Parkas v Shankar

[2025] NSWSC 1140

Supreme Court of NSW|2025-09-30|Before: Richmond J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2025-09-30

Before

Richmond J

Catchwords

LAND LAW — Co-ownership — Statutory trust for sale —
Division of net proceeds — Account for income and profitsLAND LAW
— Co-ownership — Rights between co-owners — Equitable
contribution — Where no resulting trust, joint

Source

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Catchwords

LAND LAW — Co-ownership — Statutory trust for sale —Division of net proceeds — Account for income and profitsLAND LAW— Co-ownership — Rights between co-owners — Equitablecontribution — Where no resulting trust, jointendeavour constructivetrust or common intention constructive trust present — Whether co-ownercan claim for work done personallyas opposed to monetary expenditures inrespect of improvements to the landCOSTS — Application for appointmentof trustees for sale pursuant to s 66G Conveyancing Act 1919 (NSW) — Where‘usual order’ for costs in such proceedings to be defrayed out ofproceeds of sale — Whetherone party’s conduct sufficientlyunreasonable to warrant departure from ‘usual order’

Judgment

Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.

Medium Neutral Citation:

The trustees for sale, Mr Peter Mitchell and Ms Cheryl Beaumont (the trustees), both solicitors, sold the Property on 29 July 2025 for $1.565 million. The net proceeds of sale after payment of the expenses of the sale and the amount owing to under the mortgage to Bank of Queensland (BOQ) was $900,694.19 from which the trustees have deducted their costs of $42,552.93 leaving a balance of $858,141.26 which is held in the trust account of the solicitors for the trustees. The remaining issue in dispute in the proceedings concerns the division of those funds under order 7 which requires a determination by the Court as the parties are unable to agree on the appropriate division.
In accordance with the directions regarding the preparation of accounts set out in orders 9 to 14 of the October orders, the first defendant, Mr Shankar, provided the three separate accounts responding to orders 9(a)(i), (ii) and (iii) and the second defendant, Mrs Shankar, provided one account responding to order 10. Although the plaintiff submits that the accounts provided by Mr Shankar do not strictly comply with the orders made, the hearing proceeded on the basis that they were sufficient to allow the accounting process to be dealt with by the Court. The plaintiff, Mrs Parkas, has not provided an account in accordance with order 10 and I infer from this that she does not assert that she has made any unreimbursed expenditure for which she is now entitled to an account. However, she maintains a claim that the account should recognize her contributions to the purchase price of the Property, expenditure on construction incurred with funds made under the joint borrowings from BOQ referred to below and her contributions to mortgage instalments paid to BOQ.
The plaintiff relied on (a) two affidavits made by her, (b) two affidavits made by her husband, Lalas Parkas (Mr Parkas), (c) an affidavit of Mr Sunil Chand, the builder used by the parties (Mr Chand), (d) an affidavit of her solicitor, Mr Steven Stojanovic, (e) an affidavit of one of the trustees, Mr Peter Mitchell, and (f) an affidavit of Mr Nick Alexopoulos, the real estate agent who acted on the sale of the Property. Of these witnesses, only the plaintiff and Mr Parkas were cross-examined.
The defendants relied on a number of affidavits sworn by each of them, and each was cross examined.
The defendants also sought to rely on a report by a quantity surveyor, Mr Mehdinezhad, as expert evidence on the reasonableness of the estimate made by Mr Shankar of the time he spent on the design and construction of the duplex constructed on the Property. This report was not admitted due to the failure of the defendants to comply with r 31.19 of the Uniform Civil Procedure Rules 2005 (NSW) and Practice Note SC Eq 5, paragraph 12.

