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It is a well known fact that legal proceedings are costly, stressful and time consuming. Legal costs are an important consideration that needs to be taken into account by an individual when deciding whether or not to commence legal proceedings. This is of particular importance when commencing proceedings to challenge a Will, which is also known as a family provision claim. This is because the estate may be too small in size to warrant formal proceedings being commenced or the applicant may be in a financially comprised position, and they may not have the resources and funds available to commence formal proceedings.

Family provision claims are often sought by individuals who may have been left out of a Will or feel as if they have not been adequately provided for in a Will, which leaves them to believe they are entitled to a greater share of the deceased person’s estate. These types of claims are lodged with the Supreme Court and must be made within 12 months from the date of death of a deceased person.

In order to challenge a Will, an applicant needs to fit within the class of eligible persons to make a claim[1], which includes a spouse, de facto partner, child, former spouse, a dependent or someone living in a close personal relationship with the deceased. Additionally, the eligible person needs to satisfy the Court that “adequate provision for the proper maintenance, education or advancement in life” of the applicant has not been made by the deceased person in their Will.

The Court has a broad discretion to make orders in respect of costs and parties need to be aware of who may be liable for payment of those costs when commencing proceedings. There is a common misconception that an applicant’s costs will be paid from the estate, regardless of whether they are successful or unsuccessful in their claim.

In the case of Singer v Berghouse (1993)[2], Justice Gaudron summarized the position of costs in these type of cases as follows:

family provision cases stand apart from cases in which costs follow the event… costs in family provision cases generally depend on the overall justice of the case. It is not uncommon, in the case of unsuccessful applications, for no order to be made as to costs, particularly if it would have a detrimental effect on the applicant’s financial position. And there may even be circumstances in which it is appropriate for an unsuccessful party to have his or her costs paid out of the estate“.

Furthermore, these matters are guided by Supreme Court Practice Note No. SC EQ 7[3] which sets out the practice and procedure of the Court as well as the documents required to be submitted in relation to a claim. The Practice Note contains an important direction on costs of proceedings whereby the Court has power to make an order capping the costs which may be recoverable if an estate has less than $500,000 available for distribution. This is because family provision claims are concerned with a fixed pool of assets and there can be significant effects on the funds available for distribution to the beneficiaries.

The Court can make a range of orders when it comes to costs, such as:

  1. The defendant’s costs associated with defending a claim are to be paid from the estate;
  2. That an unsuccessful plaintiff’s costs be borne by them;
  3. That a successful plaintiff’s costs by paid from the estate;
  4. That an unsuccessful plaintiff also pays the defendant’s costs; or
  5. Any other order that the Court thinks fit.

In exercising their discretionary power when making these orders, the Court looks at a variety of factors, such as the size of the estate, the merits of the claim, genuine attempts to settle the matter, the role of the parties acting reasonably and in good faith, and not unnecessarily engaging in litigation.

When deciding whether or not to challenge a Will, individuals should be mindful that there is no guarantee that their legal costs will be met by the estate, even if their claim is successful. This is why it is important to attempt to settle matters quickly and efficiently in order to avoid legal costs escalating.

If you are considering challenging a Will, or you are an executor defending a claim against an estate, please do not hesitate to contact our office to speak with our estate litigation team for further advice.

 

[1] Succession Act 2006 (NSW) section 57

[2] Singer v Berghouse (1993) 114 ALR 521 at 552

[3] Practice Note No. SC EQ 7

 

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