Perry v Perry

Orders proposed by the parties

1. Both Tanya, the plaintiff, and the other members of her family, the defendants, provided proposed draft orders as attachments to their initial written submissions. I will set out first the orders proposed by Tanya, as follows: 1. The Court declares that the plaintiff is entitled to 2/9ths of the proceeds of sale of the property situated at and known as 383 Waterfall Way, Fernmount, New South Wales, currently held in the trust account of Couper Lawyers, representing the proceeds of sale of the improved value of that land (the Fund). 2. The defendants to pay the plaintiff's costs as agreed or assessed in relation to the issues described in paragraphs [34] to [56] of the judgment as: (a) appointment of a new administrator; (b) declaration as to Tanya's entitlement to estate; (c) declaration that the Fernmount land is part of the estate; (d) declaration that the Pony Paddock monies is part of the estate; (e) order against Anne for an account; (f) order for the sale of the Fernmount land; and (g) orders concerning mortgages over the Fernmount land. 3. The plaintiff to pay the defendants' costs as agreed or assessed in relation to the issues described in paragraphs [56] to [58] of the judgment as: (a) relief concerning the value of the eco-tourism development approval; and (b) account to determine value of Tanya's contributions. 4. The Court orders that the costs the subject of orders 2 and 3 above be satisfied from the Fund prior to it being distributed to the parties pursuant to their entitlements to the remaining balance.
2. I have given the full address of the property that was referred to in the principal judgment as the Fernmount land because that property has now been sold. If I were to make order 2, as sought by Tanya, it would be necessary to refer to J [35]-[55] instead of the paragraphs identified in the draft orders.
3. The draft orders proposed by the defendants were in the following terms: The Court: notes that the first defendant elects not to seek an account in relation to the estate of the late Russell Perry, and that this election relates solely to the act of seeking an account, and does not relate to participation in any account that occurs by reason of the actions of others and orders that: 1 The Court declares that the estate of the late Russell Perry is comprised of 16/17 of the net proceeds of sale of 383 Waterfall Way, Fernmount (the "Proceeds"). 2 The Court declares that the plaintiff is entitled to two ninths of the estate of the late Russell Perry. 3 The Court declares that the first defendant holds the Proceeds on trust for the estate of the late Russell Perry. 4 The balance of the plaintiff's claims are otherwise dismissed. 5 The plaintiff pay the defendant's costs thrown away by reason of the vacation of the part-heard hearing on an indemnity basis. 6 The plaintiff pay the fourth defendant's further costs up to and including 7 February 2019 on an ordinary basis. 7 The plaintiff pay 50% of the first, second and third defendant's further costs up to and including 7 February 2019 on an ordinary basis. 8 The plaintiff pay the costs of all the defendants after 7 February 2019 on an indemnity basis.

Substantive orders

1. I will deal first with the substantive orders that should be made in the proceedings.
2. First, I will make the notation proposed by the defendants. The reason for the notation is explained at J [486]-[495]. In essence, Anne, as the administrator of the estate, claimed that the proportion of the sale proceeds of the Fernmount land that should be declared to be held by her on trust for the estate should be reduced to allow for her expenditure, in money and effort, in maintaining and improving the property. I found that the Fernmount land was an asset of the estate, but that, in any accounting of Anne's administration of the estate, she would be entitled to claim allowances for her effort and costs if she could prove them with sufficient accuracy. However, Tanya had claimed an order that Anne give an accounting of the whole of her administration of the estate since the grant of administration to her on 23 September 1975. I rejected Tanya's claim for an order for an account against Anne for discretionary reasons. That put Anne in the position that, if she sought an account in order to make a claim for allowances out of the estate, she would submit herself to the reciprocal obligation to provide an account to Tanya. The effect of the notation is that Anne has elected not to pursue her claim for allowances, but she has reserved the right to do so if any order is made against her that she provide an account of the administration.
3. My understanding of the current position of the administration is that the only remaining asset in the estate, being the Fernmount land, has been sold. The substantive orders made in these proceedings will determine the parties' entitlement to shares in the proceeds of sale. I accept the defendants' submission that the declaration should provide for the parties' shares in the net proceeds of sale of the Fernmount land, allowing for all costs of sale, and not the proceeds of sale, as suggested by Tanya.
4. There is an issue between the parties as to whether the whole of the net proceeds of sale of the Fernmount property should be declared to be an asset of the trust or only 16/17 of the net proceeds of sale. Tanya's proposed order is apparently based on my summary conclusion at J [502(3)], where I stated that Tanya's entitlement will be to 2/9 of the net proceeds of sale of the Fernmount land. The defendants correctly pointed out in their submissions that, in stating that summary conclusion, I had forgotten the finding at J [162] that, of the $17,000 that Anne paid Russell's brother, Ray, for one half of the Fernmount land, $2,000 came from Anne's own resources. The result is that order 1 as suggested by the defendants is consistent with the real findings in the principal judgment. The Court should therefore make a declaration that the estate is comprised of 16/17 of the net proceeds of sale of the Fernmount land, and another declaration that Tanya is entitled to 2/9 of the estate.
5. I will set out the substantive orders that I will make at the end of these reasons.

