Erem v Moussa (No 2)

1. [1]

   These reasons deal with costs and certain other issues raised by the first defendant following my substantive decision in this matter in Erem v Moussa [2024] NSWSC 641 (Judgment) on 15 October 2024 (abbreviations adopted in the Judgment will be adopted in this judgment).

2. [2]

   In the Judgment I concluded that: (a) the first defendant had succeeded in propounding the 1993 will which was the deceased’s only valid will, and probate of that will should be granted to the NSW Trustee and Guardian; (b) the plaintiff had succeeded in his claim that the defendants were estopped by the conduct of the deceased from denying that the plaintiff was entitled to the deceased’s half share in the McPherson St property; and (c) the plaintiff had failed on his resulting trust and family provision claims.

3. [3]

   Following submissions from the parties as to the form of final orders, the court made orders on 19 November 2024 including the following:

4. [4]

   The declaration in order 4 that the constructive trust arose as from 23 October 2015 (the date of death of the deceased) reflects the principle that where proprietary estoppel is established and detrimental reliance upon the relevant promise gives rise to a constructive trust, the constructive trust comes into existence at the time of the conduct which gave rise to the trust: McNab v Graham (2017) 53 VR 311; [2017] VSCA 352 at [102], [107]-[109] per Tate JA (Santamaria and Keogh JJA agreeing). In this case, that was the date of death of the deceased.

5. [5]

   I also made orders for the parties to file and serve submissions and any evidence relied on in relation to: (a) costs, (b) the occupancy fee payable by the plaintiff until he vacates possession of the Garfield St property, (c) whether the plaintiff is required to account to the deceased’s estate for the value of any Telstra shares and superannuation of the deceased and the form of the appropriate orders in that regard, and (d) the entitlement to the rent earned on the McPherson St property since the deceased’s death (to the extent that this issue is not dealt with by order 4 above). The issues referred to in (b), (c) and (d) were raised by the first defendant at a directions hearing for the making of the final orders and whether they are properly raised is contested by the plaintiff, as explained below.

6. [6]

   The plaintiff relied on an affidavit affirmed by him on 3 December 2024 and two affidavits sworn by his solicitor, Mr Terence Goldberg on 10 December 2024. The first defendant relied on an affidavit affirmed by her solicitor, Lana Ventsov, on 12 February 2025.

Issue 1: Costs

1. [7]

   On 29 January 2021, the plaintiff, the third defendant (Steven) and the fourth defendant (Madeline) made a joint offer to settle the whole of the proceedings, expressed to be ‘without prejudice save as to costs’ and pursuant to the principles stated in Calderbank v Calderbank [1975] 3 All ER 333 (Calderbank offer 1), on the following terms:

2. [8]

   Calderbank offer 1 was expressed to be open until 5pm on 1 March 2021. It set out estimates of the costs of the parties to the date of the offer which appear to be based on estimates given at a recent mediation which were: $300,000 in the case of the plaintiff, $430,000 in the case of the first defendant, $55,000 in the case of Steven, $60,000 in the case of Madeline and $20,000 in the case of the NSW Trustee and Guardian. It also set out a detailed analysis of the likely future costs if the matter went to hearing, and estimated that unless the matter could be compromised by the parties, the estate would quite likely be liable for costs in the range of $1,340,000 to $1,730,000 which would lead the first defendant to be worse off than if she accepted the offer.

3. [9]

   At the time Calderbank offer 1 was served, all the material lay evidence had been served as well as reports by the deceased’s two treating medical specialists (Dr Hovey and Dr Shivalingam) and their contemporaneous medical records of their consultations with the deceased. The only additional evidence served after this offer and before the hearing comprised (a) a short affidavit of the plaintiff affirmed on 9 February 2021 responding to the two affidavits of Mr Young; (b) an affidavit of Nawras Alnabulsi, a son of the first defendant, sworn on 6 August 2022, which had no bearing on the key issues in dispute; and (c) the reports of Dr Saines and Dr Fisher who were medical experts jointly engaged by the parties pursuant to orders made by the court on 24 February 2022.

4. [10]

   The first defendant did not respond to Calderbank offer 1, and instead on 3 March 2021, she made a Calderbank offer to the plaintiff, Steven and Madeline, offering to settle the proceedings on the following terms (Calderbank offer 2):

5. [11]

   Calderbank offer 2 was expressed to be conditional upon acceptance by all parties and open for acceptance until 5pm on 31 March 2021. No response was received to that offer by that time but consent orders were ultimately signed by all parties in early September 2021 for the settlement of the claims of Steven and Madeline. Mr Goldberg’s evidence, which is not contested, is that the first defendant subsequently resiled from that agreement and this prompted the plaintiff to make the further offers on 29 September 2021 referred to below.

6. [12]

   On 29 September 2021, the plaintiff made a Calderbank offer to the first defendant, Steven and Madeline, offering to settle the whole of his claims in the proceedings on the following terms (Calderbank offer 3):

7. [13]

   Calderbank offer 3 stated that the plaintiff’s cost to date on the indemnity basis were $363,000 and on the ordinary basis were $275,000, and was expressed to be open for acceptance until 4pm on 29 October 2021.

8. [14]

   At the same time, the plaintiff served on the first defendant, Steven and Madeline an offer of compromise expressed to be made in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), in the following terms (Rules offer 1):

9. [15]

   By a separate letter also sent on 29 September 2021, the plaintiff’s solicitor informed the first defendant, Steven and Madeline that they could accept Calderbank offer 3 and Rules offer 1 but not both of them. The first defendant did not respond to those offers.

