Goulston v Bogasi Pty Ltd; Bogasi Pty Ltd v Sundell; Tamara Jane Goodwin as Administrator of the Estate of James Ralph Sundell v Bogasi Pty Ltd as Trustee for the James Ralph Sundell Trust (No 2)

The Court delivered its principal judgment on 29 August 2025: Goulston v Bogasi Pty Ltd; Bogasi Pty Ltd v Sundell; Tamara Jane Goodwin as Administrator of the Estate of James Ralph Sundell v Bogasi Pty Ltd as Trustee for the James Ralph Sundell Trust [2025] NSWSC 989. These reasons should be read, and assume familiarity, with the principal judgment. Defined terms in the principal judgment have the same meaning in these reasons.

Since the delivery of the principal judgment, the Court has made some orders to give effect to that judgment. That task continues. The Court made directions for a hearing to determine outstanding matters, in particular costs. This latter topic produced a further five volume court book and submissions of approximately 160 pages. The further costs hearing occupied a day and a half. The appearances for the parties were unchanged, with the exception of Mr Chapple SC being leading counsel for Kim after the appointment of Ms Needham SC (as her Honour then was) to the Federal Court of Australia.

The issues raised by the parties fell into three categories.

The first was several relatively straightforward or procedural issues which the Court resolved without reasons (and none were sought).

The second was several more substantive applications for which reasons were given ex tempore and are set out in what follows.

The third was an application by Bogasi on which the Court reserved its judgment, which is resolved in the final section of these reasons. Bogasi relied on the fact that its forensic efforts against Kim had resulted in the estate becoming entitled to the Elmach units. Its application was that it be indemnified by the Administrator for its costs against Kim, secured by an equitable lien over the Elmach units in the amount of those costs, relying on the decision of the High Court in Re Universal Distributing Company Ltd (in liq) (1933) 48 CLR 171; [1933] HCA 2. For the reasons set out below in [42] and following, the Court has determined that Bogasi should be indemnified from the estate as to 10% of its costs against Kim secured by an equitable charge on terms over the Elmach units.

Anne-Katrine seeks her costs from the estate of the 2019 proceedings concerning her claim to 20% of the Beecroft property. The fundamental premise of that argument is that the source of that dispute was the invalid Nomination and the dispute over the ownership of the Elmach units. For the reasons advanced in their written submissions by both Mr Cheshire SC and Mr Condon SC, I accept their submission that there is no causative connection that can be made out between that dispute and the dispute between Anne-Katrine and Elmach.

In my respectful view, their dispute had its origins in Anne-Katrine’s desire, about which I make no adverse comment, to sell the Beecroft property and move somewhere else. Who was the ultimate controller of Elmach as a trustee at that point is irrelevant to the question of what would have then happened, because the trustee (whoever it was or by whomever it was controlled) would clearly have had a duty to protect the asset which was perceived to be an Elmach trust asset, namely the 20% interest in the Beecroft property.

As I do not accept the fundamental premise of Anne-Katrine’s submission as to why the estate should pay those costs, that application is refused. By way of further explanation, I have taken into account Mr Byrne’s submission that there is an analogy available in the oft-cited decision of Powell J (as his Honour then was) in Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698 at 709 and the “exceptions” to the ordinary rule as to costs identified in that case in probate litigation. I describe them as “exceptions” for convenience. They are not in themselves general rules, but potential applications of the Court’s costs discretion in certain circumstances.

Mr Byrne candidly accepted that the first of those “exceptions”, namely that Jim was the cause of litigation, depended upon my acceptance of what I referred to as Anne-Katrine’s fundamental premise that the fight over the ownership of the Elmach units was the cause of the litigation between Anne-Katrine and Elmach. Because I do not accept that fundamental premise, even if I were otherwise disposed to the view that an analogy was available with the first “exception” in Hodges, it fails.

As a fallback, in support of an order that Anne-Katrine not be ordered to pay the costs of the Beecroft property proceedings, Mr Byrne also sought to invoke the second of the Hodges “exceptions”, being circumstances leading reasonably to an investigation in relation to the document propounded. I do not agree that somehow the debate over the Elmach units could be tied back in any way to the will. The only aspect of the will that was relevant to Anne-Katrine’s case, and upon which she was unsuccessful, was whether or not the provision in the will requiring the payout of mortgages was applicable to the 20% interest in the Beecroft property.