Costs of the proceedings

1. I will now turn to a consideration of the costs orders that should be made in these proceedings. First, I will consider the significance of the parties' success or otherwise in relation to the relief claimed and the findings made by the Court. I will then deal separately with the defendants' reliance upon what they say is a Calderbank offer.

Particular costs orders

1. I consider that several of the costs orders that should be made are relatively straightforward. First, as was explained at J [14], on 18 October 2018, the fourth day of the hearing, Tanya sought leave to further amend her statement of claim. That led to the vacation of the balance of the seven-day fixture, as well as case management orders for the filing of a further amended statement of claim and a further amended defence. I am satisfied that it is conventional and proper in those circumstances for the Court to make an order that Tanya pay the defendant's' costs of and occasioned by the application to amend and the vacation of three days of the hearing. The costs payable should be limited to the costs wasted by the defendants because of the re-pleading of Tanya's claim, and any costs of the vacation of the hearing that could not be avoided by the defendants.
2. The costs should be payable by Tanya on the ordinary basis, not the indemnity basis as sought by the defendants in their proposed order 5. Primarily, Tanya's decision to amend arose out of observations that I made during the hearing to the effect that the relief sought by Tanya was not comprehensive and did not appear to deal finally with all the disputes that had arisen concerning the administration of the estate. While Tanya is responsible for not having sought all the appropriate relief in the first place, her conduct did not involve the level of delinquency necessary to justify costs being ordered against her on the indemnity basis.
3. Secondly, the fourth defendant, Louise, was only joined as a party to bind her to the outcome of the claim made by Tanya to the value of the eco-tourism development approval that Tanya and Louise had obtained in respect of the Fernmount land. Louise was a necessary party because Tanya accepted that, if her claim succeeded, Louise would be entitled to some part of the value established by Tanya. This aspect of Tanya's claim failed entirely, and, as is conceded by Tanya's proposed order 3(a), Tanya should be ordered to pay the defendants' costs in respect of that issue. I appreciate that, if the defendants' claim that Tanya should be ordered to pay some part of the costs of that issue on the indemnity basis fails, then the making of an order that Tanya pay all the defendants' costs of that issue will obviate the need for the Court to make a separate costs order in favour of Louise on that issue.