The background facts are as follows.
In 2010, Mrs Shankar approached Mrs Parkas with a proposal that the two couples work together to purchase the Property, at that time vacant land, with a view to the construction of a duplex comprising two residential dwellings on the land and then rent them to third parties. Mr Shankar is a mechanical engineer with managerial skills. Mr Parkas is a cabinet maker by trade, with skills in construction. The parties saw advantage in the two families working together.
On 7 July 2010 the parties entered into a contract for sale and purchase of the Property and completion occurred on 18 August 2010. The purchase price was $245,000. No stamp duty was paid as an exemption was claimed. The purchase price was paid by a contribution of $24,500 by Mrs Parkas, a contribution of $24,500 by Mr and Mrs Shankar and the balance of $196,000 was funded by a loan from BOQ under which all three of them were named as joint borrowers and mortgagors.
On completion of the purchase, the Property was transferred to the parties in their joint names, with Mrs Parkas holding an interest of 50% in the Property as tenant in common with Mr and Mrs Shankar, who held the other 50% interest as joint tenants between them.
On 17 July 2010 the parties established an account with BOQ called a ‘Reverse Charges Account’ having the account number ending 4920 (Account 4920). This account was in their joint names and appears to have been used as a working account for payment of expenses, payment of principal and interest on the loans made by BOQ and, later, receipt of rental income as well as distributions to the parties of surplus rental income.
Following completion of the contract, Mr Shankar prepared, and the parties lodged, an application for development approval to construct a duplex on the Property. Mr Shankar also prepared the architectural drawings and the liaised with structural and hydraulic engineers and relevant statutory bodies. This included working with the surveyors, North Western Surveys Pty Ltd, who were retained to assist with a drainage issue. Development consent was granted by Blacktown City Council on 3 February 2011.
On 7 November 2010 Lotus Constructions Pty Ltd, a licensed builder, provided a quote of $336,000 for the construction work. This quote was to construct the building to ‘lock up’ stage and excludes much although not all of the internal work including, notably, the kitchen, flooring, painting and landscaping. The parties proceeded to engage Lotus Constructions although no formal contract was ever entered into. Mr Chand, a director of Lotus Constructions, was nominee under the builders licence and gave evidence regarding the building work done. Mr Parkas’ company, Pacific Enterprises NSW Pty Ltd, provided a separate quote to do the other construction work for $201,500 on 28 February 2011.
On 29 November 2011 the parties obtained a loan facility for $344,000 from BOQ to construct the duplex. This loan facility was in their joint names and had an account number ending 1131. As noted below, this account was rolled into a new loan account with BOQ ending 8807 (loan account 8807) in June 2013.
All of the BOQ loan accounts and Account 4920 were in the joint names of the parties, but were operated by Mr Shankar alone, who controlled the finances of the project, undertaking administration of the loans and controlling payments and receipts related to construction and rental. He also retained the documents in relation to the project. This included the documents relating to rental after the duplexes were rented out. Mrs Parkas did not request details from Mr Shankar about what he was doing for many years as she trusted him.
The construction of the duplex was undertaken by Lotus Constructions. Mr Chand’s evidence, which I accept, was that his company constructed the building to lock up stage by early September 2012.
Mr Chand's evidence is that the construction remained the responsibility of Lotus Constructions as the licensed builder and insured party responsible through to completion. Mr Parkas and Mr Shankar were not owner builders. Accordingly Mr Chand continued to supervise construction to ensure that the work met applicable building standards until completion. He remained on site a few days each week and some weekends until the building was fully completed. In this period Mr Chand's evidence, which I accept, is that he often saw Mr Parkas and Mr Shankar on site working, especially on weekends.
The internal works required qualified tradesmen for plumbing, electrical and carpentry work. Mr Parkas and Mr Shankar had to arrange for quotations and select contractors although generally they used Mr Chand’s recommended contractors who regularly worked for Lotus Constructions. Mr Chand also arranged for one of his contractors to install shower screens and built in wardrobes and recalls that internal plumbing and electrical works were undertaken by his subcontractors.
Mr Shankar says that while Mr Parkas, through Pacific Enterprises, entered into a contract to undertake the finishing off stages of the project for $201,500, he did not complete the work and asked Mr Shankar to do so at Mr Parkas’ cost. Mr Parkas disputes this claim, and denies that Mr Shankar took over the project on the basis that he would undertake the work at his cost and then be entitled to a reconciliation. Rather, Mr Parkas says that the arrangement was that they would both do the work and get quotes from contractors for what they could not do themselves. He was not cross examined on this evidence which is supported by the fact that they each received payments for work done on construction of the duplex of approximately the same amounts (see [51] below) and there was no dispute that those payments were sufficient reimbursement for that work until the present dispute arose in 2021.
In February 2013 the duplex was completed and the resulting dwellings, which the parties referred to as No. 54A and No. 54B, were available to rent to tenants from March 2013. No. 54A is a two storey, three bedroom, three bathroom with a single garage and No 54B is a two storey, five bedroom, three bathroom with a double garage.
On 19 March 2013 the parties entered a management agency agreement with Blue Real Estate to manage the rental of the duplex. No. 54A was rented soon after at $500 per week and no. 54B was rented at $650 per week. The managing agents paid the rental income net of costs into Account 4920. The first defendant then made payments from Account 4920 to the parties, generally, in the proportion 50% to the plaintiff and 50% to the defendants for many years. The rental covered expenses including the mortgage repayments and the excess was shared, with the plaintiff and the defendants receiving approximately $1200 per month.
The construction loan account 1131 was closed on 18 June 2013. On the same day loan account 8807 was established. This account is discussed below. It is not in dispute that the total amount owing to BOQ for the loan to purchase the Property and the construction loan was rolled into loan account 8807 in June 2013.
In or about 2015 the plaintiff wished to sell the Property but this was opposed by the defendants and the sale did not proceed. The relationship between plaintiff and defendants began to come under strain, and finally broke down in late 2021. What led to the dispute was a payment on 15 November 2021 of the sum of $15,004 from Account 4920 to ETP Projects Pty Ltd. ETP Projects is a company owned and controlled by Mr Shankar. Mrs Parkas found out about this payment around that time and raised her concern that she had not authorised or been informed about the payment. There was no corresponding payment to Mrs Parkas to equalise the distribution.
After speaking to Mr Shankar about the matter Mrs Parkas obtained copies of bank statements for the account and approached BOQ about the withdrawal. BOQ froze the account.
The managing agent at the time, MARCS Property, gave notice terminating the managing agency agreement dated 31 July 2018 with effect from 19 February 2022. ETP Projects took over the management of the Property and all rental income from 1 April 2022 was paid into an account in the name of ETP Projects. No payments were made to Mrs Parkas for her share of the surplus rental income after that time.
On 22 December 2022 Mrs Parkas commenced these proceedings in the Real Property List by filing a summons seeking orders for the appointment of trustees for sale pursuant to section 66G of the Conveyancing Act and orders for an account.
On 6 June 2023 Mr and Mrs Shankar filed a cross-summons seeking sale of the Property, payment from the proceeds of sale to Mr Shankar of $261,701.95 and distribution of the balance equally to the plaintiff and to the first and second defendants. The claim for $261,701.95 appears to have been largely based on an expert report from a quantity surveyor (Mr Mehdinezhad) which recorded Mr Shankar’s claims to have spent:
more than 400 hours in working in the design phase including solving a significant drainage issue, that time being valued at $56,952; and
more than 750 hours on the project's construction phase valued at $97,964.95, and made financial contributions of $97,964.95 including GST.
These figures total to the amount sought in the cross-claim.
By consent the proceedings were determined by Peden J in chambers. Judgment was delivered on 10 October 2023 and orders were made on 30 October 2023. These orders appointed Peter Mitchell and Cheryl Beaumont as trustees for sale and ordered the parties to account, as noted earlier.

