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[2025] NSWSC 1136
General information, not legal advice.
Supreme Court of NSW
2025-09-29
McGrath J
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Toppi v Toppi (No 4) [2025] NSWSC 1136
Hearing dates: On the papers
Date of orders: 29 September 2025
Decision date: 29 September 2025
Jurisdiction: Equity - Succession & Probate List - Family Provision
Before: McGrath J
Decision: Costs follow the event; subject to earlier costs orders, the defendant to pay the plaintiff’s costs of the proceedings for provision
Catchwords: COSTS — Party/Party — General rule that costs follow the event — where plaintiff ultimately successful in her application for provision — where each of the plaintiff and the defendant seeks indemnity costs on basis of offers of compromise made in accordance with r 20.26 of the UCPR or principles established in Calderbank v Calderbank — where none of the offers entitles the maker to indemnity costs — HELD — costs follow the event
Legislation Cited: Civil Procedure Act 2005 (NSW), s 98
Family Provision Act 1982 (NSW), s 33
Succession Act 2006 (NSW), ss 59, 60, 65, 99
Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, 20.27, 42.1, 42.2, 42.4, 42.5, 42.13, 42.14, 42.15, 42.15A
Cases Cited: AAI Ltd v Josipovic (No 2) [2013] NSWSC 1577
Abdi v Abdi (No 2) [2022] NSWSC 582
Alexiou v Alexiou [2024] NSWSC 1340
Bates v Cooke (No 2) [2014] NSWSC 1322
Brown v Brown (No 2) [2023] NSWSC 7
Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131
Calderbank v Calderbank [1975] 3 All ER 333
Cappello v HomeBuilding Pty Ltd [2023] NSWCA 109
Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353
Chalik v Chalik [2024] NSWSC 117
Commonwealth of Australia v Gretton [2008] NSWCA 117
Ghougassian v Fairfax Community Newspapers Pty Ltd [2015] NSWCA 307
Haertsch v Whiteway (No 2) [2020] NSWCA 287
Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298
Hermes Far Eastern Shining Pty Ltd v Potable Gold Strike Pty Ltd [2025] NSWSC 263
Jvancich v Kennedy (No 2) [2004] NSWCA 397
King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204
Mead v Watson [2005] NSWCA 133
Noble v Durrant (No 2) [2023] NSWSC 835
Noon v Bondi Beach Astra Retirement Village Pty Ltd (No 2) [2010] NSWCA 285
Oates v Oates (No 2) [2025] NSWSC 929
Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11
Pethers v Pethers (No 2) [2025] NSWSC 561
Singer v Berghouse (1993) 114 ALR 521; [1993] HCA 35
SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323
The Estate of Giovanna Toppi [2024] NSWSC 1115
Toppi v Toppi (No 2) [2024] NSWSC 1363
Toppi v Toppi (No 3) [2025] NSWSC 733
Wheatley v Lakshmanan (No 2) [2022] NSWSC 851
Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311; [2013] NSWCA 188
Category: Costs
Parties: Paola Toppi (Plaintiff)
Walter Toppi (Defendant)
Representation: Counsel:
P Beazley (Plaintiff)
M Condon SC (Defendant)
Solicitors:
Beazley Lawyers (Plaintiff)
Levitt Robinson Solicitors & Attorneys (Defendant)
File Number(s): 2021/00323980
Publication restriction: Nil
This judgment concerns the issue of the final orders to be made, principally in respect of costs, following the judgment I delivered on 10 July 2025 in Toppi v Toppi (No 3) [2025] NSWSC 733 (Principal Judgment). This judgment assumes familiarity with, and adopts defined terms used within, the Principal Judgment. In this judgment, I will again refer to each of the relevant family members by their first names for convenience, without intending any overfamiliarity or disrespect.
In the Principal Judgment, I determined Paola’s application for provision from the estate of her late mother, Giovanna, under s 59 of the Succession Act 2005 (NSW). That application was defended by Paola’s brother, Walter, in his capacity as administrator of Giovanna’s estate.
In summary, for the reasons set out in the Principal Judgment, I concluded that:
Adequate provision for the proper maintenance, education or advancement in life of Paola as the adult child of Giovanna was not made by the 2020 Will.
Having balanced the respective needs, financial position and unique circumstances of each of Paola and Walter, I determined that Walter should receive a two-third share of the amount remaining in Giovanna’s WBC account and Paola should receive a one-third share of the amount remaining in Giovanna’s WBC account. From that amount, I determined that Paola must meet any liability she had already incurred for the costs orders (not yet quantified) made against her in these proceedings.
Undertaking the evaluative judgment required of me, I concluded that a wise and just testatrix in the position of Giovanna, in light of all the circumstances of the case as now known and having regard to current social conditions and standards, and consulting the criteria set out in s 60(2) of the Succession Act, would determine that Paola ought to receive out of Giovanna’s estate the following provision:
(a) the release by both the estate of Giovanna and Walter (as executor) of Paola from all liability to the estate on account of Giovanna’s right to contribution as co-guarantor of the liabilities of Bar M Pty Ltd to WFM Motors Pty Ltd; and (b) a payment in the amount of $500,000, less any amount that Paola is to pay to the estate of Giovanna following the resolution of the issue of costs in these proceedings.
These proceedings commenced in November 2021 and have had a long and troubled history. In essence, the complexity and prolongation of these proceedings arose not by reason of law, but because of the way in which they were conducted by Paola. Paola had initially sought administration of the 2018 Will or a grant of probate in respect of the 2013 Will, both of which made substantial provision for her. Challenge to the January 2019 Will, the August 2019 Will and the 2020 Will appears to have been pressed by Paola, at least initially, on the bases of a lack of testamentary capacity of Giovanna and/or undue influence by Walter. A crucial juncture in these proceedings was Paola’s abandonment of those claims in July 2024 resulting in the vacation of the trial before Pike J, leaving only Paola’s alternate (and out of time) claim for provision. That claim for provision was the subject of these proceedings which were ultimately listed for hearing before me in February 2025.
Additionally, as I observed in the Principal Judgment at [12], each of Paola and Walter placed a large volume of material before me that was of only peripheral relevance to Paola's application for provision. It can fairly be said that both parties seized the opportunity presented by these proceedings to trace, ventilate and lay blame for the many squabbles and controversies within the Toppi family over the last four decades. Clearly, each of Paola and Walter blame the other for the significant depletion of Giovanna's estate in the years preceding her death and, by virtue of these proceedings, in the years that have followed. This animosity no doubt also contributed to the costs of these proceedings, which I described in the Principal Judgment at [536] as being "outrageously disproportionate to the value of Giovanna's estate".
In these circumstances, it is perhaps unsurprising that Paola and Walter have failed to reach agreement as to where those costs, or at least those which relate solely to Paola’s claim for provision, should fall.
Paola's conduct of the proceedings as described above has already resulted in adverse costs consequences and for that reason, at the conclusion of the Principal Judgment at [534], I identified three distinct issues of costs in these proceedings, being:
The appropriate order as to costs in respect of Paola's application for provision as determined by me in the Principal Judgment. Throughout this judgment I will refer to these as the costs of the provision proceedings, being the costs of the proceedings subject to the following orders.
The order made on 29 October 2024 by Pike J that Paola pay, on the ordinary basis, Walter's costs of the proceedings other than to the extent they relate solely to a claim for a family provision order, with liberty for Walter to apply at the conclusion of these proceedings, to seek those costs on the indemnity basis: Toppi v Toppi (No 2) [2024] NSWSC 1363, Pike J.
The order made on 16 April 2025 by me in relation to Paola's application to reopen her case, being that Paola pay the costs of Walter of the notices of motion filed 7 April 2025 and 16 April 2025, including with respect to the hearings on 5 March 2025 and 16 April 2025, on the ordinary basis, with liberty for Walter to apply for those costs be paid on an indemnity basis and/or be the subject of a special costs order.
