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    The costs in an Estate Dispute

    Oct 14, 2019 12:32:00 PM

    An area of law of specific focus in respect of costs orders is family provision matters, commonly known as ‘estate disputes’. Section 99 of the Succession Act 2006 (NSW) states that the court may order the costs of proceedings in relation to a deceased’s estate to be paid out of the estate “in such manner as the Court thinks fit”. This grants the court wide discretion in respect of the costs orders it may make in interlocutory matters and the overall proceedings.

    Normally, a successful applicant for a family provision order is entitled to an order that his or her ordinary costs are paid out of the estate. A defendant, as the person representing the estate of the deceased, is normally entitled to the same order irrespective of the outcome of the proceedings.

    However, as the court recently reminded litigants in Wengdal v Rawnsley [2019] NSWSC 926 (18 June 2019), this ‘normal’ course of events does not mean that parties should assume that they can freely pursue a family provision claim with the guarantee that all costs will be paid out of the estate. Any determination regarding costs will be solely at the court’s discretion, which may be influenced by the circumstances of the case such as the size of the estate, the conduct of the parties, any offers exchanged between the parties, and any provision awarded to a successful claimant.

    The courts will also consider whether the costs incurred by the parties are proportionate to the nature of the proceedings and the size of the estate: Grant v Roberts; Smith v Smith; Roberts v Smith; Curtis v Smith [2019] NSWSC 843. If parties are wastefully incurring costs as a result of their conduct, the court may make no order as to costs, penalise a particular party for their complicity in costs unnecessarily incurred, or cap the party’s costs to prevent them spending an undue amount on litigation.

    In Wengdal v Rawnsley, the court stated that the costs were “eye-watering in amount compared to the size of the estate”. In that case, the size of the estate was adjudged to be $297,796 (including property designated as notional estate). At trial, the parties disclosed that their joint costs calculated on the ordinary basis would be $108,285 (excluding indemnity costs and uplift fees). If these costs were ordered to be paid from the estate, then the value of the estate out of which an order could be made would only be $189,511.

    The Plaintiff sought an amount that was approximately one-half of the value of the estate (before the deduction of costs). With costs deducted, this amount was over three-quarters of the total value of the estate.

    The court ultimately dismissed the Plaintiff’s summons. While the court was critical of the Defendant for its lack of prompt disclosure, the court was particularly critical of the Plaintiff for persisting with her claim notwithstanding the small size of the estate and the disproportionate costs of running her case. The court stated her approach was “not a reasonable position to adopt when she must have known the value of the estate and the competing financial circumstances of the Defendant”. As such, the Plaintiff was ordered to pay the Defendant’s costs on the ordinary basis.

    While favourable costs orders are common for successful claimants in family provision matters, it is important that litigants take a commercial approach and are correctly advised as to the possible outcomes in the matter (including in relation to costs orders). At Frank Law, we provide honest and tailored advice to enable you to make commercial decisions whilst in the thick of litigation. We are able to assist if you require advice regarding a family provision matter and any associated costs implications.

    If you have further questions, please contact Matthew Sibley at msibley@franklaw.com.au

    This is not legal advice. 

    Matthew Sibley

    Written by Matthew Sibley