There is an obvious evil to a family provision application against an estate, that is, the costs that are incurred.
Whilst costs are treated differently in family provision applications and the Court does have the power to order that the estate pay the costs of the parties, this should not be treated as a given. If you are an executor of an estate dealing with a claim, or an applicant for provision, it is important that you have a clear understanding of how costs work from the outset.
Overview of costs in a family provision application
In my experience, I generally see costs fall into four brackets when dealing with a family provision application:
- The preliminary stage of the estate being placed on notice of the application – in this stage there will generally be an exchange of material as to the applicant’s position and perhaps some negotiations will take place. If a settlement can be reached at this stage it will be the most cost effective outcome for all involved.
- The stage of commencing proceedings – if a negotiated settlement cannot be reached in the preliminary stage mentioned above, then the applicant may choose to file proceedings with the Court. If this occurs, the parties will be subject to the process of the Court. Once their application has been filed with the Court, the executor must notify all the interested persons in the estate such as the other beneficiaries in the Will that an application has been made. Similarly, the respondent executor or administrator will be entitled to file their material responding to the application.
A negotiated settlement can still occur during this stage, however, often, I see the matter proceed to mediation before an agreement is made.
- The mediation stage – once all material has been filed with the Court, the parties appoint a mediator and come together with their legal representatives to participate in a mediation. In Queensland, a practice direction by the Court exists which requires the parties to attend a mediation before the matter can proceed to a trial.
- Trial – if the parties are unable to reach a resolution at mediation, the next step is attending a trial. The length of the trial (in terms of days) will depend on the facts of the matter, the evidence and the number of the parties involved.
It is in the three latter stages that I often see most of the parties’ costs incurred. Having said that, the majority of family provision applications settle at the mediation.
How a Court deals with costs generally versus in a family provision application
Generally speaking, in litigation the unsuccessful party will pay the costs of the successful party.
However, in family provision applications the Court has the power to deal with costs differently. The Court can order that the parties’ costs are paid from the estate. Similarly, the Court can order that a party personally pay costs of another party.
In deciding the matter of costs and how those costs will be paid, the cases to date show that the Court will consider the matter as a whole looking to the conduct of the parties and whether they have acted reasonably.
Example of costs implications for an applicant
In the case of Yeomans v Yeomans (No 2)  QSC 415, the applicant rejected three formal offers prior to trial. At the trial, the applicant was ordered further provision by $2,500 more than the last offer made to her.
Dealing with the issue of costs, the Court ordered that the applicant’s costs were only to be paid by the estate on a “standard basis”. This means that the applicant only received about 60% of her total costs. The applicant would have had to cover the balance of her costs personally.
Justice Mullins stated, “In all the circumstances, the unreasonable approach of the applicant to what she thought she was entitled from the proceeding should not deprive her of a costs order in her favour, but can be accommodated by giving her costs on the standard basis only”.
Example of costs implications for an executor
In the case of Collett v Knox  QSC 132, the applicant for provision was the deceased’s de facto spouse who was 100 years of age at the time of trial, wheelchair bound and partially deaf and blind. The applicant had lived with the deceased for a period of 34 years and was seeking to be granted a life interest in the deceased’s property.
The executors argued that the applicant was not the de facto spouse of the deceased, but rather a boarder at the deceased’s property.
The Court found that the applicant was the deceased’s de facto spouse.
The major asset of the estate was the deceased’s property, with very little cash (around $1,100).
The executors’ costs in the dispute was around $70,000.
The executors’ position at trial was that irrespective of the outcome of the proceedings, the property would have to be sold to meet the estate’s legal costs.
Justice McMeekin (as he was then) states, “I do not conceive that executors in the position of those here are entitled to hide behind their appointment and claim that they have no choice but to litigate as hard as they can, incurring whatever expense they desire, and for their opponent to do the same, in an effort to defeat his claim and preserve their own”.
The Court granted the applicant a life interest in the deceased’s property and ordered the executors costs be limited to $10,000 from the estate, deferred until such time as the applicant’s life interest came to an end. The executors had to personally bear the remaining $60,000 they incurred in legal costs.
Matters to be considered in a family provision application
The above cases show that the Court will not tolerate flippant behaviour from a party when it comes to a family provision application.
Whether you are an executor, or an applicant, it is important to consider your position carefully, keeping the following matters in mind:
- The size of the estate – any steps taken by you must be made with the size of the estate in mind, and the costs that will be incurred
- The need to act reasonably – of course, there is the need for parties to act in good faith and negotiate genuinely however there is no benefit to taking an unrealistic position
- Proper consideration should be given to any offers being received by the other party or made by you
- Receiving advice in relation to the matter as a whole including your position and ability to demonstrate a need for provision, any competing claims and the position of the beneficiaries.
If you are an executor dealing with a family provision application, or a person considering making an application for provision, please do not hesitate to contact me for further advice.