Stojanovski v Stojanovski (No 3)

[2020] NSWSC 1540

Supreme Court

New South Wales

Medium Neutral Citation:

Stojanovski v Stojanovski (No 3) [2020] NSWSC 1540

Hearing dates:

11 and 12 August 2020

Date of orders:

2 November 2020

Decision date:

02 November 2020

Jurisdiction:

Equity

Before:

Robb J

Decision:

See par [309].

Catchwords:

COSTS — Party/Party — where there has been long and protracted litigation over many years — where there have been several amendments to the statement of claim — where parties have been joined to the proceedings at different times — where some parties were self-represented — where the plaintiff was made a representative of the deceased estate under r 7.10(2)(b) of the Uniform Civil Procedure Rules 2005 (NSW) — where, upon bankruptcy, trustees were appointed for a party — where parties had varying degrees of success between themselves — where several elements of the broader matter were resolved by various Justices of the Supreme Court of New South Wales — where there was associated proceedings in the Federal Court of Australia — where the Court makes bespoke orders as between the parties with reference to the relevant context — costs orders of different types made — final orders made

COSTS — Party/Party — Self represented litigant — What costs may be ordered

COSTS — Party/Party — Payable out of a fund — Deceased estate — where beneficiary sought an order under r 7.10(2)(b) of the Uniform Civil Procedure Rules 2005 (NSW) — where, in the circumstances, the representative of the deceased estate should not be granted indemnity costs out of the estate

COSTS — Party/Party — Orders when proceedings involve multiple parties — How parties liable

COSTS — Party/Party — Bases of quantification — Factors relevant to the court’s discretion when quantifying costs

COSTS — Party/Party — General rule that costs follow the event — Application of the rule and discretion

COSTS — Party/Party — Costs orders in interlocutory proceedings

Legislation Cited:

Bankruptcy Act 1966 (Cth)

Civil Procedure Act2005 (NSW)

Conveyancing Act 1919 (NSW)

Family Provision Act 1982 (NSW)

Income Tax Assessment Act 1997 (Cth)

Uniform Civil Procedure Rules 2005 (NSW)

Wills, Probate and Administration Act 1898 (NSW)

Cases Cited:

Almona Pty Ltd v Parklea Corporation Pty Ltd (No 4) [2020] NSWSC 553

Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304

Chen v Chan (No 2) [2009] VSCA 233

Daemar v Industrial Commission of New South Wales (No 2) (1990) 22 NSWLR 178

Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373

Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52; [2007] HCA 56

Foyster v Australia & New Zealand Banking Group Ltd [1999] NSWSC 300

His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Inc (No 2) [2007] NSWCA 142

James v Royal Bank of Scotland; McKeith v Royal Bank of Scotland (No 2) [2015] NSWSC 970

Kison v Papasian (1994) 61 SASR 567; [1994] SASC 4476

Nathan Elali (a bankrupt) v Mahrs [2013] NSWSC 1883

National Trustees Executors and Agency Company of Australasia Ltd v Barnes (1941) 64 CLR 268; [1941] HCA 3

Pegler v Dale (1975) 1 NSWLR 265

Re Diplock [1948] Ch 465

Re Estate Late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311

Re Estate of Hodges (deceased); Shorter v Hodges (1988) 14 NSWLR 698

Re Galtari Pty Ltd (in liq) [2018] NSWSC 917

Stojanovski v Stojanovski [2013] NSWSC 1491

Stojanovski v Stojanovski [2019] NSWSC 1713Thistlethwayte v Gender Estates Pty Ltd (1976) 8 ALR 700

Walton v Walton [2015] NSWSC 405

Texts Cited:

Halsbury’s Laws of Australia (2005, Online, LexisNexis Butterworths)

J R Martyn and N Caddick, Williams, Mortimer and Sunnucks, Executors, Administrators and Probate (20th ed, 2013, Sweet & Maxwell)

G E Dal Pont, Law of Costs (4th ed, 2018, LexisNexis Butterworths)

Ritchie’s Uniform Civil Procedure NSW (2005, Looseleaf, LexisNexis Butterworths)

Category:

Costs

Parties:

Steven Stojanovski (plaintiff)
Robert Stojanovski (first defendant)
Jovanka Stojanovski (second defendant)
Jordan Stojanovski (third defendant)
Angelina Stojanovski (fourth defendant/cross-defendant)
Fabian Kane Micheletto (fifth defendant/first cross-claimant)
Michael Carrafa (sixth defendant/second cross-claimant)

Representation:

Counsel: B Coles QC / C Bevan (plaintiff)
J Stojanovska (self) (second defendant)
A Fernon (fourth defendant / cross-defendant)
S Golledge SC (fifth and sixth defendants / first and second cross-claimants)

Solicitors: One Group Legal (plaintiff)
ICL Lawyers (fourth defendant / cross-defendant)
Polczynski Robinson (fifth and sixth defendants / first and second cross-claimants)

File Number(s):

2012 / 89349

Judgment

Introduction

1. The Court published its reasons for judgment in these proceedings after a long and interrupted hearing on 4 December 2019: Stojanovski v Stojanovski [2019] NSWSC 1713 (the primary judgment).

2. A further hearing took place on 11 and 12 August 2020 in relation to the substantive orders, and orders for costs, that should be made to give effect to the primary judgment.

3. Steven and the Trustees made their submissions by reference to separate proposed short minutes of order that they provided to the Court. Angelina substantially agreed with the Trustees’ proposed orders, although she proposed a number of changes. Although Robert and Jovanka did not participate in the hearing, they provided submissions to the Court.

4. There was a measure of agreement between the parties concerning the orders to be made. Where I set out orders below as orders that have been agreed, I will adopt the substance of those orders but formulate them in my own wording. I will number serially the orders that I will make, and give temporary identification numbers for the other orders proposed by the parties, using the first letters of their names and a number, in order to assist in the explanation of my response to the proposals.

5. These reasons will assume a familiarity with the reasons in the primary judgment. That is an important assumption, as the issues in the primary judgment required the Court to undertake a comprehensive analysis of the history of these and related proceedings, the circumstances in which the parties have incurred legal costs, and the orders that have already been made in respect of those costs. The issues that are relevant to the determination of the proper costs orders have already been considered extensively in the primary judgment. Repetition of that discussion would lead to excessive complexity. I will, where appropriate, include references to relevant paragraphs in the primary judgment. I will also use the same abbreviations that were used in the primary judgment.

Order permitting Steven to represent Nada’s estate

6. Steven sought an order appointing Steven to represent Nada’s estate for the purpose of enforcing the testamentary agreement between Nada and Robert that Robert would transfer his interest in Breakwell to Steven: as to the terms of the testamentary agreement see [34], and the reference to the testamentary agreement in clause 4 of Nada’s will: see [28].

7. Steven required this appointment because he ultimately conducted his case on the basis that Nada and Robert were the parties to the testamentary agreement, and Steven was not.

8. The defendants did not oppose the appointment, although Angelina and the Trustees opposed Steven’s claim for an order that he be paid his costs of the proceedings out of Breakwell on the basis that it was a recoverable part of Nada’s estate. I will deal with this cost claim below.

9. The circumstances in which the Court will make an order appointing Steven to represent the estate of Nada for the purpose of enforcing the testamentary agreement against Robert are arguably irregular. Care should be taken in using the fact that the Court will make the order in this case as a precedent. As is stated in Ritchie’s Uniform Civil Procedure NSW (2005, Looseleaf, LexisNexis Butterworths) at [7.10.10]: “… However, proceedings must be on foot and no appointment should be made if the deceased has a disinterested executor or administrator…”

10. There are special features of the present proceedings that commended to the parties the desirability of Steven being appointed to represent Nada’s estate, for the limited purpose of enforcing the testamentary agreement against Robert. First, in the initial part of the hearing, the parties substantially completed the testamentary agreement claim. Steven had not focused on the issue whether he was seeking to enforce his own rights or rights that resided in Nada’s estate. Robert had raised no objection to Steven prosecuting the claim. When Angelina took over the opposition to the claim at the beginning of the first hearing, she also made no objection. The Court had been told that the executor, Jordan, was incapable of prosecuting the claim. There was no formal evidence of this fact. Given the otherwise parlous circumstances of these proceedings, it would have involved an inordinate cost for the Court to have revoked the grant of probate to Jordan and appointed a new administrator to conduct the testamentary agreement claim on behalf of the estate.

11. At some stage after the end of the first hearing, I raised the possibility that procedural irregularities might be corrected by the appointment of Steven to represent Nada’s estate.

12. The matter was raised at a directions hearing that took place on 9 May 2019 under some time pressure. Steven and the Trustees were represented by counsel, as Robert had been made bankrupt. Angelina represented herself.

13. Prior to the hearing, Steven had submitted draft short minutes of order that included an order appointing Steven to represent Nada’s estate. The Trustees now had the primary interest in preserving Robert’s bankrupt estate. However, they did not oppose the enforcement of the testamentary agreement, and have at all times consented to orders to that effect being made by the Court. Only Angelina opposed the enforcement of the testamentary agreement. Consequently, in par 1.1 of the Trustees’ written submissions relevant to the directions hearing, the Trustees said that they “raise no issue as to Steven’s standing to bring that claim in effect on behalf of the estate”.

14. During the course of the directions hearing, at T 10.11, I stated that I was minded to make an appointment of Steven under Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 7.10(2)(b). However, as Angelina was not represented, I made an order directing Angelina to inform the other parties and my Associate by 14 May 2019 as to whether she opposed the making of the orders in the form of the short minutes of order provided to the Court, which included the appointment order.

15. As it happened, however, Angelina sent an email to my Associate on 14 May 2019, in which she made various suggestions concerning the appropriate terms of the short minutes of order, but omitted to give any response in relation to the appointment of Steven as the representative of Nada’s estate.

16. As the Trustees had indicated their consent to the order being made, arguably Angelina had no standing to oppose the order. However, for reasons of caution I gave Angelina the opportunity to contest the order. It is difficult to be sure, but it appears that the reason why no order was formally made was that Angelina’s email did not deal with the subject, and no other party raised with the Court the need to formally make the order.

17. Be that as it may, both Angelina and the Trustees now consent to the order being made. The consequence is that there is no opposition from the parties who now represent the only beneficiaries to Nada’s estate to the representation order being made. Those parties are also the only parties to the proceedings to enforce the testamentary agreement. Those circumstances, in my view, provide an adequate cure for what otherwise may have been irregularities in the appointment of Steven to represent Nada’s estate.

18. The Court will therefore make the following order:

1. Pursuant to Rule 7.10(2)(b) of the Uniform Civil Procedure Rules 2005 (NSW), the plaintiff is appointed as the representative of the estate of Nada Stojanovski for the purpose of seeking the relief in prayers 6, 9A and 9B of the relief claimed in the fifth further amended statement of claim.

   19. It should be noted that the order that the parties agreed to contained the words “for the purpose of seeking the relief in prayer 6”. Prayer 6 is only the claim for an order that Steven be appointed to represent the estate for the purpose of enforcing the testamentary agreement. Prayers 9A and 9B are the prayers by which Steven sought to enforce the testamentary agreement. I consider that an order that in these terms is adequate even though the Trustees did not act to become registered proprietors of Robert’s interest in Breakwell.

Orders for enforcement of the testamentary agreement

20. I found in the primary judgment that Steven is entitled to have Robert’s half interest in Jersey transferred to him by way of enforcement of the testamentary agreement.