10. [16]

    On 21 December 2021, orders were made by Hallen J approving the agreement to settle the claims of Steven and Madeline, under which Steven received $125,000 out of the estate together with an agreed amount for his costs and Madeline received $150,000 out of the estate together with an agreed amount for her costs. The terms of the settlement were essentially the same as the Calderbank offers previously made.

11. [17]

    On 18 February 2022, the plaintiff made a further Calderbank offer to the first defendant on the following terms (Calderbank offer 4):

12. [18]

    The offer was stated to be open for acceptance for 14 days from the date of the letter, and noted that the plaintiff’s costs were now about $430,000.

13. [19]

    At the same time, the plaintiff served on the first defendant an offer expressed to be made in accordance with r 20.26 of the UCPR in the following terms (Rules offer 2):

14. [20]

    Calderbank offer 4 stated that the first defendant could accept the offer in Calderbank offer 4 or Rules offer 2, but not both. The first defendant did not respond to those offers.

15. [21]

    The plaintiff seeks that his costs of and incidental to the proceedings be paid from the estate up to the making of a special costs order to the effect that the plaintiff’s costs from 2 March 2021 be paid from the estate (or by the first defendant) on the indemnity basis. If the latter, the costs be paid by the first defendant from the share of the estate passing to the first defendant as a priority and thereafter, from the estate. The plaintiff seeks that, in the alternative, the plaintiff’s costs of and incidental to the proceedings from 2 March 2021 be paid from the estate on the ordinary basis.

16. [22]

    The plaintiff relies on the various Calderbank offers and offers of compromise made by it referred to above.

17. [23]

    It was submitted the plaintiff has done significantly better than Calderbank offer 1 and it was unreasonable for the first defendant to reject it. The plaintiff also has done better than Calderbank offer 3 and at least as well as Rules offer 1 and arguably better in circumstances where he would potentially have been entitled to indemnity costs from the date of Calderbank offer 1 and, therefore, was offering to forego the difference between the value of indemnity costs and ordinary costs during the period from 29 January 2021 to 29 September 2021.

18. [24]

    Either way, the presumption in UCPR 42.14 applies such that unless the court orders otherwise, the plaintiff is entitled to an order against the first 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 assessed on an indemnity basis as from the beginning of the day following the day on which the offer was made.

19. [25]

    The first defendant opposes the plaintiff’s claim for any order that the first defendant should pay any of the plaintiff’s costs because she succeeded (and the plaintiff failed) in upholding the 1993 will and the plaintiff also failed in his family provision claim and his resulting trust claim.

20. [26]

    The first defendant noted that earlier in the proceedings, the court made the following interlocutory costs orders as between the plaintiff and the first defendant and submitted that those orders should be affirmed:

21. [27]

    The first defendant succeeded in establishing that the deceased had not died intestate but had left a valid will, namely the 1993 will, of which the first defendant is the only remaining beneficiary after the compromise of the claims of Steven and Madeline which were approved by the consent orders made by Hallen J on 21 December 2021.

22. [28]

    It was submitted that the plaintiff unreasonably maintained and prosecuted his contention that the 1993 will was invalid until the plaintiff finally abandoned that claim during the final days of the hearing. None of the treating practitioners nor any of the experts who gave evidence in the lead up to the trial, nor at the trial itself, supported the plaintiff’s contention that the deceased lacked testamentary capacity to make the 1993 will. The plaintiff also conceded in cross-examination that the deceased had been managing all of her daily affairs from the time that the plaintiff and the deceased commenced their relationship in the late 1980s and up to 1993.

23. [29]

    Although the court found that the deceased did not have testamentary capacity to make either the 2014 or 2015 wills, the court indicated that the court would have granted rectification of the 2014 will if that will had been valid: see [270]-[275] of the Judgment. It was submitted that the findings made in the Judgment engage the well-established principles in probate litigation summarised by Hallen J in Chant v Curcuruto (No 2) [2021] NSWSC 882 at [32], Heffernan v Innes (No 2) [2021] NSWSC 1187 at [110]-[114], and Ballam v Ferro (No 2) [2022] NSWSC 1358 at [77].

24. [30]

    The solicitor who prepared the 2014 will, Mr Young, and the solicitor who prepared the 2015 will, Mr Windeyer, were each experienced solicitors who reached their respective opinion that the deceased had testamentary capacity. Each of those solicitors also prepared detailed affidavits supported by their contemporaneous business records and gave lengthy oral evidence at the trial. It was reasonable for the first defendant to rely on the detailed evidence of each of those respective solicitors to support the defendant’s decision to maintain and prosecute her contention up until the end of the trial that the 2014 and 2015 wills were both valid. It was an established principle up until the trial that it was open to the court to accept the evidence of experienced solicitors, who had conferred with the deceased, in relation to the deceased’s testamentary capacity in preference to the contrary evidence of medical practitioners: see Drivas v Jakopovic (2019) 100 NSWLR 505; [2019] NSWCA 218. Likewise, it was reasonable for the first defendant to maintain and prosecute until the end of the trial her contention that the deceased had capacity to sever the joint tenancy into a tenancy in common during her conference with Mr Young on 10 October 2014.

25. [31]

    It was submitted that the plaintiff unreasonably refused to accept Calderbank offer 2, because the plaintiff did not materially improve his position in the Judgment and that accordingly, the plaintiff should pay all of the defendant’s costs on the ordinary basis, up until the date of the offer and on an indemnity basis thereafter.