Following delivery of the Principal Judgment, I made the following orders:
(1) The parties are to email the Associate to McGrath J a set of agreed short minutes of order to give effect to this judgment by 4pm on 17 July 2025, failing which they are to provide competing submissions of not more than five pages (12 font, 1.5 spacing) with proposed short minutes of order and any material on which they rely by 24 July 2025.
(2) The proceedings are listed for directions on a convenient date to be determined in respect of any application the defendant wishes to make for indemnity costs and/or a special costs order.
Failing agreement as between Paola and Walter, it now falls to me to determine the appropriate orders to give effect to the Principal Judgment.
Relevantly, absent any application by Walter for costs, either on the indemnity basis or on the basis of a special costs order, by reference to the second and third identified issues of costs in these proceedings, those orders stand as made. While Walter does press for his costs of the proceedings generally on the indemnity basis, he does so by reference to offers of settlement exchanged between the parties, specifically those made by him to Paola.
For the reasons set out below, as Paola was successful in her application for provision from the estate of Giovanna, I have determined that costs should follow the event. Subject to the costs orders already made, Paola should have her costs of the provision proceedings on the ordinary basis, as agreed or assessed.
The relevant facts are set out in full in the Principal Judgment at [6]–[410], including the procedural history of these proceedings which are addressed in the Principal Judgment at [63]–[89]. I will not repeat them.
It is against these background circumstances that the costs consequences of the provision proceedings, including any offers of compromise relied upon by each of Paola and Walter, must be considered.
Set out below are additional facts that are not mentioned in the Principal Judgment but are relevant for the purposes of determining the issue of costs.
These additional facts mostly trace the settlement offers exchanged between the parties, including by way of an offer of compromise expressed to be made in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and offers of compromise expressed to be made in accordance with the principles established by Calderbank v Calderbank [1975] 3 All ER 333. It is necessary for me to consider these offers in circumstances where each of Paola and Walter rely on their respective offers to settle these proceedings, and the other’s refusal or non-acceptance of them, as one of the reasons for which they say they are entitled to their costs of the provision proceedings, either on the ordinary or indemnity basis.
After setting out the additional facts, I will state the relevant legal principles, outline the parties’ submissions and will then conclude with my consideration.
On 14 February 2023, Paola issued an offer of compromise to Walter expressed to be made in accordance with r 20.26 of the UCPR (Paola’s 14 February 2023 offer), which in substance offered to settle the proceedings on terms including that:
probate be granted to Walter in respect of the August 2019 Will, which in essence released Paola from any liability to the estate of Giovanna in respect of the WFM Loan and left the residue of the estate to Walter;
the August 2019 Will be “varied”, purportedly pursuant to s 59 of the Succession Act, to make provision for Paola from the estate of Giovanna in the amount of $750,000; and
each party pay its own costs.
Paola’s 14 February 2023 offer was open for acceptance for 28 days, was expressly marked “without prejudice save as to costs” and concluded by stating that it may be tendered on any application in respect of costs, including an application by Paola for her costs on the indemnity basis.
Paola’s 14 February 2023 offer was not accepted by Walter.
On 21 April 2023, Walter issued an offer of compromise to Paola expressed to be made in accordance with the principles established in Calderbank (Walter’s 21 April 2023 offer), which in substance offered to settle the proceedings on the following terms:
probate be granted to Walter in respect of the 2020 Will, which left the bounty of the estate of Giovanna to Walter to the practical exclusion of Paola;
Paola to discontinue the proceedings with no order as to costs;
Paola be released from any liability to the estate of Giovanna in respect of the WFM Loan, the proceedings related to that loan, as well as the Bar M rental arrears then owing to WFM; and
Paola to receive a lump sum payment of $50,000 in consideration of her legal costs.
Walter’s 21 April 2023 offer was open for acceptance until 5 May 2023, was expressly marked “without prejudice save as to costs” and concluded by reserving Walter’s right to seek his costs (including on the indemnity basis) in the event that the offer was not accepted and Walter obtained “a more favourable outcome” at final hearing. The covering letter cast aspersions in respect of Paola’s efforts to propound earlier wills (claims which were ultimately abandoned) and rejected an offer of compromise said to have been issued by Paola on 31 March 2023 (the content of which, curiously, has not been put before me).
Walter’s 21 April 2023 offer was not accepted by Paola.
On 21 June 2023, Walter issued a second offer of compromise to Paola expressed to be made in accordance with the principles established in Calderbank (Walter’s 21 June 2023 offer), which in substance offered to settle the proceedings on the following terms:
probate be granted to Walter in respect of the 2020 Will;
Paola to discontinue the proceedings with no order as to costs;
Paola be released from any liability to the estate of Giovanna in respect of the WFM Loan, the proceedings related to that loan, as well as the Bar M rental arrears then settled as between the estate and WFM; and
Paola to receive a lump sum payment of $50,000 in part payment of her legal costs.
Walter’s 21 June 2023 offer was open for acceptance until 21 July 2023, was expressly marked “without prejudice save as to costs” and concluded by reserving Walter’s right to seek his costs (including on the indemnity basis) in the event that the offer was not accepted and Walter obtained “a more favourable outcome at trial”. The covering letter noted the “difficult and tumultuous relationship” between Paola and Giovanna, which was said to be “especially strained” at the time of Giovanna’s death, as well as Giovanna’s moral duty to provide for Walter, as being reasons that made it “unlikely that any claim for Family Provision made by [Paola] will succeed”. Annexed to the letter were calculations said to outline Paola’s potential benefit under various scenarios, including under the 2018 Will, the August 2019 Will and the 2020 Will as compared with the potential benefit to Paola if she were to accept the offer.
Walter’s 21 June 2023 offer was not accepted by Paola.
On 17 July 2024, Walter issued a third offer of compromise to Paola expressed to be made in accordance with the principles established in Calderbank (Walter’s 17 July 2024 offer), which in substance offered to settle the proceedings on the following terms:
probate be granted to Walter in respect of the 2020 Will;
Paola to discontinue the proceedings with no order as to costs, including forgiveness of any prior adverse costs orders made against Paola in these proceedings;
Paola be released from any liability to the estate of Giovanna in respect of the WFM Loan, the proceedings related to the WFM Loan, as well as the Bar M rental arrears as settled between the estate and WFM; and
Paola to receive a lump sum payment of $100,000 from the estate of Giovanna.
Walter’s 17 July 2024 offer was open for acceptance until 31 July 2024, was expressly marked “without prejudice save as to costs” and concluded by reserving Walter’s right to seek his costs (including on the indemnity basis) in the event that the offer was not accepted and Walter obtained “a more favourable outcome at trial”.
Walter’s 17 July 2024 offer was not accepted by Paola.
On or about 24 July 2024, about one month before the trial was set down to begin before Pike J, Paola notified Walter that she was abandoning her probate case and would instead pursue her alternate claim for provision.
On 25 July 2024, Paola issued an offer of compromise to Walter expressed to be made in accordance with the principles established in Calderbank (Paola’s 25 July 2024 offer), which in substance offered to settle the proceedings on the condition that Paola receive provision from the estate of Giovanna in the amount of $1,000,000, with that amount expressed to be “inclusive of costs”.
The covering letter of Paola’s 25 July 2024 offer asserted that Giovanna had contested her liability under the WFM Loan on a footing which was very difficult to reconcile with the content of the August 2019 Will, and noted the substantial withdrawals from Giovanna’s WBC Account in her final days. Both of these matters were considered by me in the Principal Judgment at [233]–[234] and [350]–[362], respectively.
Paola’s 25 July 2024 offer was expressly marked “without prejudice save as to costs” and was open for acceptance until the first day of the hearing before Pike J. That hearing was then set down to begin on 26 August 2024, but was ultimately adjourned in the circumstances described above and in the Principal Judgment at [82]–[88].
Paola’s 25 July 2024 offer was not accepted by Walter.