21. As the Trustees explained in their submissions, although the effect of the sequestration order made in respect of Robert’s bankrupt estate was to transfer all of Robert’s property to the Trustees, the Trustees have accepted Steven’s entitlement to Jersey, and accordingly they have not taken steps to become registered as proprietors of Jersey. Robert remains the registered proprietor. Accordingly, the order for the transfer to Steven of Robert’s interest in Jersey must be made against Robert. I will make the following orders (the formal orders made by the Court will include correct title details for all properties the subject of orders):

1. Order the first defendant within 35 days of the making of this order to deliver to the solicitors for the plaintiff a duly executed memorandum of transfer in registrable form transferring his estate or interest in [Jersey] together with the certificate of title in respect of [Jersey] or an executed application for the issue of a replacement certificate of title in registrable form and a signed withdrawal of caveat in registrable form of caveat AH204795.

2. If the first defendant fails to comply with Order 2, then, upon receipt of an affidavit from the solicitor for the plaintiff proving such non-compliance, and pursuant to section 94 of the Civil Procedure Act 2005 (NSW), the Registrar of the Court or a Deputy Registrar may execute any or all of the transfer, the application and the withdrawal of caveat referred to in Order 2 for and on behalf of the first defendant and provide the executed document or documents to the solicitor for the plaintiff.

3. Order the fifth and sixth defendants within 35 days of the making of this order to deliver to the solicitors for the plaintiff a withdrawal of caveat in registrable form of caveat AM680687.

Proposed order concerning the legal effect of Order 2

22. Steven sought a declaration to determine the legal effect of the testamentary agreement and the implementation of Order 2 that gives effect to that agreement, which, if made, would be in the following terms:

S1.   Declaration that the testamentary agreement made on 3 January 2006 takes effect and operates as a codicil to the will of the deceased dated 3 January 2006.

23. This order was not sought in Steven’s fifth further amended statement of claim.

24. Steven explained the rationale for this order in pars 2 and 3 of his revised outline of argument in reply. The explanation was given by reference to attached extracts from the Income Tax Assessment Act 1997 (Cth) (the ITAA97).

25. Steven submitted that this order was appropriate to enable Robert to avoid incurring a large capital gains tax (CGT) liability, as transferor, on his transfer of his half interest in Jersey, as at the date of Nada’s death, which was said to be the date when the testamentary agreement took effect.

26. Notwithstanding that Steven submitted that, as Robert’s liability to pay CGT will have arisen before he became bankrupt, the liability would be a debt of his bankrupt estate, the Trustees did not ask the Court to make this order, and indeed no mention is made of it in the Trustees’ proposed orders or in their submissions. Consequently, the Trustees have neither supported Steven’s application nor contradicted it.

27. The absence of a contradictor is significant, as I found Steven’s argument in favour of the need for the order obscure, insofar as the need was said to be derived from the application of the ITAA97.

28. I accept that the conceptual relationship between Nada’s will and the testamentary agreement is obscure, as a matter of the operation of the principles of the law of succession. The testamentary agreement took the form of a present declaration and gift of Robert’s share in Jersey to Steven. Clause 4 of Nada’s will, insofar as it dealt with Jersey, was expressed as a distribution by Nada of Jersey to Steven, with the distribution explained in the following terms:

… [This property is currently under three (3) names, namely [Nada, Robert and Steven]]. In line with my wishes [Robert] is to transfer his share in this property to his brother [Steven].

29. Although, at the hearing, Robert argued that he was not obliged by the testamentary agreement to transfer his half interest in Jersey to Steven, he did not put his claim on any basis that depended upon the legal inter-relationship between the testamentary agreement and the will. That inter-relationship was not the subject of submissions.

30. On the issue of whether the testamentary agreement had a legal effect within or outside Nada’s will, in the latter case having the essential nature of a contractual obligation, it is at least clear that it was not a valid codicil. The combined effect of ss 3 and 7 of the Wills, Probate and Administration Act 1898 (NSW), as they applied at the date of Nada’s death, have the clear effect that the testamentary agreement was not a testamentary instrument and was not formally part of Nada’s will.

31. It is not necessary for the Court to decide the question whether, for the purposes of the ITAA97, in respect of the imposition of liability for CGT, the peculiar wording of clause 4 of Nada’s will should be taken to have the legal effect that Nada’s interest in Jersey should be treated as having passed to Steven as a beneficiary of Nada’s estate. At the date of Nada’s death, Nada, Robert and Steven owned Jersey as joint tenants (see [13]), so that half of Nada’s interest passed to each of Robert and Steven by survivorship. The transfer of Robert’s own one third share was never the transfer of property of Nada. That one third could only have been transferred to Steven under the testamentary agreement, and not Nada’s will. It is at best an obscure question as to whether any part of the share originally owned by Nada in Jersey could be said to have passed to Steven under her will, and no part of Robert’s share could strictly have done so. It would seem that s 128.50 of the ITAA97 will govern the CGT consequences of the transfer of Nada’s interest in Jersey by survivorship in any event.

32. However, the reason why it is not necessary for the Court to decide this question is that the only reason for the Court to be asked to make the order sought by Steven is to declare the legal effect of a transaction for the purpose of the application of the CGT provisions of the ITAA97. The order sought has no other proper purpose. The Commissioner for Taxation has an interest in this question. If the declaration sought is made, it will not bind the Commissioner as the Commissioner has not been made a party to the proceedings: see John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19.

33. It is perplexing why Steven has proposed this order on the asserted basis that it is intended to benefit Robert. It may be wondered whether the intent of the order was to increase the cost base of Robert’s half interest in Jersey in Steven’s hands. It is not necessary for the Court to resolve that question.

29. The Court will not make the order sought by Steven.

Orders to give effect to Nada’s will

35. Clause 4 of Nada’s will included a gift of the whole of Nada’s interest in George to Steven.

36. For reasons that have not been explained, Jordan, as executor of Nada’s estate, has never transferred George to Steven, and Steven has not taken any steps to ensure that the transfer occurred at a much earlier time, even though Steven has at all times since Jordan was granted probate of Nada’s will had an unquestionable right to the transfer.

37. The parties have agreed that it should not be necessary for Steven to proceed with his application for a recall of the grant of probate to Jordan, and for the grant of letters of administration with Nada’s will annexed to an appropriate, independent administrator. That would be unduly expensive and should be unnecessary given that the administration of Nada’s estate is almost complete. It is likely that the administration may suitably be completed by means of appropriate orders made by the Court. Against the possibility that there may be outstanding issues, the parties will be given leave to apply to the Court for any orders necessary to complete the administration of the estate.

38. Consequently, the parties agree that the following orders should be made for the purpose of causing the title to George to be transferred to Steven:

1. Order the third defendant within 21 days of the making of this order to deliver to the solicitors for the plaintiff a duly executed memorandum of transfer in registrable form transferring his estate or interest in [George] as executor of the estate of the late Nada Stojanovski together with the certificate of title in respect of [George] or an executed application for the issue of a replacement certificate of title in registrable form.

2. If the third defendant fails to comply with Order 5, then, upon receipt of an affidavit from the solicitor for the plaintiff proving such non-compliance, and pursuant to section 94 of the Civil Procedure Act 2005 (NSW), the Registrar of the Court or a Deputy Registrar may execute any or all of the transfer and the application referred to in Order 5 for and on behalf of the third defendant and provide the executed document or documents to the solicitor for the plaintiff.

3. Grant leave to any party with an interest in the administration of the estate of the late Nada Stojanovski to apply to Robb J or the Duty Judge in Equity on seven days’ notice for any relief necessary for the proper administration of the estate.

Orders for the removal of caveats

39. Steven did not seek or obtain orders establishing the interests in Breakwell and Kemp that were the subject of the further caveats that Slattery J gave Steven permission to lodge: see [274]. Consequently, orders should now be made for the withdrawal of those caveats. The Court will make the following orders:

1. Order the plaintiff within 21 days of the making of this order to deliver to the solicitors for such of the fourth to sixth defendants who have an interest in the properties referred to in this order:

(a)   a withdrawal of caveat in registrable form in respect of caveat A183445 lodged by him on the title to [Breakwell]; and

(b)   a withdrawal of caveat in registrable form in respect of caveat A183444 lodged by him on the title to [Kemp].

1. If the plaintiff fails to comply with Order 8, then, upon receipt of an affidavit from the solicitor for the fourth or the fifth and sixth defendants proving such non-compliance, and pursuant to section 94 of the Civil Procedure Act 2005 (NSW), the Registrar of the Court or a Deputy Registrar may execute the withdrawal of caveats for Breakwell and Kemp referred to in Order 8 for and on behalf of the plaintiff and provide the executed withdrawal form for the solicitors for the fourth and the fifth and sixth defendants.

Orders in respect of Steven’s family provision claim

40. Steven failed in his claim against Jordan as executor of Nada’s estate for further family provision. Steven succeeded in his application for leave to make his family provision claim out of time.

41. The parties agree that the following further orders should therefore be made:

1. The plaintiff is granted leave to make an application for provision pursuant to s 7 of the Family Provision Act 1982 (NSW) outside of the time prescribed pursuant to s 16 of that Act.

2. The plaintiffs’ claims in the fifth further amended statement of claim against the defendants are, subject to orders 1 to 10 hereof, otherwise dismissed.

Steven’s claim for costs

42. Steven proposed that the Court make the following costs orders:

S2.   The plaintiff’s costs of enforcing the testamentary agreement on behalf of the estate be paid on the indemnity basis out of that part of the estate represented by the deceased’s interest in fee simple in [Breakwell] (the plaintiff’s indemnity for his costs out of the estate).

S3. Without prejudice to the plaintiff’s indemnity for his costs out of the estate, order that the plaintiff’s costs of these proceedings, as assessed on the ordinary basis:

(a)   incurred before the making of a sequestration order against the estate of the first defendant on 30 June 2017 be paid by the first defendant (that is, be paid as a post-bankruptcy debt which is not a provable debt of his current bankrupt estate but which is nonetheless payable out of his estate after his discharge from, or annulment of, his bankruptcy) and the fourth defendant jointly; and

(b)   incurred on and from 30 June 2017, be paid by the fourth defendant.

S4.   The costs of these proceedings of the fifth and sixth defendants be paid out of that part of the estate represented by the deceased’s interest in fee simple at the date of her death in [Breakwell] on the ordinary basis.

43. In Steven’s revised draft short minutes of order he included orders that would give practical effect to his claimed entitlement to have his costs of the testamentary agreement claim paid out of Breakwell on the indemnity basis. By order 8, Angelina and the Trustees would be required to transfer their interests in Breakwell to the Trustees. In default, order 9 would authorise the Registrar in Equity to execute appropriate transfers. Order 10 would require Steven to withdraw the caveats against the titles to Breakwell and Kemp authorised by Slattery J. Order 11 would have required the Trustees to sell Breakwell by public auction, and to apply the proceeds of sale for a number of purposes, including the payment of Steven’s costs of the testamentary agreement claim on the indemnity basis.

44. If the Court declines to make order S2, the need to make these consequential orders will not arise.

Costs order against Robert and Angelina personally

45. It will be convenient to deal with proposed order S3, Steven's claim for costs against Robert and Angelina personally first. That will provide a proper background for the consideration of the claim in proposed order S2 that Steven's costs of the testamentary agreement claim be paid out of Breakwell. I will defer the consideration of proposed order S4, until I deal with the Trustees' claim for costs.

46. Robert did not make any submission in response to this claim by Steven, as he only sought an order that Steven pay his costs of the part of these proceedings that was determined by Pembroke J.

