November 17, 2016

A common misconception about estate litigation is that the estate will meet all the costs.  “Have a go because the costs will be paid by the estate” has been said before but those days are close to over if not over already.

The tides are turning and Courts are being much more discerning about who should rightfully meet the costs when it comes to claims against estates.

The usual approach

As a starting point, an order for costs is always at the discretion of the court.  It is a general rule that the winner of litigation has their costs (or a portion of them) paid by the losing party.  This is described as “costs following the event” or “loser pays”.   

However, estate litigation can be a bit different and there are certain recognised exceptions to the general rule.  These exceptions include if the will maker has been the cause of the litigation or if the circumstances led to investigations reasonably being undertaken.  On top of these rules lies the principle that the executor is still entitled to their indemnity from estate funds so if there is a gap in the costs recoverable the estate may still bear some of those costs.

A recent decision

A recent decision of the South Australian Supreme Court provides a salient reminder that costs in estate litigation will not always follow these general rules.

In the Estate of Frances Ponkivar (Deceased) No.2 [2016] SASR 166 concerned the issue of costs to be ordered against an unsuccessful party.  Following the death of the deceased there were potentially two wills – a copy of a 2007 willl and a 1993 will.  The original of the 2007 will could not be located but the executor successfully rebutted the presumption of destruction and the copy of this will was admitted to probate.

This was achieved however only after a lengthy application whereby the deceased’s niece argued in favour of the 1993 will which was more in her favour.  The successful the executor sought costs against the niece.

Justice Stanley undertook a detailed review of cases on point and concluded that costs should mostly follow the event.  He rejected the niece’s argument that the will maker in some way caused the fight concluding that such a principle is grounded in history perhaps not even relevant today.  He commented that estate litigation these days is more between private parties advancing their competing claims for private financial benefit[1].

He found that the niece whilst raising a legitimate question had “pressed ahead in opposing the application” despite there being strong evidence against her[2].  He stated that the deceased’s conduct is no longer a relevant consideration on the issue of costs.  Whilst finding that the executor would always have had to bring the application, His Honour noted that it was longer than it would otherwise have been and so held that the niece:

  • Pay all of her own costs; and
  • Pay 25% of the executor’s costs of the litigation.

The warning

So let this be another warning before anyone embarks on estate litigation that it is not a forgone conclusion that the estate will pay everyone’s costs.  The general rule of costs following the event is alive and well.  It may no longer be that the conduct of the will maker (in their actions or how they left their will) will allow you to claim costs from the estate if you lose your claim.

If you bring litigation you need to be very aware of the potential of not only paying your own costs but also the other party or parties’ costs if you are not successful.  Solicitors need to ensure clients are properly advised on these issues.  It will be interesting to continue watching the stance our Queensland Court takes on the issue estate litigation costs.

What to do next

Contact us if you or someone you know is considering litigation against an estate or generally requires assistance in the area of Wills & Estates.  If you need some advice or guidance in this area, please contact the McInnes Wilson Lawyers Wills & Estates Team.

[1] [2016] SASR 166 at 9 citing Fielder v Burgess [2014] SASR 98

[2] [2016] SASR 166 at 12