cross of Chelsea in Schaefer, was alive to the distinction between whether a promisee under a testamentary contract had the status of a beneficiary as distinct from status as a creditor.

72. Emeritus Professor Rosalind Croucher AM, writing in 2005 suggested that the (then) family provision legislation in New South Wales made it clear that a contract to make a will was not covered within the general construction of the term ‘estate’ but must be considered as part of the ‘notional estate’ provisions [72] .

73. In Dalton [73] Young CJ in Eq reviewed leading cases and learned articles regarding the nature of a promisee’s rights and helpfully summarised the position post Barns [74] .

74. Young CJ in Eq noted that the pleadings left it unclear whether the claim was at law or in equity and the submissions of counsel had not made that matter any clearer [75] . Ultimately, in that did not seem to matter.

In Australia, only the NSW legislature took action to deal with the implications from Schaefer, by the introduction of comprehensive ‘notional estate’ provisions. Therefore, in New South Wales, a contract to leave property by will is treated as removing the relevant property from the estate, but the provisions allow for property to be brought back into the estate in certain circumstances. For the other Australian jurisdictions Barns resolved the conflict between Privy Council authorities. The High Court by majority rejected Schaefer and preferred Dillon…..

77. One might ponder upon the question of whether the position as to the creditor theory or beneficiary theory would differ depending upon the purpose for which the question is asked (consideration of family provision claims or otherwise) - in particular, given the Succession Act [82] distinguishes between ‘estate’ and ‘notional estate’ and the policy choices which inform that distinction.

78. Ultimately, in the absence of any family provision claim in this matter (and without full debate on the matter in any event) there is no need for me to express a concluded view as to the effect of the Succession Act on the rights of promisees of testamentary promises.

79. For the purposes of this case, the analysis of Young CJ in Eq in Dalton [83] , of the status of a promisee of a testamentary promise, appears well-founded. I consider that as a single judge of the Equity Division, I am either bound by the High Court’s implicit preference for the beneficiary view or that I should not readily depart from it unless there is extremely good reason to do so.

80. The decision of Mossop M in Kulczycki v Public Trustee [2013] ACTSC 230 is consistent with the above approach [84] .

81. Such learned articles as I have been able to locate on the issue providing critical analysis [85] of the decision in Barns do not, in my view provide any sufficient justification for a single judge departing from High Court authority. Indeed Villios & Jay, writing in 2022 stated [86]

There would seem to be little doubt that the ‘new orthodoxy’ created by Barns, having stood and been applied for almost two decades, currently represents the law in Australia. Equally, there is limited support for a suggestion that Barns is of anything less than wide application.

Issue 3 - Should there be a declaration regarding the plaintiff’s successful relief or an order for judgment?

Submissions

82. Evident from the competing proposed final orders, is that the plaintiff seeks judgment for the monetary sum and the defendant contends that the proper outcome is a declaration as to the plaintiff’s rights, with the precise amount to which the plaintiff is entitled to be worked out in the course of administration.

83. Mr Maconachie contended on one hand that damages in respect of the testamentary contract claim is a debt in contract, and a “judgment debt” as defined in s 3 CPA, and that each of such damages, pre-judgment interest on damages, and any costs awarded in favour of the plaintiff (once agreed or assessed and registered) are a debt or liability of the estate for the purposes of s 46C(2) of the PAA [87] .

84. On the other hand, he accepted that reasonable legal costs and disbursements incurred by the defendant (and there is no submission that the costs incurred are unreasonable) are appropriate testamentary expenses, being “expenses incident to the proper performance of the executor” [88] .

85. By reference to the UDS, Mr Maconachie made a number of contentions including that:

86. the gross asset position as at the date of death was $1,154,167.54 excluding certain payments [89] ;

87. ignoring the credits received after death and factoring in the extant debts [90] of the estate the [net] value of the deceased’s estate as at the date of her death was $1,151,729.34 [91] ;

88. the payment of a MasterCard debt apparently referable to Alan’s estate did not appear to be a debt of the deceased estate at all [92] ; and

89. payment of the specific legacies, and the defendant’s costs and disbursements of the proceedings must be ignored for the purposes of calculating damages [93] .

90. Ultimately, for the purposes of calculating damages, Mr Maconachie contended that the figure of net estate of the deceased as at the date of her death was $1,151,729.34 [94] , thus he contended that there should be judgment for the plaintiff in the sum of 50% of that amount, being $575,864.67 [95] .

91. Mr Yazdani in the listing on 22 May 2025 submitted that declaratory relief was appropriate because the testamentary contract claim “is a claim in equity, it’s not a common-law action” [96] .

92. Mr Yazdani, referenced a comment that I had made in the principal judgment [97] , submitting that I was not required to determine the precise amount of half the net residuary estate [98] . In any event, the tenor of Mr Yazdani’s submissions is that administration is not complete. He contends that the Court is not able to make any precise determination of what constitutes half of the residuary estate.

Determination

89. In summarising my findings in respect of the contractual claim, I stated that “Prima facie, the damages are half the value of the deceased’s residuary estate”. [99]

90. It is true that in the principal judgment I had commented that [100]

…, neither counsel suggested that it was necessary for me to identify some precise amount which constituted “half of the estate”. That is a matter that can be addressed in the administration of the estate having regard to the findings that I have made.

91. However, that was in a context of Mr Maconachie having made a submission as to precise figure of what would be constituted by “half the estate” based on figures drawn from an estate administration statement as at 31 March 2023. I made the observation that it was not apparent that that was the appropriate figure because administration has progressed since 31 March 2023 [101] .

92. Consistently with what I have found in relation to the nature of the proper characterisation of the plaintiff’s claim, it seems to me that it is not appropriate for me to make a judgment for a particular sum (even if I was able to specify the particular amount of half of residue).

93. It seems to me that subject to what I later find regarding costs and which parts of the residuary estate should bear the burden of costs, I should make a declaration that the plaintiff is entitled to half of the residuary estate.

Issue 4 - Date for calculation of damages

Submissions

94. Mr Maconachie contends that the relevant date for calculating damages is the date of the deceased’s death (5 September 2021) on the basis that the promise was effectively a promise of “half of my estate as at the date of my death” [102] .

95. In support of his submission, Mr Maconachie contended that:

96. where a party sustains a loss by reason of a breach of contract, he or she is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed [103] ; and

97. the general rule is that damages for breach of contract are assessed as at the date of the breach, however this general rule is not rigid and will yield if, in particular circumstances, some other date is necessary to provide adequate compensation [104] .

98. Thus, Mr Maconachie ultimately contends that the date of the deceased’s death (5 September 2021) is the point at which it became impossible for the deceased to perform the obligation and according to Mr Maconachie “damages crystallised” [105] .

99. Mr Yazdani submitted that the correct date for the calculation of damages of the deceased’s breach of contract is at the point when the net residuary estate is ascertainable, namely at the point when the estate has discharged all extant and future liabilities, (including the executor’s costs of these proceedings, which are a first charge over the whole of the deceased’s estate). He contends that in practical terms, the date will be a future date, immediately upon discharge of the outstanding liabilities of the estate (being the of costs of these proceedings), at which point the nett residuary estate can be ascertained, as confirmed by Barns [106] .

Determination

98. My essential finding was that the deceased promised the plaintiff “half of my estate when I die” [107] . The plaintiff did not ask the deceased to clarify what she meant by that [108] .

99. It seems to me that having regard to the way the case was conducted as I have found above, properly construed, the tenor of the promise in the circumstances of this particular case is that the words “half of my estate as at the date of my death” was the deceased’s net estate having regard to proper debts, funeral and testamentary expenses being in substance half of the deceased’s residuary estate, and as I note below, application of the burden of costs.

100. I do not consider that the deceased was conveying that no account should be taken of legitimate estate liabilities. I consider that the words “as at the date of my death” was essentially a means of highlighting that the promise was not her estate as at the date of the relevant conversation namely 17 or 18 October 2020 [109] , but rather consequent upon her death.

101. To the extent that Mr Maconachie contended that this was a figure to be calculated by reference to the date of the deceased’s death, I reject the contention.

102. To the extent that it is appropriate to identify a date on which the plaintiff’s share of the residuary estate is to be determined, subject to one matter, it seems to me that Mr Yazdani is correct and that date is the point when the net residuary estate is ascertainable. The one qualification in respect of that is that for reasons which follow, I do not accept that all of the executor’s costs of the proceedings should be charged or burdened over the whole of the deceased’s net residuary estate.