47. Angelina accepted that Steven was entitled to an order for his costs personally on the basis that costs should follow the event: see UCPR r 42.1. By proposed order S3, Steven claims that Angelina should be liable for the whole of his costs jointly with Robert up to 30 June 2017, which was the commencement of Robert's bankruptcy, and then Angelina should solely be liable for Steven's costs thereafter. As I understand Angelina's position, she accepted that she should be liable personally for Steven's costs from the first day of the first stage of the hearing, being 28 November 2017. That is the time when counsel for Robert was given leave to withdraw as counsel for Robert and to continue as counsel for Angelina. I do not understand Angelina to have accepted liability for Steven's costs before that date.

Order against Robert

48. As will be seen, Angelina's position was that Steven should be ordered to pay her costs of defending the family provision claim, and, as the litigious effort required for that claim was substantially greater than was required for the testamentary agreement claim, the proper course was for the Court to make a single costs order as between Steven and Angelina, being that Steven should pay 85% of Angelina's costs on the ordinary basis.

49. The Court will make an order against Robert personally that he pay Steven's costs of the part of these proceedings that is identified below on the ordinary basis. As Steven only introduced a claim to enforce the testamentary agreement when the second further amended statement of claim was filed on 7 April 2014, Robert's liability for the costs of the testamentary agreement claim could only run from that date: [288], [292]. Robert's liability for Steven's costs will cease on the commencement of his bankruptcy. As will be seen, the Trustees admitted Steven's entitlement to the benefit of the testamentary agreement. It is agreed by the parties that Steven will not be entitled to enforce this costs judgment by submitting a proof in Robert's bankruptcy, but the order will be enforceable after Robert's discharge: see Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52; [2007] HCA 56.

50. As, for reasons that will be given below, I propose to make separate costs orders for and against Steven on the one hand and Robert and Angelina on the other, the Court will make the following order against Robert:

12. Order the first defendant to pay the plaintiff's costs of the testamentary agreement claim incurred between 7 April 2014 and 30 June 2017 on the ordinary basis.

Order against Angelina

51. The first question in relation to the costs order to be made against Angelina is as to when Angelina's joint liability with Robert should commence. As mentioned, Steven introduced his claim to enforce the testamentary agreement in the second further amended statement of claim on 7 April 2014. The relevant facts were pleaded in pars 2C, 2CA and 4BA(a). In her defence filed on 3 December 2015, which was actually filed in response to the third further amended statement of claim, Angelina denied the first two of these allegations and admitted the third. However, notwithstanding this response to Steven's allegations of fact concerning his testamentary agreement claim, Steven sought no relief against Angelina in respect of that claim, and has only done so in relation to the costs of the proceedings.

52. Angelina did not make herself liable with Robert for Steven's costs of his testamentary agreement claim merely by pleading a response to his allegations of fact, in circumstances where no relief was sought against her. Angelina only became liable for Steven's costs on 28 November 2016, when she de facto took over the defence of Steven's claims against Robert. The order against her for Steven's costs will commence at that date.

53. It may be noted that, insofar as Steven seeks, by proposed order S2, that his costs of the testamentary agreement claim be paid out of Breakwell, Angelina is a half owner of Breakwell with the Trustees. Even if order S2 is not made, Steven will be able to execute his personal costs order against Angelina's share in Breakwell. That is subject to any set off for costs that Angelina may have for a cost order made in her favour, and the possibility that the Court will make a single costs order of the form sought by Angelina.

Steven’s costs of the family provision claim

54. Steven claimed, by proposed order S3, that Robert and Angelina pay "the plaintiff's costs of these proceedings". By these words, Steven sought to recover his costs of both the testamentary agreement claim and the family agreement claim from Robert and Angelina, notwithstanding that he only succeeded on the first claim and he failed on the second.

55. Steven justified this claim by starting with the observation made by the Court at [56] that the two claims were "intertwined". That was true, in the sense that, although the subject matter and the evidence required for each claim was quite different, success or failure by Steven on the testamentary agreement claim had a logical impact on the prospects of his success on the family provision claim. In short, if Steven prevailed on the family provision claim, then the combined effect of Nada's will and the testamentary agreement would be approximate parity in the value of the property owned by Steven and Robert. As a consideration of all of the evidence customarily relevant in family provision claims to the need for maintenance by both brothers showed that their positions were equally parlous, it would be unlikely that the Court would make a family provision order that significantly disadvantaged Robert over Steven. If, however, the testamentary agreement claim failed, then Steven's financial position would have been significantly worse than that of Robert. There would be a commensurate increase in the likelihood that the Court would make a substantial family provision order in favour of Steven. That likelihood would be enhanced because the result would then achieve the apparent testamentary objective of Nada.

56. Steven relied upon the principle commonly applied that, where a plaintiff succeeds in obtaining a verdict, the Court will treat that success as the event for the purpose of the application of UCPR r 42.1, and award the plaintiff the whole of the plaintiff's costs, notwithstanding that the plaintiff may have failed on some issues in the proceedings. The Court will usually not attempt to differentiate between the particular issues on which the plaintiff succeeded and those on which the plaintiff failed: see Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 (Elite) at [6]; Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 (Bostik) at [38]; and Chen v Chan (No 2) [2009] VSCA 233 (Chen) at [10(1)].

57. I have previously considered the relevant legal principles in Almona Pty Ltd v Parklea Corporation Pty Ltd (No 4) [2020] NSWSC 553 (Almona No 4) in the following terms, after having stated the common approach referred to in the previous paragraph:

1. However, there is no rule to this effect that governs the proper exercise of the Court's discretion, and the approach that the Court should adopt depends upon the circumstances of the particular case, viewed against the wide discretionary powers of the Court: see Elite at [8]; Bostik at [38] and Chen at [10(2)]. As was said in the last-mentioned case, "…the Court is entitled to examine the realities of the case and will attempt to do 'substantial justice' as between the parties on the matter of costs".

2. Where the court determines that substantial justice between the parties requires the making of an order that apportions costs "then it does so primarily as 'a matter of impression and evaluation', rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter": see Chen at [10(5)].

3. The value, in money terms, of the issues upon which the parties succeed and fail generally carry little weight per se in the process of apportionment: Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (No 2) [2019] NSWCA 173 (Gujarat) at [14], [15]. That is because the costs of the parties in litigating particular issues are not necessarily proportional to the value in money terms of the issues.

4. In complex cases, to avoid difficult and expensive assessments of costs, it is often appropriate to make a fractional order in respect of the total of the costs incurred by a successful party on an issue, where the court has decided that it is appropriate to treat the costs of a particular issue differentially: see Butcher v Lachlan Elder Realty Pty Ltd (2002) 55 NSWLR 558; [2002] NSWCA 237 (Butcher) at [95]. It is not usually appropriate, and it is often not possible, for the Court to engage in a minute analysis of the evidence bearing upon issues for which particular parties have succeeded and failed.

5. The Court does not usually differentiate between issues on which a successful party has succeeded and those on which it has failed "unless a particular issue or group of issues is clearly dominant or separable": see James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 (Surf Road) at [34]; Elite at [6]; and Bostik at [38]. Separable issues are not restricted to separate claims, such as causes of action, but may relate to any disputed question of fact or law before a court on which a party succeeds or fails.

…

1. In Sabah Yazgi v Permanent Custodians Ltd (No 2) [2007] NSWCA 306, Beazley, Ipp and Tobias JJA said:

   [24] … In the case where there are multiple issues litigated, the court may, in the exercise of its discretion, order that a successful party have part only of its costs. However, it does not necessarily follow that that is the appropriate order. The commencing position is that costs follow the event so that a successful party is entitled to costs. It may be appropriate to order that a successful party be deprived of costs or a portion of the costs if the matters upon which that party is unsuccessful took up a significant part of the trial, either by way of evidence or argument. This proposition is well established and does not require any discussion of the caselaw, which is conveniently contained in the annotations to r 42.1 in Ritchie’s Uniform Civil Procedure (NSW): paras 42.1.5; 42.1.10; 42.1.15.

2. This proposition was restated in Elite at [7], Bostik at [38], and Chen at [10(3)].

3. It may be accepted that the Court of Appeal in Sabah, Elite and Bostik expressed the practice as if it was the one to be followed in cases where it was thought fit to deprive the successful party of the whole of its costs; although in Chen, the Victorian Court of Appeal prefaced the statement of the practice with the word "generally".

4. Parklea and SAP responded to this submission by relying upon authorities in which the courts appear to have recognised that the successful party should have part of its costs, but the overall position as to costs should be determined on the basis that the successful party should pay some part of the unsuccessful party's costs, by reference to the issues upon which the successful party failed: see Butcher at [94], Surf Road at [33] and Pacific General Securities Ltd v Soliman & Sons Pty Ltd [2006] NSWSC 724 per Brereton J (as his Honour then was) at [10]. It should be noted, in relation to Butcher, that the case may be exceptional, as the issue upon which the successful party failed was an allegation of fraud, and Handley JA referred at [92] to a rule of practice that, in such a case, a party whose claim of fraud fails should pay the other party’s costs.

5. I would add that in James v Royal Bank of Scotland; McKeith v Royal Bank of Scotland (No 2) [2015] NSWSC 970 (James), McDougall J made costs orders that required the defendants to pay the costs of one of the plaintiffs of issues on which that plaintiff had succeeded, but ordered that plaintiff to pay the defendants’ costs of a claim raised by the plaintiff that failed. His Honour noted at [72] that, as to the different claims raised by the relevant plaintiff: “They were cumulative claims, rather than alternative claims aimed at recovering the one amount of damages”. His Honour continued:

   [73] The claims were not entirely separate and distinct, because some of the evidence was capable of application to both. Nonetheless, in my view, this case stands outside the ordinary run of cases. I do not think that anything further is needed to trigger consideration of what, in the facts of this case, the interests of justice require by way of costs order.

1. After considering the circumstances of the case before him, McDougall J reached the following conclusion:

   [108] In those circumstances, simply to order that Mr James receive only a stated percentage of his costs would not do complete justice to the defendants. First, it would not compensate them for their own outlay on this part of the case. Second, it would not reflect that they had succeeded on the very question of fact that Mr James had declined to admit. Thus, in my view, one way of doing substantial justice, but doing it by way of apportionment rather than assessment, would be to give Mr James significantly less than that stated percentage of his overall costs.

2. The authorities do not sustain Almona’s submission that the Court always applies a practice that, where a plaintiff achieves substantial success but fails on a number of issues, the proper costs order is always to reduce the costs payable by the defendant to the plaintiff by an appropriate proportion, and to leave the defendant to bear its own costs.

3. Of course, it is usual to order that the costs orders made in favour of the different parties may be set off against each other, as McDougall J did in James. The net result of this process may be that, at the end of the day, only one of the parties actually receives a proportion of the costs incurred by that party.

4. I consider that the following extracts on this subject from Dal Pont accurately capture the nuances of this difficult area of practice (footnotes omitted).

5. The first extract is of assistance in the determination of what is meant by the ‘event’:

   [8.4] Consistent with the foregoing, authority supports the proposition that, pursuant to the ‘rule’ that ‘costs follow the event’, ‘prima facie the costs of the proceedings should follow the verdicts on the issues’. Costs may therefore be awarded in the same manner as if separate actions had been brought in respect of each cause of action or issue. So a party may be entitled to the costs of an issue on which he or she has succeeded, even though the general costs of the cause may follow the judgment. Indeed, it has been judicially remarked that ‘[t]he days when a plaintiff could, with impunity, mount an attack on several fronts, some with little prospect of victory, in the hope of a direct hit and the recovery of all costs must be put behind us’.