26. [32]

    The first defendant submitted that her rejection of the plaintiff’s various offers was not unreasonable for several reasons. First, the plaintiff continued to dispute the 1993 will. Second, the plaintiff continued his family provision claim. Third, the first defendant’s decision to continue to propound the 2014 and 2015 wills was supported by Mr Young and Mr Windeyer, consistently with the principles referred to above.

27. [33]

    It was submitted that if the court is not minded to order the plaintiff to pay the entirety of the defendant’s costs, then the first defendant contends that the court should instead order that the plaintiff should pay the defendant’s costs of contesting the 1993 will and the family provision claim and the resulting trust claim; but that the plaintiff and the first defendant should otherwise (and subject to already existing orders in favour of the first defendant), bear their own respective remaining costs of the proceedings.

28. [34]

    The court has a discretion to determine by whom, to whom and to what extent costs are to be paid, although in the exercise of this discretion, the usual order is that costs will follow the event unless it appears to the court that some other order should be made: Civil Procedure Act 2005 (NSW) (CPA), s 98(1); UCPR, r 42.1.

29. [35]

    An order for costs is compensatory not punitive, being for the purpose of indemnifying the successful party for the expense of the litigation, and the usual order ‘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 v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67] (McHugh J).

30. [36]

    The ‘event’ may be characterised in more than one way, but generally refers to the result of the claim or counter claim, as the case may be, and may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15].

31. [37]

    One situation where there may be a departure from the usual order is where there are multiple issues in the proceedings and there has been a mixed outcome, and it is seen to be appropriate to apportion costs as between those issues. In Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 2) [2018] NSWCA 40 at [7], Beazley P, Payne JA and Barrett AJA adopted the following summary of the relevant principles for the determination of costs on an issue by issue basis stated in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (per Beazley, Ipp and Basten JJA):

32. [38]

    Further to the observation in the last paragraph, it is accepted that where it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, in general such an exercise will be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the court: Avopiling Pty Ltd v Bosevski; Avopiling Pty Ltd v Workers Compensation Nominal Insurer (2018) 98 NSWLR 171; [2018] NSWCA 146 at [172].

33. [39]

    In Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd (No 2) [2024] NSWCA 274 at [20], the Court of Appeal made the following observation as to when an issue is dominant or separable:

34. [40]

    Where an apportionment of costs is appropriate, it can be made by denying a party who has had only partial success a percentage of their costs: Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [5]-[6].

35. [41]

    Both parties relied on the following observations of Hallen J in Chant v Curcuruto at [32] summarising the relevant costs principles applying to contested probate litigation:

36. [42]

    The operation of the general rule that costs follow the event and are assessed on the ordinary basis is qualified by Part 20 of the UCPR, r 20.26 which provides for the making of offers of compromise which comply with that rule (rules offer). Under r 42.14, where a rules offer is made by the plaintiff but not accepted by the defendant and the plaintiff obtained an order no less favourable than the terms of the offer, then unless the court otherwise orders, the offeror is entitled to an order for costs on the indemnity basis from the day after the offer was made (in circumstances where it was made before commencement of the trial) and on the ordinary basis for costs incurred before that time.

37. [43]

    Relevantly, r 42.14(2) provides:

38. [44]

    Rule 42.14 involves a two-stage process: first, it is necessary to determine whether the offer is an ‘offer of compromise’ within the meaning of the UCPR, in particular whether it satisfies the formal requirements laid down in r 20.26 which depends in part on whether the offer made is one that can truly be called a ‘compromise’ and; second, whether the court should ‘otherwise order’ which it may do if it is persuaded that it is appropriate, in the interests of justice, that the default position under r 42.14(2) ought not to apply: Meres v Meres (No 2) [2017] NSWSC 523 at [43]-[44].

39. [45]

    The principles which apply to determine whether, under the second stage, the court should ‘otherwise order’ were recently stated by Court of Appeal in Bluth v Boyded Industries Pty Ltd (No 2) [2024] NSWCA 194 at [42]-[43]:

40. [46]

    Another situation in which the court may exercise its discretion under r 42.1 of the UCPR to make some order other than costs following the event on the ordinary basis, is where a party fails to accept an offer of compromise which is a Calderbank offer rather than a rules offer and that party does not achieve a judgment more favourable than the offer. However, merely because the party to whom the offer was made does not ultimately obtain a more favourable judgment does not automatically lead to a favourable costs order, or raise a presumption that such an order should be made: E Group Security Pty Ltd v Chief Commissioner of the State Revenue (No 2) [2021] NSWSC 1296 at [57].

41. [47]

    The onus is on the party making a Calderbank offer to satisfy the court that it should exercise the costs discretion in its favour, in particular that (a) the Calderbank offer embodies a genuine compromise and (b) it was unreasonable for the other party not to accept it, which is an evaluative judgment to be made by reference to the terms of the offer and all the relevant surrounding circumstances at the time that it was made, and not with the benefit of hindsight: Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8], [11], [16]; Wheatley v Lakshmanan (No 2) [2022] NSWSC 851 at [97]; E Group Security at [57]-[58]. A genuine offer of compromise is one which involves a party giving something away: Miwa at [9].

42. [48]

    Relevant factors in determining whether the rejection of an offer was unreasonable include (a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree’s prospects of success, assessed at the date of the offer; (e) the clarity with which the terms of the offer were expressed; and (f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it: Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 at [25]; Miwa at [12]; Wheatley at [98]; E Group Security at [59]. A finding of unreasonableness should not be made other than on clear grounds: E Group Security at [58].