The starting point is to note that the Property was purchased as vacant land with funds partly provided by the co-owners equally (the plaintiff as to $24,500 and the defendants as to $24,500) and the balance with a borrowing for which they were jointly liable. The contribution to the purchase price funded from the borrowed funds is treated as a contribution made by them equally: see eg Brennan v Duncan [2006] NSWSC 674 at [8]. Accordingly, at the time of the purchase, the Property was legally and beneficially owned by the parties as tenants-in-common as to 50% by the plaintiff and as to 50% by the defendants. It was not in dispute that the relationship between the parties was not a partnership, as their co-ownership did not amount to the carrying on of a business with a view to profit: Partnership Act 1892 (NSW), s 1(1).
There is no pleaded claim that the beneficial interest in the Property changed as a result of the expenditure used to construct the duplex. So, for example, there is no claim for relief on the basis of a common intention constructive trust or under the principles stated in Mushinski v Dodds (1985) 160 CLR 583 at 620-621; [1985] HCA 78 and Baumgartner v Baumgartner (1987) 164 CLR 137 at 147-148; [1987] HCA 59. Rather, the dispute concerns the extent to which their right to the net proceeds of sale should be adjusted on the termination of the common ownership on the equitable principles that apply in that situation.
At common law, a co-owner of property who has incurred expenditure in improvements, repairs or maintenance on the property has no claim for reimbursement against the other co-owners unless they have expressly or impliedly requested or agreed to that expenditure: Maio v Sacco [2009] NSWSC 413; (2009) 14 BPR 27,591 at [4].
The position is different in equity where a claim for contribution for expenditure on repairs or improvements which increase the value of the land can be made when the co-ownership comes to an end, including when the court determines the rights of the co-owners to the proceeds of a judicial sale under s 66G.
White J summarised the position in Maio v Sacco as follows (at [5]-[6]):