By 14 August 2024, it had become clear that Paola’s evidence in relation to her claim for provision was lacking, mostly due to the absence of information as to her financial position and the then potential sale of Toppi Bar & Restaurant (Principal Judgment at [83]–[86] and [267]–[283]).
On 21 August 2024, Pike J made various orders including the dismissal of the balance of Paola’s claims – the exception being her claim for provision – as well as an order that probate in respect of the 2020 Will in solemn form be granted to Walter.
On 29 August 2024, Pike J made further orders, including that Paola was granted leave to rely on further evidence and that the matter was adjourned. The hearing dates that remained were vacated, and Paola was ordered to pay the costs thrown away by reason of the adjournment: The Estate of Giovanna Toppi [2024] NSWSC 1115. In addition, Pike J noted that Paola consented to the sum of $1 million being paid out to Walter in his capacity as executor of the estate of Giovanna, and that sum may be used (subject to Walter’s duties as executor) to pay his legal costs in these proceedings and in part satisfaction of his claim to the residue of the estate.
On 29 October 2024, Pike J ordered Paola to pay Walter’s costs of the proceedings other than to the extent that they relate solely to her claim for provision, with liberty reserved for Walter to apply at the conclusion of these proceedings to seek the ordered costs on the indemnity basis: T**oppi v Toppi (No 2).
On 17 February 2025, the three-day hearing of these proceedings commenced before me.
On 19 February 2025, I reserved my judgment.
On 25 February 2025, Mr Beazley on behalf of Paola emailed my Associate copies of a notice of motion seeking leave to reopen Paola’s case.
In summary, at the first hearing of that motion on 5 March 2025, it became clear Paola’s evidence was incomplete and so I adjourned the hearing of that motion to 16 April 2025.
On 16 April 2025, I determined that Paola’s application to reopen her case was successful but only to a very limited extent. The application was otherwise dismissed, and I ordered Paola to pay the costs of Walter in respect of it, including with respect to the hearings on 5 March 2025 and 16 April 2025, payable forthwith. Liberty was reserved for Walter to apply for those costs on the indemnity basis, or on the basis of a special costs order, the latter being foreshadowed by Walter at the hearing of the motion on 5 March 2025. I otherwise reserved my judgment.
On 10 July 2025, I delivered the Principal Judgment and made orders inviting the parties to submit either agreed short minutes of order to give effect to the Principal Judgment or, failing agreement, competing submissions with proposed short minutes of order and any material on which they rely.
Failing any application by Walter to pursue the costs ordered by either Pike J or me as against Paola on the indemnity basis or on the basis of a special costs order, the issue of costs has been determined by me on the papers.
(1) Subject to rules of court and to this or any other Act—
(a) costs are in the discretion of the court, and
(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and
(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
(2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court.
(3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.
(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to—
(a) costs up to, or from, a specified stage of the proceedings, or
(b) a specified proportion of the assessed costs, or
(c) a specified gross sum instead of assessed costs, or
(d) such proportion of the assessed costs as does not exceed a specified amount.
…
The discretion to award costs under s 98 of the CPA is broad and the section itself is to be construed liberally: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, Gaudron and Gummow JJ at [21].
The discretion is, however, subject to the rules of court, including the UCPR and must be exercised judicially and with regard to the principle that an award of costs is compensatory in nature, not punitive: Oshlack, Gaudron and Gummow JJ at [44].
Rules 42.1, 42.2, 42.4 and 42.5 of the UCPR relevantly provide:
42.1 General rule that costs follow the event
Subject to this Part, 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.
42.2 General rule as to assessment of costs
Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis.
…
42.4 Power to order maximum costs
(1) The court may by order, of its own motion or on the application of a party, specify the maximum costs that may be recovered by one party from another.
…
42.5 Indemnity costs
If the court determines that costs are to be paid on an indemnity basis—
(a) in the case of costs payable out of property held or controlled by a person who is a party to the proceedings—
(i) in the capacity of trustee, executor, administrator or legal representative of a deceased estate, or
(ii) in any other fiduciary capacity,
all costs (other than those that have been incurred in breach of the person’s duty in that capacity) are to be allowed, and
(b) in any other case, all costs (other than those that appear to have been unreasonably incurred or appear to be of an unreasonable amount) are to be allowed.
The “general rule” is that costs follow the event, and they are calculated on the ordinary basis unless it is apparent that some other order should be made as to the whole or any part of the costs of the proceedings: rr 42.1 and 42.2 of the UCPR. The general rule “embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour”: Oshlack, McHugh J at [67].
When the court exercises its discretion to award costs, a number of observations made by McHugh J in Oshlack at [67]–[68] should be kept in mind, as summarised below:
An award of costs rests on fairness between the parties, with the unsuccessful party generally bearing the liability for the costs of the proceedings.
The primary purpose of an award of costs is to indemnify the successful party, not to punish an unsuccessful party because, had the proceedings not been brought, the successful party would not have incurred the expense of them.
As a matter of policy, one beneficial by-product of the compensatory purpose may well be to instil in a party contemplating the commencement of proceedings a sober realisation of the potential financial expense involved.
The circumstances in which the court may, in the exercise of its broad discretion as to costs, depart from the general rule are not closed but relevantly include:
where there has been some relevant conduct on the part of the party against whom cost are sought which involves some “special or unusual feature” or “relevant delinquency” that justifies an award of costs on the indemnity basis: Cappello v HomeBuilding Pty Ltd [2023] NSWCA 109, Mitchelmore JA (with whom Meagher JA and Simpson AJA agreed) at [47]; and
where there has been an unaccepted offer of compromise between the parties made either in the form of:
(a) that contemplated by r 20.26 of the UCPR, which can result in automatic costs consequences unless the court orders otherwise: see, for example, rr 42.14, 42.15, 42.15A of the UCPR; or (b) a Calderbank offer, the making of which is a matter that the court may have regard to when deciding the issue of costs, but it “does not automatically bring a different order as to costs”: SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323, Giles JA at [37].
It has been recognised that family provision cases represent a unique creature of sorts where it may be appropriate to make costs orders which deviate from the usual course contemplated by the UCPR: Chalik v Chalik [2024] NSWSC 117, Henry J at [530].
In Singer v Berghouse [1993] HCA 35; 114 ALR 521, in a single-judge hearing of an application for security for costs of an appeal to the High Court, Gaudron J stated the following oft-cited proposition at 522 (citations omitted):
Family provision cases stand apart from cases in which costs follow the event. Leaving aside cases under the Act which, in s 33, makes special provision in that regard, costs in family provision cases generally depend on the overall justice of the case. It is not uncommon, in the case of unsuccessful applications, for no order to be made as to costs, particularly if it would have a detrimental effect on the applicant's financial position. And there may even be circumstances in which it is appropriate for an unsuccessful party to have his or her costs paid out of the estate.
Her Honour’s reference to s 33 is a reference to the Family Provision Act 1982 (NSW) which has now been superseded by s 99 of the Succession Act. That provision, like its predecessor, provides that in the appropriate case this court may order that the costs of proceedings of this kind – including the costs of unsuccessful applicants for provision – be paid out of the estate.
The remarks of Gaudron J in Singer were considered in the context of claims for provision in this jurisdiction by the Court of Appeal in Haertsch v Whiteway (No 2) [2020] NSWCA 287, Macfarlan, Meagher and Leeming JJA at [5]–[11]:
[5] It is well established that family provision applications “raise different issues with respect to costs” to those raised by other proceedings: Salmon v Osmond [2015] NSWCA 42 at [172] (Beazley P, McColl and Gleeson JJA agreeing). The liberal approach to costs in such cases has a long provenance, though reference is now typically made to remarks of Gaudron J in Singer v Berghouse [1993] HCA 35; (1993) 67 ALJR 708 at 709, to the effect that “costs in family provision claims generally depend on the overall justice of the case” and that it is “not uncommon, in the case of unsuccessful applications, for no order to be made as to costs, particularly if it would have a detrimental effect on the applicant’s financial position”. Indeed, in some jurisdictions it would seem that no order as to costs is the usual or general consequence of an unsuccessful application: Bowyer v Wood (2007) 99 SASR 190 at 210 211; [2007] SASC 327; Underwood v Underwood [2009] QSC 107 at [32]–[33].