Issue 5 - Is the plaintiff entitled to an award of interest or is there any basis on which interest may be appropriately awarded as part of the plaintiff’s relief?

Submissions

103. Mr Maconachie submitted that the amount of the plaintiff’s claim, being the contractual claim, ought to carry with it an order for interest pursuant to s 100 Civil Procedure Act 2005 (NSW) (CPA) rather than the ‘legacy rate’ pursuant to s 84A Probate and Administration Act 1898 (NSW). He contended that the appropriate date from which interest should run was 6 September 2022 being 12 months after the death of the deceased reflecting the ‘executor’s year’ within which the deceased estate sought, generally be administered [110] .

104. Mr Maconachie performed a calculation of interest from 6 September 2021 to 30 June 2025 said to be $149,206.54 including interest (7.85%) continuing at least up to 31 December 2025 at $123.85 per day pending final orders [111]

105. Mr Yazdani submitted that as the plaintiff’s claim is not for a specific legacy or asset of the estate [112] and she is not a creditor of the estate but rather is a residuary beneficiary, interest cannot accrue on her entitlement “as the damages” equates to 50% of the net residuary estate [113] . Further, subject to a matter that I will shortly mention, Mr Yazdani submitted that the plaintiff was not entitled to interest payable as a residuary beneficiary “as her entitlement to 50% of the nett residuary estate only crystallises as and when the nett residuary estate is ascertainable (i.e., the date immediately following payment of all estate debts and liabilities, including costs of these proceedings, out of the estate)” [114] .

106. Nonetheless, Mr Yazdani contended for an order for interest on the plaintiff’s entitlement as follows [115]

An order that no interest be paid on the entitlement of the Plaintiff to 50% of the nett residuary estate if it is paid within 28 days of the date of the making of these orders and notations; and if not so paid interest is to be paid on any unpaid part thereof, calculated at the rate prescribed by s. 84A(3) of the Probate and Administration Act 1898 (NSW), from the 29th day from the date of the making of these orders and notations until the date of payment in full.

Determination

107. Ultimately, it seems to me that the question regarding whether the plaintiff is entitled to any interest is both informed by and effectively concluded by what I have found above regarding the nature of the plaintiff’s rights.

108. If the plaintiff were a creditor of the estate and if it were appropriate to enter judgment for a particular sum, then the question of whether interest should be permitted on the sum up to the time of judgment would be engaged.

109. However, in light of my findings that the plaintiff’s rights as promisee are essentially as a residuary beneficiary, subject to the question of the burden of costs, the calculation of the plaintiff’s entitlement will occur at the point of time at which residue is calculated or able to be calculated.

110. Consequently, I do not consider that it is appropriate to award interest on the plaintiff’s entitlement to residue.

111. In any event, Mr Maconachie did not cite any authority in which interest has been awarded on residue.

112. The provisions of the PAA do not readily give strong support for any claim for interest on residue.

113. The terms of s 84 PAA refer to powers of the court to make orders in relation to relevantly a ‘residuary bequest’ as follows:

If the executor or administrator, after requesting in writing, neglects or refuses to--

(a) sign such acknowledgment, or

(b) execute a conveyance of land devised to the devisee, or

(c) pay or hand over to the person entitled any legacy or residuary bequest,

the Court may, on the application of such devisee or person, make such order in the matter as it may think fit.

114. The wording of the section in relation to a residuary bequest is curious. Ordinarily, a residuary beneficiary only becomes entitled to the residuary bequest at the point of time at which administration is complete. At that point of time the executor or administrator would generally speaking, not hold the estate property qua executor but would hold as trustee. Conceptually there may be some circumstances in which the administration of the estate had progressed such that it was obvious that there would be a certain amount of residue which might be the subject of some interim distribution or alternatively it might be clear enough, after expenses and liabilities had been provisioned, what final balance of residue is available to be finally distributed.

115. If a residuary beneficiary was seeking some form of payment of a residuary bequest, there are various statutory powers available to the Court to direct executors or administrators or trustees to take certain action regarding that, such as pursuant to Pt 54 UCPR. However, relevantly, whatever s 84 PAA may entitle the Court to do in respect of a residuary bequest, to my understanding s 84 PAA has rarely (if ever) been used to justify an award of interest on residue.

116. Leaving aside an express exception regarding appropriation of property in payment of a legacy [116] , by s 84A(1) PAA interest is payable on a legacy or on any arrears of an annuity in accordance with the Will or instrument pursuant to which the legacy or annuity is payable or with any enactment or rule of law.

117. The interest (unless the Will or instrument otherwise provides, or the Court otherwise orders), is payable at the ‘relevant rate’ or such other rate as may be prescribed in a regulation made under s 153 PAA [117] .

118. There are no regulations prescribing an ‘other rate’.

119. The ‘relevant rate’ is defined to mean the rate that lies 2% above the cash rate last published by the Reserve Bank of Australia before 1 January in the calendar year in which interest begins to accrue [118] .

120. There is no suggestion by the terms of s 84A PAA that it extends to addressing the situation in which interest is calculable on residue. Having said that, there is no reason why in any given situation a party cannot proffer that interest will be payable calculated by reference to the ‘relevant rate’ for legacies.

121. In light of all the above I decline to make an award of interest as sought by Mr Maconachie.

122. That leaves trying to make sense of Mr Yazdani’s submissions that interest is not payable to the plaintiff as a residuary beneficiary but nonetheless proposing a time qualified order for the payment of interest as outlined above.

123. Reconciling Mr Yazdani’s submissions, it seems to me that his ultimate contention is that until a time is reached when the precise amount of residue that each of the plaintiff, HCT and WIRES are entitled to is ascertainable (after all payments of estate debts and liabilities including costs have either been made or accounted for and crystallised in that sense) - which for convenience I will describe as the ‘’, the plaintiff is not entitled to any interest. However, once the precise amount is known he appears to accept that if that amount is not paid to the plaintiff within a period of 28 days from the ‘distribution’ date the plaintiff ought to be paid interest on that sum calculated by reference to the rate prescribed pursuant to s 84A(3) PAA.

Issue 6 - In light of the plaintiff’s costs offers, should the plaintiff have an award of indemnity costs?

Statutory principles

126. Costs are in the discretion of the Court, subject to CPA, rules of Court and any other Act. The Court has full power to determine by whom, to whom and to what extent costs are to be paid and may order that costs are to be awarded on the ordinary basis or on an indemnity basis. Ordinarily, if the Court makes any order as to costs, the Court is to order that the 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 [119] . Generally, costs payable to a party under an order of the Court are to be assessed on the ordinary basis [120] .

Offers of compromise

127. The UCPR provide a regime by which offers of compromise (OC) may be served to compromise any claim in the proceedings. In cases where an OC is made, a party who has obtained a favourable judgment outcome (having regard to the terms of the offer) is “entitled” to have its costs assessed on an indemnity basis from the beginning of the day following the date of the offer (or 11 am on that following day, if the offer was made on or after the first day of the trial), unless the Court orders otherwise [121] .

128. UCPR r 42.14 deals with the situation where an offer of compromise has been made by the plaintiff in accordance with the UCPR but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim that is no less favourable to the plaintiff than the terms of the offer [122] .

129. Relevantly, UCPR r 42.14(2) provides as follows:

42.14 Where offer not accepted and judgment no less favourable to plaintiff

…

(2) Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff’s costs in respect of the claim—

(a) assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and

(b) assessed on an indemnity basis—

(i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and

(ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.

130. In Meres v Meres (No 2) [2017] NSWSC 523, Hallen J indicated at [43]-[44] that the question for determination regarding the effect of what is said to be an offer of compromise involves a two-stage process. His Honour stated as follows:

43. From the authorities, it appears the question for determination regarding the effect of what is said to be an Offer of Compromise involves a two-stage process. The first stage is to enquire whether the offer made is an ‘Offer of Compromise’ at all, within the meaning of the UCPR. This will depend, in part, on whether it satisfies the formal requirements laid down by UCPR rule 20.26. It also depends, in part, on whether the offer made is one that can truly be called a “compromise”.

44. If the court concludes that the offer which is made is an “Offer of Compromise” within the meaning of the Rules, and that the offer made is one that can truly be called a compromise, then UCPR rule 42.15A(2) operates to establish a ‘default’ position, relevantly that, if the defendant obtains a judgment no less favourable than that which the defendant had offered to accept, then indemnity costs would follow. It is then that the second stage of the process arises, in that the court can “otherwise order”. The court will “otherwise order” if it is persuaded that is appropriate, in the interests of justice, that the “default” position ought not apply: Manly Council v Bryne (No 2) [2004] NSWCA 227, per Campbell JA, at [10]; Evans v Braddock (No 2) [2015] NSWSC 518, at [52].