In those circumstances, I am unable to discern any basis upon which anything other than the usual consequences should follow in a case where Anne-Katrine has not succeeded in any of the relief which she sought and Elmach has succeeded in obtaining the relief which it sought in its cross-claim. In those circumstances, costs should follow the event and there will be an order that Anne-Katrine pay Elmach’s costs of the 2019 proceedings.

For the avoidance of doubt, and to the extent there is any issue, because of the fact that those proceedings were reconstituted to remove claims in relation to ownership of the Elmach units, the costs order which I make is confined to the dispute between Anne-Katrine and Elmach in relation to the Beecroft property and I make no order as to costs in those proceedings as to any of the matters that were excised from the pleading.

Having made an order that Anne-Katrine should pay Elmach’s costs, the remaining issue is an application by Elmach that those costs be on the indemnity basis from 24 September 2020, being the date until which a Calderbank offer dated 18 September 2020 was open for acceptance.

After setting out the basis for Elmach’s contentions (which the Court accepts were almost completely upheld by the Court) the offer concludes:

There are three reasons why the Court rejects Elmach’s application, bearing in mind the well-understood principles concerning Calderbank offers, which go to the Court’s discretion as to costs and do not have an automatic consequence.

The primary issue is whether Anne-Katrine’s failure to accept the offer was reasonable (or not unreasonable). The Court has concluded that it was reasonable (or not unreasonable) for two reasons.

First, as at September 2020, the proceedings were still in a relatively early stage. Pleadings may have closed, but there was a great deal of evidence yet to come. There was no hearing date. In those circumstances, the offer was only open for acceptance for four business days. In my view, that was too short.

Second, the offer included a sum of $250,000 for costs. I accept that there is no reason why a Calderbank offer should not be effective if it sets out a principal sum plus an amount for costs. However, the mere assertion of an amount for costs with nothing more would, in general terms, make it reasonable (or not unreasonable) for the recipient to reject the offer.

While there can be no general rule, in any case that I can think of it would be incumbent upon the offeror to provide some detail as to what costs it has incurred and how the amount it proposes has been determined. This is so that the offeree could come to an informed position about whether or not the amount for costs was reasonable and represented a compromise. For example, it was not apparent from the offer, and Anne-Katrine and her advisors would have had no idea, whether the $250,000 for costs was in effect a full indemnity or involved a substantial discount.

Either of the two matters to which I have referred is sufficient to render Anne-Katrine’s non-acceptance of the offer reasonable (or not unreasonable). The third reason for my conclusion is a more general, discretionary consideration.

As Mr Byrne pointed out in his submissions, as late as 15 September 2020, which was only shortly before the offer was sent, the evidence in the proceedings disclosed that Mr Wooldridge and Ms Francis undertook for Kim a detailed examination of the Sundell Group accounts in an endeavour to piece together how payment had in fact been made for the Beecroft property. While the ultimate outcome or the event was no different to that which was being sought in the 2019 First Cross-Claim at the time of the offer, the Court is very conscious that a great deal of evidence came on after this date. Had it been available at the time of the offer, it may have cast a significantly different forensic light on the litigation from Anne-Katrine’s point of view.

It seems to me that it would be quite unfair to visit the costs of the proceedings on an indemnity basis from 24 September 2020 on Anne-Katrine when so much more evidence came on after the date of the offer that had a real bearing on the outcome of the litigation in Elmach’s favour. For example, had she been aware of the detail of the case that was ultimately advanced by Elmach as to how the Beecroft property was paid for, a quite different risk assessment may have informed her decision.

For these reasons, I reject the application for indemnity costs. Elmach’s costs of the dispute in relation to the Beecroft property will be payable by Anne-Katrine on the ordinary basis.

Because the outcome of the 2022 proceedings was that the Court declared that it was not in a position to give judgment for a sum certain pending the resolution of set-offs and other issues, the costs for determination today are, for the avoidance of doubt, the costs of the 2022 proceedings up to and including today. There was no dispute that Kim should pay Bogasi’s costs of those proceedings. The issue was whether there should be a discount in relation to the outcome, given both the outcome and the way in which that outcome was achieved.

