CHALLENGING A WILL – FAMILY PROVISION CLAIMS – A SISTER’S DAY IN COURT GOES HORRIBLY WRONG

September 18, 2019 Madsen Law

A family provision claim is a complaint that adequate provision for a person’s proper maintenance, education, advancement in life and support was not left for them in a deceased’s Will.

An application for Family Provision can only be made by eligible person (i.e. a Spouse, a Child or a Financial Dependent).

So, who pays for these types of cases?

The usual position is that the Applicant’s costs, if successful, will be paid from the estate’s funds at the rate prescribed under the standard published costs of Court (called party verses party costs or standard costs). The usual position regarding costs encourages two things. Firstly, it encourages applicants to make a claim because they don’t have to reach into their own pocket to pay the legal fees.  Secondly, it encourages lawyers to run speculative “no win, no fee” type cases such as the one described below.

The usual position is that the Respondent’s (i.e. the Executor’s) costs, irrespective of the outcome will be paid by the estate on an indemnity basis (i.e. payment for every dollar of costs incurred).

However, the size of the deceased estate and the conduct of the parties may justify the Court departing from the usual position.

The recent case of Wengdal v Rawnsley [2019] NSW SC, 18 June 2019, reminds parties that it is wrong to assume that family provision litigation can be pursued safe in the belief that all costs will be paid out of the estate.

Wengdal v Rawnsley involved two sisters. The elder sister received 30% of funds held in any bank account at the date of her mother’s death under the terms of her late mother’s Will. The younger sister, who the mother thought was in poorer circumstances than her sister, was left the rest of the estate which was valued at around about $168,000.00 after all debts and expenses had been paid.

The elder sister wasn’t happy with only $34,000.00 when her sister got $168,000.00 and commenced the proceedings. Neither sister made any real attempt to settle the dispute at mediation or by offers to settle, preferring instead to go to trial.

The New South Wales Supreme Court was not satisfied that adequate provision for the elder sister’s proper maintenance and support had not been made under the will. The elder sister had lived for many years independently and was self-sufficient. She owned a $1.3mill home in Sydney with a small debt of $30,000.00 secured by mortgage. She had $130,000.00 in super and she received an aged pension and a pension from her super of $600.00 a month.

In this case, the elder sister’s actual incurred legal costs were estimated at $116,000.00 and her estimated costs calculated using the Courts Standard Scale were $70,108.00.

The Executor’s costs were about $79,400.00 of which $25,000.00 had been paid leaving a balance owing of around $55,000.00.

The estate had assets of a little over $200,000.00.  To put this case in perspective, the elder sister incurred legal costs of $116,000.00 (of which, even if successful, she could only recover $70,000.00 from the estate) chasing an increase from $34,000.00 to something more.

The Court reminded the parties, and their lawyers, of these points:

1.         A claim for family provision (and the costs incurred pursing it) must be proportionate to the value of the estate and the value of any family provision order that may be made.

2.         It is not the courts function to treat the sisters equally because their mother didn’t in her will.

3.         It is expected in such cases, especially in claims over a small estate, that parties will behave reasonably and genuinely explore options to settle.

When the court rejected the elder sisters claim, instead of receiving $34,000.00 in cash, she was left with her own legal costs of $116,000.00 and an order to pay her sister’s legal costs of $55,000.00. The reality for the elder sister is that she will have to sell her home or cash in her super to pay her legal bills.

If this article raises questions or concerns for you or perhaps you would value a second opinion about an existing family provision claim, please call us today.