[6] However, as Giles JA observed in Jvancich v Kennedy (No 2) [2004] NSWCA 397 at [11] (Handley and McColl JJA agreeing), the “overall justice of the case” is “not remote from costs following the event”. For one thing, the default rule encourages prospective applicants for provision to have regard to the significant costs consequences to themselves of making such an application. But while the default rule in r 42.1 applies to family provision proceedings, its application remains subject to the court exercising greater than usual “liberality and discrimination” in deciding whether to depart from it: Salmon v Osmond at [174] (Beazley P, McColl and Gleeson JJA); Chapple v Wilcox (2014) 87 NSWLR 646; [2014] NSWCA 392 at [26]–[27] (Basten JA, Gleeson JA agreeing); [138]–[139] (Barrett JA, Gleeson JA agreeing).
[7] It is not uncommon, though atypical, for an unsuccessful applicant not to be ordered to pay the defendant’s costs where the applicant is or would become impecunious and the claim for provision was reasonable or borderline: see eg, with no attempt to be exhaustive, Re Sherborne Estate (No 2) (2005) 65 NSWLR 268; [2005] NSWSC 1003; Moussa v Moussa [2006] NSWSC 509; Bevilacqua v Robinson (No 2) [2008] NSWSC 520; Ray v Greenwell [2009] NSWSC 1197; Dugac v Dugac [2012] NSWSC 192; Raiola v Raiola [2014] NSWSC 1172; Purnell v Tindale [2020] NSWSC 746.
[8] Is there any reason for departing from the rule that costs follow the event in this case? In her submissions the plaintiff, now self-represented, emphasises that compliance with a costs order would require her to liquidate a substantial part of her superannuation balance (her only significant asset). She is presently unemployed, has been so for some time, and suffers from health conditions which will make it difficult for her to return to work (PJ [195(d)]). She does not currently have the ongoing benefit of income protection payments from BT Insurance. Whether that will continue to be the position is uncertain, because the plaintiff still has opportunities to review or challenge the insurer’s decision. The plaintiff also submits that her claim for provision was reasonably made, and was successful at first instance.
[9] The impecuniosity of an unsuccessful party, without more, is no reason to deprive a successful party of an order for costs to which they are otherwise entitled: Sassoon v Rose [2013] NSWCA 220 at [10] (Meagher JA, Gleeson JA agreeing); Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25 at [26]–[27]. However, the irrelevance of impecuniosity is said to be “subject to some relaxation in family provision cases”: Chapple v Wilcox at [141] . One reason that the impecuniosity of an unsuccessful applicant for family provision is of greater than usual relevance is that adverse costs orders might alter the basis on which the claim for provision was rejected, and thereby cause or justify a further application: McCusker v Rutter [2010] NSWCA 318 at [34]. That consideration is of little or no relevance to this case: the plaintiff’s claim failed for reasons unrelated to her financial position and no further application for provision could possibly succeed.
…
[11] Although family provision claims can only succeed or fail, those binary outcomes tend to conceal difficult and even “borderline” questions of judgment. That is one reason for the more liberal approach to costs: Re Sherborne Estate (No 2) at 279; Moussa v Moussa at [8]. Those observations are typically directed to the evaluative and discretionary judgments as to what would constitute adequate provision for the applicant’s proper maintenance, education or advancement. The plaintiff’s application did not fail for that reason; indeed, it succeeded before the primary judge and it is not obvious that the grounds of appeal directed to those exercises of judgment would have been upheld, had they been addressed.
It is abundantly clear from this consideration that, while proceedings of this kind invite a more “liberal approach” to the issue of costs, r 42.1 of the UCPR applies equally to family provision proceedings and the “overall justice of the case” necessarily involves both consideration of that starting position and, if appropriate, the discernment of some principled basis for departure from it: Jvancich v Kennedy (No 2) [2004] NSWCA 397, Giles JA (with whom Handley and McColl JA agreed) at [11].
It follows that the prima facie position is that the unsuccessful party in family provision proceedings should pay the other’s costs unless there is good reason to depart from that position and parties seeking provision should not assume or expect their costs to be borne by the estate. So much was observed in Noble v Durrant (No 2) [2023] NSWSC 835, by Richmond J at [9]:
It is clear that the default rule in r 42.1 of the UCPR applies to family provision proceedings, so that the prima facie position is that the unsuccessful plaintiff should pay the defendant’s costs and it is necessary for the plaintiff to show that there is good reason to depart from that prima facie position. This is not inconsistent with the observations of Gaudron J in Singer: see Chapple v Wilcox (2014) 87 NSWLR 646; [2014] NSWCA 392 at [27] and [139]; Haertsch at [6]. Nevertheless, in family provision cases the Court exercises a greater degree of “liberality and discrimination” than usual in deciding whether to depart from the default rule: Haertsch at [6]. The main reasons for that more liberal approach are that the impecuniosity of the unsuccessful applicant may in some circumstances be a relevant matter (in contrast to other types of proceeding) and that family provision claims are often decided on difficult evaluative and discretionary judgments: Haertsch at [7], [9] and [11]. However, it is clear that applicants in family provision claims cannot have an expectation that as a general rule the discretion in r 42.1 will be exercised in their favour so as to exempt them from liability for costs in the event of an unsuccessful application, or that an order will be made for the payment of costs out of the estate: see e.g. Brindley v Wade (No 2) [2020] NSWSC 882 at [198]–[204].
As stated above, costs will generally follow the event and be assessed on the ordinary basis unless the court orders otherwise or the UCPR otherwise provides: rr 42.1 and 42.2 of the UCPR.
The UCPR otherwise provides under Part 42, Division 3, which is headed ‘Offers of compromise’. Pursuant to r 42.13 of the UCPR, that division applies to proceedings in respect of which an offer of compromise is made under r 20.26 with respect to a plaintiff’s claim.
Rule 20.26 of the UCPR provides as follows:
20.26 Making of offer
(1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms.
(2) An offer under this rule—
(a) must identify—
(i) the claim or part of the claim to which it relates, and
(ii) the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, and
(b) if the offer relates only to part of a claim in the proceedings, must include a statement—
(i) in the case of an offer by the plaintiff, as to whether the balance of the proceedings is to be abandoned or pursued, or
(ii) in the case of an offer by a defendant, as to whether the balance of the proceedings will be defended or conceded, and
(c) must not include an amount for costs and must not be expressed to be inclusive of costs, and
(d) must bear a statement to the effect that the offer is made in accordance with these rules, and
(e) if the offeror has made or been ordered to make an interim payment to the offeree, must state whether or not the offer is in addition to that interim payment, and
(f) must specify the period of time within which the offer is open for acceptance.
…
42.14 Where offer not accepted and judgment no less favourable to plaintiff
(1) This rule applies if the offer is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer.
(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.
The effect of these provisions is that where:
an offer of compromise is made by a plaintiff before the commencement of a trial; and
that offer complies with r 20.26 of the UCPR; and
that offer is not accepted by the defendant; and
the plaintiff later obtains an order no less favourable than the terms of the offer,
then, unless the court orders otherwise, the plaintiff is entitled to an order for their costs on the indemnity basis from the day after the offer was made and on the ordinary basis for their costs incurred before that time: UCPR r 42.14(2).