The invoices paid with borrowed funds ($221,000) are to be treated as contributions by the co-owners. The total amount paid by the defendants from their own funds was $94,642.31 and this is properly regarded as expenditure by them on improvements to the land as all the payments to Lotus Constructions were for the construction of the duplex.
In order for a right to an allowance for 50% of the payment of $94,642.31 to arise it is necessary that the value of the Property has been enhanced by at least that amount at the date on which co-ownership was terminated. Given that the expenditure was incurred in constructing the duplex and the value of the Property on the date of termination of co-ownership as indicated by the sale price of $1.565 million greatly exceeded the cost of purchase of the land and construction the duplex, this requirement is met.
The plaintiff submitted that any claim by the defendants in respect of the account relating to the construction of the duplex is not maintainable as it arises more than 6 years prior to the commencement of the proceedings and is precluded by s 15 of the Limitation Act 1969 (NSW). I reject this submission. As pointed out by White J in Maio v Sacco at [9], the right to an equitable accounting in this case did not arise at the time the expenditure was made or the work on the construction of the improvements was done, but rather on the application for the appointment of trustees for sale or similar event which terminated the co-ownership. Accordingly, there should be an allowance by the plaintiff to the defendants for 50% of $94,642.31.
As regards the second category, the account made pursuant to order 9(a)(i) and the evidence provided in support of it indicates that a large number of payments were made by Mr Shankar from his own funds or those of his wife in connection with the construction of the duplex. As the account is not prepared in a manner which allows for easy identification of the various payments, I have grouped the items into the three categories listed below, and set out my conclusions as the payments made based on the invoices and other records in evidence as follows:
payments for expenses in connection with obtaining the development consent for construction of the duplex (including payments to the surveyor, engineers, and Blacktown Council), which amount in total to $15,668.53;
payments to third-party suppliers for materials used for the further work to finish the construction following lock-up stage, which amount in total to $40,701.74; and
payments to third-party tradesmen for the further work to finish the construction following lock-up stage, which amount in total to $39,967.50.
The sum of these three categories is $96,337.77.
In my view, no allowance should be made to the defendants for this additional amount. The evidence establishes that Mr Shankar and Mr Parkas each received reimbursements for expenditure they had incurred for the construction of the duplex in 2012 and 2013. It is not in dispute that the following payments were made with funds advanced BOQ under the construction loan:
on 30 November 2012, Mr Parkas received $60,000 in payment of an invoice for that amount issued by Pacific Enterprises dated 23 November 2012;
on 8 April 2013 Mr Shankar received $63,000 which the parties agree was for the purpose of the reimbursing him for various expenses he had incurred on construction; and
in addition, in June 2012 BOQ advanced further amount of $64,000 under the construction loan of which $32,000 was paid to a joint account in the name of Mr and Mrs Parkas, and $32,000 was paid to Mr Shankar. I infer that this was treated by each of them as a payment to reimburse them for their expenditure on the construction of the duplex.
The total amount received by Mr Shankar from the funds advanced by BOQ ($95,0000) is very close to the amount of the construction expenditure which he is able to support by his records ($96,337.77). Indeed, it is so close that it is likely that the parties agreed that the payments they had received from BOQ was sufficient to reimburse them for their expenditure, particularly as there is no evidence of any claim by Mr Shankar that he had incurred unreimbursed expenditure for which he was entitled to recoupment from the plaintiff until the present dispute arose in 2021.
Further, given the lack of specificity in the evidence as to what a significant part of the amount of $96,337.77 was spent on, I am not satisfied on the evidence that the difference between the expenditure of $96,337.77 and the reimbursements of $95,0000 (being $1,337.77) has been shown to be expenditure on improvements which enhanced the value of the land at the time the co-ownership was terminated some 12 years after it was incurred.