In my view, there should be a discount and I accept Mr Condon SC’s submission that if the Court were minded to make a discount, the appropriate discount would be 10%. The reasons for that are threefold. The first two are Mr Condon SC’s reasons, being to reflect Bogasi’s loss on the issues of set-off and interest.

More substantively, the third reason is that I consider that I should give some weight to, and reflect in the costs outcome, the fact that the parties sensibly resolved a significant issue in the proceedings. This involved an admission, albeit late, by Kim that he did owe a principal amount of some $13.9 million to Bogasi.

I put to the parties whether this was a case in which the principles in Re Minister for Immigration & Ethnic Affairs of the Commonwealth of Australia; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 should apply. I accept Mr Condon SC’s submission that those principles do not apply because there was in fact an event, and the Court has brought at least a significant part of the proceedings to an end by the declarations which I made earlier.

Nevertheless, it seems to me appropriate that by analogy with Lai Qin there be some reflection of the parties’ agreement, with the result that there would be no order as to their costs in respect of those matters that they ultimately resolved and upon which the Court did not have to adjudicate. In my opinion that outcome is also sufficiently represented by the discount of 10%. That is to say, Kim should not be required to pay 10% of Bogasi’s costs where, in addition to the matters on which Bogasi failed, some element of those costs is also attributable to the matter that was resolved.

For these reasons, Kim will be ordered to pay 90% of Bogasi’s costs of the 2022 proceedings.

On 26 September 2025, the Court made this order:

Bogasi’s entitlement to that order is not in dispute. However, it submits that Kim should not be allowed to propound what it described as the “defence” of just allowances because Kim had failed to plead it. The Court accepts Kim’s written submissions in reply as to why Bogasi’s submission fails, but expresses its conclusion by reference to these propositions.

First, with respect, the submission has an air of unreality. An account of profits generally occurs after the entitlement to an account has been established at trial and an election for an account has been made (for example, instead of advancing a claim for equitable damages or compensation). Irrespective of the question of election, Bogasi made no submission at the substantive hearing as to the mechanism of an account or what profits might be the subject of such an order.

The conclusion of Bogasi’s 210-page final written submissions in chief is instructive. After setting out tables of the distributions made to Kim referable to the Elmach units from 2003 to 2023 totalling just under $41,000,000, those submissions say:

There was no suggestion at that stage that any profits made on those distributions were also sought (as opposed to repayment of the distributions themselves), although the 2019 Third Cross-Claim includes “equitable compensation or an account of profits” among the relief sought and an account of profits is pleaded in various places. The entitlement to an account is denied in Kim’s defence to the 2019 Third Cross-Claim. I do not accept that Kim would, as a matter of pleading, have had an obligation to plead in the alternative that if there was such an entitlement to an account of profits, he would be claiming just allowances. Bogasi has not pointed to any pleading rule that would have that outcome. Nevertheless, it is incontrovertible that, in the events which have happened, Bogasi is entitled to an account of profits (for which, as with any return of the distributions and interest thereon, it would have to account to the estate).

Mr Condon SC has today clarified that the application for an account of profits is not intended to include the return to the Administrator of the distributions which Kim received in respect of the Elmach units, together with interest thereon. The precise amount which the Court will order in that regard will be the subject of further argument between the parties, because Kim has foreshadowed an argument that some equitable considerations would need to be brought to bear to reduce the amount that, on its face, Bogasi (or really the Administrator) is otherwise entitled to in respect of those distributions.

Second, the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) Pt 46 r 46.8 provides that, “In taking an account under a judgment, all just allowances must be made”. An example of just allowances being made in the case of a defaulting fiduciary in an account being taken by a judge (Brereton J as his Honour then was) is Torlonia v Wright (No 2) [2017] NSWSC 951 at [86].

Third, as the note to r 46.8 in Ritchie’s Uniform Civil Procedure (NSW) makes clear, “Claims for just allowances are usually left to be decided within the account-taking process”. Furthermore, the venerable, but nonetheless often still useful, AG Neville and AW Ashe, Neville & Ashe Equity Proceedings with Precedents (New South Wales) (1981, Butterworths), referring to the rule in identical terms under the Supreme Court Rules 1970 (NSW), says:

Fourth, to the extent it may be contended that an account of profits does not fall within Part 46 (a proposition I doubt – see r 46.1, and because an account of profits is no less an account), similar principles must necessarily apply in this case where Kim is a defaulting trustee or constructive trustee of funds to which he was never entitled: see the judgment of the plurality in Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18 at 561 to 562.