There is no doubt that the UCPR provisions concerning formal offers of compromise can be utilised in the context of family provision proceedings but, in this context particularly, considerable care must be taken to formulate an offer that complies with the requirements of r 20.26 of the UCPR, which is couched in “emphatic” and unambiguous language: Oates v Oates (No 2) [2025] NSWSC 929, Brereton J at [19], citing AAI Ltd v Josipovic (No 2) [2013] NSWSC 1577, Campbell J at [33], Alexiou v Alexiou [2024] NSWSC 1340, Lindsay J at [152] and Pethers v Pethers (No 2) [2025] NSWSC 561, Meek J at [58].
In order for an offer of compromise to be compliant with r 20.26 of the UCPR, among other things, that offer must:
not include an amount as to costs and must not be expressed to be inclusive of costs: r 20.26(2)(c) of the UCPR; and
identify the proposed orders for disposal of the claim or relevant part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment: r 20.26(2)(a)(ii) of the UCPR.
Additionally, the proposed orders must be in a form that could be made in response to the relevant claim such that it is an offer that could be accepted with judgment entered accordingly: r 20.27(3) of the UCPR; Oates, Brereton J at [17]–[20].
As to the form of order required in proceedings of this kind, s 65(1) of the S**uccession Act provides as follows:
65 Nature of orders
(1) A family provision order must specify—
(a) the person or persons for whom provision is to be made, and
(b) the amount and nature of the provision, and
(c) the manner in which the provision is to be provided and the part or parts of the estate out of which it is to be provided, and
(d) any conditions, restrictions or limitations imposed by the Court.
… The making of an offer of compromise in the form of a Calderbank letter (from Calderbank v Calderbank (1976) Fam 93), where the offeree does not accept the offer but ends up worse off than if the offer had been accepted, is a matter to which the court may have regard when deciding whether to otherwise order, but it does not automatically bring a different order as to costs. All the circumstances must be considered, and while the policy informing the regard had to a Calderbank letter is promotion of settlement of disputes an offeree can reasonably fail to accept an offer without suffering in costs. In the end the question is whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure …
[44] Two general ‘rules’ have emerged relating to Calderbank offers, namely, that to justify the making of an order for costs on an indemnity basis, the offer must be a genuine offer of compromise, which it is unreasonable for the appellant not to accept: Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [4]-[5]; Leichhardt Municipal Council v Green at [21]-[24], [36]. However, as this Court (Santow, Bryson JJA, Stein AJA) pointed out in Leichhardt Municipal Council v Green at [8], the ‘common law principles’ that have been developed in relation to costs “operate merely as guides to how the discretion might appropriately be exercised”. The principles or rules to which I have just referred fall within that category.
[45] The discretion is to be exercised having regard to all the relevant circumstances in the case. The question that had been raised in Leichhardt Municipal Council v Green was whether there had been a genuine offer of compromise. As the Court said at [21]:
“There is little appreciable difference between saying that an offer should not in the court’s discretion attract costs sanctions in the circumstances and saying that an offer is not a genuine offer of compromise in the circumstances. Both depend upon a value judgment of the offer and the conduct of the parties in the circumstances of the claim.”
In order to warrant an order of costs on the indemnity basis, a Calderbank offer must embody a genuine compromise and the party seeking to rely on it must show that it was unreasonable for the unsuccessful party not to accept it. That is an evaluative judgment to be made by reference to the terms of the offer and all the relevant circumstances at the time the offer was made: Abdi v Abdi (No 2) [2022] NSWSC 582, Ward P at [28], citing King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204, Young JA (with whom Campbell and Hodgson JJA agreed) at [11]; Wheatley v Lakshmanan (No 2) [2022] NSWSC 851, Ward CJ in Eq at [97]–[99].
The relevant reasonableness or otherwise is not to be determined with hindsight. The merits and weaknesses of the relevant claim are to be considered prospectively as at the time of the offer: Noon v Bondi Beach Astra Retirement Village Pty Ltd (No 2) [2010] NSWCA 285, Giles, Macfarlan and Young JJA at [11]; Gretton, Beazley JA (with whom Mason P agreed and Hodgson JA substantially agreed) at [78].
In Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311; [2013] NSWCA 188, Bathurst CJ (with whom Beazley P and McColl JA agreed) at [42] concluded that the essence of a Calderbank offer is an intention that the offer (or the circumstances in which it was conveyed) indicated that it would be relied on in relation to costs, should a verdict more favourable than the offer be achieved, stating:
In the present case all that there was, were the offers of compromise, the second seeking a greater amount by way of settlement than the former. There was nothing in either of the offers to indicate that they were intended to have effect other than as offers under r 20.26. Further, there was nothing in the correspondence with which the offers were enclosed or in the surrounding circumstance to indicate they would be relied on in relation to the question of costs should a verdict more favourable than the offer be achieved. Such an indication, in my opinion, is the essence of a Calderbank offer.
A finding that rejection or non-acceptance of a Calderbank offer was unreasonable should not be made other than on clear grounds: Abdi, Ward P at [28], citing Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353, Basten JA (with whom Giles JA and Young CJ in Eq agreed) at [113].
In Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298, Warren CJ, Maxwell P and Harper AJA at [25] summarised the relevant factors in determining whether the rejection or non-acceptance of a Calderbank offer was unreasonable, including:
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 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 rejecting it.
These factors were cited with approval in Abdi, Ward P at [29] and Wheatley, Ward CJ in Eq at [98].
In Abdi, Ward P at [27]–[30] provided the following comprehensive statement of the principles relating to an award of indemnity costs following the rejection or non-acceptance of a Calderbank offer:
[27] The party seeking the special costs order bears the onus of demonstrating that the rejection of the offer was “unreasonable” in all the circumstances of the case (see Leichhardt Municipal Council at [19]; Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26] per Giles, Ipp and Tobias JJA).
[28] Whether rejection of a Calderbank offer (or other offer of settlement) was unreasonable is an evaluative judgment to be made by reference to the terms of the offer and all the relevant surrounding circumstances (King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204 at [11] per Young JA with whom Campbell and Hodgson JJA agreed). It has been said that a finding of unreasonableness should not be made other than on clear grounds (Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [113] per Basten JA with whom Giles JA and Young CJ in Eq agreed).
[29] The factors to be taken into regard when considering whether the rejection or non-acceptance of the offer was unreasonable (summarised in Favotto at [20]-[30]) 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 rejecting it (see Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 at [25] per Warren CJ, Maxwell P and Harper AJA; Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398 at [8] per Buchanan and Tate JJA and Sifris AJA; Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [12] per Basten JA with whom McColl and Campbell JJA agreed).
[30] Factors that have been found to be relevant in determining whether the rejection of a Calderbank offer was not unreasonable, and tending against such finding, have included: all relevant evidence not having been served at the time of the offer (Vale v Eggins (No 2) [2007] NSWCA 12 at [22] per Beazley JA); the full parameters of the dispute remaining uncertain at the time of the offer (Precision Products (NSW) Pty Ltd v Hawkesbury City Council (2008) 74 NSWLR 102; [2008] NSWCA 278 at [192] per Allsop P with whom Beazley and McColl JJA agreed); the offeror’s case changing after the making of the offer (South Eastern Sydney Area Health Service at [85] per Hunt AJA); the inclusion of conditions in the offer (Magenta Nominees Pty Ltd v Richard Ellis (WA) Pty Ltd (unreported, FCAFC, Spender, French and Lee JJ, 29 August 1995); and the issues in dispute in the proceedings being complex (MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236 at 242D per Lindgren J). …
As mentioned above, costs are in the discretion of the court and the court has full power to determine by whom, to whom, and on what basis they are to be paid, if at all: r 42.1 of the UCPR; s 98(1) of the CPA.
A successful party to proceedings only has a “reasonable expectation” of being awarded their costs as against the unsuccessful party, unless there is good reason for that general rule to be displaced: Oshlack, Gaudron and Gummow JJ at [44] and Kirby J at [134].
In Gretton, Hodgson JA (with whom Mason P agreed) observed at [121] that:
In my opinion, underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs. …
While Walter seeks his costs on the indemnity basis principally by reference to the offers of compromise made by him, the alternative to that submission is simply that Paola should receive no award of costs in her favour.