Costs of the proceedings generally save for one issue

1. I now turn to a consideration of the significance of the outcome of the proceedings more generally. I accept the defendants' submission that the principles summarised by Ward CJ in Eq (as her Honour then was) in In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) (No 2) [2021] NSWSC 1161 at [83]-[86] properly state principles that should be applied in this case, as follows: [83] Turning then to the principal protagonists within the overall group of successful defendants (Ivana Cassaniti, the AKA corporate entities, and the Borg Parties), an issue arises as to the costs orders to be made where there are multiple issues in proceedings and mixed success on those issues. Costs may be apportioned where there has been a mixed outcome in the issues in proceedings (see Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1423 at [30], where Hammerschlag J referred to the authorities collated by White J, as his Honour then was, in Short v Crawley (No 40) [2008] NSWSC 1302 at [25]-[32]). [84] Relevantly, the circumstances in which apportionment of costs as between different issues may be appropriate include: where, in respect of one or more issues, the successful party has "unfairly, improperly, or unnecessarily increased the costs" (Waddell J, as his Honour then was, in Windsurfing International Inc v Petit (1987) AIPC 90-441); where the bulk of the time has been taken on an issue on which the unsuccessful party had succeeded (see, for example, Waters v PC Henderson at 5 per Mahoney JA; Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748 per Toohey J); or where a particular issue or group of issues is clearly dominant or separable (see, for example, Waters v PC Henderson at 5 per Mahoney JA; Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [6] per Beazley JA, as Her Excellency then was, McColl and Basten JJA). [85] Where the apportionment of the costs attributable to such issues is considered appropriate, the question of apportionment is recognised to be a matter of discretion, the exercise of which "will often depend upon matters of impression and evaluation" (Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272 per Gummow, French and Hill JJ). [86] Ultimately, fairness should dictate how the costs discretion should be exercised (see, for example, Commonwealth of Australia v Gretton [2008] NSWCA 117 at [85], [121] per Studdert J; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [5] per Finkelstein and Gordon JJ cited in Tonna v Mendonca (No 2) [2020] NSWSC 306 at [176]).
2. I also accept the defendants' submission that it will be appropriate for the Court to make broad orders dealing with the parties' costs, if appropriate, by ordering that one party pay a stated proportion of the other parties' costs, rather than for the Court to make differential orders as to which parties should pay the costs of particular issues. As Brereton J (as his Honour then was) stated in In the matter of Commercial Indemnity Pty Ltd [2016] NSWSC 1125 at [44]: [44] …It is highly undesirable to have multiple costs orders defined by reference to issues arising out of the one set of proceedings, and preferable to make a single order that covers all of the issues, albeit on a "broad axe" basis. …
3. In this case, each side of the record has in its submissions sought to portray the outcome of the proceedings as being in substance a victory for that party or those parties, subject to relatively minor exceptions that the Court should overlook. For the reasons that follow, I do not accept this to be an accurate characterisation of the outcome, viewed from the perspective of either side of the record.
4. Much of the reasoning in the principal judgment was concerned with the nature and significance of what the parties called the family deal. I set out my findings concerning the elements of the family deal at J [338]. In different ways, and with different legal significance, the family deal governed the way Anne administered the estate during the minority of her children and then after each child reached their majority, until late 2015, when Tanya began to insist upon her legal rights as a beneficiary of the intestate estate of her father. So long as the family deal was in effect, by mutual agreement of Anne and her children to its terms, the family deal was inconsistent with Anne being required to administer the estate strictly in accordance with her legal obligations as administrator under her grant of administration. Anne was not obliged to avoid benefiting from the estate, she was not obliged to apply the assets of the estate solely for the purpose of commercial gain for the benefit of the beneficiaries, and she was not obliged to prepare detailed accounts and to keep vouchers.