6. The learned author then considers the problems involved in dealing with the relative success of parties who fail and succeed on different issues in the following terms:

   [8.5] In giving effect to the relative success of each party on the various issues between them, a court may opt to tally the ‘wins and losses’ on issues, and make an award of costs both for and against each party to this end. This may be realistic if a party has simply failed or succeeded on one or more severable issues…

   Yet outside of the discrete or several issue scenario, such an approach has an air of potential artificiality – which explains at least in part why many judges have expressed reticence to do so – and is unlikely to be conducive to simplicity in framing a costs order…

   The more usual approach, described as ‘a pragmatic approach’, is to order a proportion of costs in favour of one of the parties (or, if the court finds the issues are evenly balanced, make no order as to costs). Although imprecise, an intelligently made apportionment of costs may generate an outcome no less fair than an issue-by-issue approach. Yet judicial reticence to pursue an issue-by-issue costs allocation cannot be a cloak for injustice; as fairness underscores costs orders, if an issue-by-issue approach will produce a result that is fairer than an alternative, it will be applied.

   [8.6] This does not, however, address whether a party who has failed on an issue should, in accordance with the general costs rule, be ordered to pay the costs of his or her opponent on that issue, or merely be deprived of his or her own costs in respect of it (thus leaving the opponent to bear his or her own costs on that issue). Again the matter is governed by the court’s discretion, its exercise directed to ensuring, as much as possible, that the outcome accords with the justice of the case. Yet, at least where the party who proves ultimately successful neither improperly nor unreasonably raised the issues nor made the allegations on which he or she has failed, he or she will not, as a general rule, be ordered to pay any part of the unsuccessful party’s costs. Similarly, as a general principle and starting point, ‘an applicant who relies on different legal rules in pursuit of a single outcome, and who achieves that outcome, should not have his or her entitlement to costs qualified by reference to the rules under which his or her case was not successful’…

   58. Steven referred to the example where a plaintiff sues successfully in nuisance, in a case where water has been allowed by the defendant to escape onto the plaintiff's adjoining property, but the plaintiff fails in a claim for negligence to recover the same remedies. That is the sort of case where it would be usual for the Court simply to order the defendant to pay the plaintiff's costs of the proceedings.

   59. I do not accept Steven's argument that the relationship between the testamentary agreement and family provision claims in the present case is analogous to the example given by Steven. In that example, the facts relevant to the nuisance and negligence cases are likely to overlap almost completely. The success of each legal basis for obtaining essentially the same relief is likely to depend on technical legal propositions the consideration of which will not absorb a substantial part of the hearing.

   60. In the present case the family provision claim was not simply an alternative means of claiming the same relief as was sought in the testamentary agreement claim. That is true notwithstanding that success or failure on the testamentary agreement claim was likely to have a substantial impact on the outcome of the family provision claim. The two claims were fundamentally different in their juridical nature, and required the consideration of entirely different evidence.

   61. Initially, when Steven pleaded his family provision claim in his summons filed on 20 March 2012, it was expressed to be an alternative to Steven's claims for orders that would enforce the deed of release: [224], [225].

   62. By the time Steven filed his second further amended statement of claim on 7 April 2014, on an analysis of the pleading, the family provision claim had ceased to be an alternative to the claim for enforcement of the testamentary agreement: see [300]-[302]. As I have observed at [300], and explained more fully at [410]-[415], Steven's family provision claim increasingly took on a life of its own that was independent of the success or failure of the testamentary agreement claim. Until the very end of the second stage of the hearing, Steven claimed, as a component of the further family provision that he sought, an amount sufficient, when added to his net assets, to enable him to meet his expected liability of about $1,410,000 as a result of the family law property proceedings with Jovanka: see [339]. By the second stage of the hearing, Steven sought further family provision to cover all of the costs that he had incurred in the various proceedings: see [386(3)]. The amount of that costs liability was approximately $1.6 million: see [409]. In the primary judgment I accepted, as the value of Jersey (including Milsop) an appraisal at $1.8 million, of which the half share the subject of the testamentary agreement was $900,000: see [25], [26]. A broad consideration of these figures shows how, with the passing of time and the accumulation of Steven's liability for legal fees, the family provision claim came to dominate the litigious effort required by the parties.

   63. It would be wrong for the Court to order Robert and Angelina to pay Steven's legal costs of the family provision claim, notwithstanding his failure to succeed, on the basis that the family provision claim was nothing but a subsidiary or fall back claim to achieve substantially the same result as the testamentary agreement claim.

   64. Finally, it is material to this issue that Steven obviously could have prosecuted his testamentary agreement claim much more efficiently and expeditiously than he did. Even allowing for the advantages of hindsight, Steven could have achieved a result in the testamentary agreement claim that would have informed him whether or not it was worthwhile for him to continue with his family provision claim. If he had done that, he would not have incurred costs, which the Trustees have rightly described as "crippling", that have had the unfortunate consequence that the family provision claim came to overwhelm the testamentary agreement claim in significance.

   65. Subject to what may follow from a consideration of the costs orders sought by Robert and Angelina, I would make a costs order against Robert and Angelina personally, but only in respect of Steven's costs of the testamentary agreement claim.

   66. The personal costs order in favour of Steven against Angelina will be:

13. Order the fourth defendant to pay the plaintiff's costs of the testamentary agreement claim from 28 November 2016 on the ordinary basis.

67. I acknowledge that the making of differential costs orders in relation to the testamentary agreement and family provision claims is likely to create enormous difficulties for the assessment process. Steven attempted to solve this difficulty by persuading the Court to order Robert and Angelina to pay all of his costs of the proceedings, but I have rejected that approach. I will defer further consideration of this problem until I deal with the costs order sought by Angelina.

Costs of testamentary agreement claim out of Breakwell

68. I will now turn to a consideration of Steven's claim, in proposed order S2, that he be entitled to recover his costs of the testamentary agreement claim out of Breakwell.

69. It may be noted, from the wording of proposed order S2, that it is not in form an order that Steven's costs be paid by Jordan, or that they be paid out of the estate. It is in effect an order directly creating a charge over Breakwell.

70. Angelina and the Trustee did not object to the Court making an order that Steven's costs of the testamentary agreement claim be made out of the estate. However, the only estate asset retained by Jordan is George. Steven is solely entitled to George under Nada's will. Steven rejected the suggestion that his costs should be a charge against his own property. That is why he seeks an order charging his costs against Breakwell.

71. Breakwell is owned by Angelina and the Trustees in equal shares. They oppose proposed order S2 being made.

72. It will be appropriate to start by noticing the following preliminary matters.

73. First, Breakwell was transmitted by Jordan to Robert shortly after 30 June 2009 in compliance with clause 3.11 of the deed of release: see [157]. On its face, that term had the effect of a direction by the two beneficiaries to the executor to transmit Breakwell to Robert, as the beneficiary entitled to that property under Nada's will.

74. Under clause 3.14 of the deed of release, Jordan was also required to transfer George to Steven in performance of Nada's will. For unexplained reasons, that did not happen.

75. Steven submitted that, as Pembroke J made a declaration that the deed of release was void ab initio, the Court should decide his costs claim on the basis that the joint direction of the beneficiaries to the executor in clause 3.11 of the deed of release had never existed.

76. That, at the least, is a controversial submission. The direction existed as a matter of fact when it was acted upon by Jordan. The subsequent declaration that the deed of release was void did not make the physical deed of release disappear. It also did not have the effect of avoiding the transmission of Breakwell to Robert. Steven has suggested that the avoidance of the deed of release had the consequential effect of obliging Jordan to take proceedings to recover the title of Breakwell from Robert. That may or may not be correct, given that, after all, the title to the property had been transmitted to the correct beneficiary, and the only argument could be that the partial distribution of the estate was premature.

77. Steven also made the submission that, as a result of the deed of release being declared void ab initio, Angelina and the Trustees hold their interests in Breakwell on trust for Jordan as executor of the estate. I will consider the significance of this argument later.

78. For present purposes, the significant point is that these matters were not pleaded and have not been the subject of forensic contest. They have only been raised by a side wind in connection with the costs order sought by Steven.

79. Secondly, it is necessary to follow the evolution of the claims for costs in the serial statements of claim filed by Steven.

80. Steven first made a claim for the transfer to him of Robert's half interest in Jersey in the second further amended statement of claim filed on 7 April 2014. He did so on the basis that the effect of Robert declining to perform the testamentary agreement was that he held his interest in Jersey on trust for Steven, or alternatively on trust for Jordan as executor of Nada's estate. That remained the basis of Steven's claim in the third further amended statement of claim, which was the pleading on the basis of which the first stage of the hearing took place. As a result, during that hearing, Angelina was defending a constructive trust claim, which was a claim that Steven ultimately did not pursue.

81. The only claim for costs that Steven made in his third further amended statement of claim was the claim in prayer 10 that Robert and Angelina pay all of his costs on the indemnity basis.

82. Steven did not make a claim to enforce the testamentary agreement as representative of Nada's estate until he added prayer 6 to that effect in his fourth further amended statement of claim filed on 16 March 2017. The Court considered that issue at the hearing on 9 May 2019 that yielded the inconclusive outcome referred to above. It is proper for the Court to proceed upon the basis that Steven and the other parties understood from that time that the Court would make an appropriate order under UCPR r 7.10(2) formally appointing Steven as the representative of Nada's estate to prosecute the testamentary agreement claim.

83. However, during the second stage of the hearing, Steven's claim for costs continued to be the claim in prayer 10, which was now found in Steven's fifth further amended statement of claim.

84. In Steven's submissions at the end of the second stage of the hearing, he put his application for costs of the testamentary agreement claim on two bases. One was that sought in prayer 10, being that the costs be paid by Robert and Angelina personally. The other was that the Court should make an order that the costs be payable out of Nada's estate, because the whole of the proceedings were in some way Nada's fault, because of her decision to enter into the testamentary agreement with Robert. As Nada had sought to implement her testamentary intentions of dividing her properties with approximate equality between Steven and Robert in a way that required the enforcement of the testamentary agreement, outside the administration of her will by her executor, according to Steven’s submission, she created the risk of non-performance of the agreement by Robert.

85. At [446] of the primary judgment, I rejected Steven's claim that he should be paid his costs of enforcing the testamentary agreement out of Nada's estate because the need for the making of that claim arose out of inadequate testamentary arrangements made by Nada. However, I observed at [447] that there was arguably a case for the Court to make an order that Nada's estate bear the costs of its representative in enforcing the testamentary agreement. I observed that Steven did not put his claim on that basis.

86. At the hearing, Steven made submissions that the finding at [447] that he had not based his claim for costs on his appointment as representative of Nada’s estate was wrong. Steven did not at the hearing pursue an order included in his draft short minutes of order that would have had the effect of the Court recalling that finding. However, the submissions remained in his revised written submissions. In effect, Steven submitted that it necessarily followed from his appointment as representative of Nada's estate that he would seek a costs order as if he stood in the shoes of the executor, and the defendants ought to have understood that from the beginning. Secondly, he submitted that the parties were only required to deal with the issue of costs after the publication of the primary judgment, so that Steven was at large as to the costs orders that he could seek.

87. Steven added the submission, in his written reply submissions, that Angelina and the Trustees had omitted, on or about 9 May 2019, to raise the issue of the basis of Steven's costs, when he sought to be appointed as representative of Nada's estate, in order to have the Court impose a costs condition on the appointment. Steven submitted that the defendants had waived their right to resist the costs order now sought by Steven, or made a binding election not to contest the claim.

88. I do not accept Steven's submissions. The defendants were not given an opportunity on 9 May 2019 to make submissions on the basis of Steven's entitlement to costs as representative of Nada's estate. The Court has never dealt with that issue.

89. Furthermore, given that Steven expressed in his pleadings, and in his oral submissions to the Court, grounds for the costs order for the testamentary agreement claim being made in his favour that were inconsistent with proposed order S2, the defendants were entitled to conduct their cases as if that was in fact the way Steven would frame his costs claim.