The account provided by Mr Shankar under order 9 (a)(ii) of the October orders relates to payments made by him from Account 4920 which is an account in the joint names of the parties opened on 17 July 2010 which was blocked by the bank on around 30 November 2021. Deposits to this account included rent paid by tenants of the duplex. Payments from the account included mortgage instalments on loan account 8807 and payments of expenses incurred for the Property, including council rates and building insurance.
The plaintiff disputes: (a) four payments from Account 4920 made to ETP Projects, and (b) a further seven payments from Account 4920 made to an account with BOQ in the joint names of the defendants with an account number ending 8967 (Account 8967) which are identified in Ex A.
In relation to the four payments to ETP Projects, the position is as follows. The first payment was an amount of $5,000 made on 4 April 2017. There is no invoice for $5,000 provided to support this payment. The description given in the account is that it is for ‘maintenance work’ but there being no invoice or other evidence as to the maintenance work, I do not accept the claim for this payment. The defendants need to make an allowance to the plaintiff for 50% of this amount.
Next are two payments to ETP Projects of $808.50 made on 6 February 2019 and $900.90 made on 18 August 2019. There is an invoice for each payment stating the work done, being repairs to the Property. Each claim is accepted and accordingly no adjustment should be made for these payments from Account 4920.
The fourth payment to ETP Projects is an amount of $15,004 made on 19 November 2021. This is said to be supported by an invoice dated 21 February 2020 issued by ETP Projects to the plaintiff which describes the work done as: (a) concept design by Mr Shankar for the development application for $19,950 (charged at 190 hours at $105 per hour); (b) concept design for a stormwater outlet to satisfy the requirements of the council for $1,500 (charged at 20 hours at $75 per hour); and (c) project management services construction duplex for $5,850 (charged at 130 hours at $45 per hour). An allowance of 50% is then given for the defendants’ interest, leaving a net amount payable by the plaintiff of $15,004.
Neither the plaintiff nor the other co-owners engaged ETP Projects to undertake work on design and construction of the duplex, as ETP Projects was not incorporated until 11 August 2014. Rather, Mr Shankar undertook that work personally, and it was not until December 2020 (some 8 years later) that he decided to issue an invoice through ETP Projects for that work. As this invoice does not relate to expenditure incurred by Mr Shankar, but rather is a claim for his labour and skill for work for which no charge was actually made, it is not allowable. As noted earlier, the authorities indicate that a co-owner is only entitled on an account to an allowance for expenditure which he or she incurred on improvements or repairs which enhance the value of the land, and not for expenditure saved. While in Maio v Sacco White J observed that it was arguable that an allowance could be made for the expense saved by a co-owner who carries out improvements or repairs personally, he did not take the matter further beyond stating that the value of the amounts could be measured by what would reasonably cost to engage third party to carry out development work. There was no evidence of that nature in the present case.
Accordingly, there should be an allowance in favour of the plaintiff for 50% of the amount of $15,004 paid to ETP from Account 4920.
As to the second category of seven disputed payments made from Account 4920 to the defendants’ Account 8967, these are as follows:
a payment of $1,317.10 was made on 17 January 2017. Mr Shankar gave evidence that this was a reimbursement to him for water rates which he paid using his credit card, which I accept and accordingly no adjustment is required;
payments of $1,346.35 made on 17 February 2017 and $1,523.10 made on 11 February 2018 were explained as payments for homebuilding insurance, which the plaintiff now accepts and no adjustment is required for these amounts;
there was a payment of $1,112.05 made on 21 August 2017 which was reversed on 12 October 2017 by a payment from Account 8967. Accordingly, no adjustment is required for this amount; and
there are three remaining payments $1,900 on 7 August 2017, $12,204.87 on 12 October 2017 and $666.98 on 8 March 2018. No evidence has been provided to support these payments and accordingly they are not allowed. There needs to be an allowance of 50% in favour of the plaintiff for the total amount of these payments.