131. The Court of Appeal has, in various judgments given guidance regarding the enlivenment of OC regime and effectiveness of OCs. The guidance includes the following:

132. For an offer to be regarded as an OC, it must contain a genuine or real element of “compromise” [123] and not merely be made so as to trigger the costs consequences under the rules [124] .

133. Whether there was a real element of compromise is determined:

(a) objectively according to the circumstances of the particular case at the time the Offer was made rather than with the benefit of hindsight [125] ; and (b) upon the totality of the circumstances and it involves an impressionistic assessment [126] .

3. Where an OC operates under r 20.26 UCPR so as to trigger the costs consequences provided for in Pt 42 Division 3 UCPR, the offeree bears the onus of persuading the Court that indemnity costs should not be ordered [127] .

4. The power to order “otherwise” must be for proper reasons [128] .

5. The mere fact that it was reasonable for a litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule. However, that does not mean that reasonableness of the rejection is an irrelevant consideration [129] .

6. Generally speaking, an estate representative will have a number of options regarding coverage for legal costs.

7. Relevantly, these include positively obtaining an indemnity either from beneficiaries or seeking judicial advice.

8. In Walker v Harwood [2017] NSWCA 228, Basten JA stated the following in the context of discussing the power to order “otherwise” under UCPR r 42.14(2):

21. It may be accepted that the role of executors, particularly where the executors have no personal interest in the defence of the will, may be relevant to the possible exercise of the discretion to order otherwise. Nevertheless, there is no general principle that r 42.14 does not apply in the case of a dispute over the validity of a will; if the executors do not wish to be personally at risk, there are protective strategies available to them. For example, they may seek an indemnity from sui generis beneficiaries, or, being a trustee within the terms of the Trustee Act 1925 (NSW), may seek advice from the court, pursuant to s 63 of that Act.

135. In Walker, Basten JA made a comment regarding apparent inconsistency of the costs consequences of non-acceptance of an OC with the requirement that the offer must remain open for a certain period of time, whether it be 28 days or a closing date that is “reasonable in the circumstances”. His Honour stated [130]

11 These cost consequences are not entirely consistent with the time allowed by the offer. UCPR r 20.26 provides that the offer “must specify the period of time within which the offer is open for acceptance”. [2] Where an offer is made two months or more before the date set down for the commencement of the trial, the closing date is to be no fewer than 28 days after the date on which the offer is made. [3] In any other case, the closing date is to be “reasonable in the circumstances.” [4] Despite those provisions, the costs consequences are to run from the day after the offer is made and not from the last date on which it can be accepted. That appears to be inconsistent with the principle that an early offer must remain open for consideration for 28 days. The assumption underlying that provision appears to be that the offeree is entitled to consider its position and to have at least 28 days to do so. The order which will flow from the application of the costs rule means that throughout that period costs are running against the offeree, should the offer not be accepted and the offeror betters the offer in the judgment.

12 In my view the Court should readily “otherwise order” to the extent that indemnity costs should run, as was conceded with respect to the Calderbank offer, from the day following the closing date for acceptance of the offer. That course would reconcile the apparent inconsistency.

136. In Walker that so-called inconsistency was ameliorated by Basten JA proposing orders that the indemnity costs would operate from, in that case the closing time for acceptance namely the first day of the trial [131] .

137. Without suggesting that the decision of Basten JA was incorrect, I simply note that on one view, there is no particular inconsistency. The offeree has a statutory period (whether it be 28 days or a “reasonable” period) to consider the offer. The cost consequences of non-acceptance of the offer do not operate to remove that period of consideration. Rather, if it be the case that the offeror obtains an order or judgment on the claim no less favourable to the offeror than the terms of the offer, the cost consequences operate not from the closing time for acceptance but rather the day after the offer was made which is a risk known to the offeree. In one sense, it is simply an added incentive or encouragement to the offeree to accept the offer to avoid the consequence that if the offer is ultimately held to be a valid one, the costs become payable on an indemnity basis from the day following the day date the offer was made.

Calderbank Offers

138. Costs offers may be made by parties other than through the OC regime. Sometimes such offers are described as a ‘Calderbank’ offer expressed to be without prejudice except as to costs and relied upon in accordance with the principles in Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333 (Calderbank).

139. There is an onus on the party making the Calderbank offer to satisfy the Court that it should exercise the costs discretion in its favour [132] .

140. Generally speaking, despite whether or not such an offer is described as a Calderbank offer, the effect of such an offer is that there is no prima facie entitlement of a party who has achieved a favourable outcome (having regard to the terms of the offer) to have an indemnity costs order made in its favour. Rather, the making of a non-OC offer is one of a number of circumstances the Court takes into account in exercising its discretion to make an order for costs on an indemnity basis [133] .

141. In the context of considering a Calderbank offer [134] , Ward CJ in Eq has noted that factors to be taken into account when considering the rejection or non-acceptance of the offer was unreasonable include: the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree’s prospects of success assessed as at the date of the offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it [135] .

Plaintiff’s submissions

142. Mr Maconachie contended that the first offer proposed an outcome reflecting the plaintiff’s claim and conceding much of the cross-claim, which had an outcome significantly less favourable to the plaintiff than the result obtained via the reasons for judgment [136] . In submissions [137] , Mr Maconachie referenced the decision of Rees J in Halkett v APG & Co Pty Ltd (No 2) [2023] NSWSC 1215 (Halkett). I note in that case that the relevant offer of compromise was served after the proceedings had commenced and a few days after the defendants had filed a Commercial List Response [138] . Thus, offers may be made prior to the commencement of litigation.

143. He contended that by the time of first offer, the parties had articulated their competing positions to each other and were in a position to properly assess the parameters of the dispute [139] .

144. Mr Maconachie alternatively submitted that the second offer was operative. Seemingly, he relied upon the fact that it was an effective offer with the consequence provided for under the OC regime, but did not articulate any other particular reasons as to why it should hold sway [140] .

Defendant’s submissions

145. Mr Yazdani submitted that each of the offers was not a genuine offer and further that it was not unreasonable for the defendant to reject them.

146. As to the first offer, he submitted that this was because (in summary):

147. its timing before any pleadings or evidence had been served provided no basis or yardstick upon which the defendant could properly measure the genuineness of the offer [141] ;

148. there was no genuine element of compromise as it involved essentially capitulation by the defendant [142] ; and

149. the letter was not in the form of a Calderbank offer nor contained the phrase “Without Prejudice save as to costs” [143] .

150. As to the second offer, he submitted (in summary):

151. its timing occurred before all of the evidence was served by either party including the main affidavits in chief [144] ;

152. the offer involved essentially capitulation by the defendant on the basis that “the plaintiff was to receive “windfall” as to 33.3% of the net residuary estate at the expense of the charity beneficiaries” [145] ; and

153. the plaintiff failed on her alternative estoppel claim which she contended involved additional evidentiary matters [146] .

154. He contended that there should be a reduction or apportionment of the costs awarded to the plaintiff as the successful party because the plaintiff lost her alternative claim in estoppel [147] .

Determination

First offer

149. To the extent that Mr Yazdani pressed a submission that the first offer could not be regarded as an effective non-OC offer, I reject the submission. It was sent on a “without prejudice basis” and reserved the right to tender the letter in support of any application for the plaintiff’s costs of the proceedings to be paid out of the estate, including on an indemnity basis [148] .

150. The first offer was sent at a very early point of time, approximately 4 months before the commencement of the proceedings.

151. The offer called upon performance of the contended testamentary agreement, and demanded payment equivalent to 50% of the net residual estate. There was some preparedness to accept a sum of approximately $40,000 already received by the plaintiff in forming part of her entitlement which also indicated that it was in lieu of, not in addition to the legacy to which she was entitled.

152. Clearly at the time the offer was made, there had been some degree of correspondence regarding the plaintiff’s claim. The offer in its terms refers to correspondence in December 2021.

153. However, overall, I am not persuaded that the plaintiff has demonstrated that the Court should exercise a discretion to award indemnity costs from the date of the offer or 28 days’ after the time of the offer.

154. Without being exhaustive, the rejection or non-acceptance of the offer was reasonable, and given the circumstances that the offer was sent at a relatively early stage, and from what I perceived, there was some compromise but not significant compromise on the plaintiff’s ultimate position, I am simply not persuaded otherwise.