5. In broad terms, the event that triggered Tanya's dissatisfaction with the family deal was a growing belief that Anne had preferred the interests of Mark and Michelle by making the Fernmount land available to support guarantees given by her to financiers who advanced loans to Mark and Michelle for the purposes of their business interests. While earlier minor levels of assistance provided by Anne to various family members, including Tanya, had apparently been accepted as being part of the family deal, Tanya came to believe that Anne had acted outside the bounds of the family deal, and had done so without Tanya's knowing consent. That led Tanya to send to Anne on 6 October 2015 the email that is set out at J [410]. In short, Tanya demanded a full breakdown of the transactions that Anne had entered into using Tanya's equity in the Fernmount land.
6. Anne responded, as set out at J [411], by declining to provide Tanya with the information that she had requested.
7. That led to the present solicitors for the defendants writing a letter to Tanya on 28 October 2015. The relevant terms of that letter are set out at J [413]. The letter asserted that Tanya and Louise consented to the Fernmount land being used as collateral security for certain business purposes of Mark and Michelle. It advised Tanya that the original advance had been increased from $1,250,000 to $1,579,000, and the Fernmount land was used as collateral security by mortgage securing a guarantee given by Anne limited to $1,310,000. The letter gave reasons why the guarantee given by Anne was not at risk of being called on by the financiers.
8. Tanya's then solicitors wrote a response to this letter on 9 November 2015. Relevant terms of the response are set out at J [416]. The letter concluded, as follows: Our client requests a full accounting of all loan transactions made on the Property from January 2006 to date. She also requests confirmation as to which loans were for the benefit of Anne Perry. For the above reasons, our client has instructed us to lodge a caveat in the Department of Land and Property Information. We now enclose a copy for your reference. We look forward to a response regarding the matters stated above. Further, our client requests that all of the co-owners agree to attend a mediation in the near future so that all of these matters can be ventilated and resolved without the need for our client to resort to commencing formal legal proceedings to protect her interests. Further, our client will seek orders that her legal costs are paid by your clients and Anne Perry personally if she is forced to commence legal proceedings. Our client simply wants her lawful entitlement to the Property (including recognition for her contributions to the Property) and to her lawful share of her father's estate. In this regard, our client also requires that her equitable interest in the Property to be formally registered on the title. Finally, our client also requires: 1. that Mark and Michelle Perry provide a proposal on how they intend to reduce the current amount of liability over the Property with a view to ultimately discharging the current mortgage; 2. a written undertaking from Anne Perry, Mark Perry and Michelle Perry that there will be no further funds borrowed or mortgages incurred over the Property until this matter is resolved; and 3. confirmation that no other significant decisions will be made with respect to the Property without obtaining our client's consent via this office. We look forward to hearing from you.
9. Tanya commenced these proceedings by statement of claim filed on 10 November 2016. Tanya did not by the relief claimed seek only to vindicate the rights that were the subject of the solicitor's 9 November 2015 letter. Tanya sought a suite of orders against Anne to oblige her to account in accordance with her obligations as administrator if Anne had been required to administer the estate on an arm's length basis as if it were a trust for the benefit of unrelated beneficiaries. Tanya also sought orders designed to achieve full recovery by Tanya of her alleged contributions to the estate, including but not limited to the eco-tourism joint-venture. The Court does not know how this mission creep occurred, but it ignored (a) the fact that Anne had applied the assets of the estate for the benefit of herself and her children during their minority; (b) that the facts necessary to support Tanya's claim over the previous 40 years were beyond possible proof because of the passage of time; (c) the claims were all probably statute barred or at risk of rejection on the grounds of laches or acquiescence; and (d) most of Tanya's claims were plainly inconsistent with the existence of the family deal.