90. It is clear that Steven has only raised the claim to be paid out of Breakwell as representative of Nada's estate after I suggested the possibility at [447] of the primary judgment.

91. The reality is that, by reason of Steven's failure to give Angelina and the Trustees any notice that he would eventually seek an order that his costs of the testamentary agreement claim be paid out of Breakwell, those defendants were not able to raise any issue at the hearing that may have disentitled Steven to an order that his costs be paid out of Breakwell.

92. The essence of Steven's argument that he should be paid his costs of the testamentary agreement claim out of Breakwell was that the effect of his appointment to represent Nada's estate is that he should be treated as standing in the shoes of Jordan, and be entitled to all relief that would have been available to Jordan in respect of his costs, if Jordan had enforced the testamentary agreement on behalf of Nada's estate.

93. Both Angelina and the Trustees responded to this argument by submitting that, even if it were accepted in principle, Steven should not be entitled to recover his costs out of Breakwell because it is no longer part of Nada's estate.

94. In his submissions in reply, Steven first submitted that the transmission of Breakwell to Robert was liable to be set aside because the deed of release was declared by this Court to be void ab initio. Consequently, Angelina and the Trustees hold Breakwell on a constructive trust for Nada's estate.

95. Steven is not now entitled to put his claim for costs on this basis. As explained at [381], at the commencement of the second stage of the hearing, Steven provided to the Court a marked up copy of the fifth further amended statement of claim that indicated the prayers for relief that Steven no longer sought to pursue. In that pleading, at par 26A, Steven pleaded the declaration by this Court on 16 November 2012 that the deed of release was void. At par 26B, Steven alleged that, in consequence of the nullity of the deed of release, Robert became obliged to effect a retransfer of the title to Breakwell to Jordan to hold as executor. Finally, in par 28A, Steven alleged that he was entitled to a taking of accounts and restitution for the benefits received by Robert under the deed of release. Thus, in the pleading, Steven made a claim that Robert was obliged to retransfer the Breakwell to Jordan. However, Steven deleted the claim in prayer 5 for an order that accounts be taken and such orders as the Court thinks just by way of restitution to restore the parties to their positions before the making of the deed of release. The consequence of the avoidance of the deed of release therefore ceased to be an issue in the proceedings. It was not contested by the defendants, and is not the subject of any finding in the primary judgment.

68. Steven at no stage sought a declaration that the Trustees hold their interest in Breakwell on trust for Steven. Steven sought, by prayer 9D, an order that Angelina transfer her interest in Breakwell to Steven, but that was only by way of provision for Steven as part of his family provision claim.

69. Further, Steven will only be appointed as the representative of Nada's estate to prosecute the testamentary agreement claim. That appointment would not give him the authority to claim that Jordan's transmission of Breakwell to Robert should be set aside. Steven's only capacity in that respect is as a beneficiary. Steven did not provide any authority for the proposition that a beneficiary has standing to interfere with the decision by the executor as to when to transmit to a beneficiary property to which that beneficiary is entitled under the will.

70. Steven's second argument was, in effect, that Jordan had prematurely distributed Breakwell to Robert before all of the estate's debts had been ascertained, with the result that Jordan would be entitled to a refund of the amount of the costs from Angelina and the Trustees, as well as being entitled to follow Breakwell into the hands of Angelina and the Trustees, for the purpose of recovering the costs.

71. With respect to this argument, Steven submitted that both defendants must restore Breakwell "for the payment of the estate debts (such as its liability to Steven for the cost of prosecuting the testamentary agreement)" on the basis that both defendants were volunteers. Steven submitted that Breakwell was not distributed estate that cannot be recalled and "that Jordan would be personally liable for its value to pay any outstanding estate debts".

72. It may be noted from these arguments that there appears to be some ambiguity as to whether Steven's argument is, on the one hand, that he is entitled to stand in the shoes of Jordan and be given the same costs order as Jordan would be given as executor, or, on the other, whether he is to be treated as a creditor of the estate and entitled to pursue his costs claim against Angelina and the Trustees on that basis.

73. The Trustees made a second response, being that, by reason of the fact that they were not given notice of the ultimate basis upon which Steven would seek an order that his costs be paid out of Breakwell, they lost the opportunity to claim a paramount lien over Breakwell to cover their costs of recovering that interest from Angelina, by means of the proceedings that were heard and determined by Ward CJ in Eq: see [375]-[377].

74. Steven responded to this submission by submitting that the Trustees had not given evidence that they would in fact have made this claim, and that, in any event, there was no evidence that the Trustees would be unable to recover their costs by enforcing the order for costs that her Honour made against Angelina.

75. The Trustees' final response was to put the argument, to be relied upon if necessary, based upon the effect of s 27 of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act), following what Gleeson JA said in Re Galtari Pty Ltd (in liq) [2018] NSWSC 917 at [57]: “It is well-established that matters involving claims with the effect of declaring for or against the title of a trustee in bankruptcy fall within the scope of s 27: Scott v Bagshaw [2000] FCA 816; (2000) 99 FCR 573”. The point of the submission was that Steven’s claim to be entitled to his costs out of Breakwell impugned the Trustees’ title, and is a “special federal matter” that can only be decided by a Federal Court.

76. Steven’s response to this argument was to submit that, as the Trustees held their interest in Breakwell on trust for Nada’s estate, it was not part of the bankrupt estate held beneficially by the Trustees, so that Steven was entitled to assert the estate’s beneficial entitlement to Breakwell in these proceedings.

77. I now turn to a consideration of the issue of whether the Court should make the order sought by Steven charging Breakwell with his costs of the testamentary agreement claim.

78. As already noted, Steven submitted that the Court should exercise its costs discretion by treating Steven as standing in the shoes of Jordan, the executor, to prosecute the enforcement of the testamentary agreement.

79. Steven relied upon authorities that establish in proceedings commenced by executors and trustees, such as construction suits, or for the grant of probate, the standard order is that the costs of the executor or trustee are to be paid out of residue. It is not necessary to examine those authorities. However, the following statement by Campbell J (as his Honour then was) in Re Estate Late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311 is pertinent:

[37]… Costs have been ordered to be paid out of the legacies of those parties who were the real cause of litigation: In the Estate of Osment; Child v Osment [1914] P 129, or out of the shares of residue given to unsuccessful parties: Harrington v Butt [1905] P 3 n.

108. It is clear that, if Steven had prosecuted the claim in the capacity of executor of Nada’s estate, he would be entitled to reimburse himself for the costs out of the assets of the estate: see National Trustees Executors and Agency Company of Australasia Ltd v Barnes (1941) 64 CLR 268; [1941] HCA 3 (Barnes), especially per Williams J at 277. The executor would have been entitled to ask for such an order at the end of the hearing, provided, as here, all of the beneficiaries had been joined. The executor would be given a costs order against the defendant personally, as well as an order that, after having recovered as much of the executor’s costs as possible from the defendant, the executor would be authorised to retain any unrecovered part out of the assets of the estate (at 280). Moreover, as Williams J said at 279: “… At the same time the indemnity must be given effect to in such a way as to make the burden fall upon the beneficiaries equitably having regard to the circumstances under which the costs, charges and expenses were incurred. Here they were incurred as a result of the action of nine out of the 37 beneficiaries, so that the shares of these beneficiaries should be exhausted before any part of the burden is placed on the shares of the 28”.

109. By reason of the executor’s fiduciary duty to uphold the will and to administer the estate, the executor has, by reason of his or her office, a right of indemnity that was explained by Powell J (as his Honour then was) in Re Estate of Hodges (deceased); Shorter v Hodges (1988) 14 NSWLR 698 at 709, in the course of explaining exceptions that apply in the field of probate litigation to the general rule that costs follow the event:

To these exceptions to the general principle should, perhaps, be added the principle that, although a legal personal representative may be entitled to recover from a party to litigation costs only on a party and party basis, he, as a fiduciary, retains the right to an indemnity from the estate, and, thus, may have recourse to the estate for any difference between his costs on a trustee basis and the costs recovered from a party.

110. Thus, if Steven had been an executor, the Court would have made an appropriate costs order in respect of Steven’s costs of prosecuting the testamentary agreement claim against Robert personally (and in the peculiar circumstances of the present case, also against Angelina personally). There would be an order that Steven could retain any unrecovered balance out of the estate’s assets in his hands. To the extent he retained property given to Robert under Nada’s will, Steven would have been authorised to exhaust that property in recovering the balance before he looked to any other property in the estate.

111. The question is whether Steven is entitled to costs orders to an equivalent effect in this case, where he has been appointed to represent Nada’s estate by an order made under UCPR r 7.10(2)(b). Steven does not have the right to an indemnity, as he would if he were the executor. He can only gain that entitlement through the Court making an equivalent order in the exercise of its discretion under s 98 of the Civil Procedure Act2005 (NSW) (Civil Procedure Act).

112. I note that in Walton v Walton [2015] NSWSC 405, Stevenson J expressed a reservation as to whether it was proper to treat a representative appointed under UCPR r 7.10(2) as if the representative were an executor for the purpose of determining the representative’s entitlement to costs of proceedings. His Honour was not required to consider the issue in detail, and the representative’s application failed for other reasons. His Honour said:

16. First, it is by no means clear to me that the appointment of the plaintiff as representative of the deceased’s estate for the purposes of UCPR r 7.10 elevates the plaintiff to the position of executor or trustee.

113. Orders may be made under UCPR r 7.10(2) for the appointment of a representative of a deceased estate to conduct or defend proceedings in many circumstances. In order to confine the focus of the discussion necessary to determine Steven's claim, it will be appropriate to identify the relevant characteristics of the present case.

114. First, because of the arguably irregular approach of appointing Steven as representative of Nada's estate, for the purpose of prosecuting the testamentary agreement claim while Jordan continues to be the executor, complications may arise that would not arise in the general case where there is no executor.

115. As noted, Jordan continues to hold property in the estate that is notionally available to meet a costs order made in favour of a representative of the estate, but that property was given solely to Steven under Nada's will. This is not a case where property remains in the estate that is not the subject of a gift to the representative.

116. This is not a case where the estate has many beneficiaries, and the representative is appointed to pursue a claim on behalf of the estate for the benefit of the beneficiaries generally. Here, there are only two beneficiaries and one, being Steven, seeks to pursue a claim against Angelina and the Trustees, who hold Breakwell through the other beneficiary, Robert.

117. Steven will be appointed to represent Nada's estate to enforce the testamentary agreement. That action is solely for Steven's benefit. It may be considered to be to the benefit of the estate only in so far as it will fulfil the wish stated by Nada in clause 4A of her will that: "Robert Stojanovski is to transfer his share in this property to his brother Steven Stojanovski".

118. This is a case where Steven asks the Court to order that a charge be created over Breakwell, after it was distributed out of the estate by the transmission from Jordan to Robert.

119. As already noted, Jordan in fact transmitted Breakwell to Robert at the direction of both beneficiaries under Nada's will, notwithstanding that the deed of release was subsequently declared by the Court to be void. The question whether the direction upon which Jordan acted was also ineffective is unresolved.

120. After the transmission of Breakwell to Robert, and before the Court has been asked to create the charge for Steven's costs over Breakwell, Robert has transferred half of his interest to Angelina as a volunteer, but his remaining interest has become vested in the Trustees because of his intervening bankruptcy.

121. Even though Steven will be appointed to represent Nada's estate, he will not hold the office of executor, and will not have a right of exoneration from the estate property that exists by reason of his office. The question is whether, by the making by the Court of an order under s 98 of the Civil Procedure Act, the Court should now create a charge over Breakwell in favour of Steven.