43. [49]

    In relation to (d), what is required is an objective assessment of the offeree’s prospects of success as at the date of the offer: Hazeldene’s Chicken Farm at [30].

44. [50]

    The practice of treating Calderbank offers in this way is informed by the public policy objective of providing an incentive to the parties to end their litigation as soon as possible and discouraging wasteful and unreasonable behaviour by litigants: Commonwealth Bank of Australia v Gretton [2008] NSWCA 117 at [41]. However, the mere fact that the offer is a reasonable one does not make it unreasonable for the offeree to have rejected it: Gretton at [74] and [120].

45. [51]

    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 costs: Chandrasekaran v Western Sydney Local Health District (T/A Westmead Hospital) (No 2) [2024] NSWCA 21 at [12]; Gretton at [121] per Hodgson JA (Mason P agreeing at [1] and Beazley JA agreeing at [91]).

46. [52]

    I will consider first the position apart from the offers of compromise.

47. [53]

    The Judgment identified at [6] the issues which the court was required to determine having earlier noted at [1] that the plaintiff had initially challenged the deceased’s 1993 will but had abandoned this during the hearing. This did not occur until the end of the fourth day (T229.27). This was a significant concession by the plaintiff because by prayer 1 of his third further amended statement of claim filed on 20 October 2021 (SOC) (consistently with each earlier version of the SOC) he sought an order that the deceased died intestate the result of which would have been that he took her entire estate on intestacy under s 111 of the Succession Act 2006 (NSW). That claim would only have been successful if each of the 1993, 2014 and 2015 wills was invalid by reason of the deceased’s lack of testamentary capacity. The first defendant’s cross-claim was defensive as it sought to uphold whichever of the three wills was the valid last will of the deceased.

48. [54]

    The plaintiff’s concession regarding the 1993 will was correct and reflected the fact that there was no evidence to suggest that the deceased did not have testamentary capacity when she made that will on 30 June 1993. In particular, both court appointed experts (Dr Saines and Dr Fisher) accepted in their expert reports that the deceased had testamentary capacity when she made the 1993 will. In my view, this was a weakness in the plaintiff’s case which ought to have been readily apparent to him and his advisors from an early stage of the litigation.

49. [55]

    If the 1993 will was valid, it made no material difference to the plaintiff which of the 1993, 2014 and 2015 wills was the relevant testamentary instrument because (a) the first defendant was the residuary beneficiary under each of them (in the case of the 1993 will, this was the result of the consent orders made by Hallen J on 21 December 2021), and (b) the plaintiff was not a beneficiary under any of them except the 2015 will, but under that will his entitlement was only to receive the deceased’s superannuation benefit and her interest in the 2,400 Telstra shares owned jointly by the plaintiff and the deceased at her death both of which he claimed independently of the will, and indeed his contention was that the 2015 will was invalid.

50. [56]

    As a consequence of the plaintiff’s concession regarding the 1993 will, the only remaining live issues in the proceedings as between the plaintiff and the first defendant were: (1) whether the plaintiff was entitled to claim the deceased’s half share of the McPherson St property which he put in three alternative ways (that the severance of the joint tenancy in October 2014 was invalid, or if valid he was entitled to the deceased’s half interest through an equitable estoppel or a resulting trust); and (2) in the alternative, whether a family provision order should be made. He succeeded on the first of these issues, as a consequence of which the family provision claim was not pressed, which I concluded in the Judgment at [299] was a correct concession.

51. [57]

    It follows that the plaintiff failed on an issue in the proceedings (whether the deceased died intestate) which is properly regarded as separable from the issue on which he succeeded.

52. [58]

    In my view, the plaintiff’s mixed success does not justify an award of costs in the first defendant’s favour because there was an overlap in the evidence relating to the deceased’s testamentary/mental capacity in October 2014 and the severance of the joint tenancy, and ultimately the court found that the first defendant failed in her attempt to propound the 2014 and 2015 wills, but it does justify depriving the plaintiff of a significant portion of his costs. In assessing the appropriate discount and bearing in mind that this involves an evaluative exercise and a relatively broad-brush approach, I have made an assessment of the amount of pre-trial work relating to the question of the deceased’s testamentary capacity at the time of making the 1993 and 2015 wills, and the amount of time spent on those questions at the hearing.

53. [59]

    A significant part of the evidence, submissions and hearing time were devoted to the issue on which the plaintiff failed which did not overlap with the issue on which he succeeded. In particular (a) the evidence of Mr Windeyer and Dr Shivalingam, who were both extensively cross examined, was relevant only to the validity of the 2015 will; (b) a significant part of the evidence of the court appointed experts, Dr Saines and Dr Fisher, both of whom were cross-examined at length, was directed to the deceased’s testamentary capacity at the time of making the 1993 will and the 2015 will; and (c) there was cross-examination of the plaintiff directed to the validity of the 1993 will before he made his concession (see T159). None of this evidence was relevant to the severance of the joint tenancy in 2014 or the equitable estoppel claim.

54. [60]

    I have also taken into account the matter raised in the Judgment at [303] regarding the disproportionality between the parties’ costs compared to the issues in dispute. As at 10 December 2024, the plaintiff’s costs were estimated to be $643,000 (including GST) on the ordinary basis and $854,000 (including GST) on the indemnity basis. This is disproportionate to the value of the plaintiff’s claim given that the deceased’s half interest in the McPherson St property valued at the date of the hearing was $825,000. This disproportionately is also indicated by the fact that the assets of the estate (including the deceased’s half share of the McPherson St property) at the date of the hearing had an estimated value of $1,559,826 before costs: Judgment [122]. Hence, if the plaintiff were to recover all of his costs on an indemnity basis, the first defendant would essentially receive nothing from the estate. In my view, this disproportionality is a relevant matter to be taken into account by the court in the proceedings in light of the overriding purpose stated in s 56 of the CPA, the requirement for proportionality of costs stated in s 60 of the CPA and the power conferred by s 98(4)(b) of the CPA.

