10. Costs rules in succession proceedings

Introduction

  1. 10.1 The Attorney-General has asked the Commission to review ‘the application of costs rules in succession proceedings, taking into account any developments in rules or practice notes made or proposed by the Supreme Court’.
  2. 10.2 In this chapter, costs rules in succession proceedings are considered at a general level. Costs orders in relation to statutory wills and family provision are considered in Chapters 3 and 6 respectively.

Succession proceedings

  1. 10.3 Succession proceedings may arise in either the probate jurisdiction or the general jurisdiction of the court.
  2. 10.4 The Supreme Court of Victoria has exclusive jurisdiction in the area of probate. The following are examples of succession proceedings in the probate jurisdiction:
  • challenges to the validity of wills propounded for probate (for example, on the grounds of want of capacity, lack of knowledge and approval, undue influence or fraud)
  • questions concerning entitlement to a grant of letters of administration with the will annexed where the will does not effectively appoint an executor, or to a grant of letters of administration where the deceased dies intestate
  • applications for the revocation of an existing grant on the basis:

– in the case of intestacy, that a valid will has been discovered

– in the case of a grant of probate, that the will in question is invalid

  • applications for the removal and replacement of an executor or administrator on the grounds, for example, that they are unfit to act in the office.
  1. 10.5 The following are examples of succession proceedings that may arise in the general jurisdiction of the Court:
  • proceedings for the interpretation or construction of a will
  • proceedings for a share of the estate (or a greater share of the estate) brought under family provision legislation.
  1. 10.6 Almost all succession proceedings are heard in the Supreme Court. Family provision applications may be heard in either the Supreme Court or the County Court.
  2. 10.7 The executor appointed by the will, or an administrator appointed by the Supreme Court, represents the estate in succession proceedings. They may have initiated the litigation (for example, to obtain a grant of probate in respect of a will the validity of which is in issue). Alternatively, they may defend litigation that someone else has instituted (for example, proceedings concerning the adequacy of provision made in the will for the applicant or available on intestacy to the applicant).

Costs orders

  1. 10.8 After deciding the outcome of succession litigation, the Court usually makes a costs order. A costs order directs what, if anything, each party is obliged to pay or is entitled to receive. The costs order will also direct whether the obligation to pay costs is personal (that is, to be paid out of the executor’s or administrator’s own pocket) or is to be paid out of the estate.
  2. 10.9 The costs order will indicate the extent of the costs to be paid. Costs are payable in one of the following ways:
  • on a standard basis covering all costs reasonably incurred and of reasonable amount
  • on an indemnity basis covering all costs except insofar as they are of an unreasonable amount or have been unreasonably incurred
  • on such other basis as the Court may direct.1
  1. 10.10 Whether a costs order is made, and what it directs to be done, is a matter for the Court guided by applicable rules of court and case law.

The Court’s approach to the payment of costs in succession proceedings generally2

Executors and administrators

  1. 10.11 Executors and administrators may recover costs which they have incurred out of the estate when:
  • those costs are not paid by another party to the proceeding; or
  • the executors or administrators are not ordered to pay their own costs personally.3
  1. 10.12 In practice, executors and administrators will recover their costs out of the estate on an indemnity basis. In this way, whether or not successful, executors and administrators will not be required to pay personally for representing the estate in litigation.4

Other parties to succession proceedings

  1. 10.13 The overriding principle is that costs are in the discretion of the court.5 Subject to the overriding principle, there exists a general rule that costs ‘follow the event’.6 In other words, a successful party will recover their costs out of the estate. An unsuccessful party will pay the costs of the successful executor or administrator. Although the overriding principle is applied in succession proceedings, there are important exceptions.
  2. 10.14 An unsuccessful plaintiff’s costs will usually be paid out of the estate in the so-called ‘testator’s fault’ cases—cases where the litigation finds its origin in the fault of the will-maker.7 The classic case is one involving the interpretation of the will. Here the cause of the litigation finds its origin in the will-maker’s choice of language in the formulation of the will. However, a broad approach has been taken to the identification of fault of the will-maker in this context and the court will inquire whether the will-maker by their mode of life, or irrational actions, or other dealings with relatives, or failures towards relatives, has caused the litigation to occur.8
  3. 10.15 If the circumstances led reasonably to an investigation concerning the will-maker’s will—that is, to an investigation of the execution of the will or the capacity of the will-maker, or the existence of undue influence or fraud—there will usually be no order for costs against the unsuccessful party. The unsuccessful party will, in these circumstances, be required to pay their own costs but will not be required to pay the estate’s costs.9
  4. 10.16 Where the unsuccessful party does not have the means to pay the estate’s costs, the court may decide not to make a costs order against the unsuccessful party on the ground that to do so would be futile or ‘wholly symbolic’.10
  5. 10.17 Even if a party is ultimately successful in challenging the validity of a will, if grounds of the challenge included undue influence or fraud and the party was unsuccessful in establishing undue influence or fraud (as the case may be), they will usually be ordered to pay the costs of the estate incurred in relation to these issues. A party alleging undue influence or fraud must prove it and otherwise will be at risk of having to pay costs.11

Protection of executors and administrators

  1. 10.18 An executor or administrator who is concerned about whether to prosecute or defend a claim on behalf of the estate, or appeal a decision of the court, may seek the advice of the court as to whether to do so.12 Costs incurred in seeking this advice are paid out of the estate on an indemnity basis. Ordinarily, if an executor or administrator proceeds with litigation against the court’s advice and is unsuccessful, they will not be entitled to payment of their costs out of the estate.13
  2. 10.19 In a number of situations, however, the executor or administrator will have no choice but to become involved in litigation. For example, an executor is required to act as defendant in family provision proceedings14 and is bound to initiate legal proceedings when seeking to prove the final will of a will-maker and obtain a grant of probate.15

Views and conclusions

  1. 10.20 At the general level dealt with in this chapter, the Commission considers that costs rules in their application to succession proceedings are working satisfactorily and do not require legislative amendment. The Commission has received no submission expressing a contrary view.
  2. 10.21 The judges are privy to the legal and factual details and nuances of each case that comes before them. They are best placed to apply the costs rules in the exercise of their discretion. They are also best placed to improve or clarify, as necessary, current costs rules or practices. A recent example of a significant rule change is found in the Supreme Court (Chapter 1) New Scale of Costs and other Costs Amendments) Rules 2012 (Vic) to be read with Supreme Court of Victoria Practice Note 1 of 2013New Scale of Costs and Counsel Fees.  

Footnotes

Main menu

Back to top