Importantly both submissions – that Walter should be awarded his costs on the indemnity basis and that, in any event, Paola should not be awarded her costs – are said to be informed by Paola’s “delinquent approach” to the proceedings. For this reason, it will be necessary to provide a brief summary of the principles relevant to an award of costs based on the conduct of a party to proceedings. Ordinarily, those principles are invoked to justify an award of costs on the indemnity basis. However, it is axiomatic that the same matters which might justify an order of costs on the indemnity basis may also inform this court’s costs discretion more generally, including any decision to award or refuse costs in the usual course. In other words, it is plain that such matters may inform this court’s discretion as to whether costs should be ordered in the usual course or whether some other order should be made: r 42.1 of the UCPR.
A summary of the relevant principles relating to the discretion to award indemnity costs based on the conduct of a party can be found in Cappello, in which Mitchelmore JA (with whom Simpson AJA and Meagher JA agreed) at [46]–[48] stated:
[46] The Court has a discretion to award costs on an ordinary or indemnity basis. Usually costs will follow the event, unless the Court considers that some other order ought to be made: Civil Procedure Act 2005 (NSW), s 98; Uniform Civil Procedure Rules 2005 (NSW), r 42.1; Collier v Country Women’s Association of New South Wales [2018] NSWCA 36 at [116] (“Collier”).
[47] For an order of indemnity costs to be made, the conduct of the party against whom such costs are sought must usually exhibit some special or unusual feature: Collier at [117]. The focus is on the way the litigation was conducted: Mead v Watson [2005] NSWCA 133 at [8]-[9]. For example, the discretion may be enlivened where a party persists in what should have been seen to be a hopeless case, such as where the case was unduly prolonged by groundless contentions: Ferella at [36]; Liverpool City Council v Estephan (Executor and Administrator of the Estate of the late Jocelyn Estephan and Ors) [2009] NSWCA 161 at [93] (“Liverpool City Council”). It has also been said that indemnity costs may be awarded where the unsuccessful party’s conduct was unreasonable or delinquent: Amirbeaggi v Matrix Group Co Pty Ltd [2021] NSWCA 21 at [18].
[48] The categories of circumstances in which the discretion may be exercised are not closed: Liverpool City Council at [93]. Ultimately, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on the ordinary basis: Liverpool City Council at [93].
The discretion to award indemnity costs based on conduct must be exercised judicially and by reference to some "special or unusual feature" or "relevant delinquency" that justifies such an award. Further, the conduct of the party against whom indemnity costs are sought must be connected with the litigation itself and, more specifically, the way the litigation was conducted: see Oshlack, Gaudron and Gummow JJ at [44]; Mead v Watson [2005] NSWCA 133, Sheller, Ipp and Tobias JJA at [8]–[9]; Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131, Meagher and Barrett JJA and Tobias AJA at [6].
Finally, the mere late abandonment of a claim may not, of itself, be sufficient to warrant an order for indemnity costs. So much was observed by Emmett JA in Ghougassian v Fairfax Community Newspapers Pty Ltd [2015] NSWCA 307, at [53] (footnotes omitted):
Mere abandonment of a claim may not, of itself, be sufficient to warrant an order for indemnity costs. If, upon material reflection and consideration of the questions, an appellant resolves to abandon an appeal at a stage when the issues have been clarified, it does not necessarily follow that indemnity costs should be ordered. Parties should not be discouraged from the proper, albeit late, abandonment of unwinnable appeals or points. The reality is that close attention to an appeal is often not made until shortly before the hearing of the appeal. Parties should not be discouraged from abandoning bad arguments by reason of the possibility of an order for indemnity costs.
Paola seeks her costs of the proceedings insofar as they relate to her claim for provision.
Paola submits that, as she was successful in that claim, the starting point is that costs should follow the event. Paola cites r 41.2 of the UCPR in support of this proposition (which is obviously an erroneous reference to r 42.1) and refers to this court's broad discretion to award costs, with the “starting point” being that costs follow the event and are calculated on the ordinary basis, citing Chalik, Henry J at [528]–[530].
Paola rejects Walter’s reliance on offers of compromise made by him, which he submits are bases upon which he should be entitled to his costs of the proceedings on the indemnity basis.
Paola says that the offers made by Walter to settle these proceedings, including Walter’s 21 April 2023 offer, Walter’s 21 June 2023 offer and Walter’s 17 July 2024 offer amounted to little more than the release of Paola from her liability to Giovanna’s estate as co-guarantor of the WFM Loan (as provided for in the Principal Judgment), plus a lump sum payment of $50,000 (or $100,000 under Walter’s 17 July 2024 offer) towards Paola’s legal costs. Paola submits that these offers are not more favourable than the outcome provided for in the Principal Judgment and “could not be considered as a reason” for a costs order being made against her.
Paola spent a great deal of her submissions focused on the remarks of Gaudron J in Singer at 522, which I have addressed above, as subsequently considered by members of this court and the Court of Appeal. Those remarks primarily concern the position of an unsuccessful applicant for provision and provide that it may be appropriate in family provision proceedings to make costs orders that deviate from the usual course where an unsuccessful applicant is impecunious or would be rendered so by a costs order being made against them. Reliance on this authority is somewhat puzzling in circumstances where Paola was successful in her claim for provision and seeks costs orders in the usual course. In any event, Paola ultimately submits that the “overall justice of the case” would not involve any award of indemnity costs in favour of Walter, which could “wipe out” the provision ordered by this court and leave her impecunious.
Paola further submits that if the Principal Judgment was that Paola’s entitlement to provision is “limited to only a legacy of $500,000 plus the other relief granted”, then she should be awarded her costs on the ordinary basis.
Unfortunately, Paola’s submissions then descend into an irrelevant hypothetical, which it will be necessary for me to analyse in more detail. That hypothetical is premised on:
The fact that $1,000,000 was released from Giovanna’s WBC Account by way of an interim distribution to Walter by order of Pike J on 30 August 2024, being a fact which is outlined in the Principal Judgment at [344].
The fact that Paola’s 14 February 2023 offer predated this interim distribution.
My determination in the Principal Judgment at [531] that, by way of provision, Paola ought to receive a one-third share of the amount in Giovanna's WBC Account and Walter ought to receive a two-third share. Importantly, that determination was clearly made by reference to the amount then remaining in Giovanna's WBC Account and in the light of my findings as to:
(a) the net value of Giovanna's estate as at 13 February 2025 (Principal Judgment at [499](1)(a)); and (b) that Giovanna’s estate's second largest asset, being the liability of Paola as co-guarantor of the WFM Loan, was "likely irrecoverable" and was a liability from which Paola ought to be released (Principal Judgment at [530]).
The recasting of my determination as to her receiving a one-third share in the balance of Giovanna’s WBC Account retrospectively, as though I had somehow determined that Paola ought to have received a one-third share of Giovanna’s estate as it was at a prior date and so before the interim distribution to Walter ordered by Pike J.
As a result, Paola says that at the time of Paola’s 14 February 2023 offer, the balance of Giovanna's WBC Account was approximately $2,521,301 and a one-third share of that amount would have been $840,433.66, being $90,433.66 greater than Paola’s 14 February 2023 offer.
Cast in this way, Paola says that Paola’s 14 February 2023 offer could be seen as less favourable to her than my ultimate determination that she be released from liability as co-guarantor and receive a payment of $500,000 (being an approximately one-third share of the amount remaining in Giovanna’s WBC Account in July 2025), subject to her satisfaction of costs orders made against her in these proceedings (a crucial aspect of my determination which appears to have been ignored for the purpose of this creative submission).
It also ignores the fact that my order for provision out of Giovanna’s estate for Paola’s maintenance, education or advancement in life was made having regard to the facts known to the court at the time the order is made in accordance with s 59(2) of the Succession Act. Those facts included both the interim distribution to Walter and the assets and liabilities of Giovanna’s estate at the time of the hearing.