122. This question must be addressed in the context that the Court will make an order for Steven's costs of the testamentary agreement claim against Robert and Angelina personally. Steven will be entitled to enforce his costs claim against Angelina, assuming it is ultimately made, out of her half share in Breakwell, together with any other property that she may own. Steven will not be able to enforce the costs order against Robert against the half interest in Breakwell that is in the hands of the Trustees, but that is because his bankruptcy has intervened. If the Court created by its costs order the charge sought by Steven, that would prefer Steven over the unsecured creditors of Robert.

123. I have referred above to the ambiguity arising out of Steven's submissions as to whether he bases his claim for a charge for his costs over Breakwell on the basis that he should be treated as if he stood in Jordan's shoes as executor of Nada's estate, or whether he should be treated as a creditor. I do not think that it would be valid for the Court to approach the question on the basis that the costs order would make Steven a creditor of the estate.

124. Steven is not now a creditor of Nada's estate. His entitlement will only arise when the Court makes the order. Plainly, Steven was not a creditor of Nada, and if the effect of the Court's order was to make Steven a creditor, the only debtor could be Jordan. Jordan has not been given notice of Steven's costs claim. The Court has been told that Jordan has submitted to the order of the Court. I have not been able to find any submitting appearance on the Court's file. If Jordan did formally submit, I would infer that the submission was not in respect of the costs claim now made by Steven.

125. The natural and proper basis for the Court to determine Steven's claim for a charge for his costs over Breakwell is from the perspective of his appointment to represent Nada's estate as a de facto substitute for the executor, Jordan.

126. That calls for a consideration of the entitlement that Jordan would have had to recover the costs of the testamentary agreement claim, either from Angelina and the Trustees, or by means of a charge over Breakwell if Jordan had prosecuted the testamentary agreement claim.

127. Although Steven seeks to trace Breakwell into the hands of Angelina and the Trustees, on the basis that they are volunteers, in my view the amount for which both defendants could be liable to refund to Jordan can be no more than would have been required to be refunded by Robert before he transferred Breakwell in two steps to Angelina.

128. The issue is whether Steven is entitled to a charge over Breakwell in order to recoup his liability to pay the costs that he has incurred to his lawyers.

129. The lawyers are creditors of Steven and not of the estate.

130. The principles that govern the rights of creditors of the estate to follow and trace property of the estate distributed to beneficiaries are thus not relevant.

131. Steven's claim to enforce the testamentary agreement is not an aspect of the administration of the estate of Nada in the strict sense. If Jordan had taken action, it would have been a suit to enforce a contract made by the deceased with a third party to confer a benefit on another party. An executor is entitled to prosecute such a claim: see J R Martyn and N Caddick, Williams, Mortimer and Sunnucks, Executors, Administrators and Probate (20th ed, 2013, Sweet & Maxwell) (Williams, Mortimer and Sunnucks) at [68-01]. Normally, the Court could make an order that Robert pay Jordan's costs personally under s 98 of the Civil Procedure Act, but could not make any order that Jordan be entitled to recover any shortfall out of the assets of the estate: see Williams, Mortimer and Sunnucks at [68-01]. That is because the beneficiaries of the estate would not usually be parties to the suit. As it happens, in the present case, Steven and Robert are both parties. On the authority of Barnes, referred to above, this Court would therefore have jurisdiction to make a costs order of the type that would be made in administration proceedings. No party made any submission to the contrary.

132. Jordan would have had a right of exoneration out of the assets of the estate in his hands. That would have permitted him to have had recourse to George for any shortfall in the costs that he was able to recover personally from Robert. Jordan would have had that entitlement, even though it would have been to the prejudice of Steven, who was the intended beneficiary of the testamentary agreement entered into by Nada.

133. It is not clear, as a matter of principle, that in those circumstances, Jordan would have been entitled to follow Breakwell into the hands of Angelina and the Trustees through Robert, simply because Robert was the defaulting party under the testamentary agreement. Because of the unusual terms of Nada's will, that would have been a difficult question to answer. Strictly, Robert was a contracting party in respect of Jersey, and not a beneficiary. It is not clear whether the principle referred to in Barnes, of making the burden fall upon the beneficiaries equitably, would justify treating Robert as a beneficiary, rather than simply a defaulting contracting party, just because the testamentary agreement is mentioned in Nada's will.

134. For the purposes of the argument, I will make the questionable assumption that the terms of Nada's will, and the breach of the testamentary agreement by Robert, would have justified Jordan seeking to recall Breakwell from Robert, rather than to have recourse against George for any shortfall in the recovery of his costs from Robert.

135. If that assumption is made, the question becomes: what would the outcome have been, if Jordan had sought to recall Breakwell from Robert and trace that property into the hands of Angelina and the trustees?

136. The learned authors of Williams, Mortimer and Sunnucks say the following concerning the executor's right to a refund at [83-05] (footnotes omitted):

The executor's right may depend on whether the payment was made voluntarily or involuntarily. If it was made under compulsion of proceedings, he is entitled to compel the beneficiary to refund to make good a deficiency of assets. If, however, an executor pays a legacy voluntarily, the presumption is that he has sufficient assets to pay all legacies. Consequently he can only compel a true legatee to refund if, after the payment of the legacy, liabilities appear of which he had no previous notice.

Thus, an executor cannot compel residuary legatees to refund if he has paid over the assets with notice of a debt. A notice, however, of a possible remote contingent liability (such as future calls on shares) is not sufficient to disable an executor from recovering back the assets in the liability afterwards ripens into a debt…

137. See also Halsbury’s Laws of Australia (2005, Online, LexisNexis Butterworths) (Halsbury’s) at [395-4715]. It is not necessary to investigate these principles in detail, as they were not addressed at the substantive hearing and it is only necessary to understand the issues that would have arisen if they had been addressed.

138. Thus, the executor does not have a right to a refund if the executor knows of or is on notice of unpaid estate creditors. The executor will be entitled to a refund in respect of entirely unknown creditors, or where debts crystallise from contingent possibilities.

139. Jordan's right to a refund from Robert, and consequently from Angelina and the Trustees, may have been defeated if the defendants could establish that Jordan had transmitted Breakwell to Robert voluntarily, or that he had relevant notice of the debts to lawyers that he would subsequently incur in the course of proceedings to enforce the testamentary agreement.

140. That consideration gives rise to issues that did not arise in the present proceedings and have not been the subject of forensic contest.

141. First, there is a question whether Jordan's transmission of Breakwell to Robert, in compliance with clause 3.11 of the deed of release, should be treated as being voluntary on the part of Jordan, or in effect under the compulsion of the direction of the two beneficiaries of the estate.

231. Thus, the stance taken by the Trustees is that they have not intervened in Robert’s application, or refused to give him permission to pursue his costs claim against Steven.

232. As, in the present case, the Court has not yet made any costs order, any such order that is now made will be even more clearly after acquired property than was the case in Kison v Papasian, where the costs order had already been made.

233. I therefore find that Robert is entitled to apply for the costs order that he seeks, and accordingly will make order R2 for the reasons given above.

Jovanka’s claim for costs

235. Jovanka provided written submissions to the Court in which she sought the following costs order:

J1. Order the first defendant to pay to the second defendant her costs of the proceedings on a gross sum basis pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) fixed at $103,945.40.

236. The alternative order sought by Jovanka was in the same terms, save that the order would be made against Jordan, so that Jovanka’s costs would be paid out of Nada’s estate (J2). Jovanka did not address the question as to what assets of the estate should be the source of payment of her costs, given that the only property presently held in the name of Jordan is George. That is a property to which Steven is entitled.

237. Jovanka swore an affidavit in support of her application for costs, which was only filed in court on 5 June 2019. She stated that she had incurred legal costs and disbursements of $103,945.40, of which $62,707.76 have been paid. Jovanka said that barrister’s fees of $2,598.75 and solicitors’ fees of $38,638.89 remain outstanding.

238. Jovanka annexed to her affidavit 20 tax invoices from her solicitors and one tax invoice from a barrister. On my calculation, the total amount evidenced by the tax invoices is $62,118.51. The discrepancy may be explicable by Jovanka having counted a credit of $5000 dated 17 April 2014 as a cost, and she may have added the $36,823.89 that appears as a cost rendered in the 28 February 2017 tax invoice as an additional cost.

239. The circumstances of Jovanka’s involvement in these proceedings are not entirely clear. Steven filed the summons that commenced these proceedings on 20 March 2012: [221]. On 22 May 2012, a Registrar made an order that Steven join Jovanka to these proceedings within seven days. Apparently, Steven did not comply with that order.

240. On 29 May 2012, Robert’s then solicitors wrote a letter to Jovanka’s solicitors. The letter noted that Steven had been ordered to join Jovanka. It suggested that prayers 1 to 5 of Steven’s summons be heard separately. Those prayers were concerned with Steven’s attempt to enforce the deed of release. The expressed purpose for the separate determination was to enable Family Court proceedings that had been listed in August 2012 to be heard, rather than being adjourned.

241. Jovanka’s solicitors wrote to Steven’s and Robert’s solicitors on 4 June 2012. Among other things, the letter stated that Jovanka would file a submitting appearance in respect of prayers 1 to 5 of the summons, but she reserved the right to file a claim for further family provision in the proceedings.

242. On 13 June 2012, Robert’s solicitors said in a letter to Jovanka’s solicitors: “Given that you have indicated that your client will file a submitting appearance we seek your client’s consent to be joined to the proceedings on the basis that she file a submitting appearance”.

243. Jovanka’s solicitors advised the solicitors for Steven and Robert, by letter dated 19 June 2012, that they had instructions that Jovanka consented to being joined as a party to these proceedings on the basis that she would file a submitting appearance in relation to prayers 1 to 5 of the summons, but that she reserved the right to make an application for family provision relief.

244. It is not clear when Jovanka was joined as the second defendant to the proceedings. The third further amended statement of claim was filed by Steven on 16 October 2015: [319]. Jovanka is a party to that pleading.

245. Jovanka filed a submitting appearance on 6 November 2015 in the following terms:

Jovanka Stojanovski, Second Respondent, appears and submits to the making of orders 1-10 inclusive of the Third Statement of Claim filed on 16 October 2015, and the giving or entry of judgment in respect of all claims made within orders 1-10 under the heading Relief Claimed; save as to the costs of the proceedings past, present and future.

246. Prayers 1 to 10 of the third amended statement of claim encompassed all of the relief sought by Steven.

247. The position appears to be that Jovanka was initially invited to consent to being made a party to these proceedings on the basis of her prior indication that she would submit to the Court’s orders in relation to Steven’s claim to enforce the deed of release. I infer that Jovanka was served by Steven with the series of statements of claim up to the third amended statement of claim, as well as any defences filed by the defendants.

248. It appears that Jovanka was joined to the proceedings as an interested party, and so that she would be bound by the Court’s orders. It was expected that the orders would establish what property Steven and Robert would receive out of Nada’s estate. Those orders would establish the matrimonial property, as between Steven and Jovanka, for the purpose of the Family Court proceedings that were on foot. Robert was also a party to those proceedings.

249. On 18 March 2016, Young AJA made an order that Jovanka and Jordan be excused from appearing at the hearing of the third amended statement of claim. Thereafter, from time to time, Jovanka attended court, and usually sat in the public gallery.