The account provided by Mr Shankar under order 9 (a)(iii) of the October orders relates to receipts of rental income and payments made from that income from the time around March 2022 when ETP Projects took over the management of the Property.
It was not in dispute that the first four entries in the account were not properly included as they pre-date the period in which ETP Projects commenced to receive the rental income. I note that each is a payment of $1,650 described as a ‘mortgage repayment’ which is supported by reference to a credit entry to the loan account 8807 on that date. The first two entries, on 17 December 2021 and 17 January 2022, should not be included in any event because there were corresponding credit entries on the same day by Mrs Parkas in the same amount (and hence the parties have contributed equally to the relevant mortgage repayment on those dates). The remaining two entries, on 17 February 2022 and 16 March 2022, are supported by credit entry to the loan account 8807 on the relevant date and as there is no corresponding credit entry for Mrs Parkas there should be an allowance in favour of the defendants but I will deal with this in the context of claim 4 as these payments are dealt with there as well.
The remaining entries in this account comprised receipts of rent for the period from 1 April 2022 until 23 January 2025 and items described as ‘mortgage repayments’ and payments for expenses in relation to the Property, such as water and council rates, building insurance premiums, and expenses for repairs or painting.
The plaintiff did not dispute the entries for rental income in the account although it was noted that the evidence does not disclose what happened to (a) the rental receipts between 29 November 2021 and 1 April 2022 or (b) the rental receipts from 23 January 2025 until the settlement of the sale of the Property on 29 July 2025.
An allowance should be made in favour of the plaintiff for 50% of the rental income included in the account (after deducting the ‘mortgage repayments’ and expenses for the Property which are included in the account and are not disputed by the plaintiff, as noted below). In relation to the rental income before and after the period covered by the account:
as to the period from 29 November 2021 to 1 April 2022, the answer may be that credits were made to the BOQ loan account 8807 of $10,574.60, $989.35 and $5,352.52 in February and March 2022 described as a ‘Direct Credit Rescom Property’ which may well be for the rental income prior to termination of its engagement at the end of March 2022; and
as to the period from 23 January 2025 until 29 July 2025, the defendants need to make an allowance favour of the plaintiff of 50% of the rental income in that period, and the parties accepted at the hearing that this could be estimated at $23,200.
The plaintiff did not dispute the amounts described as ‘mortgage repayments’ made by ETP Projects from 30 August 2022. There are corresponding credit entries to the BOQ loan account 8807. These amounts are properly deducted from the rental income to meet the parties’ joint liability to BOQ.
The plaintiff also did not dispute the various items in the account described as expenses in relation to the Property, and these amounts are properly deducted from the rental income from which they were paid.