10. As I noted at J [51], Tanya sought orders that Anne account to Tanya on a wilful default basis, and that Anne, Mark and Michelle indemnify Tanya in respect of the consequences of the mortgages that Anne granted over the Fernmount land. I noted at J [52] that during the hearing, Mark and Michelle reordered their financial affairs so that all mortgages on the Fernmount land granted for their benefit were discharged. Consequently, while the existence of the mortgages may have prejudiced Tanya, had the lenders exercised their security rights, that did not in fact happen and could not now happen.
11. In essence, I found that, while Tanya had been informed of the initial proposal for Anne to give a guarantee of the original loan borrowed by Mark and Michelle, as time went by, the amount for which Anne was at risk under the guarantee was increased from time to time without the knowing consent of Tanya. I found at J [442] that Tanya was entitled to make the demand in her solicitors' 9 November 2015 letter that Mark and Michelle provide a proposal on how they intended to reduce the amount secured by the mortgage over the Fernmount land with a view to ultimately discharging the mortgage.
12. Tanya also sought an order that the grant of letters of administration to Anne be revoked, and that letters of administration be granted to Tanya or alternatively to a person nominated by her in her pleading. Tanya sought an order that the Fernmount land be sold. During the hearing, Anne voluntarily decided to sell the Fernmount land. As it I explained at J [496]-[499], the consequence of these actions on Anne's part was that it was no longer necessary for the Court to decide whether the assets of the estate should be realised, and it was not necessary for the Court to subject the estate to the costs that would be incurred by the appointment of a new administrator. As the assets of the estate would be turned into money in an account, the Court could leave Anne as the administrator and supervise the administration by the making of appropriate orders, so that the administration was conducted within the Court.
13. It may be that if Anne had not agreed to sell the Fernmount land, her involvement in guaranteeing the loans borrowed by Mark and Michelle and granting the mortgages to secure the guarantees would, in all of the circumstances, have justified the Court in making an order revoking the grant of letters of administration to Anne and replacing her as administrator. In the events that happened, it was not necessary for the Court to receive submissions on that issue, or to decide it.
14. As I have explained above, Anne initially claimed that the assets in the estate, and accordingly Tanya's 2/9 share in the estate, should be reduced to allow for increases in the value of the assets in the estate because of Anne's effort and expenditure of costs. Anne failed in that aspect of her claim, in the sense that, for practical reasons, she has elected to abandon her right to have an account conducted in which she could claim allowances against the estate.
15. For all of these reasons, it can thus be seen that Tanya achieved a substantial measure of practical success in the proceedings, and that the costs of the proceedings would have been significantly reduced if the defendants, other than Louise, had recognised in late 2015 that they had stepped outside the family deal, and agreed to arrange for the cancellation of the guarantees given by Anne and the discharge of the mortgages on the Fernmount land, and also agreed to the sale of the Fernmount land and the final administration of the estate.
16. However, on the other hand, Anne also enjoyed a substantial measure of practical success in resisting the relief sought by Tanya. In short, all of Tanya's claims for an accounting by Anne failed, including in respect of the proceeds of sale of the Pony Paddocks. That represented a significant level of success by Anne, given the burden of what would have been required by her in the conduct of an accounting in respect of the affairs of the estate from 23 September 1975. Although Tanya succeeded in demonstrating that much of Anne's conduct of the administration of the estate was not in accordance with her strict legal obligations, the currency of the family deal, the fact that Anne had used the assets in the estate to support herself and her children during their minority, and the consequences of the delay in the making of the claim by Tanya, all led the Court to the almost unavoidable conclusion that it should exercise its discretion against granting the relief sought by Tanya.
17. Notwithstanding the lapse of time since the hearings took place, I have been able to ascertain the following broadly material matters concerning the course of the hearing:

