Mills v Dodds (No 2)

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

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

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

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

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

In summary I have determined that:

I set out my reasons for that determination. The reasons make reference to the principal judgment and will adopt its nomenclature and abbreviations. I will cite the material in the proceedings by reference to the abbreviations I have given to the affidavits, exhibits, submissions and transcript (T), and the parties post PJ written submissions addressing final orders and costs being, plaintiff’s submissions dated 19 May 2025 (subsequently superseded) [4] , defendant’s submissions dated 19 May 2025 (DFOS1), plaintiff’s submissions dated 27 June 2025 (PFOS), and defendant’s submissions dated 27 June 2025 (DFOS2).

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

The defendant’s proposed final orders [6]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The plaintiff made 2 costs offers.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

His Honour, after analysis of caselaw and relevant articles commented that whilst the High Court did not advert explicitly to the two theories, it is implicit in the majority’s rejection of Schaefer and their reasons for doing so, that the beneficiary principle should be adopted [76] . His Honour thus either favoured (or considered himself bound to adopt) the beneficiary theory [77] . Consistent with that finding, his Honour found that in the circumstances of the case (albeit that there was vagueness regarding whether the plaintiff’s claim was at law or in equity) that the relevant plaintiff [78] was entitled to receive half of the deceased’s estate subject to the payment of family provision claims or damages of an equivalent amount [79] .

Dr Susan Barkehall Thomas writing in 2017 [80] and commenting on the High Court’s decision in Barns and the effect of whether the promisee took rights as a beneficiary under a Will rather than as creditor of the estate commented upon the differences in approach as between Australia and the United Kingdom. Further, Dr Thomas observed that [81]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In support of his submission, Mr Maconachie contended that:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

There are no regulations prescribing an ‘other rate’.

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

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

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

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

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

It seems to me that that is a reasonable position and I propose to make an order to that effect.

Finally on this matter, I should note that if some reason I have misunderstood Mr Yazdani submissions and he truly intended that interest might be payable within 28 days from the Court orders rather than what I have described as the ‘distribution date’, that can be addressed by either party under the liberty to apply which I propose to order. I might add that by the time of the ‘distribution date’, having regard to the fact that the residuary estate would then be able to be distributed, it is unlikely that there would need to be a greater period than 28 days in any event to make the payment to the residuary beneficiaries of their entitlements.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The position regarding the second offer however is different.

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

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

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

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

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

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

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

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

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

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

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

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

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

Secondly, I reject Mr Yazdani’s submission that “the offer involved essentially capitulation” by the defendant on the basis that the plaintiff “was to receive a windfall as to 33.3% of the net residuary estate at the expense of the charity beneficiaries” [156] . If, as I have found to be the case, the deceased did make the promise and there was valuable consideration for their promise, the outcome for the plaintiff can hardly be characterised as a “windfall”.

Thirdly, as to Mr Yazdani’s submission that the plaintiff failed on her alternative estoppel claim which she contended involved additional evidentiary matters [157] , it does not seem to me that that is an accurate description of my findings.

On all but the last of the 6 estoppel elements (clear and unequivocal promise; reasonable assumption of relationship; reasonable reliance, intentional knowledge that the plaintiff would act on the promise, and detriment), I found in favour of the plaintiff. On the last issue as to whether the deceased acted unconscionably in not honouring the promise I found as follows:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr Yazdani further submitted that:

Mr Yazdani also submitted that the costs of all parties should be paid out of the whole estate due to the dominant cause of all the problems the parties have encountered being attributable to the deceased [186] . The submissions included contentions that:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

However, the submission was expressly qualified by the words “(which has driven them into litigation with all the resulting costs expenditures necessarily involved)”. Contrary to the submission of Mr Yazdani, I reject the notion that “all the resulting costs expenditures necessarily involved” are laid at the hands of the deceased. The Court of Appeal has emphasised that the decision of a party to not accept a valid OC notionally lays at the feet of that party, the (ongoing) cause of the litigation. This appears clearly from the comments of Mason P in Morgan v Johnson (1998) 44 NSWLR 578 at 581E-582E:

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

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

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

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

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

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

Further, it should be evident from what I have indicated above that the table at JB2[8] gives some indication of what amount of the plaintiff’s costs calculated on the ordinary basis for work incurred up to and including 15 December 2023 should be burdened against and paid out of the whole of the residuary estate and what amount of the plaintiff’s legal costs calculated on the indemnity basis for work incurred after 15 December 2023 should be burdened against and paid out of the half share of the residuary estate to which HCT and WIRES are entitled.

There is no suggestion on the materials before me that the half share of the residuary estate to which HCT (as to 70%) and WIRES (as to 30%) are entitled would be inadequate to bear the costs burden which I have indicated. However, to guard against the remote chance that for some reason the HCT and WIRES half share is inadequate, I will give the parties liberty to apply in relation to the working out of these orders and in particular issues arising in respect of the burden of the costs orders.

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

The orders of the Court are - the Court: