Zacharatos v Western Agricultural Co Pty Ltd (No 2)

1. [1]

   These proceedings, which concern the share register of the first defendant, Western Agricultural Co Pty Limited (“WAC”), were the subject of a judgment which I delivered on 20 February this year: Zacharatos v Western Agricultural Co Pty Ltd [2026] NSWSC 106 (“J1”). The parties have now asked me to resolve a dispute between them as to costs.

2. [2]

   The plaintiff, Mr Zacharatos, was named as the executor of a will made in 2016 by the late Arthur William Pardey. Mr Pardey died in 2020 and Mr Zacharatos later obtained probate in common form of the will. Mr Pardey was survived by three children (“Ian”, “Sarah” and “Andrew”; collectively “the Pardey Children”), who are the second, third and fourth defendants in the proceedings. Ian and Andrew are commonly represented; Sarah has her own separate representation.

Background

1. [3]

   The factual background and the prior course of the proceedings are set out in detail in my February judgment. Familiarity with them will be assumed for the purpose of this judgment. Abbreviations used in the February judgment will also be used in this judgment.

2. [4]

   During his lifetime, Mr Pardey controlled the affairs of WAC. Mr Zacharatos brought these proceedings in order to obtain orders which would have the effect of transmitting the shares in the company into his name for the purpose of administering Mr Pardey’s estate. There were five shares in question. Four of them had been previously owned by Mr Pardey. The other had been owned by his wife, Mrs Pardey, who predeceased him; under the terms of her will, the share passed to Mr Pardey.

3. [5]

   The proceedings remained in abeyance for several years as a result of other proceedings (“the Probate Proceedings”) being brought concerning Mr Pardey’s estate. Those proceedings are still pending. A settlement agreement has been reached in principle but there remain matters to be agreed on.

4. [6]

   The proceedings came before me last year because of a concern about the corporate governance of WAC and its subsidiaries. The companies lacked functioning boards of directors and were effectively rudderless. There were competing applications. Ian and Andrew sought the appointment of a receiver to the companies. Mr Zacharatos sought a separate hearing of his claim for final relief with respect to the transmission of Mr Pardey’s four shares in WAC (but not the fifth share which had formally belonged to Mrs Pardey).

5. [7]

   The two applications were the subject of a hearing on 31 October last year, and a supplementary hearing on 16 December. Ian and Andrew’s interlocutory process was filed on 28 October. Mr Zacharatos’ was not filed until 17 December, but, as filed, reflected the application which had previously been made informally on his behalf.

6. [8]

   I found in favour of Mr Zacharatos. I made an order for rectification of WAC’s share register so as to effect the transmission to him of the four shares formerly owned by Mr Pardey. As a consequence, the interlocutory process filed for Ian and Andrew should be dismissed, although I have not made any formal order to that effect yet.

7. [9]

   My decision left the claim for transmission of Mrs Pardey’s share unresolved. At the hearing on 20 February, I asked the parties whether, in the light of my decision, the result of that claim could either be agreed or made the subject of a supplementary hearing so that it could be finally determined. But I was later advised that the parties do not wish to take this course and propose to leave the claim undetermined, at least for the time being.

8. [10]

   At the same time, the parties asked me to make orders for costs consequential upon my decision. They recognised that, as the proceedings have not been finally disposed of, any such order will be interlocutory. It will therefore not be assessable or enforceable until after the whole of the proceedings have been disposed of: Uniform Civil Procedure Rules 2005 r 42.7.

Costs

1. [11]

   Counsel for Mr Zacharatos submitted that he had been successful in his claim in the proceedings concerning Mr Pardey’s four shares in WAC. The Pardey Children could have consented to the relief sought, but they did not do so. Costs inter partes should follow the event. Counsel asked me to order that the Pardey Children pay Mr Zacharatos’ costs of the proceedings (on a party-party basis).

2. [12]

   Counsel also asked me to make orders concerning the incidence of costs on Mr Pardey’s estate. Counsel noted that Mr Zacharatos had obtained judicial advice from the Court in 2022. Counsel also relied on UCPR r 42.25. They asked the Court to order that Mr Zacharatos’ costs be paid out of the estate on an indemnity basis. But there should be no equivalent order for the Pardey Children’s costs (including the costs payable under the inter partes cost order sought against them).

3. [13]

   Sarah did not participate in last year’s hearing, or in the further hearings this year. No submission has been made on her behalf; I am not sure that she has necessarily been notified of the claim for costs against her. Written submissions were, however, made on behalf of Ian and Andrew.

4. [14]

   Counsel for Ian and Andrew acknowledged that they had been unsuccessful in the applications which resulted in my February judgment. It was accepted that they should pay Mr Zacharatos’ costs from 15 October last year onwards (the reason for fixing on this date was not specified; the applications were foreshadowed, and directions made for the hearing on 31 October, on 19 September).

5. [15]

   But counsel submitted that prior to 15 October Ian and Andrew had behaved reasonably. Counsel pointed out that a consensus was reached between the parties that the proceedings would remain in abeyance until the Probate Proceedings had been determined: see J1 [85]. In counsel’s submission, this consensus only broke down because of a pressing need to make orders concerning the corporate governance of WAC (see J1 [85] and [118]). Had the consensus continued, there would have been no need for either of the claims for final relief to be determined and there would be no order as to costs in accordance with the principles stated in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622, 624-625.

6. [16]

   In these circumstances, counsel asked me to make no order as to costs inter partes for the period prior to 15 October last year, but to give Mr Zacharatos indemnity for his costs (to the extent not recovered from Ian and Andrew) out of the estate.

7. [17]

   I will begin with costs inter partes. It is true that Mr Zacharatos has substantially succeeded in obtaining the final relief which he sought concerning the four shares in WAC owned by Mr Pardey. But this was only one of two claims for final relief which he made in the proceedings. The claim with respect to the share formally owned by Mrs Pardey remains undetermined.

8. [18]

   In these circumstances, I do not think that I should make any order dealing inter partes with the costs of the proceedings prior to 15 October. That is simply because I do not think that the costs of the proceedings should be determined until all of the claims in the proceedings had been finally dealt with. There is always the possibility of differential outcomes to the two claims which will result in the need to apportion the costs: cf Akierman Holdings Pty Ltd v Akerman (No 3) [2021] NSWSC 869 at [54]-[86].

9. [19]

   I will therefore confine the costs orders inter partes at this stage to the costs of the competing applications which were the subject of my February judgment. So far as those applications are concerned, there is no contest. Counsel for Ian and Andrew accept that they must pay Mr Zacharatos’ costs of them. In each case the costs of the application should include costs incurred from 19 September last year when they were foreshadowed to the Court.

10. [20]

    This leaves the recovery of costs out of the estate. There is nothing before me to suggest that the costs have not been properly incurred by Mr Zacharatos in the discharge of his duties as executor, and that he will therefore be entitled to a full indemnity for them out of the assets of the estate. But I cannot exclude the possibility that the beneficiaries of the estate (who will not be finally known until the Probate Proceedings are determined) might wish to question those, or other, costs which Mr Zacharatos has incurred.

11. [21]

    The possibility may be remote, but I do not think that I should cut it off without hearing from all of the beneficiaries who might ultimately be affected. The proper course is not to make any order at this point, and to allow the question about indemnity for the costs of these proceedings, if it ever arises, to be dealt with along with any other issues which might be raised concerning Mr Zacharatos’ expenses: cf Vlahos v Vlahos [2025] NSWSC 1612 at [103]-[109].

12. [22]

    Of course this should not prevent Mr Zacharatos, if he has not already done so, from drawing on the assets of the estate to meet the costs of the proceedings as they arise in the meantime. It should also be noted that, once the costs order against Ian and Andrew becomes enforceable, Mr Zacharatos will be obliged to proceed to recoup those costs as quickly as possible, so as to minimise the ultimate expense to the estate.

Orders

1. [23]

   The orders of the Court are:

   1. (1)

      Order that the second and fourth defendants’ interlocutory process filed 28 October 2025 be dismissed.

   2. (2)

      Order that the second and fourth defendants pay the plaintiff’s costs, of the second and fourth defendants’ interlocutory process filed 28 October 2025 and the plaintiff’s interlocutory process filed 17 December 2025, in each case including costs of the applications as foreshadowed from 19 September 2025 onwards.