• Most of the affidavit and documentary evidence was compiled by the parties before the first tranche of the hearing.
• The first stage of the hearing was taken up with the openings and objections to evidence, and the only witnesses who were called were the two expert valuation witnesses.
• In the interval between the two hearings, Tanya prepared a supplementary tender bundle containing documents relevant to Tanya's claim that Anne had breached her duties as administrator by giving guarantees and mortgaging the Fernmount land for the benefit of Mark and Michelle without Tanya's consent.
• It appears that, in that interval, Tanya obtained additional affidavit evidence concerning the value of the Fernmount land, and Mark prepared a detailed affidavit concerning his farming activities on the Fernmount land and his other dairy properties. Documentary evidence was also collected concerning activities of the Bellingen Shire Council, certain probate files, and Tanya's estimate of her costs of obtaining the eco-tourism development approval.
• All the witnesses except for the two expert valuation witnesses were cross-examined during the second stage of the hearing.

1. The two greatest changes to the position adopted by the defendants in the proceedings were Anne's decision to sell the Fernmount land and Mark's and Michelle's decision to refinance their borrowings to remove the guarantee given by Anne and the final mortgage over the Fernmount land. The former had the practical effect that it ceased to be necessary for the Court to determine whether Anne should be replaced as administrator because of maladministration, and it became possible for the Court to supervise the completion of the administration by giving appropriate orders. The latter had the effect of removing the risk to Tanya's share in the estate that existed so long as Anne's guarantee could be enforced, and the powers granted by the mortgage exercised.
2. As accurately as I can tell from an examination of the transcript, I was informed at a directions hearing on 20 March 2019, in the interval between the two hearings, that it was likely that the Fernmount land would be sold (T 20/03/19 1.33). On the first day of the second hearing, I was advised by counsel for the defendants that the Fernmount land had been on the market since 1 April 2019 (T 01/07/19 5.9). In relation to the guarantee and mortgage issue, senior counsel for Tanya still understood as of 28 March 2019 that it remained an issue whether Tanya was entitled to indemnification from Anne, Mark and Michelle in respect of the interests that encumbered the Fernmount land (T 28/03/19 3.40). When senior counsel referred to the issue in opening on the first day of the second stage of the hearing, counsel for the defendants informed the Court that Mark and Michelle had accepted an offer from their financier to refinance their loan facility in a way that would remove the guarantee and the mortgage over the Fernmount land (T 01/07/19 8.17). Counsel informed the Court that this transaction was unlikely to be completed before the end of the second stage of the hearing.
3. The position therefore is that even though the defendants other than Louise responded to Tanya's claim by removing the need to determine the suitability of Anne as administrator, the need for the Court to decide whether the Fernmount land should be sold, and the need for the Court to decide the consequences of the guarantee and mortgage having been given by Anne, that did not happen until shortly before the second stage of the hearing in one case and on the first day of the second stage in the other case. As a practical matter, that had the effect that the parties were not entirely spared the need to deal with those issues at the second stage of the hearing. Although the course taken by the defendants simplified the second stage of the hearing, it occurred so late that it would be unreasonable to expect Tanya to have resolved those issues without the need for a hearing. In any event, it remained reasonable for Tanya to seek to prove that Anne, Mark and Michelle had acted outside the family deal, as that remained an important issue concerning the orders that should be made for payment of the costs of the proceedings.
4. There was an issue between the parties as to whether the defendants had maintained until the end of the proceedings that Tanya's right to a 2/9th share in the estate had been lost because of a combination of the effect of the elapse of limitation periods, laches in her attempt to enforce her rights, and the consequences of Anne being entitled to allowances out of the estate for the improvements to its value that were caused by Anne's effort and capital contributions. I have not been able to fully reconstruct the circumstances relevant to this dispute. The defendants are correct in their submission that they have always admitted in their defence the allegation in par 1 of the various iterations of Tanya's statement of claim that she was "a beneficiary entitled to 2/9th of the estate". Looking at the further amended defence, it is at least true that the defendants claimed that Tanya's interest in the Fernmount land was limited to a share of its unimproved capital value (par 20E). The defendants also pleaded that, if Tanya's contributions to the estate were to be taken into account, so should the much larger contributions made by the defendants (par 57). It appears that the defendants resisted Tanya being entitled to a 2/9th share in the improved capital value of the Fernmount land until the end of the proceedings. However, this issue is not of decisive significance to the conclusion that I have reached concerning the appropriate costs orders to be made.

Costs of the eco-tourism development approval issue

1. I consider the costs relevant to Tanya's claim concerning the value of the eco-tourism development approval should be treated differently to the other costs of the proceedings. It was a distinct claim that depended upon Tanya being able to demonstrate that her and Louise's efforts in obtaining the development approval increased the value of the Fernmount land by some ascertainable amount. As noted at J [458]-[466], Mr King, the expert valuation witness called by Tanya, opined that the attachment of the development approval to the Fernmount land added $350,000 to his assessed value without the development approval. That was on the basis that he accepted, as an assumption, the costs incurred by Tanya of $214,178.10, which he rounded up to $250,000. He then added an additional $100,000 to allow for the scarcity value of the development approval being attached to the Fernmount land because of a subsequent change in the zoning rules. There was no satisfactory evidence that this approach was in accordance with accepted valuation principles. There was no reason for the Court to accept, given Tanya's personal work experience, that the costs that she incurred, based upon her own hourly billing rates, would be accepted in the market as the true costs of obtaining the development approval. The expert valuation witnesses ultimately accepted that the only valid way to determine whether the existence of the development approval added value to the Fernmount land was to monitor the result of the land being put to the market. As I concluded at J [485], the evidence of what happened during the sale process did not establish that the existence of the development approval added to the market value of the Fernmount land at the date of its sale.
2. This aspect of Tanya's case was separate from the relief that she sought generally to ensure the proper administration of the estate. Costs should follow the event on this aspect of the case, and Tanya should be ordered to pay the defendants' costs of defending this claim.

