Australia, Sept. 9 -- New South Wales Land and Environment Court issued text of the following judgement on Aug. 8:

1. Judgment was delivered in these proceedings on 23 July 2025: Penya v Penya [2025] NSWSC 805. These reasons concern the costs of the proceedings. Familiarity with the principal judgment is assumed. As in the principal judgment, I generally refer to the parties by their first names to avoid confusion arising from their common surnames. No disrespect is intended.

2. Mr Paul Penya, the successful plaintiff in the s 66G proceedings, refers to my summary of the principles applicable to the exercise of the costs discretion in such proceedings in Eva Joy Ambrus v Lee Ellen Buchanan (No. 2) [2023] NSWSC 5 at [4]-[6]:

"4 The Court has a discretion under s 98 of the Civil Procedure Act 2005 (NSW) to make an order for costs determining by whom, to whom and to what extent costs are to be paid. In proceedings under s 66G of the Conveyancing Act, that discretion is usually exercised by ordering that the parties' costs to be paid out of the proceeds of sale of the land, the rationale being that the costs of the proceedings are an incident of joint ownership: Kardos v Sarbutt (No. 2) [2006] NSWCA 206 at [28] (Brereton J (as his Honour then was), Basten JA and Hunt AJA agreeing); Chow v Chow (No 2) (2015) 18 BPR 35,385; [2015] NSWSC 1348 at [7]-[8] (Young AJA); Chetwynd v Rose [2021] NSWCA 193 at [120] (White JA, Meagher and Leeming JJA agreeing).

5 The usual rule generally extends to the costs of an unsuccessful defendant who has properly advanced substantial arguments in support of an estoppel or contractual or fiduciary obligation which may have afforded a good reason to decline to appoint trustees for sale, although the arguments ultimately failed: Stone v Stone (2014) 17 BPR 33,443; [2014] NSWSC 1655 at [51]-[52] (Darke J); Norris v Norris [2021] NSWSC 1676 at [25]-[26] (Robb J).

6 However, unreasonable conduct on the part of a party that results in costs being incurred unnecessarily may warrant a departure from the usual rule. As Darke J explained in Stibbard-Leaver v Leaver [2021] NSWSC 65 at [5]:

'I observe at this point that in litigation of this type under s 66G of the Conveyancing Act, it is usual to order that the costs of the proceedings be paid out of the proceeds of sale. The rationale for this approach is that the costs of such an application are an incident of joint ownership (see Kardos v Sarbutt (No 2) [2006] NSWCA 206 at [28]). It remains the case of course that unreasonable conduct by a party may be a basis to conclude that some other order is appropriate in a s 66G case. Lewin v Lewin [2019] NSWSC 380 is an example. In that case, it was held that certain unreasonable conduct led to an unnecessary incurring of costs. However, as I noted in that case (at [41]), a co-owner is ordinarily under no obligation to seek to avoid a need to bring a s 66G application (see also Chow v Chow (No 2) [2015] NSWSC 1348 at [12] where it was stated by Young AJA that co-owners have no obligation to negotiate their dissolution).'"

3. Paul submits that the Court should order that the whole of his costs be paid out of the proceeds of sale of the Eastlakes property, that the costs of the unsuccessful first defendant, Ms Therese Penya, incurred up to and including 13 April 2023 should be paid out of those sale proceeds, and that Therese should pay her own costs from and including 14 April 2023. Paul submits that Therese acted in a dishonest, disreputable and unreasonable manner by departing on 14 April 2023 from the position which Paul had understood to have been agreed between them, that they would consent to the sale of the property on certain terms. That agreement was made in circumstances where Paula-Marie had not yet foreshadowed her claim to a beneficial interest in the Eastlakes property. As recorded in the principal judgment at [141]-[145], those consent orders were not made after it became clear that Ms Paula-Marie Penya intended to commence the trust proceedings claiming that Paul and Therese held the Eastlakes property on constructive trust for her. Paula-Marie commenced those proceedings on 4 May 2023.

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/19887d4741bc2c593b2b00b5)

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