Fifth, it is at the taking of the account of profits that Bogasi will be able to rely on the various principles to which Mr Condon SC referred in address about just allowances, and which are conveniently set out in D Heydon, M Leeming and PG Turner, Meagher, Gummow and Lehane’s Equity: Doctrine & Remedies (5th ed, 2014, Lexis Nexis Butterworths) at [5-280], starting with the proposition that the onus will be on Kim to establish his entitlement to any just allowances. In that regard, I do not overlook Mr Condon SC’s submission about whether I could hear evidence from Kim on the accounting in the light of the adverse credit findings I have made. That is a matter that can only be determined when the scope of any dispute and the evidence to be relied upon is known, including the extent to which Kim’s state of mind will be further explored, as opposed to submissions being made on the basis of the evidence adduced at trial, albeit informed by the Court’s findings of fact.

For these reasons, the Court rejects the submission that on any account of profits (properly understood) Kim would not be entitled to assert a claim for just allowances.

The final issue was raised by Bogasi’s notice of motion filed on 10 October 2025 which sought:

The first prayer of the motion was ultimately not pressed.

As to the third prayer, the Court rejects that application. This is because there was no allegation of improper or unreasonable conduct on the part of the Administrator. To my observation, the Administrator played an entirely appropriate and carefully calibrated role throughout the proceedings. I assume that was necessitated, at least in part, by the fact that the Administrator was unfunded (a point made more than once during the hearing). In the absence of any specific challenge to particular conduct of the Administrator, the Court is satisfied that there is no basis on which to limit what is otherwise the Administrator’s entitlement to a full indemnity from the estate for her costs, charges and expenses, including her fees.

It was the second prayer of the motion to which most of the argument was directed.

Bogasi’s application, based either on the “salvage principle” set out in the decision of Dixon J (sitting alone hearing a reference to the High Court by the District Registrar at Canberra) in Universal Distributing or the general costs discretion of the Court, was that Bogasi be indemnified out of the estate for its costs in relation to the 2019 Third Cross-Claim and its defence of the 2019 Second Cross-Claim. This was put on the basis that, in relation to the Elmach units, Bogasi (as a residuary beneficiary) had sued on behalf of the estate and had succeeded in achieving a result where the Elmach units were held to be the property of the estate. The difference between the two bases advanced by Bogasi was that if Universal Distributing applied, Bogasi would be entitled to an equitable lien over the Elmach units securing its costs entitlement, and its interest would take precedence over all estate creditors including the Administrator. There was no question of a lien if the Court achieved a similar result in the exercise of its ordinary costs discretion.

On behalf of the Administrator, Mr Cheshire SC submitted that it was not correct to describe Bogasi as suing “on behalf of” the estate. This was not least because some of the allegations made by Bogasi were contrary to the interests of the estate. Furthermore, he argued that the Universal Distributing principle was confined to cases involving Court appointed officers such as liquidators or those appointed under contract such as receivers who had the task of realising property for the benefit of others. In the present case, Bogasi was primarily advancing its own case and, insofar as it contended for matters which benefitted the estate, it had done so at its own risk as to costs.

Most importantly, Mr Cheshire SC submitted that the result which Bogasi had obtained, being that the Elmach units were assets solely of the estate, was not an outcome for which Bogasi had contended. It was the result of the Court accepting one of the many arguments advanced by Bogasi, being as to the proper construction of the Declarations and the terms of the trust on which Kim held the Elmach units. Furthermore, insofar as Bogasi had asserted alternative trust arrangements in relation to the Elmach units, these were all in the context of urging the Court to accept that they were held in accordance with the Common Assumption, a matter on which Bogasi had failed.