In the case of proceedings under s 66G of the Conveyancing Act the usual order as to costs is that the costs of the parties be paid out of the proceeds of sale in the same proportions as their proportionate interest in the land, on the basis that those costs are an incident of the dissolution of the co-ownership: see eg Kardos v Sarbutt (No 2) [2006] NSWCA 206 at [28]; Chow v Chow (No 2) [2015] NSWSC 1348; (2015) 18 BPR 35,385 at [8]; Chetwynd v Rose [2021] NSWCA 193 at [120]. However, in cases where the conduct of a co-owner was unreasonable so as to cause the incurrence of unnecessary costs some other order might be appropriate: Lewin v Lewin [2019] NSWSC 380 at [42]; Stibbard*-Leaver* v Leaver [2021] NSWSC 65 at [5]. In Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 581; [2018] NSWCA 84 at [8], Basten JA said that such a finding of unreasonable conduct ‘should only be made where that judgment is manifest by reference to known circumstances, not in dispute between the parties. If the question cannot be answered without reviewing large swathes of evidence and resolving, on a tentative basis, disputed questions of fact, the task should not be embarked upon’.
The plaintiff did not rely on this line of authority, but rather referred to the similar principle stated by Palmer J in Slim v Kabra [2006] NSWSC 837 at [9] in relation to proceedings for winding up or dissolution of a partnership that the costs of proceedings consequent upon, and necessary for, the dissolution should be paid out of partnership assets unless there is a good reason for making some other order.
The plaintiff submitted that there is good reason for making some other order here due to the first defendant’s unreasonable decision to cease using the rent to make interest payments to BOQ and to retain the whole amount with no regard to the plaintiff’s entitlement, and his failure to comply with the orders of the Court concerning the sale of the Property thereby causing delay in resolving the proceedings. It was submitted that these matters justify an order for the costs of the proceedings or at least the amount to come out of the first defendant’s share of the net proceeds of sale. It was also submitted that the first defendant should pay 50% of the trustees’ costs of $42,552.93 which have been deducted from the sale proceeds, although it was not explained how that percentage was derived.
In my view, the costs of the proceedings up to and including the making of the October orders should be paid out of the proceeds of sale and hence borne by the plaintiff and the defendants equally in accordance with the usual approach referred to at [72] above, except that the defendants should bear their own costs of the cross-claim. I am not satisfied that the defendants engaged in unreasonable conduct prior to the making of the October orders which led to the incurrence of unnecessary costs.
For the period from the making of the October orders, the sole remaining issue in the proceedings was the appropriate accounting for the net proceeds of sale. The parties had mixed success on the accounting and neither party advanced submissions which were unreasonable. By analogy with the principle applying to the taking of partnership accounts, the appropriate order is that the costs of the parties be borne equally out of the proceeds of sale: Hungerford v Richardson [2018] NSWSC 1543 at [119]-[124]; Sarbutt (No 2) at [28].
I do not accept that the matters referred to in [74] above amount to unreasonable conduct or a good reason for making a different order as to costs. As to the first, the evidence establishes that from April 2022 payments were made from the rental income to pay mortgage instalments, and in any event Mr Shankar’s management of the rent did not lead to unnecessary costs being incurred in the proceedings. As to the second, Mr Shankar’s failure to give access to the Property to the trustees to enable them to sell the Property in accordance with the October orders caused considerable delay, and necessitated the trustees bringing a motion for access. Peden J granted the relief sought by the trustees on 9 December 2024, and made an order that Mr Shankar pay the trustees’ costs of the motion. The evidence before me does not establish to what extent additional costs were incurred by the parties in the proceedings or by the trustees as a result of Mr Shankar’s conduct, and for the Court to attempt to undertake that exercise now would be entirely speculative.
In my view, the appropriate orders as to costs are that the costs of the parties be borne equally out of the proceeds of sale except that the defendants should bear their own costs of the cross claim. This is not intended to disturb any existing order as to costs.

Parkas v Shankar

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Claim 2

Claim 3

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Cases Cited (6)