Second offer

155. The position regarding the second offer however is different.

156. First, Mr Yazdani did not submit that the second offer as a matter of form was non-compliant with r 20.26 UCPR. Subject to one matter it seems to me that the offer was as a matter of form an effective offer of compromise. Without being exhaustive, it: identified the claims to which it related and proposed orders for disposal of the claims identified orders; bore a statement that it was an offer made in accordance with the UCPR; and specified a period of time within which the offer was open for acceptance, (the relevant “closing date” being no less than 28 days in circumstances in which the offer was made more than two months before the date set down for the commencement of the hearing).

157. The one matter that may be noted is that an OC must not include an amount for costs and must not be expressed to be inclusive of costs [149] . That requirement arose as a consequence of an amendment to the rules in 2013 [150] .

158. The purpose of the rule as amended was referred to in Jojeni Investments Pty Ltd v Mosman Municipal Council (No 2) [2015] NSWCA 208 (Jojeni) which I stated in Horn v GA & RG Horn Pty Ltd (No 2) [2022] NSWSC 1747*:*

“97. The purpose of the rule is clear. It is directed to the mischief of a monetary offer in a lump sum which does not differentiate between the plaintiff’s claim on one hand and the plaintiff's costs on the other: Jojeni Investments Pty Ltd v Mosman Municipal Council (No 2) [2015] NSWCA 208 (Jojeni) at [11] per Macfarlan, Gleeson and Leeming JJA .

98. Generally, a recipient of an offer will have some basis (whether it be pleadings, particulars and evidence) for making an assessment of a plaintiff’s claim but without some particular prior disclosure, will not have an informed basis for making assessment of the plaintiff's costs: Jojeni at [11].

99. The prohibition in r 20.26(2)(c) avoids the difficulty that it may not be possible to determine whether the default position of indemnity costs applies until the costs have been assessed: Jojeni at [11].

100. Thus, an offer that there be no order as to costs with the intention that each party bear their own legal costs with respect to the proceedings does not fall within that which is precluded under r 20.26(2)(c) and, accordingly, is not invalid for that reason: Jojeni at [10]-[15].”

159. I do not regard the offer as offending the requirement in r 20.26(2)(c) UCPR.

160. On any view of the matter, the plaintiff has obtained an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer both in respect of the testamentary contract claim and the main claim.

161. I reject the contention that the offer was not a genuine offer. The offer gave a significant reduction to the plaintiff’s main claim to half of the residuary estate, down to 33.3%; offered to bear her own costs of and incidental to the proceedings; and, offered to pay the full amount of the defendant’s cross claim out of the estate on an indemnity basis (on which the plaintiff has been successful and is not required to pay any amount at all under the cross-claim). Further, the offer provided for the plaintiff to pay the defendant the sum of $81,799 within 28 days of the entry of the orders.

162. The offer being an effective offer, the plaintiff is entitled to an order against the defendant for the plaintiff's costs in respect of the claim assessed on the ordinary basis up to the date of the offer (15 December 2023) and on an indemnity basis as from the beginning of the day following the day on which the offer was made [151] .

163. The onus is on the defendant to demonstrate there is reason for the Court to order otherwise.

164. Overall, I am not persuaded that there is any reason to order otherwise. None of the reasons that Mr Yazdani advanced seem to me to be sufficient basis to “order otherwise”.

165. First, as to the submission that the timing of the offer occurred before all of the evidence was served by either party including the main affidavits in chief [152] , whilst true, it does not seem to me that that necessarily means that the defendant was unable to make some appropriate assessment of the offer.

166. The second offer was sent 4 days after an unsuccessful mediation before Registrar of the Court [153] .

167. There is facility for an offeree who considers that that he or she has insufficient particulars of a claim or insufficient documents to enable the offeree to fully consider the offer to give notice to the offeror within 14 days of having received the offer that he or she is unable to assess the reasonableness of the offer because of the lack of particulars or documents [154] . There is no indication that any such notice was given by the defendant/cross-claimant to the plaintiff/cross-defendant.

168. To the extent that Mr Yazdani contended that the Plaintiff’s case here was essentially a factual case without any supporting documentation, this is not a case where the defendant in her capacity as executor was in no position to know whether the plaintiff’s allegations are true or false. The defendant “denied” rather than “not admit” the material parts of the testamentary contract and estoppel claims. The denial suggests she believed that the allegations were not true, and had sufficient knowledge or belief about those matters ,such that she could appropriately deny the allegations, as distinct from being in a position in which she was unable to know whether or not the allegations were true, after having made reasonable inquiry as to their truth [155] .

589 On balance, I confess that I am unpersuaded that the minimum equity appropriate to do justice to the claim is to enforce the promise according to its terms.

590 No submissions were made by or on behalf of the plaintiff in respect of what would constitute the minimum equity and be a proportionately just amount to assuage the conscience of the deceased, in the event that I were to conclude (which I do) that I am unpersuaded that the minimum equity required is to enforce the promise according to its terms.

591 Having regard to the findings that I have made in relation to the attempt that was made by the plaintiff at a testamentary contract case, there is no need for me to further ponder this.

172. Without attempting to be precise, much of the evidence and evidentiary context that was applicable to the findings in respect of the estoppel claim applied to my findings in respect of the plaintiff’s success on the testamentary contract claim. I do not think that there should be any reduction or apportionment in the costs awarded to the plaintiff in respect of the estoppel claim.

173. The result is that, I consider that the costs consequences of the second offer pursuant to r 42.14(2) UCPR should operate. Mr Yazdani did not put any submissions regarding the costs consequences of the second offer being operative from the day following the day the offer was made, in the event that I found the second offer to be operative; a reason to “order otherwise”.

174. In any event, in a practical sense there is little difference to the outcome. The amounts which are recorded in Mr D Yazdani’s invoice dated 14 December 2023 and the DOH invoice dated 19 December 2023, both of which were paid out of the estate on 21 December 2023 (i.e. after 15 December 2023) are clearly referable to work performed before the second offer was made [158]

175. Thus, whilst it appears that some legal costs were incurred by the defendant within the 28 day period after the offer was made on 15 December 2023, [159] they appear to be minimal namely telephone attendances on the defendant, an email to the defendant and an email to Mr Yazdani.

Issue 7 - Is it appropriate to make a gross sum costs order in respect of any of the costs?

176. The plaintiff contended that costs should be dealt with by way of gross sum costs orders, relieving the parties of the additional burden of costs assessment, and “(so far as is possible) avoid the estate becoming insolvent by reason of continuing legal costs”. Applying “the ordinary broad-brush approach”, he suggested the plaintiff’s costs be assessed in the sum of $150,000.00 (inclusive of any applicable GST) [160] notwithstanding that the plaintiff may achieve a more favourable cost outcome on an indemnity basis assessment [161] .

177. I have set out above the table produced by Mr Brigden regarding costs. Mr Brigden gave some evidence regarding his costs assessments of the plaintiff’s costs on an indemnity basis and his estimate of the plaintiff’s properly recoverable costs on the ordinary basis, as follows [162]

5 The indemnity costs specified are the actual solicitor and client costs incurred in the proceedings. I am aware of these, having been the solicitor engaged by the plaintiff in these proceedings since inception, and by virtue of having access to and reviewed our practice management software (including time recording) and accounting records.

6 My estimate of ordinary costs in the table below is based on my experience as a solicitor of over 18 years standing, having practiced predominantly in commercial litigation throughout that time. I would estimate that I have conducted over 300 Local, District and Supreme Court civil matters, and acted in at least 20 (but probably significantly more) costs assessment procedures.

7 My estimates of ordinary costs for professional fees for solicitor and counsel are based on a calculation of 75% of actual solicitor and client costs incurred. I have also allowed for deductions of the disbursements claimed on the ordinary basis such as solicitor travel, accommodation and sustenance for attendances in Sydney, which would not be recoverable on the ordinary basis.

178. Mr Yazdani submitted that the Court is not presently in a position to make a gross sum costs order of the plaintiff’s costs [163] .

179. The Court is empowered, pursuant to s 98(4)(c) CPA, to make a specified gross sum costs order instead of assessed costs.

180. I acknowledge that one of the purposes of specified gross sum costs is to avoid the expense, delay and aggravation likely to be involved in a contested costs assessment process [164] . In addition, I admit of the possibility that having regard to the contest between the parties so far, any cost assessment process might also be contested.

