Background
This is a case where a claim for added provision out of a small estate was rejected and the unsuccessful claimant was ordered to pay the estate’s costs. It demonstrates that the financial position of parties is a key consideration in determining if a family provision order should be granted out of a modest estate and shows the Court’s willingness to depart, in these circumstances, from any expectation that costs be paid out of the estate.
In this case, two sisters were pitted against each other in respect of the estate of their deceased mother. Taking into consideration all of the estates assets and liabilities, the highest value of the estate available to the Court was $297,796.00.
The court, in coming to a decision as to whether to grant added provision, took into consideration the modest value of the estate compared with the:
- High costs incurred in running the proceeding. The Court found that the total costs that could be ordered to be paid out of the estate would be $108,285.00. This would impact significantly on the value of the estate;
- Plaintiff’s financial position. The Plaintiff had $113,000.00 in superannuation and was the sole proprietor of a $1.3 million property. The Court gave significant weight to the fact that the Plaintiff held assets that far exceeded the total value of the estate;
- Defendant’s financial position. The Defendant had no assets of significance, no car and no superannuation. The Defendant’s living expenses exceeded her income, resulting in increasing debt.
The Court also considered the size of the Plaintiff’s claim as a proportion of the total estate. In this case, the Plaintiff sought over 75% of the total value of the estate, making her the principal beneficiary of the estate and effectively amounting to a wholesale departure from the deceased’s intentions.
The Court ultimately held that whilst no one consideration was more or less important than any other, the Plaintiff did not establish that any further provision out of such a small estate ought to be made. The Court held further that even if it had been satisfied that the Plaintiff had not been left adequate provision (which it was not), the financial circumstances of the Defendant had the effect of ‘extinguishing any order for provision for the Plaintiff that might be made’ [at 215-216].
On the question of costs, the court held that ‘in small estates particularly, the court should be careful not to foster the proposition that obstinacy and unreasonableness will not result in an order for costs’ [at 147]. Consequently, the Court held that the Plaintiff should pay the Defendant’s costs on an ordinary basis because the Plaintiff had persisted with her claim despite knowing the financial circumstances of the Defendant and the modest value of the estate.
This article was written by Simon Crawford, Partner, Christian Teese, Senior Associate, and Sarah Roberts, Solicitor.
