Costs in Family Provision Will Dispute Claims – Does the Unsuccessful Party Pay?

Published 09 Apr 2014

Author: David Cossalter

Within the Australian Legislative Framework there are a significant number of provisions which deal with the issue of costs, and in particular, who is responsible to bear the cost of an unsuccessful application or defence to an application. The key piece of legislation in New South Wales is Section 98(1) of the Civil Procedure Act 2005 which generally deals with the cost powers of courts and reads:-

          98 Courts powers as to costs:-

1.     Subject to Rules of court and to this or any other Act;

a.     The costs are in the discretion of the court, and

b.     The court has full power to determine by whom, to whom and to what extent costs are to be paid, and

c.     The court may order that the costs are to be awarded on the ordinary basis or on an indemnity basis.

The question which then arises is how the court should exercise its broad jurisdiction in relation to costs. Guidance regarding this can be drawn from Part 42 – Costs of the Uniform Civil Procedure Rules 2005 NSW. Rule 42.1 establishes that the general rule or the “usual order as to costs” is that costs follow the event:-

subject to this part, if a Court makes any order as to costs, the Court is to order that the costs follow the event unless it appears to the Court that some other order should be made as to whole or any part of the costs”.

What this essentially means is that the victor is to receive their costs, and that the unsuccessful party is to pay them. McHugh J in Oshlack v Richmond River Council [1998] 193 CLR 72 at 66 identified:-

The expression “usual order as to costs” embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.

Whilst cost principles have been well establish throughout the Australian Legislative Framework, it Is not clear if the usual order as to costs can be maintained in Family Provision or Succession Act claims. The Court, in family provision claims, has a very wide discretion as to costs as outlined in Section 99 of the Succession Act 2006 (NSW):-

          99 Costs

1.     A court may order that the costs of the proceedings under this chapter in relation to the estate or notional estate or the deceased person (including costs in connection with mediation) be paid out of the estate or the notional estate or both in such manner as the court thinks fit.

Gaudron J, in Singer v Berghouse (1993) 114 ALR 521 at 52 identified that:-

family provision cases stand apart from cases in which costs follow the event. Leaving aside cases under the case which, in S.33, makes special provision in that regard, costs in family provision cases generally depend on the overall justice of the case. It is not uncommon, in the case of unsuccessful applicants, for no order to be made as to costs, particularly if it would have detrimental affect 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”.

What this ultimately means for Will Dispute claims is that the narrower cost rules identified in Section 98(1) of the Civil Procedure Act 2005 and Rule 42.1 of the Uniform Civil Procedure Rules 2005 are replaced by a much broader Succession Act position. What the Court will undertake is a review of the overall case and the conduct of the parties.

Hallen J in Harkness v Harkness (No2) [2012] NSWSC 35 at [18] outlines a number of principles which will give rise to a cost order. His Honour summarises the essential position as follows:-

Parties should not assume that this type of litigation can be pursued, safe in the belief that costs will be paid out of the estate: Carey v Robson (No 2) [2009] NSWSC 1199; Forsyth v Sinclair (No 2) [2010] VSCA 195. It is now much more common than it previously was for an unsuccessful applicant to be ordered to pay the defendant’s costs of the proceedings (Lillis v Lillis [2010] NSWSC 359 at [23]) and be disallowed his, or her, own costs.

Where, as here, the issue is whether the unsuccessful applicant should bear the costs of the successful defendant, s98 of the Civil Procedure Act, and rules quoted above, will apply, and, in the absence of some good reason to the contract, there should be an order that the costs of the successful defendant be paid by the unsuccessful plaintiff: Moussa v Moussa [2006] NSWSC 509 at [5].

An unsuccessful plaintiff will, usually, be ordered to pay cost where the claim was frivolous, vexatious, made with no reasonable prospects of success, or where she, or he, has been guilty of some improper conduct in the course of the proceedings: Re Sitch (No 2) [2005] VSC383.

In small estates particularly, the court should be careful not to foster the proposition that obstinacy and unreasonableness will not result in an order for costs: Dobb v Hacket (1993) 10 WAR 532, at 540.