55. [61]

    Taking all these matters into account, I consider that (apart from the offers of compromise) the appropriate way to reflect the plaintiff’s partial success, and the responsibility of each of the parties for the incurring of costs, is that the first defendant should pay 50% of the plaintiff’s costs of the proceedings, as agreed or assessed.

56. [62]

    The plaintiff relies on Calderbank offer 1 which proceeded on the premise that the 2015 will was valid. This was the first defendant’s primary case. She did not achieve a judgment more favourable than Calderbank offer 1. In reliance on that offer, the plaintiff seeks indemnity costs from 2 March 2021.

57. [63]

    I am satisfied that Calderbank offer 1 embodied a genuine compromise when the offers made in it by the plaintiff, Steven and Madeline are considered together. The plaintiff’s offer was that he would receive the deceased’s half share of the McPherson St property, retain the deceased’s superannuation benefit and bear his own costs. It represented a very significant compromise by him given that his costs were $300,000 at that time. Steven’s offer was that he would receive $125,000 and his costs on the indemnity basis out of the estate, which represented a very significant compromise given that his entitlement under the 2015 will was a legacy of $400,000. In the case of Madeline, her offer was to receive $150,000 (reflecting her entitlement under the will but as a lump sum rather than a legacy payable by instalments) and her costs on an indemnity basis. The offer was a significant compromise when considered as a whole because if the 2015 will was valid, the plaintiff’s claim to the deceased’s half share in the McPherson St property would succeed if he established his estoppel claim (which he ultimately did) and further the first defendant’s claim on the residue of the estate would be reduced by Steven’s legacy of $400,000 (compared to the amount of $125,000 to be paid to him under the offer). As noted earlier, the first defendant ultimately settled the proceedings against Steven and Madeline on substantially the same terms as this offer.

58. [64]

    As to whether the first defendant’s rejection of the offer was unreasonable, I will address this by reference to the factors set out at [48] above.

59. [65]

    As to (a), the offer was sent when all the material lay evidence had been filed except for the expert reports of Dr Saines and Dr Fisher, and the additional affidavit of the plaintiff of 9 February 2021 was served well before the offer expired. Importantly, the first defendant had all the evidence relevant to the plaintiff’s equitable estoppel claim which if successful (as it ultimately was) would give him an entitlement to the deceased’s half share of the McPherson St property irrespective of whether the deceased lacked testamentary capacity at the time of the 2015 will or 2014 will or mental capacity at the time of her severance of the joint tenancy. Hence, the first defendant was able to assess the strength of the equitable estoppel claim at the time of the offer notwithstanding that the further medical expert evidence had not yet been obtained.

60. [66]

    As to (b), the offer allowed the first defendant 30 days to consider the offer, which I consider to be a reasonable time in all circumstances as it allowed her sufficient time to consider the strength and weaknesses of her case. That she had a reasonable time is indicated by the fact that two days after the offer expired, she made her own settlement offer in the form of Calderbank offer 2.

61. [67]

    As to (c), the offer involved a very significant compromise. In the case of the plaintiff, he compromised his claim for costs against the estate in an amount which was very significant and in the case of Steven, the compromise was a reduction of $275,000 in respect of his entitlement under the 2015 will.

62. [68]

    As to (d), I consider that the first defendant’s prospects of defeating the plaintiff’s equitable estoppel claim to the deceased’s half share of the McPherson St property was low. This claim was introduced by the plaintiff’s further amended statement of claim filed on 9 November 2018 and turned on his evidence contained in his affidavits served by the time the offer was made (principally his affidavit of 12 April 2019). In my view, an objective assessment of the first defendant’s prospects in meeting the equitable estoppel claim would have indicated that her prospects of success were weak. It is important to recognise that the equitable estoppel claim was quite independent of the issues concerning the deceased’s testamentary and mental capacity in 2014 and 2015 as is made clear in the Judgment at [233]-[234].

63. [69]

    While Calderbank offer 1 did not set out any detailed legal analysis, the nature of the plaintiff’s equitable estoppel claim and its basis was made clear in the SOC, and I do not consider that any additional canvassing of the issue in the offer was necessary: Miwa at [13].

64. [70]

    As to (e) and (f), the terms of the offer were clearly expressed and foreshadowed an application for costs in the event that the offer was ignored or rejected.

65. [71]

    In my view, the first defendant’s failure to accept Calderbank offer 1 was unreasonable and the appropriate order under r 42.1 is that the first defendant pay 50% of the plaintiff’s costs on the indemnity basis from 2 March 2021. I have considered whether the unreasonable rejection of the offer would justify an order that the first defendant pay all of the plaintiff’s costs on the indemnity basis from 2 March 2021 and have decided that it does not, principally because (a) the plaintiff continued to press until the fourth day of the hearing a claim that the 1993 will was invalid without a proper evidentiary basis, (b) the court is not bound to order indemnity costs against an offeree who unreasonably rejects a Calderbank offer and fails to obtain a more favourable judgment and the precise form of the order remains a matter within the discretion of the court: Tati v Stonewall Hotel Pty Ltd (No 2) [2012] NSWCA 124 at [9]; and (c) ultimately, the question is what is fair having regard to the parties’ respective responsibility for the incurrence of costs and for the reasons explained above, I consider that the 50% apportionment is necessary to reflect that principle.