Paola concludes this aspect of her submissions by stating that a one-third share of Giovanna’s WBC Account as at the date of her 14 February 2023 offer would have been greater than $750,000 and that, had Walter accepted the offer, a large degree of costs could have been avoided and “all parties (except the legal representatives) would have been substantially financially better off”. The irony of this submission is not lost on me in circumstances where it was Paola’s conduct of the proceedings which unnecessarily prolonged them, and resulted in costs being incurred in respect of claims she ultimately abandoned shortly before the hearing was due to take place.
Additionally, while nothing turns on it in light of what I have said, I have doubts that the order proposed by Paola’s 14 February 2023 offer (which included an ordered variation to the August 2019 Will to make provision for Paola) was in a form that could be made in response to the relevant claim such that it is an offer that could be accepted with judgment entered accordingly: r 20.27(3) of the UCPR; Oates, Brereton J at [17]–[20].
In conclusion, Paola submits that:
Walter’s costs are excessive, and the court should not make any costs orders sought by him;
the court should “at lease [sic] make an order that [Walter] pay [Paola’s] costs” of the provision proceedings on the ordinary basis; and
the interests of justice may allow the court to order that Walter pay those costs on the indemnity basis.
In terms of the form of order that should be made, Paola submits she should have her costs of the provision proceedings on the ordinary basis and, of the payment of $500,000 to be made to her by way of provision, Paola says that $250,000 should be released to her forthwith and $250,000 should be set aside pending the assessment and resolution of the issue of costs.
Walter’s principal submission on costs is as follows:
Paola should pay his costs of the proceedings generally on the indemnity basis from 21 April 2023; or 21 June 2023; or, in the further alternative, 17 July 2024 (being the dates of the three offers of compromise made by Walter to Paola in respect of these proceedings); and
in any event, Paola should not have any order for costs in her favour owing to Paola’s conduct of the litigation more generally including:
(a) her late and unexplained abandonment of her probate claims; (b) her persistent failure to adequately disclose her financial resources; and (c) her application to reopen her case, which was “largely misconceived”.
In respect of both Walter’s 21 April 2023 offer and Walter’s 21 June 2023 offer, Walter submits that:
the parties conducted a settlement conference in March 2023 such that Paola was well-advised about the merits or otherwise of her case at the time these offers were made;
these offers were made at a time when Paola was electing to prosecute her probate claims as a priority, not her claim for provision which was then only pleaded as alternate relief;
Paola would have secured a more favourable outcome than that ultimately ordered had she accepted either of these offers and that is so whether the assessment is undertaken in 2023 having regard to her case as formulated at that time or in 2025 in light of the Principal Judgment, because Paola would have:
(a) immunised herself from adverse costs orders; (b) received $50,000; and (c) been released from the WFM-based liabilities.
The context in which those offers were made are said to include the last minute and unexplained abandonment of her probate claims over 12 months later, which caused the vacation of the trial, citing Ghougassian, Emmett JA at [53]–[57].
Paola acted unreasonably in rejecting (or failing to accept) these offers because her only possible justification at the time for doing so was a probate case which she later disavowed without explanation. Walter says her decision not to accept these offers cannot be justified by reference to her claim for provision which, while raised in her summons as alternate relief, she was not then actively prosecuting.
Walter submits that all that has been said in relation to both Walter’s 21 April 2023 offer and Walter’s 21 June 2023 offer applies with more force in mid-2024, when Walter’s 17 July 2024 offer was made.
On 24 July 2024, Paola notified Walter that she was no longer propounding her probate case, but, following this, Walter’s 17 July 2024 offer was not withdrawn. Walter submits that Paola could have accepted Walter’s 17 July 2024 offer and freed herself of the “significant risk as to costs” or “inevitable liability” resulting from her abandonment of her probate claims and vacation of the trial date to allow Paola to put on fresh evidence for her provision claim.
Walter says that had Paola accepted Walter’s 17 July 2024 offer, she would have received $100,000 and that the result of the Principal Judgment will “certainly yield a smaller benefit to her (if any)”. I note that in support of this submission, Walter points to my “finding” in the Principal Judgment that Walter’s costs as of August 2024 relating to the abandoned claim would be in the order of $375,000. I made no such finding and merely noted what had been asserted in Walter’s opening submissions by reference to an affidavit of Ms Georgiou sworn 27 August 2024 (Principal Judgment at [512]). Importantly, those costs are yet to be agreed or assessed and, in any event, were ordered on the ordinary basis such that the full amount is not a yardstick by which to measure Paola’s eventual liability, much less an estimate of that amount. The same could be said about Paola’s liability under costs orders I made against her following her application to reopen her case (Principal Judgment at [435]).
Walter submits that the principles applying to Calderbank letters apply to family provision cases and the fact that an evaluative judgment is undertaken in assessing such claims does not dictate a different position, citing Brown v Brown (No 2) [2023] NSWSC 7, Henry J at [51]; Wheatley, Ward CJ in Eq at [101].
Walter submits that giving effect to Calderbank letters is reflective of the public policy in discouraging wasteful and unreasonable behaviour by litigants generally; and that certain features of family provision litigation – all of which he says are present in these proceedings – serve to underscore and reinforce the public policy of encouraging resolution, including those stated in Bates v Cooke (No 2) [2014] NSWSC 1322, by Kunc J at [31]:
the presence of fixed fund that risks being substantially depleted by legal costs to the disadvantage of all concerned;
the absence of fault on the part of the executor; and
the fact that the emotional and financial strain on natural persons can be much higher because the subject matter of the claims concern matters of family, relationships and emotions.
Walter further submits that Giovanna’s estate was modest in size and that it must have been obvious to Paola that continuation of the litigation would result in its depletion to Walter’s prejudice. Walter highlights concessions made by Paola during cross-examination, including her acceptance that Walter should receive at least half of the estate, that Walter had a need for accommodation and a poor employment history, and that Giovanna wanted to look after Walter including by way of provision from her estate. Walter says these are also matters which Paola should be taken to have known at the time his offers of compromise were made, and her failure to accept those offers was unreasonable and inconsistent with her proper acknowledgement of Walter’s needs.
Finally, Walter submits that, even if the court finds that Paola’s rejection or non-acceptance of each of the three offers of compromise made to her do not of themselves give rise to indemnity costs consequences, this court is entitled to consider those offers together with Paola’s “delinquent approach” to these proceedings more generally: Hermes Far Eastern Shining Pty Ltd v Potable Gold Strike Pty Ltd [2025] NSWSC 263, Brereton J at [37].
Walter concedes that some costs consequences have already flowed (although that concession appears confined to Paola’s application to reopen) but he submits that Paola’s conduct as a whole, together with the rejection of reasonable offers and the “unjustifiably large” quantum of her claim ultimately pressed at trial (Principal Judgment at [400]), has led to the “needless diminution of a modest estate”.
Walter says that the form of order to be made should include:
the release of Paola from all liability as co-guarantor of the WFM Loan;
the payment of $500,000 to Paola, less any amount she is to pay Giovanna’s estate following the resolution of the issue of costs in these proceedings;
that $1 million from Giovanna’s WBC Account be paid forthwith to Walter by direct transfer to his solicitors’ trust account; and
in addition to the costs orders made by Pike J on 29 August 2024 and 29 October 2024 and by me on 16 April 2024, order that Paola is to pay Walter’s costs of the proceedings generally on the indemnity basis by reference to the dates on which his offers of compromise were made (with each expressed as an alternative); and, otherwise, there be no order as to costs.
The starting position is that Paola was successful in her claim for provision and, in the ordinary course, costs should follow the event unless I determine that some other order should be made: r 42.1 of the UCPR.
In my judgment, there is no principled basis for departure from that position.
