Costs in estate claims

Claims by disappointed children or partners to a share – or a greater share – of a deceased estate are becoming more common. These claims (known as family provision claims) have a significant impact upon the estate because of the costs involved, the delay in administering the estate because of litigation, and the potential adjustment by making further provision for the claimant.

But is it possible that an unsuccessful claimant will have to pay the costs of the estate in defending the claim? The answer is yes, in some cases.

The general position in litigation is that “costs follow the event”. That means that usually, a successful party will have their costs paid, an unsuccessful party will have to pay their own costs and those of the other party.

A typical family provision application in the District Court, running to trial for 2 days with barristers, might result in the incurring of costs of somewhere between about $60,000 to $80,000 for each side, though in some cases it might be much more depending on what is in dispute. Not all of those costs would be recoverable on the usual basis of orders (that “standard basis”), a successful party would potentially recover about 60% of their costs on the standard basis and 80% on the indemnity basis, though in some instances the rate of recovery might be a lot less because of the arrangements of the party with their lawyer, perhaps where there is a “no win no fee” type of arrangement with a much higher rate of fees than the court scale.

In family provisions however it is not uncommon for the courts to order – where the applicant failed and usually would have to pay the estate’s costs – that each party bear their own costs. This means that in many cases the estate will have to bear its own costs of the dispute, meaning that there is now (say) $80,000 less available for distribution to beneficiaries.

This sort of order is dependent on the facts of the matter and the conduct of the litigation, including whether the case was borderline (i.e. it could have gone either way, which would tell against costs being awarded against the unsuccessful applicant) or poor or adventurous (which would suggest that costs should be ordered against the unsuccessful applicant). Also of relevance is the financial position of the applicant (would they suffer significantly if costs were ordered against them) and whether the estate had made a reasonable offer of settlement.

These factors were considered in the decision of Dawson v. Joiner (No.2) [2011] QSC 403, with a very handy discussion of the state of the law in respect of the costs of these applications.

If you are considering making a claim against an estate, or intend to oppose one, please do not hesitate to contact Peter Muller at peterm@qbmlaw.com.au