Proceedings for a family provision order involve elements of judgment and discretion beyond those at work in most inter partes litigation: Jvancich v Kennedy (No 2) [2004] NSWCA 397; Re Sherborne Estate (No 2); Vanvalen v Neaves [2005] NSWSC 1003.

In exercising its discretion in relation to costs, the court will have regard to “the overall justice of the case ”:Jvancich v Kennedy (No 2). The overall justice of the case” is “not remote from costs following the event”. However, the court may be more willing to depart from the general principle in proceedings for a family provision order than in other types of case: Moussa v Moussa; Carey v Robson (No 2); Bartkus v Bartkus [2010] NSWSC 889 at [24].

As proceedings for a family provision order are essentially for maintenance, a court may properly decide to make no order for costs, even though it were otherwise justified, against an unsuccessful applicant, if it would adversely affect the financial position which had been taken into account in dismissing the application: Morse v Morse (No2) [2003 TASSC 145; McDougall v Rogers; Estate of James Rogers [2006] NSWSC 484; McCusker v Rutter [2010] NSWCA 318 at [34].

There are also other circumstances that may lead the court to order payment out of the estate of the costs of an unsuccessful plaintiff. The court may allow an unsuccessful plaintiff costs out of the estate if in all the circumstances the case was meritorious, reasonable or “borderline”: McDougall v Rogers; Estate of James Rogers; Re Bodman [1972] Qd R 281; Shearer v The Public Trustee (NSWSC, Young J, 21 April 1998, unreported).

In Harknessv Harkness (No2) [2012] NSWSC 35 at [22 – 23] His Honour found:-

22.     In all these circumstances, weighing up all of the matters upon which submissions have been made, together with the features to which I have referred, I am of the view that the overall justice of this case points against application of the usual rule that costs follow the event.

23.     I order that the defendant’s costs, calculated on the indemnity basis, be paid out of the estate of the deceased. Otherwise, I make no order as to costs.

It was determined in this matter that even though the applicant had not established that she was an eligible person His Honour determined that “had eligibility been established, I would have found that there were factors warranting the making of the application” at [21].

Effectively His Honour identified that the claim was not frivolous, vexatious and would have otherwise been successful.

In Bartkus v Bartkus [2010] NSWSC 889 at [24] it was stated that:-

in exercising its discretion in relation to costs the court will have regard to the overall justice of the case and, as a result, the court may be more willing to depart from the general principle”. 

In determining costs in the matter of McDougall v Rogers; Estate of James Rogers [2006] NSWSC 484 Brereton J [57] emphasised that:-

the court may allow an unsuccessful plaintiff costs out of the estate, if in all the circumstances the case was meritorious and reasonable. In determining the applicant’s claim on costs His Honour went on further to identify at [58] Jamie’s claim, though it has failed, was not unreasonably brought”. His Honour then went on to explain at [59] that “Jamie’s financial position is fragile. In dismissing his application, I have taken into account that he is able to support himself. That he has no capacity to meet an adverse cost order, which would leave him in a truly necessitous, if not desperate, position, and would falsify one basis of my decision, that he is able to support himself. This is a case in which the balance of justice between the parties, having regard to the detrimental impact on Jamie’s position which an adverse costs order would have, his status as a child of the deceased, the absents of any provision for him in Will, and the circumstance that his claim, though unsuccessful, was not unreasonably brought, justifies a decision not to make an order for costs against him”.

In Will Dispute claims the Court is reluctant to order costs against an unsuccessful applicant but will do so if the party has brought a claim that was completely without merit so as to amount to being frivolous or vexatious. It is evident that in circumstances where the case should never have been brought in the first instance, the wide discretion of the Court has in relation to costs would generally advocate the “usual order”.

To go further, the Court also has discretion to order costs for an applicant even where unsuccessful. Such discretion generally will not be utilised unless the conduct of the successful party, usually the estate, was so as to amount to a miscarriage of justice.

The estate will almost always pursue an unsuccessful plaintiff for costs. However, what can be taken from the decisions mentioned above is an understanding that an applicant, with a reasonable claim, can be confident that the Court will give due consideration to their position, and the total conduct of the matter. Plaintiffs can proceed with a matter knowing that it is possible that the Court may not order costs against them even if unsuccessful.

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