181. However, I do not consider this as an appropriate case in which to make such a gross sum costs order.

182. First, other than the table that has been set out above and the brief evidence I have outlined above, I have been provided with no other detail regarding how the plaintiff’s costs have been calculated including charge rates and hours attending to items. Thus, I do not consider that I am in any proper position to make an appropriate assessment.

183. Secondly, in any event, having regard to the fact that the plaintiff’s estimate of costs actually incurred on the indemnity basis is in excess of $100,000 more than the defendant’s indication of indemnity costs, I consider that some caution is warranted before readily agreeing to a figure which on any view is very substantially more than double the costs the defendant incurred.

Issue 8 – Does the Court have power to alter the part of the deceased’s estate which would ordinarily bear the burden of the costs of the proceedings, and if so, should it exercise that power to burden a specified part of the residuary estate?

Plaintiff’s submissions

184. Mr Maconachie submitted that the discharge of the funeral, testamentary and administrative expenses debts and liabilities of the estate are payable in accordance with the PAA Schedule [165] (because there are no charges on property of the estate, the deceased’s Will is silent as to the payment of debts [166] and as the estate is solvent).

185. In the above context, he submitted that the question of priorities of competing liabilities will not arise and the only question is what assets should be burdened with the liabilities [167] .

186. By application of category 2 of the PAA Schedule, he contends that the residue of the estate gifted to HCT (as to 70%) and WIRES (as to 30%) pursuant to cl 10 of the Will is burdened with payment of the debts and liabilities [168] including costs of both parties on the indemnity basis [169] .

187. Mr Maconachie stressed that the concession in the first offer that the plaintiff “…will limit her claim to 50% of the rest and residue of the estate” was given in a context in which the plaintiff did not wish to interfere with the specific bequests and should apply only to the extent that the residue of the estate would otherwise be insufficient to discharge the damages, interest on damages, and costs payable to the plaintiff [170] .

188. In the event that there is a shortfall in the estate’s capacity to meet the parties’ costs on an indemnity basis (after first satisfying the plaintiff’s 50% entitlement and interest thereon), Mr Maconachie argued that the shortfall should be borne by the defendant, the least having regard to the fact that the defence pleaded positive denials and did not seek judicial advice in defending the claim and in prosecuting the cross-claim [171] .

Defendant’s submissions

189. Mr Yazdani cited a number of statutory provisions including ss 59(4) and 93 Trustee Act, r 42.25 UCPR, and extensive authority in support of the proposition that the Court has power to make an order both pursuant to statute (that the defendant be paid costs out of the whole of the trust estate on the indemnity basis), and under general law (that an executor is entitled to an indemnity (or, where costs are being paid, reimbursement) from the estate for expenses incurred in the execution of the Will and in the administration of any trusts) [172] .

190. Mr Yazdani submitted that, in this particular case, “all roads lead to Rome”, as the effect of the application of the two ‘creditor’ and ‘beneficiary’ theories will ultimately lead to the same result [173] .

191. He submitted, premised on the defendant having properly incurred costs and expenses [174] and acting reasonably [175] , that the defendant’s costs of these proceedings and costs of administration generally are (he contends) the only extant liabilities of the estate and the defendant’s costs are to be paid out of the whole of the estate on the indemnity basis (based on copious cited authority), “as a first charge and in priority” to the plaintiff’s contract claim [176] .

192. Mr Yazdani contended that if (contrary to his submissions) the ‘creditor theory’ were to apply, the plaintiff promisee will be nothing more than an unsecured creditor and the executor’s costs would be paid out in priority to satisfying her claim having regard to (or confirmed by) ss 46C(2) and 82 PAA [177] .

193. Mr Yazdani further submitted that:

194. the defendant had not acted unreasonably or dishonestly for her own benefit rather than for the benefit of the estate [178] ;

195. failure to obtain judicial advice does not preclude indemnity, the touchstone being whether the executor has acted reasonably [179] ;

196. consent orders made on 31 August 2023 [180] suffices to allow the Court to infer that the parties had agreed to the proposition that the defendant’s costs ought to be paid out of the whole of the estate (as opposed to any one share of the residuary estate) on the indemnity basis prior to any distribution to the plaintiff (in the event that she was successful) [181] ;

197. the defendant as a necessary party to the proceedings did not pursue her own interests but rather those of the charity residuary beneficiaries [182] ;

198. the plaintiff, if properly characterised as a residuary beneficiary should not be placed in any special position of advantage or superiority to the other residuary beneficiaries [183] ;

199. at no point did the plaintiff seek relief to the effect that she was entitled to a specific lump sum that must be paid prior to distribution of the net residuary estate [184] ; and

Determination

Preliminary matters

195. Prior to addressing the issue of what part of the deceased estate should bear the burden of costs orders or whether the Court has any power to alter the ordinary order of which assets would bear the burden of testamentary expenses, it is appropriate to address a few of the matters that Mr Yazdani has raised.

196. First, there is no suggestion that the defendant was self-interested in the residue of the estate let alone acted dishonestly.

197. Secondly, I accept that generally speaking the defendant has not acted unreasonably. The one qualification to that is considering the operation of the OC regime, I was not persuaded that indemnity costs should not be ordered in respect of the second offer, a matter to which I will return.

198. Thirdly, to the extent that Mr Yazdani contended that the order made on 31 August 2023 should be construed or that the Court should infer that the parties had agreed to the proposition that the defendant’s costs ought to be paid out of the whole of the estate (as opposed to any one share of the residuary estate) on the indemnity basis prior to any distribution to the plaintiff in the event that she was successful [190] , I reject the contention. No particular context was provided for the order and it is far from evident to me that it in any way was intended to speak to the issue of what part of the estate should bear the burden of any ultimate order for costs.

199. Fourthly, as to the submission that the defendant (albeit a necessary party to the proceedings) pursued not her own interests but “rather those of the charity residuary beneficiaries” and that the plaintiff “should not be placed in any special position of advantage or superiority to the other residuary beneficiaries”, it seems to me that for the reasons I explain below the effect of the second offer self-evidently created tension between the interests of the plaintiff and the other residuary beneficiaries.

200. In part this is connected to Mr Yazdani’s sixth point. It is not entirely correct (as Mr Yazdani suggests) to say that at no point did the plaintiff seek relief to the effect that she was entitled to a specific lump sum that must be paid prior to distribution of the net residuary estate. The plaintiff’s claim was put as a claim for damages for breach of contract. That certainly admitted of the possibility that the plaintiff was contending to be a creditor of the estate in the event that she succeeded. Further or more specifically, the second offer (made on 15 December 2023), expressly conveyed to the defendant and her legal representatives that the plaintiff’s case will be that the residue of which she is entitled to half, be calculated after only funeral and standard administrative costs are deducted.

201. However, further and more specifically, the second offer relevantly contained the following terms which expressly put the defendant on notice that quite apart from the cost consequences there would be a contention that the plaintiff’s share of residue should not bear the costs

The above offer is made on the basis that the plaintiff will bear her own legal costs, and that the estate's legal costs may be accounted for prior to calculation of the percentage payable to the plaintiff. If the matter falls to be determined by the Court, the plaintiff’s case will be that the residue of which she is entitled to half, be calculated after only funeral and standard administrative costs are deducted.

202. Lastly, Mr Yazdani’s reliance on Coverdale and Bigg does not assist the defendant. The decision in Coverdale regarding the burden of costs was self-evidently a discretionary decision, and could not stand for the proposition that this Court has no jurisdiction to make a specific order as to how the burden of costs is borne such that the calculation of damages to which the plaintiff may be held to be entitled should exclude certain costs. I do not regard the decision in Bigg as being any different.

What part of the estate should bear the burden of costs orders

203. A significant issue in which the parties were divided, as noted during the listing on 22 May 2025 was which part of the estate should bear the burden of any costs order [191] .

204. Despite Mr Yazdani’s earnest recurrent submissions that the executor’s costs are considered to be a first charge over the whole of the trust estate and paid in priority to all other claims [192] , neither he nor Mr Maconachie (who contended otherwise [193] ) directly addressed the substance of the matter on which I had requested submissions; namely whether the Court has any power and/or discretion to alter the burden or order of payment of liabilities from the assets of the deceased estate that would ordinarily apply.

205. Specifically, neither counsel addressed submissions as to the effect of statutory provisions addressing that issue, specifically s 98 CPA and s 93(3) Trustee Act 1925 (NSW) [194] .