These submissions were made good by analysis of Bogasi’s further amended statement of cross-claim in the 2019 Third Cross-Claim, by which it sought to establish that (references are to the paragraphs of that pleading):

In the course of argument, I raised with the parties that if the Court were to make an order of the kind sought by Bogasi, not all of Bogasi’s costs could properly be referrable to the outcome which it had in fact achieved (being an outcome which it had not specifically sought). I initially suggested an allowance of only one third of those costs and later a figure of 30%. Mr Condon SC submitted, if the Court adopted that line of reasoning, that an allowance of 50% would be appropriate. In supplementary written submissions in reply, and relying on the matters set out in [48] and [49] above, Mr Cheshire SC submitted only “in the region of” 10% should be allowed, but put further arguments as to why those costs should be seen as de minimis. He also drew attention to what he submitted were other inequities in the respective positions of Bogasi and the Administrator in relation to such costs, including that Bogasi already had a costs order against Kim, against whom the Administrator had no recourse in relation to the dispute over the Elmach units.

The starting point is Dixon J’s statement of the principle in Universal Distributing (at 174-175) (citations omitted):

The High Court further considered Universal Distributing in Stewart v ATCO Controls Pty Ltd (in liq) (2014) 252 CLR 307; [2014] HCA 15. Of importance for the present case, the judgment of the Court includes (citations omitted):

The next authority is the decision of the Court of Appeal in the Supreme Court of Victoria in Primary Securities Ltd v Willmott Forests Ltd (mgrs and recs apptd) (In Liq) (2016) 50 VR 752; [2016] VSCA 309. That decision establishes that the Universal Distributors principle will apply to an asset that has been got in, as much as it will to a fund that has been realised. Whelan and Santamaria JJA (Maxwell P agreeing) said (citations omitted):

Finally, in Thackray v Gunns Plantation Ltd [2011] VSC 380; (2011) 85 ACSR 144, Davies J (in a case concerning a receivership) said (citations omitted):

In my respectful opinion, the relevant propositions which emerge from the authorities considered in [51] to [54] above are:

Applied to the case at bar, the Court accepts Mr Condon SC’s submission that the estate cannot take the benefit of the Elmach units without indemnifying Bogasi (including by equitable charge) for its costs and expenses of having realised the outcome which has resulted in the estate becoming entitled to the Elmach units. However, provided that the basic principle of preventing inequity identified in paragraph [55(1)] above is given effect, the traditional flexibility of equity enables it to mould the terms of any indemnity and equitable charge to reflect the circumstances of the particular case.

In this case, bearing in mind that the charge will only extend to expenses incurred “exclusively” in realising the Elmach units for the benefit of the estate, the Court accepts Mr Cheshire SC’s submissions that an allowance of only 10% is appropriate. Bogasi succeeded only insofar as the Court accepted that on the proper construction of the Declarations (and hence of the trust on which Kim held the Elmach units) any valid Nomination could only be to Gunnar or a company within the Sundell Group. The relevant evidence for that conclusion was confined to the period prior to the making of the Consent Orders and did not include the substantial amount of evidence called in relation to whether the Nomination occurred and subsequent events.

Furthermore, insofar as the “surrounding circumstances” relevant to the construction of the Declarations was concerned, it was confined to the evidence of Kim, Jim and Mr Wooldridge as to how the relevant trusts were created and the general practice of the businesses of the Sundell Group being operated for the equal benefit of Jim and Gunnar (and their respective families). The Court accepts Mr Cheshire SC’s submission that what can be “exclusively” attributed to the basis on which Bogasi achieved the result it did is only a relatively confined and uncontroversial subset of the evidence.

I also consider that the Court should mould any relief to reflect these matters:

Taking into account all of the matters in [57] to [59] above, the Court has determined that there will be an order that the estate indemnify Bogasi for 10% of its costs of the 2019 Second Cross-Claim and the 2019 Third Cross-Claim to be secured by an equitable charge over the Elmach units upon the following terms:

If I am wrong about the application of the Universal Distributors principle to the present case, I would have made the following orders in discretionary exercise of the Court’s general costs jurisdiction (with the result that Bogasi would be an ordinary unsecured creditor of the estate for its costs):

Because Bogasi has enjoyed only limited success on the motion, it will be otherwise dismissed with no order as to costs. Any party wishing to be heard against this outcome should notify my Associate no later than 24 November 2025.

The parties will be given an opportunity to bring in further short minutes to give effect to these reasons.