250. Jovanka has not provided submissions that explain the basis of her claim for costs.

251. I have reviewed the tax invoices issued by Jovanka’s solicitors and counsel but, without further detailed evidence, I am unable to draw safe conclusions about the meaning of the evidence. A number of preliminary observations may be made. The legal work done does not appear to have been unreasonable on its face. A significant proportion of the work appears to have involved a watching brief. That is not surprising, as the litigious enterprise in which Steven was engaged was likely to have serious ramifications for Jovanka’s future financial position, because all of the matrimonial property was either at stake or at risk. One conclusion that can be drawn is that Jovanka was represented by solicitor and counsel at the hearings before Pembroke J. Those hearings dealt with Steven’s failed attempt to enforce the deed of release. It appears that Jovanka was represented in a conventional way for that aspect of the proceedings, including four directions hearings. There is a possibility that some of Jovanka’s legal costs concerned the investigation of a possible family provision claim on her part against Nada’s estate. There are occasional references in the tax invoices to work being done on the Family Court matter. However, without a more transparent evidentiary explanation of the significance of the entries in the tax invoices, most of these observations should be treated as being tentative.

252. In considering Jovanka’s entitlement to a cost order as sought by her, it must be borne in mind that she was originally joined on the basis that she would submit to the order of the Court on Steven’s deed of release claim. Jovanka has not commenced any family provision claim. No party has claimed any relief against Jovanka. Jovanka did not file a submitting appearance until 6 November 2015.

253. In these circumstances, Jovanka has not demonstrated an entitlement to any cost order either against Robert or against Nada’s estate.

254. Consequently, the Court will not make either of orders J1 or J2 as sought by Jovanka.

255. However, I will not dismiss Jovanka’s costs claim now. Jovanka is self- represented. She has incurred a considerable cost burden. Her interests have probably been detrimentally affected by these proceedings. It is reasonable to infer that Jovanka did not have the resources to continue to retain appropriate legal representation after her solicitors ceased to act for her in the proceedings. It is possible that Jovanka has a better claim for costs than she has been able to put to the Court through her own resources. I will therefore give her an opportunity to make a further application. I respectfully advise Jovanka that it will probably not avail her unless she can get appropriate legal advice and assistance. Jovanka should bear in mind that if she makes an application that is not sustainable she may be at risk of an adverse costs order.

256. The orders that I will make concerning Jovanka’s application for costs are:

1. Note that the Court declines to make any costs order in favour of the second defendant on the basis of the present application before the Court.

2. Grant leave to the second defendant to deliver to the Associate to Robb J and serve on the other parties to the proceedings any further submissions and affidavit evidence in respect of her claim for costs within 21 days of the publication of this judgment.

3. Order that, if the second defendant does not act on the grant of leave in Order 17 within the 21 day period, the second defendant’s application for an order for costs will be dismissed.

Angelina’s claim for costs

257. Angelina asked the Court to make the following costs orders:

A1.   Order the plaintiff to pay to the fourth defendant 85% of her costs of this proceeding as agreed or assessed on an indemnity basis.

A2.   The Court notes that the fourth defendant’s costs in proceedings 2013/294278, being the subject of Slattery J’s judgment in Stojanovski v Stojanovski [2013] NSWSC 1491, and in proceedings NSD 2146/2017 in the Federal Court of Australia shall form part of her costs in this proceeding.

258. Angelina also made an alternative claim for an order for her costs on the ordinary basis (A3).

259. Angelina sought an order that Steven pay 85% of her costs on the basis that Angelina would be liable for part of Steven’s costs of his testamentary agreement claim, but, as Steven failed in his family provision claim, which included a claim that property owned by Angelina should form part of the notional estate of Nada, Steven should be ordered to pay Angelina’s costs of resisting the family provision claim. Angelina submitted that the litigious effort involved in the family provision claim was substantially greater than for the testamentary agreement claim. Accordingly, Angelina submitted, the appropriate course was for the Court to make a single costs order that reduced the costs that Steven was ordered to pay Angelina by 15%.

260. The first question is whether Angelina is entitled to an order for her costs of defending Steven’s family provision claim.

261. The first stage of the hearing was conducted on the basis of Steven’s third further amended statement of claim. The claims made by Steven that affected Angelina’s interests are described at [320]-[327] and [331], [332] of the primary judgment. It is clear that Angelina had a personal interest in defending these claims.

262. After further amendment and the abandonment of some claims, the second stage of the hearing was conducted on the basis of Steven’s revised fifth further amended statement of claim. Prayers 1 and 2 of that pleading continued to claim a designation that Breakwell is part of the notional estate of Nada. Angelina no longer had an interest in defending a designation of Kemp as the Court had ordered that Angelina transfer her interest in that property to the Trustees. Consequently, Angelina continued to have an interest in defending Steven’s family provision application.

263. Angelina succeeded in her defence of Steven’s family provision application and accordingly the protection of her interest in Breakwell.

264. Consequently, Angelina is entitled to an order that Steven pay her costs of the family provision claim on the ordinary basis.

265. In expressing that conclusion, I refer to the ruling that I have already made above that Steven’s entitlement to his costs of prosecuting the testamentary agreement claim does not encompass the costs of the family provision claim.

266. The next question is whether the Court should make order A1 as sought by Angelina, which would have the effect of combining the costs orders made for and against Steven and Angelina by estimating Steven’s recoverable costs of the testamentary agreement claim as being 15% of the recoverable costs of Angelina’s defence of the family provision claim, and making a single order that Steven pay 85% of Angelina’s costs on the ordinary basis.

267. Angelina did not tender any evidence of her costs. Angelina was represented by counsel at the first stage of the hearing, after counsel changed his appearance from Robert to Angelina. However, the first stage of the hearing was primarily – though not exclusively – concerned with the testamentary agreement claim. For most of the balance of the proceedings, including the second stage, Angelina was not legally represented. As a practical matter, Angelina took advantage of the fact that the Trustees were legally represented and fully contested the testamentary agreement claim. Angelina was legally represented on a number of applications, including the recent hearing in respect of the final orders that should be made by the Court.

268. Notwithstanding the absence of any quantitative evidence concerning the costs incurred by Angelina, the Court can be confident that – at least in relation to her defence of the family provision claim – the cost will be substantially less than the costs incurred by Steven in prosecuting his testamentary agreement claim.

269. The Court must decide, in the circumstances, whether this is an appropriate case to make a single reduced costs order in favour of Angelina. I have considered the principles relevant to this question in Almona No 4 at [120]-[229].

270. The present case is not a suitable one for simplifying the effect of the costs orders in favour of Angelina and Steven by the Court making a composite order that Steven pay 85% of Angelina’s costs, or some other appropriate percentage. The reason is that Angelina’s costs are so relatively small in proportion to the costs incurred by Steven that the practical effect of such an order would simply be to deprive Steven of a substantial proportion of his costs to which he is properly entitled.

271. That is shown by the following example. Assume parties A and B contest two issues. Each party succeeds on one issue and fails on the other. Assume that, from the perspective of the Court, the litigious effort required by A in succeeding on one issue is twice the litigious effort required by B to succeed on the other issue. It might seem that a suitable costs order is that B pay A 2/3 of A’s costs. But if for some reason A’s costs were $3X and B’s costs were $10X, such an order would have the following effect. B would be required to pay $2X to A, who would only have to bear a shortfall of $X. On the other hand, B would not recover any of the $10X in costs that B has incurred in succeeding on an issue that involved 1/3 of the total litigious effort in the case. This reasoning simply shows that, where the Court contemplates making a single composite order, the result is likely to be unfair on one of the parties, unless the Court has evidence of all of the parties’ costs, and those costs are incurred on the same basis – generally professionally – and the costs are reasonably commensurate with the relative litigious effort.

272. I must add that, even though, for the reasons discussed above, I have not found it possible, at this stage of the proceedings, to make a reliable judgment about the relative litigious effort required for the testamentary agreement and the family provision claims, I do not accept that a reduction of as little as 15% of Angelina's costs would be appropriate to accommodate Steven's success on the testamentary agreement claim.

273. The Court will not make order A1, but will make the conventional order that Steven pay Angelina’s costs of the family provision claim on the ordinary basis.

274. That Order will be:

1. Order the plaintiff to pay the fourth defendant's costs of the family provision claim on the ordinary basis.

   275. The next question is whether the Court should make proposed order A2 in so far as that order would involve a notation that Angelina’s costs of the proceedings before Slattery J be treated as her costs of these proceedings.

   276. As appears from the reasons for judgment of Slattery J, Angelina represented herself at the hearing before his Honour: see Stojanovski v Stojanovski [2013] NSWSC 1491. Consequently, her costs should not be substantial relative to the costs that Steven claims to have incurred.

   277. As I have explained above, when considering Steven's claim to be awarded these costs, at the hearing in these proceedings Steven only sought to enforce the testamentary agreement as representative of Nada’s estate, on the basis that the only parties to that agreement were Nada and Robert. Consequently, Steven did not attempt to prove that he had the interests in Breakwell and Kemp that he sought to protect by the caveats that he lodged against the titles to those properties with the leave of Slattery J. He did not prove the existence of those interests.

   278. Accordingly, Angelina must be considered to be the successful party in these proceedings concerning the issue determined by Slattery J in the other proceedings heard by his Honour.

   279. Accordingly, the Court will make the following notation:

2. Note that the costs payable by the plaintiff to the fourth defendant pursuant to Order 19 will include the fourth defendant's costs in proceedings 2013/294278, being the subject of Slattery J's judgment in Stojanovski v Stojanovski [2013] NSWSC 1491, on the ordinary basis.

   280. The remaining question is whether the Court should make proposed order A2, insofar as it has the effect that the costs recoverable by Angelina under order 13 shall include Angelina’s costs of the Federal Court proceedings before Flick J.

   281. As noted already, Flick J recorded that the parties to the application before him had agreed that the costs of the proceeding will be the parties’ costs in this Court. Consequently, the costs of the Federal Court proceedings should be included in the costs recoverable by the successful parties in these proceedings on the issues that required Steven to make his application for leave in the Federal Court.

   282. The Federal Court application was made in order to obtain that Court’s leave for Steven to pursue prayers 9 and 10 of the fifth further amended statement of claim.

   283. Prayers 9 and 10 of the fifth further amended statement of claim were in the following terms (with the underlining showing the amendments made):

3. Alternatively, an order that the plaintiff be entitled to equitable compensation, which is to constitute a provable debt in the first defendant’s bankrupt estate, comprising of:

(a)   the plaintiff’s loss of the first defendant’s one third interest, together with a one half of the interest of Nada Stojanovski deceased, in [Jersey] in the amount determined by the Court.

(b)   a one-half share of all rates, taxes, outgoings and charges levied against Jersey since the date of death of the said Nada Stojanovski deceased; and

(c)   equitable damages or compensation to the extent of any unjust enrichment and material benefit obtained by the first defendant to the prejudice of the plaintiff by reason of the plaintiff’s part performance of the Deed dated 30 June 2009.

…

1. An order that the first defendant, Robert Stojanovski, and the fourth defendant, Angelina Stojanovski, jointly and severally pay the plaintiff’s costs and costs of the second defendant, Jovanka Stojanovski, of and incidental to the proceedings, including all reserved costs, on the indemnity basis and, in the case of the first defendant, that the plaintiff be entitled to claim any such costs as a provable debt in the first defendant’s bankrupt estate.

   284. Prayer 9 was made in the alternative. The identification of the prayers to which prayer 9 was intended to be an alternative is not straightforward. Prayers 1 to 3 sought notional estate designations in respect of Breakwell, Kemp and Jersey. Prayers 4 to 5A sought relief in relation to Morts that was abandoned. Prayer 5B sought an order for accounts following the avoidance of the deed of release. Prayer 6 sought an order that Steven be appointed as the representative of Nada’s estate to enforce the testamentary agreement in respect of Jersey. Prayers 7 and 8 sought to resurrect Steven’s abandoned family provision claim.