Weighing all of the circumstances of this case and applying the principles in SMEC Testing, Gretton and Abdi as outlined above, in my view none of the offers of compromise relied upon by each of Paola and Walter justify an order that they be paid their costs on the indemnity basis, nor do they otherwise sway my discretion as to costs in any significant respect.
Additionally, applying the factors summarised in Cappello, this is not a case in which I can conclude that Paola’s conduct had some special or unusual feature which justifies an order that Paola pay Walter’s costs on an indemnity basis from any of the dates submitted to me, or that Paola’s “delinquent” conduct of these proceedings (in which she was ultimately, eventually successful) should otherwise disentitle her from any award of costs in her favour.
My rejection of Paola’s reliance on Paola’s 14 February 2023 offer as a basis upon which I should award her costs on the indemnity basis was at the very least implicit in my description of that submission as an “irrelevant hypothetical” premised upon a retrospective recasting of findings within the Principal Judgment. Among other things, that submission was made on a footing which is contrary to the task of this court under s 59 of the Succession Act, and it conveniently ignored Paola’s as yet unquantified costs liability to Giovanna’s estate under extant costs orders in these proceedings.
Walter’s submissions that Paola should pay his costs of the proceedings generally on the indemnity basis from 21 April 2023; or 21 June 2023; or, in the further alternative, 17 July 2024 (being the dates of the three offers of compromise made by him in these proceedings) are also rejected. Addressed collectively, these submissions appear to live or die on the proposition that Paola would have been financially better off by abandoning these proceedings at any of those times, avoiding the adverse costs orders made to date, and accepting a payment of either $50,000 or $100,000 in consideration of her legal costs (in addition to her release from any liability as co-guarantor of the WFM Loan). Those submissions are rejected for three reasons:
They expressly assume that the payment of $500,000 to Paola less her satisfaction of extant costs orders in these proceedings will “certainly yield a smaller benefit to her (if any)” than $100,000 in circumstances where:
(a) the extent of Paola’s liability under those orders is yet to be agreed or assessed; and (b) the costs thrown away were submitted to be in the order of $370,000 and were ordered on the ordinary basis.
They appear to implicitly assume that Paola will not be awarded her costs of the provision proceedings, despite being successful in her claim for provision.
They fail to address my description of the collective costs of these proceedings (which appear to be in the order of $1 million) as being “outrageously disproportionate to the value of Giovanna’s estate” (Principal Judgment at [536]).
In her submissions, Paola characterises Walter’s costs of approximately $800,000 as “excessive” and I tend to agree. Even if Paola were to ultimately receive less than $100,000 from the $500,000 that I ordered by way of provision, I would decline to exercise any costs discretion in Walter’s favour on that mathematical basis alone.
So far as Paola’s delinquent conduct of these proceedings is said to both:
support Walter’s application for his costs on the indemnity basis by reference to the offers of compromise made by him; and/or
provide a separate ground upon which I should decline to make any costs order in Paola’s favour “in any event”,
I consider that any “delinquency” in Paola’s conduct of the proceedings, and the prejudice to Walter thereby occasioned, has been sufficiently addressed by costs orders already made in these proceedings by Pike J on 29 August 2024 and 29 October 2024 and by me on 16 April 2025.
Applying the principles recited in Ghougassian by Emmett JA at [53]–[57], the mere abandonment of the probate case shortly before the trial was first fixed to commence is not sufficient to warrant an order for indemnity costs. This unfortunate but fairly routine circumstance should be considered distinct from the abandonment of the entire proceedings on the eve of the trial without explanation in circumstances which suggested that the claim lacked a proper object and the remarks of Emmett JA in Ghougassian at [54] (upon which Walter relies) should be read in context, with particular attention to [55]–[57].
Plainly, Paola’s claim for provision under the Succession Act had both a proper object and prospects of success. So much is evidenced by my consideration of the many unfortunate circumstances underpinning her claim as distinct from the eventual outcome: Noon, Giles, Macfarlan and Young JJA at [11]; Gretton, Beazley JA (with whom Mason P agreed and Hodgson JA substantially agreed) at [78]. The inefficient and, in many respects, wholly unsatisfactory way in which Paola conducted these proceedings is highly regrettable but, as I have stated above, I consider this is adequately addressed by the costs orders already made in these proceedings.
Doing the best I can to estimate how much of the estate of Giovanna as currently is available to make any payments (being at least the balance of Giovanna’s WBC account of $1,510,264.27 plus interest) and the likely amount that each of Walter as executor and Paola may be required to pay in relation to the costs orders in these proceedings, I consider that $750,000 of Giovanna’s WBC account can now be released to Walter and $150,000 of Giovanna’s WBC account can now be released to Paola. This would leave in the order of $600,000 in Giovanna’s WBC account to pay the liabilities of Giovanna’s estate, Paola’s costs and make any further payment that may be required to be made to her in accordance with the provision order.
Each of Paola and Walter have either made submissions in respect of, or otherwise outlined in the evidence put before me, what I will describe as more discrete costs orders made earlier in these proceedings, including that:
on 18 November 2022, an order was made that Paola pay the costs of Walter thrown away by reason of the amendment to the amended statement of claim;
on 24 April 2023, an order was made that required each of Paola and Walter to lend $3,063.50 to Giovanna’s estate, representing one half each of the fees of the expert handwriting witness, with the intention that as soon as reasonably possible after probate or administration is granted, that the amount paid by each of them will be reimbursed out of the Giovanna’s estate; and
on 8 November 2023, an order was made that Paola pay Walter’s costs of the day.
About these issues, all that I am minded to observe is that I have no mandate or desire to re-write, or otherwise interfere with the operation of, extant costs orders made by other members of this court, and that is particularly so in this case where there appears to be very little ambiguity about each of these matters.
Finally, I note that each of Paola and Walter made a strikingly similar observation in their submissions on costs. In substance, that observation was to the effect that their dogged pursuit of this litigation has resulted only in the depletion of their Giovanna’s estate to their joint prejudice. Each suggest that “if only” the other had acted more reasonably, a timely compromise to what proved to be a legitimate claim for provision might have been reached; with the result that both parties would have avoided “significant costs” and been “substantially financially better off” by avoiding this bitter and expensive experience altogether.
Human experience is filled with many “if only” episodes but it also requires a person to live with the consequences of the choices which have been made, as each of Paola and Walter must in these proceedings.
This aspect of the parties’ submissions serves to underscore the serious and senseless harm caused by these proceedings, where two siblings fought long and hard and, in the end, neither was truly victorious. It is a sad and timely reminder of the perils of litigation of this kind, where the subject matter of the claims concern matters of family, relationships and emotions.
I will make the following orders:
Order pursuant to s 58(2) of the Succession Act 2006 (NSW) that the time for the plaintiff to make application for a family provision order be extended to 22 November 2022.
Order pursuant to s 59 of the Succession Act 2006 (NSW) that, in addition to the provision made for the plaintiff in the Will of the late Giovanna Toppi of 2 September 2020, admitted to probate on 21 August 2024, there be a legacy to the plaintiff in the following terms:
(a) the Estate of the late Giovanna Toppi (the Estate) and the defendant as executor of the Estate release the plaintiff from all liability to the Estate on account of the deceased’s right to contribution as co-guarantor of the liabilities of Bar M Pty Ltd to WFM Motors Pty Ltd; and (b) the sum of $500,000 less any amount that the plaintiff is to pay to the Estate in relation to the costs in these proceedings, as agreed or assessed.
(a) $750,000 to the defendant or his nominee; and (b) $150,000 to the plaintiff or her nominee.
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Toppi
Toppi
(2005) 13 VR 435
(1998) 193 CLR 72
(1993) 114 ALR 521
(2013) 84 NSWLR 311
(1993) 67 ALJR 708
(2007) 99 SASR 190
(2014) 87 NSWLR 646
(2005) 65 NSWLR 268
(2019) 265 CLR 164
(2008) 74 NSWLR 102
(1996) 70 FCR 236