66. [72]

    I will now briefly address the other settlement offers. The first defendant’s reliance on her Calderbank offer 2 is misplaced because it was clearly not as favourable to the plaintiff as the outcome of the proceedings, given that it required him to pay the estate $175,000. It also suffers from the defect that it was not capable of acceptance by the plaintiff independently of the other offerees (one of whom, Madeline, had also filed a cross-claim): Sahade v Bischoff (No 2) [2016] NSWCA 45 at [23].

67. [73]

    The plaintiff’s Rules offers 1 and 2 include a term that there be judgment in favour of the plaintiff. Given that the plaintiff’s pleaded case was that the deceased died intestate, the plaintiff did not obtain an order no less favourable than the terms of those offers and consequently r 42.14(2) is not engaged.

68. [74]

    The plaintiff’s Calderbank offers 3 and 4 are essentially the same terms as his Calderbank offer 1 except that it is an offer made solely by him rather than jointly with Steven and Madeline. Had it been necessary to consider these offers, I would have concluded that the first defendant’s rejection of each of them was unreasonable for the same reasons as apply to her rejection of Calderbank offer 1.

69. [75]

    For the above reasons, the appropriate order is that the first defendant pay 50% of the plaintiff’s costs on the ordinary basis up to and including 1 March 2021 and on the indemnity basis from 2 March 2021.

70. [76]

    There is no reason to disturb the existing orders as to costs and the first defendant’s entitlement under those orders should be set off against this order.

71. [77]

    It is appropriate in all the circumstances and in order to do justice between the parties that the plaintiff’s costs, after the set-off referred to in the previous paragraph, be paid out of the estate.

Issue 2: Occupation fee

1. [78]

   On 13 December 2017, Lindsay J made orders (by consent of the plaintiff and the first defendant) appointing the plaintiff administrator pendente lite with limited powers (December 2017 orders). The plaintiff performed that role until the orders made by the court on 19 November 2024 referred to above. Paragraphs 8 and 9 of the December 2017 orders included the following notes which were also expressed to be by consent of the plaintiff and the first defendant (emphasis added):

2. [79]

   The first defendant now seeks an order that the plaintiff pay an occupancy fee to the NSW Trustee and Guardian of $500 per week operating retrospectively from 13 December 2017 until he vacates the Garfield St property, being an additional $400 per week from December 2017. This is said to be permitted as an application under paragraph 9 of the December 2017 orders. The quantum of the additional occupation fee sought is based on rental appraisals prepared recently by two real estate agents. The first, by Century 21 in an email dated 11 November 2024, states that the rental in 2015 would have been around $450 per week and with gradual increases it would now be around $600 per week. The second, by Morin Property in a letter also dated 11 November 2024, states that the rent in 2015 would have been around $450 per week and it would have slightly increased over the years to reach a market rental currently of $650 per week.

3. [80]

   The first defendant submits that it is unclear on the materials how the original $100 per week fee was determined (as it was done with the consent of solicitors previously acting for her in the matter) but submits that it could only ever have been intended to be a temporary measure until a proper appraisal could be completed.

4. [81]

   The first defendant submits that it was reasonable for the first defendant to wait until the Judgment was delivered before revisiting the appropriate occupation fee in regard to the issues and proceedings including whether the deceased had left any valid will or had died intestate. She submits that it is reasonable to make the increased occupation fee retrospective to December 2017 for four reasons. First, the Judgment at [299] found that the 1993 will did not fail to make adequate provision for the plaintiff’s proper maintenance, education and advancement of life, because he failed in his family provision claim. Second, the increased occupation fee is appropriate to discharge the testamentary obligation the deceased owed to the first defendant, as recorded in the Judgment at [297]-[298]. Third, the increased occupation fee is of significance to the deceased estate, which is now a modest estate only: Judgment at [300]. Fourth, the evidence at the trial establishes that the plaintiff has sufficient assets and income to cover all of his foreseeable personal needs for the rest of his life.

5. [82]

   The plaintiff concedes that going forward the court can make an order varying the occupation fee, although says it should be for an amount less than $500 per week, because if the Garfield St property had been rented on the open market the estate would only have netted a net amount after deducting its expenses, including the real estate agent’s fees. However, I note that there is no evidence to suggest that the net return would be less than $500 per week.

6. [83]

   The plaintiff submits that the court should decline to backdate any increase to the occupation fee for five reasons. First, properly construed the notation contained in paragraph 9 of the December 2017 orders simply noted that the first defendant may make an application at a future date for the ongoing weekly occupation fee to be changed and did not reserve to the first defendant the right to make any such application retroactively nor did it state that the requirement to pay $100 per week was ‘unless otherwise ordered or agreed’. Any such application should have been made prior to, and determined at the hearing in March 2024, particularly as it would have been relevant consideration under s 60 of the Succession Act in relation to plaintiff’s family provision claim.

7. [84]

   Second, the first defendant did not raise the issue of a variation to the quantum of the fee until 12 November 2024. Her conduct in standing by for over seven years without seeking to vary the occupation fee in a manner suggesting that she accepted that fee was conduct amounting to acquiescence in, or consent to, the occupancy continuing at that fee, and it would not be fair or right for the first defendant to be permitted to backdate any increase in the fee: Carrington v Wallace [2022] NSWSC 1078 at [227], [264]-[265]

8. [85]

   Third, the first defendant’s conduct amounted to fully informed consent which provides the plaintiff, in his capacity as administrator, a prima facie defence to any allegation of breach of the self-dealing rule, and in all the circumstances it would not be fair and equitable for first defendant to now be permitted to complain of the breach: Spellson v George (1992) 26 NSWLR 666; [1992] NSWCA 254 at 669, 673.