206. Section 98 CPA confers a very wide discretion and enables the Court to decide who should bear the costs of litigation before it quite independently of whether those costs do, or do not, amount to testamentary expenses [195] .

207. The Court’s discretion under s 98 CPA to order the costs of the proceedings to be borne in such way as the Court thinks just, if exercised, permits allocation of costs burden to particular parts or shares of an estate and, displaces (to the extent described in the costs order) the statutory order provisions of s 46C(2) PAA concerning how testamentary expenses are to be borne [196] . Exercise of that power is not dependent upon findings as to misconduct or unreasonableness on the part of an executor.

208. Where an indemnity is permitted, a particular consideration which may guide a Court in determining the share of the estate (and thus the entitlements of beneficiaries) that bears the burden of the indemnity is the circumstances under which the costs, charges and expenses were incurred [197] . Thus, if costs are incurred as a result of the action of only some of the beneficiaries, it may be ordered that the burden falls on the shares of those beneficiaries and such shares be exhausted before any part of the burden is placed on the shares of the other beneficiaries [198] . In some cases, costs have been ordered to be paid out of the share of residue given to unsuccessful parties [199] .

209. I have determined above that the plaintiff’s second offer is operative.

210. In accordance with the general position, the plaintiffs and the defendant’s costs of the proceedings up until the second offer should come out of the residuary estate as a whole as a testamentary expense.

211. However, I consider that for the period after 15 December 2023, the position is different.

212. On one view, the submission of Mr Yazdani that the “dominant cause of all problems the parties have encountered…should arguably be seen as attributable to the deceased herself” has some force to it.

The prima facie consequence of non-acceptance will be that the rule will be enforced against the non-accepting party: NSW Insurance Ministerial Corporation v Reeve (at 102); Hillier (at 422). This is because, from the time of non-acceptance “notionally the real cause and occasion of the litigation is the attitude adopted by [the party] which has rejected the compromise”: Maitland Hospital (at 724); see also Hillier (at 420).

214. The fact that the party is an executor or acting in a representative capacity makes no material difference to how the non-acceptance is viewed.

215. Returning to the matters that I emphasised above, the second offer did at least two things. First, it expressly put the defendant on notice that if the offer was rejected, she could not simply litigate using estate funds without any cost consequences. Secondly and more specifically, it expressly put the defendant on notice that quite apart from the cost consequences there would be a contention that the plaintiff’s share of residue should not bear the costs.

216. That was hardly a surprising contention. The very nature of the plaintiff’s case being a claim for half of the residuary estate, self-evidently would have the consequence that (to the extent that costs were ordered to be paid out of the estate) the ordinary or default position under the PAA Schedule would be that the whole of the residue of the estate would bear the burden of the costs.

217. Undoubtedly, the second offer made it clear that that was a consequence which the plaintiff was seeking to avoid. That must have been self-evident to the defendant (and if they were consulted, HCT and WIRES as residuary beneficiaries). I consider that it would be entirely unjust in the face of non-acceptance of the second offer for the plaintiff’s share of residue, at least from the time of the second offer to be eroded by the costs of the litigation.

218. Whilst what I have indicated above should be sufficient guidance for the parties, I propose to make some specific comments about what costs should be borne against the residuary estate.

219. For the avoidance of doubt and to hopefully avoid any further dispute over the matter my intention is that the defendant’s legal costs of the proceedings:

220. recorded in the DOH invoices dated 19 September 2023 and 30 November 2023 [200] should be burdened on the whole of the residuary estate, they representing work performed prior to the second offer;

221. recorded in Mr D Yazdani’s invoice dated 14 December 2023 and the DOH invoice dated 19 December 2023 both of which were paid out of the estate on 21 December 2023 [201] (i.e. after 15 December 2023) should be burdened on the whole of the residuary estate because they are clearly referable to work performed before the second offer was made [202] ;

222. recorded in the DOH invoices dated 19 March 2024 and 30 August 2024 and Dr Chapple SC invoice dated 28 May 2025 [203] all of which are referable to work after 15 December 2023 should be burdened on the half of the residuary estate to which HCT and WIRES are entitled;

223. the legal costs incurred by the defendant but not paid in the sum of $14,166.45 and any other of the defendant’s legal costs referable to these proceedings for work performed after 15 December 2023 should be burdened on the half of the residuary estate (to which HCT and WIRES are entitled).

Conclusion

222. In summary on the disputed issues I have concluded as follows:

223. The proceedings were conducted by the plaintiff on the basis that the enunciated claim for relief in respect of the testamentary contract was for half or 50% of the residuary estate or net residuary estate.

224. The plaintiff’s rights as a promisee under a testamentary contract are more properly characterised as rights as a residuary beneficiary rather than as a creditor of the estate, with consequential effect on administration.

225. Subject to my findings regarding costs and which parts of the residuary estate should bear the burden of costs, that I should make a declaration that the plaintiff is entitled to half of the residuary estate.

226. To the extent that it is appropriate to identify a date on which the plaintiff’s share of the residuary estate is to be determined, that date is the point when the net residuary estate is ascertainable and not the date of the deceased’s death.

227. I do not consider that it is appropriate to award interest on the plaintiff’s entitlement as contended for by Mr Maconachie but consider that it is reasonable to allow interest to run after a certain period, as seemingly accepted by Mr Yazdani to allow interest on the plaintiff’s entitlement residue once that precise sum is known after payment of all estate debts and liabilities including costs. If as earlier indicated, I am mistaken about Mr Yazdani’s submission, the parties can have liberty to apply in relation to my order.

228. In relation to costs:

(a) the plaintiff’s costs, calculated on the ordinary basis, up to 15 December 2023, should be paid out of the residuary estate of the deceased; (b) the defendant’s costs calculated on the indemnity basis, up to 15 December 2023, should be paid out of the residuary estate of the deceased; (c) the plaintiff’s costs, calculated on the indemnity basis on and from 16 December 2023 should be paid by the defendant out of the half share of the residuary estate to which WIRES and HCT are entitled; (d) the defendant’s costs, calculated on the indemnity basis on and from 16 December 2023 should be paid by the defendant out of the half share of the residuary estate to which WIRES and HCT are entitled; and (e) there should not be a gross sum costs order in respect of the plaintiff’s costs.

7. The estate should be administered on the basis that the costs of the proceedings should be borne from the residuary estate in accordance with my findings in [6] above to the intent that no part of the plaintiff’s legal costs and the defendant’s legal costs for the period after 16 December 2023 should be burdened against the half share of the residuary estate to which I have found the plaintiff is entitled.

Orders

223. The orders of the Court are - the Court:

224. Declares that the plaintiff is entitled to 50% of the deceased’s net residuary estate (excluding the costs of these proceedings pursuant to Order 2(c) and (d)) in lieu of the pecuniary legacy in clause 8 of the Will of the deceased dated 26 October 2020.

225. Orders pursuant to s 98 CPA that:

(a) the plaintiff’s costs, calculated on the ordinary basis, up to 15 December 2023, be paid out of whole of the residuary estate of the deceased; (b) the defendant’s costs calculated on the indemnity basis, up to 15 December 2023, be paid out of whole the residuary estate of the deceased; (c) the plaintiff’s costs, calculated on the indemnity basis on and from 16 December 2023 be paid by the defendant out of the half share of the residuary estate to which WIRES and HCT are entitled; (d) the defendant’s costs, calculated on the indemnity basis on and from 16 December 2023 be paid by the defendant out of the half share of the residuary estate to which WIRES and HCT are entitled.

3. Orders in the administration of the estate that:

(a) pursuant to s 98 CPA, the costs of the proceedings be paid out of the residuary estate in accordance with Order (2); and (b) no interest be paid on the plaintiff’s entitlement to 50% of the net residuary estate if it is paid within 28 days of the distribution date; and if not so paid, interest is to be paid on any unpaid part thereof, calculated at the rate prescribed by s 84A(3) PAA, from the 29th day from the distribution date until the date of payment in full.

4. Orders that there be liberty to the parties to apply in relation to the working out of these orders and in particular issues arising in respect of timing of the interest payment and the burden of the costs orders.
5. Orders that the Statement of Claim be otherwise dismissed.
6. Orders that the Statement of Cross-Claim be dismissed.

**********

Endnotes

Mills v Dodds [2025] NSWSC 396 (principal judgment or PJ) at [1].

PJ at [624].

PJ at [626].

Mr Maconachie in providing his submissions dated 27 June 2025 he indicated that the latter submissions superseded and replaced the earlier submissions dated 19 May 2025: PFOS [2].

