Family provision claims in small estates is an inherit danger zone for claimants and lawyers.
The recent case of Wengdal v Rawnsley  NSWSC 926 has demonstrated this again where Justice Hallen has ordered that the plaintiff’s claim be dismissed and the plaintiff pay the defendant’s costs on the ordinary basis.
In this case, the deceased was survived by her two daughters; the plaintiff (aged 74 years) and the defendant (aged 69 years). In her Will, the deceased gave 30% of “any monies held in any financial institution by me on deposit” and the residue to the defendant. The gross value of the estate at the date of death was $414,215.00. The estate primarily consisted of a retirement village (leasehold) interest and money in the bank. The liabilities were estimated to be approximately $180,236.00 which ultimately resulted in a likely net estate value of $297,796.00.
The costs of the litigation were:
- for the plaintiff, estimated $102,285.00;
- for the defendant, estimated $79,440.00 (of which $23,736, had already been paid from estate funds).
Ultimately, this led the Court to estimate that the value of the estate of which an order could be made out of was approximately $167,930.00 (including costs).
Justice Hallen commented on the importance of facilitating the just, quick and cheap resolution of the real issues in the proceedings (para 48). Referring to apt comments from Chief Justice Ward in Grant v Roberts; Smith v Smith; Roberts v Smith; Curtis v Smith  NSWSC 843, where she wrote at -:
“…There is an understandable concern that costs incurred in proceedings oft his kind not be disproportionate to the nature of the proceedings and the size of the estate (see for example the recognition by Basten JA in Page v Page  NSWCA 141 at , in the context of the family provision jurisdiction, of the need not to encourage litigation where costs often reach a high proportion of the value o the estate; and His Honour’s concern expressed in Harris v Harris  NSWCA 334… (at ) that what His Honour regarded as the Court’s “willingness to entertain comparatively expensive litigation of this sort” might well have encouraged the pursuit of such claims). It is no secret that the Family Provision List judge pays close attention to the control of costs, particularly in small estates, for that reason.
The present is yet again a case where, regrettably, the costs (which, i have to say, are eye-watering in amount compared to the size of the estate (even if notional estate is taken into account) will inevitably have a significant impact on the outcome of the proceedings….”
In dismissing the plaintiff’s claim, the Court noted that whilst she may have some “needs”, such need is not the only factor to consider. The Court commented that the plaintiff was provided for, and without these proceedings having been commenced, the plaintiff may have been able to discharge a good portion of her mortgage liability.
The Court said, at paras -:
“Considering the situation in life of the Plaintiff at the present time, I was not satisfied that adequate provision for her proper maintenance, education and advancement in life had not been made by the Will of the deceased. In this regard, she has a home, a car, superannuation and a secure income (by way of a pension). She does have a liability, being the debt secured by the mortgage, but that debt accounts for less than 5 per cent of the value of the home on which it is secured.
In this case, any provision the Court makes in favour of the Plaintiff has to be made at the expense of the Defendant, for whom the deceased believed, more provision ought to be made, and whose claims to such provision from the estate appear far more compelling than those of the Plaintiff. To make provision for the Plaintiff, as well as for her costs, would result in a significant part of the available estate going to her rather than to the principal chosen object of the deceased’s estate. The Plaintiff’s financial position is far better than the Defendant’s is, and that financial position does not justify an order for additional provision being made out of the deceased’s estate and notional estate.”
His Honour went on to say even though the had found that the plaintiff had not satisfied the jurisdictional test, even if he had found otherwise, he was not satisfied, having regard to all the considerations of the matter, that a family provision order ought to be made to the plaintiff (at para -).
As to the form of costs, His Honour took into account that the plaintiff had not made any written offers to settle, but had made an offer to settle on terms that provided for $95,000 plus her costs on the ordinary basis. The Court said that, given the costs of the plaintiff, it was “hardly surprising that the Plaintiff’s offer was not accepted” (at para .
The defendant had made a Calderbank offer to the plaintiff and in light of the plaintiff’s claim being dismissed, the Court stated that there was no reason to make an order for indemnity costs. The plaintiff suggested that very late disclosure of an estate liability by the defendant (as to the retirement villages costs) only days before the hearing was a good reason for there to be no order as to costs. The Court did not agree and ordered that the plaintiff pay the defendants costs on the ordinary basis and provided the following comment on the topic:
“Whilst it is not possible to come to the conclusion that the approach by the Plaintiff would have been different had she known this information prior to the lapsing of the Offer to Compromise, I cannot conclude that the Court should, in this case, “otherwise order”.
The same reasons do not provide a basis for making no order as to costs (as was submitted by counsel for the Plaintiff). The Plaintiff was well aware that, on any view, the value of the estate was small. She persisted with her claim, which at the hearing was one for about half the value of the estate (before the deduction of costs). This was not a reasonable position to adopt when she must have known the value of the estate and the competing financial circumstances of the Defendant.” (para 223)
There is simply no doubt that we live in a litigious society. There’s also no doubt that a lot of wealth is held by the elder generations and less so for the younger. It’s understandable that this may impact on the growth of family provision claims in today’s society. What is evident, however, is the court’s continued focus and stern warnings to claimants (and their lawyers!) to be forever mindful of costs in these types of proceedings; particularly so in small estates. This is a fundamental reminder that parties to litigation always pursue their matter at their risk of an adverse costs order and that costs are a live issue at the beginning, middle and end of any litigation.
You can read the case here.