   285. Prayer 9 clearly is directed at obtaining relief in respect of Jersey. Sub-paragraph (a) appears to assume that Robert’s half interest in Jersey will not actually be transferred to Steven and seeks equitable compensation in lieu. The purpose of the claims in sub-pars (b) and (c) is unclear, as the evidence established that in fact since Nada’s death, Steven has solely enjoyed the benefit of Jersey: see [604].

   286. It is to be noted that prayers 9A and 9B seek orders against the Trustees that they hold a one half interest in Jersey on a constructive trust for Nada’s estate or alternatively for Steven, and that the Trustees transfer their interest in Jersey to Steven.

   287. Although the structure of the prayers for relief in the fifth further amended statement of claim is infelicitous, I conclude that prayer 9 was intended to be an alternative claim to the following prayers 9A and 9B. That is, Steven sought equitable compensation for breach of the testamentary agreement if, for some reason, he failed in his claim that the Trustees were obliged to transfer the half interest in Jersey to Steven in performance of the testamentary agreement.

   288. Section 58(3) of the Bankruptcy Act prevented Steven from prosecuting any claim for a provable debt against the Trustees without the leave of the Federal Court. That is why that Court’s leave was required in relation to prayers 9 and 10.

   289. As the Trustees effectively conceded Steven’s right to the relief in prayers 9A and 9B, they did not put in issue the need for Steven to prosecute the alternative relief in prayer 9.

   290. The Court accepted Angelina’s claim that she had standing to resist Steven’s testamentary agreement claim: see [49]-[64]. Angelina then defended that claim unsuccessfully.

   291. However, nothing of substance was done by Angelina in resistance to Steven’s alternative equitable compensation claim.

   292. That may be because, at the commencement of the second stage of the hearing, Steven provided to the Court a marked up copy of the fifth further amended statement of claim that indicated that, among other changes, he abandoned so much of prayers 9 and 10 as claimed orders that he was entitled to equitable compensation and costs from Robert that were provable in Robert’s bankruptcy: see [381(3) and (4)]. For clarity, prayer 9 in its entirety was deleted, and although Steven continued to claim his costs from both Robert and Angelina, he deleted the part of prayer 10 that claimed that the costs were a provable debt in Robert’s bankruptcy.

   293. It appears from the judgment of Flick J that that Angelina was represented in the Federal Court proceedings. Accordingly, she would have incurred some costs. However, it was the Trustees who had the primary responsibility for dealing with Steven’s application. The Trustees were represented by counsel. The outcome of the application was relatively uncontroversial. Insofar as s 58(3) of the Bankruptcy Act prohibited Steven taking further steps in this Court without leave of the Federal Court to prosecute a provable debt, Flick J required Steven’s pleading to be amended to insert the claims that the equitable compensation and costs would be a provable debt. However, Flick J made it a condition of the leave that he gave that Steven not enforce any judgment in respect of a provable debt without the leave of the Federal Court. The application was therefore not contentious in that respect.

   294. It is reasonable to infer that Steven joined Angelina in the Federal Court application because she was a party to the proceedings in this Court and to ensure that she was bound by any order made by the Federal Court.

   295. Steven made his application to the Federal Court for reasons necessitated by the Bankruptcy Act. The application had nothing to do with Steven's right to proceed against Angelina in this Court. The fact that Steven has abandoned the claims that caused him to obtain the orders from Flick J does not mean that he should be ordered to pay Angelina's costs of those proceedings. Angelina had no interest other than to submit to such order as the Federal Court might make.

   296. Accordingly the Court will not make the note sought by Angelina that her costs pursuant to order 19 should include her costs of the Federal Court proceedings.

Trustees’ claim for costs

297. The Trustees also opposed the Court making the costs orders sought by Steven

298. The Trustees proposed that the Court make the following orders for their costs, instead of the orders sought by Steven:

T1.   Order the plaintiff to pay the fifth and sixth defendants’ costs of these proceedings on the ordinary basis.

T2.    The Court notes that the fifth and sixth defendants’ costs of proceedings NSD 2146/2017 in the Federal Court of Australia shall form part of their costs of this proceeding.

299. From the time the Trustees filed their defence to Steven’s fifth further amended statement of claim, they have admitted Steven’s entitlement to the benefit of the testamentary agreement: see [48]. The Trustees have done nothing to impede Steven’s success on that claim. Steven complained that the Trustees had spent too long in assessing how they should plead to the testamentary agreement claim, but the validity of that complaint will be a matter for the assessment process.

300. The only course taken by the Trustees was to defend Steven’s family provision claim, effectively standing in the shoes of the bankrupt Robert. They acted to protect the bankrupt estate from Steven’s claim that property held by them in their official capacity should be declared to be notional estate of Nada.

301. Specifically, the Trustees at no time acted as representatives of Nada’s estate. When the issue of the standing of the active parties in the proceedings was considered in May 2019, the Trustees expressly declined to be the subject of any order that they be appointed to represent the estate. Apart from other considerations, the absence of consent from the Trustees prevented such an order being made: see UCPR r 7.10(2)(b). As I stated on 9 May 2019, in the circumstances the Court could not appoint the Trustees as representatives: see T 11.30.

302. Not only do the Trustees not seek the order proposed by Steven that an order be made that the Trustees’ costs be paid out of Breakwell, but there is no basis in principle for such an order to be made.

303. The Trustees succeeded on all issues in their defence of the family provision claim made by Steven. There is no reason why the costs should not follow the event: see UCPR r 42.1. I will therefore make proposed order T1 sought by the Trustees.

304. The remaining question is whether the Court should make proposed order T2, which is a note having the effect that the costs recoverable by the Trustees under order T1 shall include the Trustees’ costs of the Federal Court proceedings before Flick J.

305. I have set out the considerations relevant to this issue in the discussion above concerning Angelina's application for a similar notation to that which is sought by the Trustees.

306. The position of the Trustees is different to that of Angelina, in that they had an obvious interest in ensuring that the application made by Steven under the Bankruptcy Act was dealt with properly in the interests of the bankrupt estate. There is no suggestion that the Trustees conducted themselves otherwise than appropriately.

307. As Steven abandoned the claims for which he sought leave to proceed in this Court, the Trustees must be considered the successful parties for the purpose of the agreement as to costs recorded by Flick J.

308. Accordingly, the Trustees are entitled to the notation that they have sought.

Orders

309. The Court makes the following orders:

1. Pursuant to Rule 7.10(2)(b) of the Uniform Civil Procedure Rules 2005 (NSW), the plaintiff is appointed as the representative of the estate of Nada Stojanovski for the purpose of seeking the relief in prayers 6, 9A and 9B of the relief claimed in the fifth further amended statement of claim.

2. Order the first defendant within 35 days of the making of this order to deliver to the solicitors for the plaintiff a duly executed memorandum of transfer in registrable form transferring his estate or interest in [Jersey] together with the certificate of title in respect of Jersey or an executed application for the issue of a replacement certificate of title in registrable form and a signed withdrawal of caveat in registrable form of caveat AH204795.

3. If the first defendant fails to comply with Order 2, then, upon receipt of an affidavit from the solicitor for the plaintiff proving such non-compliance, and pursuant to section 94 of the Civil Procedure Act 2005 (NSW), the Registrar of the Court or a Deputy Registrar may execute any or all of the transfer, the application and the withdrawal of caveat referred to in Order 2 for and on behalf of the first defendant and provide the executed document or documents to the solicitor for the plaintiff.

4. Order the fifth and sixth defendants within 35 days of the making of this order to deliver to the solicitors for the plaintiff a withdrawal of caveat in registrable form of caveat AM680687.

5. Order the third defendant within 21 days of the making of this order to deliver to the solicitors for the plaintiff a duly executed memorandum of transfer in registrable form transferring his estate or interest in [George] as executor of the estate of the late Nada Stojanovski together with the certificate of title in respect of [George] or an executed application for the issue of a replacement certificate of title in registrable form.

6. If the third defendant fails to comply with Order 5, then, upon receipt of an affidavit from the solicitor for the plaintiff proving such non-compliance, and pursuant to section 94 of the Civil Procedure Act 2005 (NSW), the Registrar of the Court or a Deputy Registrar may execute any or all of the transfer and the application referred to in Order 5 for and on behalf of the third defendant and provide the executed document or documents to the solicitor for the plaintiff.

7. Grant leave to any party with an interest in the administration of the estate of the late Nada Stojanovski to apply to Robb J or the Duty Judge in Equity on seven days’ notice for any relief necessary for the proper administration of the estate.

8. Order the plaintiff within 21 days of the making of this order to deliver to the solicitors for such of the fourth to sixth defendants who have an interest in the properties referred to in this order:

1. a withdrawal of caveat in registrable form in respect of caveat A183445 lodged by him on the title to [Breakwell]; and

2. a withdrawal of caveat in registrable form in respect of caveat A183444 lodged by him on the title to [Kemp].

9. If the plaintiff fails to comply with Order 8, then, upon receipt of an affidavit from the solicitor for the fourth or the fifth and sixth defendants proving such non-compliance, and pursuant to section 94 of the Civil Procedure Act 2005 (NSW) the Registrar of the Court or a Deputy Registrar may execute the withdrawal of caveats for Breakwell and Kemp referred to in Order 8 for and on behalf of the plaintiff and provide the executed withdrawal form for the solicitors for the fourth and the fifth and sixth defendants.

10. The plaintiff is granted leave to make an application for provision pursuant to s 7 of the Family Provision Act 1982 (NSW) outside of the time prescribed pursuant to s 16 of that Act.

11. The plaintiffs’ claims in the fifth further amended statement of claim against the defendants are, subject to all preceding orders 1 to 10 hereof, otherwise dismissed.

12. Order the first defendant to pay the plaintiff's costs of the testamentary agreement claim incurred between 7 April 2014 and 30 June 2017 on the ordinary basis.

13. Order the fourth defendant to pay the plaintiff's costs of the testamentary agreement claim from 28 November 2016 on the ordinary basis.

14. Note that where a costs order is made in favour of any defendant against the plaintiff the costs to which the defendant will be entitled include all of the costs incurred by or thrown away by the defendant as a result of each amendment by the plaintiff of his statement of claim, including the abandonment by the plaintiff of prayers for relief in his fifth further amended statement of claim.

15. Order the plaintiff to pay the first defendant’s costs of the separate determination of a question and the determination of claims made by the plaintiff at pars 5 and 5A of his amended statement of claim dated 31 October 2012 the subject of judgments of Pembroke J delivered on 16 November 2012 and 14 December 2012 on the ordinary basis.

16. Note that the Court declines to make any costs order in favour of the second defendant on the basis of the present application before the Court.

17. Grant leave to the second defendant to deliver to the Associate to Robb J and serve on the other parties to the proceedings any further submissions and affidavit evidence in respect of her claim for costs within 21 days of the publication of this judgment.

18. Order that, if the second defendant does not act on the grant of leave in Order 17 within the 21 day period, the second defendant’s application for an order for costs will be dismissed.

19. Order the plaintiff to pay the fourth defendant's costs of the family provision claim on the ordinary basis.

20. Note that the costs payable by the plaintiff to the fourth defendant pursuant to Order 19 will include the fourth defendant's costs in proceedings 2013/294278, being the subject of Slattery J's judgment in Stojanovski v Stojanovski [2013] NSWSC 1491, on the ordinary basis.

21. Order the plaintiff to pay the fifth and sixth defendants’ costs of these proceedings on the ordinary basis.

22. The Court notes that the fifth and sixth defendants’ costs of proceedings NSD 2146/2017 in the Federal Court of Australia shall form part of their costs of this proceeding.

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Decision last updated: 02 November 2020