Plaintiff's proposed Order 1 Short Minutes of Order dated 19 May 2025; PFOS [31].

DFOS2 [100]. I note that these reflected the Defendant's earlier proposed Short Minutes of Order dated 19 May 2025, with the exception that the later version reflected in the 27 June 2025 submissions added the interest order being Order 2.

See Orders 22 May 2025 revised by Orders on 26 May 2025.

JB2 [8].

HO annexure ‘A’ pages 2-4, and annexures ‘C’ and ‘E’ to ‘J’.

PFOS [8].

PAA s 46C(2).

PAA s 46C(3).

This arises from the express wording of class 2. See generally G E Dal Pont, Law of Succession (3rd ed, 2021, LexisNexis) at [14.3].

See e.g. In re Carless; Carless v Carless (1911) 11 SR (NSW) 368 at 389, 390 per A.H. Simpson CJ in Eq; Gleeson v Fitzpatrick (1920) 29 CLR 29; 1920 [HCA] 81 per Knox CJ at 34, Isaacs J at 35, Rich J at 37; [1920] HCA 81.

Macquarie Dictionary, (online at 20 January 2026) ‘residue’.

See e.g. Armstrong v Children’s Hospital at Westmead [2008] NSWSC 1315 (Armstrong) at [16] per Bryson AJ.

Macquarie Dictionary, (online at 21 January 2026) ‘residuary estate’.

See e.g. Dal Pont, G E, Law of Succession (3rd ed, 2021, LexisNexis) at [7.10] citing inter alia Blight v Hartnoll (1883) 23 Ch D 218 at 223 per Jessel MR, at 224 per Lindley LJ (though I note that citation does not appear to strongly support the proposition) and Armstrong at [16].

See e.g. Stokes v Churchill; Estate of Fryer (1994) NSW ConvR 55-694 at 59,967–9.

G L Certoma, The Law of Succession in New South Wales (4th ed, 2010) at [11.70] citing Bland v Lamb (1820) 2 Jac & W 399; 37 ER 680.

PJ [26].

PJ [34].

HO annexure ‘A’ pages 1-2.

HO annexure ‘A’ page 2.

HO annexure ‘A’ page 3.

See for example ibid.

HO annexure ‘B’.

HO annexure ‘B’ page 1.

HO [8].

HO annexure ‘A’ page 2.

HO [4].

HO [3].

HO annexure ‘A’ page 3 (i.e. being $195,665 - $14,166.45).

Ibid.

HO [8] and [9].

PFOS [7f].

PFOS [28], [37.1].

PFOS [36].

DFOS2 [97h, i and k], [98].

See Court Book (CB), 334-335; T (28 August 2024) 5.34-6.54.

JB1 annexure ‘B’ pages 5-6.

JB1 annexure ‘C’ pages 7-9.

PFOS [10].

PFOS [2].

DFOS2 [3].

“nett residual estate” CB 334.

CB 15-16 (Statement of Claim [6], [12(d)], [13]). Noting the plaintiff’s estoppel case was also framed in terms of a representation and consequent loss of 50% of the value of the deceased’s residuary estate: CB 16-17 (Statement of Claim [15], [22], [23]).

The first issue in respect of the testamentary contract in terms of whether the purported conversation between the plaintiff and the deceased constituted an agreement “that she would receive half of the deceased's residuary estate upon her death”: PJ [47(1)(a)].

POS [1], [33], [115.1], [115.4], [116]; CB 334.

DOS [9], [9a].

T (28 August 2024) 1.21-2.32 and 4.4-.13.

Plaintiff's proposed Order 1 Short Minutes of Order dated 19 May 2025.

T (28 August 2024) 4.4-.13.

PFOS [9]-[11], [17]-[19].

T (22 May 2025) 4.12-.13.

DFOS2 page 1 (heading).

DFOS2 at [5]-[17]: citing at various points Coverdale v Eastwood (1872) 15 Eq 121 (Coverdale) at 132–133; Jervis v Wolferstan (1874) LR 18 Eq 18 at 24 per Sir George Jessel MR; Central Trust and Safe Deposit Co v Snider [1916] 1 AC 266 at 270–271; Schaefer v Schuhmann [1972] AC 572 at 585H–586D per Lord Cross of Chelsea; Barns v Barns (2003) 214 CLR 169; 2003 [HCA] 9 (Barns) at [65] per Gummow and Hayne JJ; Delaforce v Simpson-Cook [2010] NSWCA 84 at [32] per Handley AJA (Allsop P and Giles JA agreeing).

DFOS2 at [19]-[21] but see [18]-[30] citing various passages from Barns including Gleeson CJ at [21], [32], [35]; Gummow and Hayne JJ at [74], [108] and also citing at various points Re Richardson’s Estate (1935) 29 Tas LR 149 at 159 per Clark J; Dillon v Public Trustee of New Zealand [1941] AC 294 (Dillon) at 304–305, Viscount Simon LC on behalf of the Board of the Privy Council; Dalton v Ellis; Estate of Bristow (2005) 65 NSWLR 134; [2005] NSWSC 1252 (Dalton) at [59], [67]).

Sylvia Villios and Olivia Jay, ‘Competing policies and claims when enforcing testamentary business succession promises’ (2022) 16 J Eq 262 (Villios & Jay) at 265.

Barns at [69] per Gummow and Hayne JJ.

In Dalton at [59] Young CJ in Eq attributed the theories to Professor Ian Hardingham in his article “Schaefer v Schuhmann: Promisee v Dependant” (1972) 10 University of Western Australia Law Review 115.

Ross A Sundberg, “The Problem in Schaefer v Schuhmann — A Simple Answer” (1975) 49 Australian Law Journal 223 (Sundberg) at 226; Villios & Jay at 270.

Villios & Jay at 270 (footnotes omitted); Dalton at [59]-[60] citing Sundberg at 226.

Dalton at [61].

Villios & Jay at 270.

New South Wales Law Reform Commission, Report 28 (1977) – Testator’s Family Maintenance and Guardianship of Infants Act, 1916 (June 1977) at [1.7] ‘Summary of recommendations’; see also the Report at [2.11.2] and [2.11.3].

Barns per Gleeson CJ at [8].

See e.g. Schaefer v Schuhmann [1972] AC 572 at 600D–E per Lord Simon of Glaisdale.

Barns per Gleeson CJ at [23]; per Gummow and Hayne JJ at [109]; Dalton at [64] citing Dillon per Viscount Simon LC at 305 and Barns at [109].

Barns per Gleeson CJ at [23], [32]-[35]; Gummow and Hayne JJ at [114]-[115]; Kirby J at [123].

Barns per Gleeson CJ at [20], [25]-[28].

See e.g. Rosalind Croucher, "Contracts to Leave Property by Will and Family Provision After Barns v Barns [2003] HCA 9" [2005] SydLawRw 12; (2005) 27(2) Sydney Law Review 263 (Croucher) p11/23.

Dalton involved a claim in which the deceased executed a deed between himself and the mother of his en ventre sa mère daughter in which he acknowledged that he is the father of the daughter and covenanted to make and keep in force a valid and effective Will pursuant to which he may provision for the daughter.

At [57]-[70].

At [56] (Paragraph 9 of the statement of claim seeks an order that one-half of the deceased’s estate is held on trust for the second plaintiff and an order that the value of that interest be paid to her. However, it also claims damages and interest: [55]).

Dalton at [57]-[70] especially [67]-[68].

Ibid.

Specifically the second plaintiff being the daughter.

Dalton at [70].

Susan Barkehall Thomas ‘Proprietary estoppel and family provision: Competing moral obligations’ (2017) 26 APLJ 24.

Ibid at 29-30.

Succession Act 2006 (NSW).

At [67] referencing Gleeson CJ (at 183 [30]–[32]) and Gummow J and Hayne J’s adoption (at 208 [115]) of Street J’s statement of principle at first instance in Schaefer, reported sub nom Re Seery and Testator’s Family Maintenance Act (at 295) and a similar statement by McLelland J in Lim v Permanent Trustee Co Ltd (McLelland J, 26 March 1981, unreported).

At [61]-[62].

Croucher (see above); Julie Cassidy "Life (or More So Death) After Barns v Barns" [2006] UTasLawRw 3; (2006) 25(1) University of Tasmania Law Review 61.

Villios & Jay at 271 (footnotes omitted).

PFOS [18]-[19].

PFOS [20] citing Sharp v Lush (1879) 10 Ch D 468.