Significance of Calderbank offer relied upon by defendants

1. The final issue that requires consideration is the defendants' reliance upon a Calderbank offer dated 7 February 2019 made in a letter from their solicitors to the solicitors for Tanya.
2. The making of this offer may have been a response to an offer made by Tanya in open court at the conclusion of the first hearing on 18 October 2018 (T 125.11-34) in the following terms: NEEDHAM: Your Honour, there's one further thing. I have instructions to make an open offer of settlement, which I'd like to provide to my learned friend and to your Honour now. The offer is, and I think - I'm happy to provide this in writing to my learned friend when I can - that Fernmount be sold in accordance with the following process. A. The plaintiff, together with an independent agent, are to manage the sale with a marketing and sales campaign to last no longer that 12 months. B. All communications from the plaintiff to the defendants or vice versa regarding the sale are to pass through the agent and for the avoidance of doubt there's to be no direct contact between the parties at any stage. C. The parties agree that the value of Fernmount without the DA is 1.375 million. D. Any excess on the agreed value be divided between the plaintiff and the fourth defendant as follows. (1) 60% to the plaintiff and 40% to the fourth defendant. (2) The plaintiff receive an amount equivalent to: (a) two-ninths of the farm only value of Fernmount referred to in para 1(c) and: (b) 60% of any excess on the agreed value referred to in para 1(d)(1) above net of any selling costs. The defendants pay the plaintiff's costs of these proceedings on a full indemnity basis. That offer is open for acceptance for 28 days from the date of the offer. Your Honour, that will expire prior to the matter coming back before you on the next occasion.
3. This offer by Tanya implicitly accepted that the only issue that she would continue to prosecute was her claim for her share in the alleged increase in the value of the Fernmount land that flowed from the attachment of the eco-tourism development approval. However, it is also implicit in the requirement that the defendants pay Tanya's costs on the indemnity basis that Tanya required the defendants to accept that Tanya's claim was valid and that it was delinquent of the defendants to resist it. It is apparent that the defendants did not accept Tanya's open offer.
4. The defendants' counter-offer was in two parts. The first option was that Tanya could purchase the interests of Anne, Mark and Louise in the Fernmount land for the price of $1 million. The second option was more complicated, and is summarised as follows:

• A named real estate agent would be appointed by Anne to sell the property and all parties would be authorised to speak to the agent.
• The agreed value of the Fernmount land would be $1.375 million.
• All parties would use their best endeavours to achieve as high a price as possible, without any claim for compensation for their efforts.
• The letter then continued as follows: E. On a sale, the price obtained will be applied I) Firstly to pay selling costs (being the agent's selling fee, any advertising costs authorised by the Administrator, and costs of the conveyance. II), Secondly, without admission as to the merits of your clients for contributions, any amount remaining after payment of selling costs above $1.375 million will be divided between the plaintiff and the fourth defendant (60% to the plaintiff and 40% to the fourth defendant). III) 2/9th of the balance will be paid to each of the Plaintiff, Second and Fourth Defendants. IV) 1/3rd of the Balance shall be paid to the First Defendant. F) If the property has not sold, after a period of 6 months the property will be marketed for sale with a price of offers $1.3 million with the Administrator being approved to accept any offer over this price. G) On a sale, the price obtained will be applied; I) Firstly to pay selling costs (being the agent's selling fee, any advertising costs authorised by the Administrator, and costs of the conveyance. II) 2/9th of the balance would be paid to each of the Plaintiff, Second and Fourth Defendants. III) 1/3rd of the Balance shall be paid to the First Defendant. H) If the property has not sold, after a period of 12 months the property will be marketed for sale in a manner and at a price recommended by the agent with the Administrator being approved to accept any offer. I) On a sale, the price obtained will be applied; I) Firstly to pay selling costs (being the agent's selling fee, any advertising costs authorised by the Administrator, and costs of the conveyance. II) 2/9th of the balance will be paid to each of the Plaintiff, Second and Fourth Defendants. IV) 1/3rd of the Balance shall be paid to the First Defendant. The terms of any settlement would that say either offer/potion as outlined above accepted would require that these proceedings would be dismissed and the parties will bear their own costs.