9. [86]

   Fourth, the first defendant does not have standing to make this application; rather, given the appointment of the NSW Trustee and Guardian as administrator, that is the entity which has the requisite standing to make the application to alter the occupation fee.

10. [87]

    Fifth, the first defendant is statute barred from claiming an increased occupation fee from earlier than six years ago: Limitation Act 1969 (NSW), s 14.

11. [88]

    In my view the plaintiff’s submission recorded at [83] above is correct. Paragraph 9 of the December 2017 orders did not grant liberty to apply; rather it merely noted ‘any rights’ of the first defendant to apply to recover the market rent. The licence granted to the plaintiff to occupy the Garfield St property was in breach of the self-dealing rule unless consented to by all the beneficiaries of the estate. The first defendant gave her consent by consenting to the December 2017 orders, but reserved her ‘right’ to apply to increase the fee to market rent (implicitly accepting that $100 per week was not market rent).

12. [89]

    It was open to the first defendant to make such an application in these proceedings through her cross-claim but she chose not to do so and accordingly whether there should be an increase in the occupation fee for the period prior to the hearing was not an issue at the hearing. No explanation has been given for why it was not raised in good time before the hearing by inclusion in the first defendant’s cross claim. It would not be in the interests of justice to allow the claim to an increase in the occupation fee for the previous seven years to be raised at this late stage, given that the plaintiff has been denied the opportunity to put on evidence both as to the quantum of the market rent over the period from 13 December 2017 to 19 November 2024 and any potential defences including acquiescence and delay: cf Holder v Holder [1968] Ch 353 at 393-395.

13. [90]

    However, the plaintiff’s concession recorded at [82] above, makes it appropriate that an adjustment be made to the occupation fee for the period from 19 November 2024. I will make orders that the occupation fee be increased to $500 per week from 19 November 2024 until the plaintiff gives up possession of the Garfield St property, which is the amount claimed by the first defendant and is a reasonable estimate of the net rent achievable by the estate given the market appraisal by each real estate agent.

Issue 3: Telstra shares and superannuation benefit

1. [91]

   The plaintiff and the deceased jointly owned 2,400 Telstra shares as at the deceased’s death. The plaintiff contends that the Telstra shares passed to the plaintiff by virtue of survivorship, as recognised by s 1072A(5) (formerly s 1091AA(5)) of the Corporations Act 2001 (Cth) and consequently these shares did not form part of the deceased’s estate. The first defendant now accepts that this is correct, so that this issue falls away.

2. [92]

   The deceased was a member at the time of her death of the REST Industry Superannuation Fund (REST Fund). On 21 August 2014 she signed a binding death benefit nomination (BDBN) stating that on her death her interest in the fund would pass to the plaintiff as her spouse. On 5 January 2016, the trustee of the fund paid the deceased’s death benefit of $107,114.16 to the plaintiff.

3. [93]

   The first defendant now contends that the superannuation benefit forms part of the deceased’s distributable estate under her 1993 will and disputes the plaintiff’s entitlement to it, on two alternative grounds.

4. [94]

   First, she submits that the deceased signed the BDBN after she had been diagnosed with brain cancer (on 29 May 2014) and before she signed the 2014 will (10 October 2014). She submits that the findings made in the Judgment in relation to the deceased’s testamentary capacity to make the 2014 will and to sever the joint tenancy in respect of the McPherson St property lead to an additional finding now to be made that the deceased lacked the requisite mental capacity as at 21 August 2014 to nominate the plaintiff as the person to take her superannuation benefit, relying on van Camp v Bellahealth Pty Ltd [2024] NSWSC 7 at [172]. She contends that, accordingly, the court should now make a finding that the deceased lacked mental capacity to make the BDBN so that her superannuation benefit will form part of the residue of the deceased’s estate, which will pass to her as the residuary beneficiary.

5. [95]

   Second, she submits that the BDBN was ineffective because it states that the fund member ‘can only nominate a person(s) who is a dependant and/or your legal personal representative (your estate) to receive your death benefit’ and the plaintiff was neither a dependant nor the legal personal representative.

6. [96]

   The plaintiff submits that this claim cannot now be made. First, it is a fresh claim which has not previously been the subject of pleadings, evidence or submissions, and is precluded by the principles of Anshun estoppel and abuse of process. Second, the first defendant has not addressed the relevant test which is to be applied in light of the different nature of the transaction as compared to the impugned wills and severance of joint tenancy and, in particular, the lower level of capacity required for the BDBN as compared to making a will: see van Camp at [169]-[174]. Third, the first defendant has not addressed the evidence dealing with the deceased’s mental capacity at the time of the BDBN and instead has made a blanket assertion that because the deceased did not have capacity to enter into a will in October 2014, she must not have had capacity to nominate her de facto partner of many years as a beneficiary of her superannuation fund in August 2014. Fourth, the plaintiff has not been afforded the opportunity to lead evidence in respect of that issue and it would be procedurally unfair for the court to accept the first defendant’s submission. Fifth, the court has no evidence regarding the trust deed of the superannuation fund and hence is not in a position to determine whether the deceased’s superannuation benefit would have passed to the plaintiff, as her de facto partner of 25 years, if the BDBN was invalid. Sixth, is not clear whether the court has jurisdiction to determine the first defendant’s assertion given that superannuation issues are usually dealt with by the Superannuation Complaints Tribunal.