PFOS [7b] being $1,186,591.89 - $32,424.35 (The $32,424.35 being the total of (i) a shortfall of the probate fee paid by LPP of $197.41; (ii) an ATO refund of $277.15; (iii) & (iv) 2 entries for interest on the term deposits $29,295.70 plus $2506.85, and (v) a remediation payment from Australian Super of $147.24).

PFOS [7e] contended to be 2 amounts totalling $2,438.20 being an overpaid pension amount of $1910.87 and an electricity account of $527.33.

PFOS [7f] being $1,154,167.54 - $2,438.20 = $1,151,729.34.

PFOS [7g].

PFOS [11].

PFOS [10] referencing PFOS [7f].

PFOS [28], [37.1].

T (22 May 2025) 3.23-.31.

PJ at [39].

DFOS2 [3b], [4] citing PJ [39].

PJ [519].

PJ [39].

PJ [37]-[39].

PFOS [7] citing PJ [127], [193] and [429].

PFOS [12] citing Robinson v Harman (1848) 1 Exch 850, 855; 154 ER 363, 365.

PFOS [12] citing McCrohon v Harith [2010] NSWCA 67, per McColl J at [54]-[56].

PFOS [14].

DFOS2 [97f].

PJ [193] read with PJ [429].

PJ [203(7)].

PJ [426].

PFOS [29].

PFOS [30], [37.2].

PFOS [93]-[95].

PFOS [92].

Ibid.

PFOS [100(2)].

In the case of an appropriation of property in or towards satisfaction of a legacy other than an annuity: the legatee shall be entitled to the income from the property so appropriated, and interest shall not be payable out of any other part of the estate on so much of the legacy as has been satisfied by the appropriation: PAA s 84A(1) and(2).

PAA s 84A(1).

PAA s 84A(3).

CPA s 98(1)(a)-(c).

Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 42.20(1).

UCPR rr 42.14, 42.15 and 42.15A.

UCPR r 42.14(1).

Leichhardt Municipal Council v Green [2004] NSWCA 341 at [23], [31]-[37] per Santow JA (Bryson and Stein JJA agreeing).

Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [16] per Spigelman CJ; Beazley and McColl JJA.

Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19 at [17]; Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 at [11].

Shellharbour City Council v Johnson (No 2) (2006) 67 NSWLR 308; [2006] NSWCA 114 at [20]-[23] per Hunt AJA (Beazley (as her Excellency then was) and Tobias JJA agreeing).

South Eastern Sydney Area Health Service v King [2006] NSWCA 2 (at [83]) per Hunt AJA (Mason P and McColl JA agreeing); Leach v Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 (Leach) at [29] per McColl JA (Gleeson JA and Sackville AJA agreeing).

Leach at [47] per McColl JA (Gleeson JA and Sackville AJA agreeing), adopting the comments of Hely J in Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437; (2004) 212 ALR 281 at [17].

Leach at [48].

At [11]-[12] (omitting footnotes).

At [10]-[12], [32], [36] (Payne JA agreeing at [80]).

Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26].

See e.g. Pethers v Pethers (No 2) [2025] NSWSC 561 at [60]-[61].

E Group Security Pty Ltd v Chief Commissioner of State Revenue (No 2) [2021] NSWSC 1296 at [57].

Ibid at [59].

PFOS [32]-[33].

PFOS [34].

Halkett at [14].

PFOS [34].

PFOS [35].

DFOS1 [6a]; DFOS2 [89a].

DFOS1 [6c]; DFOS2 [89c].

DFOS1 [6d]; DFOS2 [89d] citing Old v McInnes and Hodgkinson [2011] NSWCA 410 at [117]-[118].

DFOS1 [7a]; DFOS2 [90a].

DFOS1 [7b]; DFOS2 [90b].

DFOS1 [7c]; DFOS2 [90c].

DFOS1 [8]; DFOS2 [91].

See JB1 annexure ‘B’ page 6; PFOS [33].

R 20.26(2)(c) UCPR.

See e.g. Ye v Chen [2022] NSWSC 494 at [104]-[105] per Adamson J.

UCPR r 42.14(2).

DFOS1 [7a]; DFOS2 [90a].

See ROP 11 December 2023.

See UCPR r 20.26(4).

See UCPR r 14.23(3) and affidavit verifying his defences.

DFSOS2 [90b].

DFOS1 [7c]; DFOS2 [90c].

HO annexures ‘F’ and ‘G’; JB2 annexures ‘F’ and ‘G’ pages 26-32.

JB2 annexure ‘H’ page 33.

PFOS [33], [37.3] - Contended to be a rough mid-point between the plaintiff’s ordinary and indemnity costs positions.

PFOS [33].

JB2 [5]-[7].

DFOS2 [98d].

Ahern v Aon Risk Service Australia Pty Ltd (No 2) [2022] NSWCA 39 at [15]; See more generally Ritchie’s Uniform Civil Procedure NSW at [s 98.60]-[s 98.70].

PFOS [15]-[16].

PFOS [23].

PFOS [21]-[22].

PFOS [25]-[26].

PFOS [31].

PFOS [27].

PFOS [27], [31].

DFOS2 [55]-[73].

DFOS2 [31].

DFOS2 [74a].

DFOS2 [74b].

DFOS2 [31], [33]-[54], [74 chapeau], [74a], [75].

DFOS2 [32].

DFOS2 [74b].

DFOS2 [74c].

The consent orders made on 31 August 2023 were as follows: 1 The Court Notes the defendant’s undertaking that she will not distribute any of the estate of the late Lynette Rose Paton, pending further order of the Court. … Notation [A] For the avoidance of doubt, the undertaking provided for in order one does not preclude or otherwise prevent the defendant from paying legal costs, administration costs, tax and other disbursements from the estate.

DFOS2 [74d], [80b].

DFOS2 [74e], [75].

DFOS2 [80a].

Ibid.

DFOS2 [80e].

DFOS2 page 24 heading and [74c] citing inter alia Lee v Australian Executor Trustees Ltd as trustee of the estate of the late Ronald William Lee (No 4) [2021] WASC 257 at [21] – [35] per Kenneth Martin J.

DFOS2 [78], [80c].

DFOS2 [79], [80d].

Ibid.

DFOS2 [74d].

T (22 May 2025) 3.17-.18, 13.37-.39.

The DFOS2 record 12 instances where this submission or a variation of it is made ([14], [17], [31], [32], heading above [33], [34], [74 chapeau], [74a], [75], [97f], [97g] x 2, [97i], [99b]) with additional 9 caselaw references.

Namely that the plaintiff’s 50% share of the net residuary estate should exclude the costs of these proceedings.

Whilst Mr Yazdani referenced s 93 Trustee Act (see PFOS [58]) it was in a context of a statutory power dealing with litigation costs unaccompanied by any submission to the effect that it empowered the court to alter the ordinary order of which assets would bear the burden of testamentary expenses.

Murdocca v Murdocca (No2) [2002] NSWSC 505 (Murdocca (No2)) per Campbell J at [70] (remarks concerning the provisions of s 76 of the Supreme Court Act 1970 (NSW), which for present purposes are not materially different to the relevant provisions of s 98 of the CPA); see also Reeves v Reeves (No 2) [2024] NSWSC 386 (Reeves) at [56]. Noting that the decision is unaffected by the appeal to the Court of Appeal in Murdocca v Murdocca [2002] NSWCA 373, which was an appeal from an earlier decision of Campbell J in Murdocca v Murdocca & Ors [2002] NSWSC 159 on a construction issue, which appeal was dismissed with costs).

Murdocca (No2) at [76], see also Reeves at [56]. The same is true of s 93(3) of the Trustee Act (to order any costs to be paid out of such part of the property as in the opinion of the Court is the real subject matter of the proceedings): Murdocca (No 2) at [76] .

See e.g. National Trustees Executors and Agency Company of Australasia Ltd v Barnes (1941) 64 CLR 268 at 279 per Williams J (Rich ACJ at 273 agreeing); [1941] HCA 3.

Ibid.

See e.g. Re Estate Late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311 at [37] per Campbell J, citing Harrington v Butt [1905] P 3.

HO annexures ‘C’ and ‘E’; JB2 annexures ‘C’ and ‘E’ pages 19-21, 23-25.

HO annexure ‘A’ page 3.

HO annexures ‘F’ and ‘G’; JB2 annexures ‘F’ and ‘G’ pages 26-32.

HO annexures ‘H’, ‘I’ and ‘J’; JB2 annexures ‘H’, ‘I’ and ‘J’ pages 33-41.