1. The most material difference between the two offers is that Tanya's acceptance of the defendants' alternative offer would have had the effect that the parties would have to bear their own costs of the proceedings, rather than that the defendants would be required to pay Tanya's costs on the indemnity basis.
2. The Court was provided with a copy of Tanya's solicitors' 19 March 2019 counter-offer to the defendants' offer. That letter contained reasons why the defendants should agree to pay Tanya's costs of the proceedings on the indemnity basis.
3. The question is whether the defendants have achieved a result in these proceedings that was more favourable to them than the offer contained in the February 2019 Calderbank offer (Singleton v Macquarie Broadcasting Holdings Ltd (1991) 24 NSWLR 103 at 108), and if so, whether the offer was a real compromise (Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375) and whether it was unreasonable for Tanya to have rejected that offer in the circumstances (Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344).
4. The Fernmount land was sold for a price of $1,750,000 under a contract exchanged on 6 April 2021 and completed on 18 May 2021: J [474(11)]. The sale therefore took place over two years after the date of the Calderbank offer.
5. The effect of Tanya having rejected the offer was that she and Louise did not share the $375,000 difference between the sale price and the agreed price in the offer of $1,375,000 in the proportions 60% to 40%. If one ignores the possible significance of the passage of time, the defendants achieved a result that was better than if Tanya had accepted the offer because they became entitled to their respective shares in the $375,000. They also achieved a better result because they will be entitled to the costs of the issue concerning the alleged value of the eco-tourism development approval. I accept that the Calderbank offer involved a substantial element of compromise in that it gave Tanya the opportunity of realising a share in the value of the Fernmount land if it sold for a price greater than $1,375,000, which would give Tanya a mechanism for achieving some success on the development approval issue.
6. I am not satisfied, however, that it was unreasonable for Tanya to decline to accept the offer. The offer did not include any proposal for Mark and Michelle to procure a release of the guarantee given by Anne and the discharge of the mortgage that encumbered the Fernmount land. Tanya's 19 March 2019 reply clearly conveyed Tanya's continuing concern about the risk to her share in the estate that arose out of the existence of those interests. Although it was implicit in the offer that Tanya would receive her 2/9th share of the net sale price up to $1,375,000 that both the guarantee and the mortgage would be discharged before completion of the contract of sale, the continuing existence of those interests placed Tanya's share in the estate in jeopardy. It is immaterial whether or not that risk was insignificant or substantial. Tanya was entitled to require that the risk be removed. The defendants' offer required Tanya to bear the risk for a considerable period as it was contemplated that the sale process could take more than 12 months to complete.

Orders

1. The Court: 1. Notes that the first defendant elects not to seek an account in relation to the estate of the late Russell Perry, and that this election relates only to the act of seeking an account, and does not relate to participation in any account that occurs by reason of the actions of others. 2. Declares that the estate of the late Russell Perry is comprised of 16/17th of the net proceeds of sale of 383 Waterfall Way, Fernmount (the Proceeds). 3. Declares that the first defendant holds the Proceeds on trust for the estate of the late Russell Perry. 4. Declares that the plaintiff is entitled to 2/9th of the estate of the late Russell Perry. 5. Orders that the balance of the plaintiff's claims are otherwise dismissed. 6. Orders the plaintiff to pay the defendants' costs thrown away by reason of the vacation of the part-heard hearing on 18 October 2018 on the ordinary basis. 7. Orders the plaintiff to pay the defendants' costs of the eco-tourism development approval issue on the ordinary basis. 8. Makes no other order for the costs of the proceedings with the intent that the plaintiff and the first, second and third defendants will bear their own costs of the balance of the proceedings not the subject of another costs order. 9. Orders that the obligations on the plaintiff to pay costs pursuant to orders 6 and 7 are to be a charge against the plaintiff's entitlement under the declaration in order 4 with the intent that the plaintiff only receive the balance of her entitlement after her costs obligations have been discharged.

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