7. [97]

   In my view, it is too late for the first defendant to raise this issue now. The issues for determination at the hearing were defined by the pleadings and the submissions of the parties at the hearing and are recorded in the Judgment at [6]. Whether the deceased had validly nominated the plaintiff as the beneficiary of her superannuation benefit was not one of the issues raised by the pleadings, or by the parties in their submissions at the hearing. It would be contrary to s 56 of the CPA for it to be raised now.

8. [98]

   In addition, three further points should be made. First, the plaintiff was well and truly on notice that the deceased had made the BDBN as it was repeatedly mentioned in the plaintiff’s Calderbank offers referred to earlier and also in the joint schedule of the assets and liabilities of the estate tendered at the hearing (Ex K), which included it as an asset which might be considered notional estate. Notwithstanding this, the first defendant did not seek an order designating the superannuation benefit as notional estate under Part 3.3 of the Succession Act, or put in issue whether the BDBN was valid.

9. [99]

   Second, it does not follow from the findings in the Judgment that the deceased lacked the mental capacity to make the BDBN, which was signed several months before the 2014 will was made.

10. [100]

    Third, in so far as the submission recorded at [95] above is concerned, the absence of any evidence as to the rules of the REST Fund means that the court cannot determine the question whether the plaintiff was properly nominated as a dependant in the BDBN. However, it seems likely that he was. Under s 59(1A) of the Superannuation Industry (Supervision) Act 1993 (Cth) read with reg 6.17A of the Superannuation Industry (Supervision) Regulations 1994 (Cth), the governing rules of a superannuation entity may permit a member by notice to the trustee to make a binding death benefit nomination in favour of a person mentioned in the notice being the legal personal representative or a dependant or dependants. The term ‘dependant’ is defined in s 10 to include ‘the spouse of the person’ which in turn is defined to include a de facto spouse. It seems likely that the trust deed for the REST Fund followed this definition of ‘dependant’, as the BDBN identifies a spouse as a potential nominated beneficiary (and the plaintiff identified himself as such when he signed the form).

Issue 4: Rent from the McPherson St property

1. [101]

   The first defendant contends that order 10(d) of the orders made on 19 November 2024 needs to be supplemented by an additional order in respect of the entitlement to the rental proceeds of the McPherson St property which has accrued prior to the deceased’s death on 23 October 2015 (pre-death rent), which had not been apportioned and distributed, as between the plaintiff and the deceased, prior to that date. Reliance is placed on statements made by the plaintiff in his affidavit evidence that ‘the deceased’s notional half share of the net rent from the lease of the McPherson St property was being paid into St George Bank account BSB ### Account number ###8404’.

2. [102]

   The first defendant submitted that the combined effect of paragraphs [268] and [269] of the Judgment is that the net rental proceeds of the McPherson St property (that had accrued but not yet been apportioned, nor distributed, up until the date of the deceased’s death) are to be shared equally between the NSW Trustee and Guardian as administrator and the plaintiff. It is then submitted that 50% of the net rental proceeds that are payable by the plaintiff to the NSW Trustee and Guardian up until the deceased’s death are for the benefit of the first defendant is the person entitled to the residuary estate under the 1993 will.

3. [103]

   The plaintiff submits that the first defendant faces four issues regarding this claim for pre-death rent. First, any such claim is out of time, as the deceased died more than six years ago: Limitation Act, ss 14 and 63. Second, this issue was not the subject of pleadings, evidence or submissions and is also precluded by the principles of Anshun estoppel and abuse of process. Third, the first defendant faces an evidentiary issue as she has not established that the deceased’s share of the pre-death rent was not paid to, or used at the direction or for the benefit of, the deceased. Fourth, the first defendant has raised no principled basis on which the funds relating to the pre-death rent ought now to be apportioned in the manner she urges.

4. [104]

   In my view, the first defendant’s contention regarding the pre-death rent is misplaced for two reasons. First, this issue was not raised by the pleadings or by the parties in their submissions at the hearing. It is too late to raise it now.

5. [105]

   Second, in any event, the uncontested evidence of the plaintiff at the hearing reveals that the issue now sought to be raised simply does not arise. The evidence of the plaintiff (on which he was not cross-examined) regarding the treatment of the pre-death rent was that (1) prior to the discharge of the mortgage to Citibank over the McPherson St property, all the rent was paid to meet interest on the loan secured by the mortgage for which they were joint borrowers; (2) following the discharge of that mortgage the net rent was paid 50% to the plaintiff and 50% to the deceased until her death: see plaintiff’s affidavit sworn on 12 April 2019, paragraphs 173, 174 and 176. This is the evidence referred to in the last sentence of [268] of the Judgment. The evidence also establishes that the deceased had a number of bank accounts in her own name which subsequently became assets of the estate. The inference I draw from this evidence is that the deceased’s 50% share of the pre-death rent was applied for her benefit and, to the extent not so applied during her lifetime, became an asset of the estate on her death.

6. [106]

   The plaintiff also gave evidence (noted earlier) that following the deceased’s death he deposited the deceased’s 50% share of the net rent from the McPherson St property to the account with St George Bank referred to above, which was an asset of the estate.

7. [107]

   Accordingly, there is no basis in the evidence to suggest that the plaintiff has any obligation to account now to the estate for the deceased’s share of the pre-death rent, and hence this issue simply does not arise.

Conclusion

1. [108]

   For the above reasons the court will make the following orders: