In civil litigation it is the general position that costs follow the event which means that the losing party will pay the winning party's costs. In fact, Order 66 Rule 1 of the Rules of the Supreme Court 1971 (WA) states that the Court will generally order that the successful party to any action or matter shall recover their costs.
This general position is not always applicable to proceedings commenced under the Family Provision Act 1972 (WA) (the FP Act). Section 14(6) of the FP Act provides that the Court may make "such order as to the costs of any proceedings under this [FP] Act as it deems just".
On 21 August 2014 Sadie Craig made an application to the Court seeking an extension of time to file her application for an order that adequate provision be made out of her late husband's estate. This application was made just over five weeks after the six month period had expired under the FP Act. His Honour Justice Mitchell dismissed Mrs Craig's application for leave to file out of time on 24 March 2015 ( Craig v Craig [2015] WASC 109).
The defendants to those proceedings were the Executor and three beneficiaries of the late Mr Craig's Will. More importantly, there was a solicitor and counsel acting for the first defendant (Executor) and a separate solicitor acting for the second, third and fourth defendants.
On 24 April 2015 Mitchell J handed down his supplementary decision ( Craig v Craig [2015] WASC 109 (S)) and ordered:
- Mrs Craig to pay the Executor's costs of the application as between party and party.
- The costs of the Executor be taxed on a trustee basis and, to the extent that those costs exceed the costs borne and paid by Mrs Craig as between party and party, be paid out of the estate.
In exercising His discretion in respect of the costs of the proceedings, Mitchell J had regard to the circumstances of the case and set out the following factors which led him to the view that Mrs Craig should pay at least some portion of the defendants' costs of the application:
- It was significant that in his judgment on 24 March 2015 Mrs Craig did not have an arguable case and that if properly advised, Mrs Craig should have appreciated that her proposed application under the FP Act had no reasonable prospect of success.
- Mrs Craig was a person of considerable personal wealth (over $2 million) who had the capacity to meet a costs order.
- Mrs Craig had sought an indulgence of the Court where she had failed to comply with the time limits prescribed by the FP Act.
In saying that, Mitchell J found the following factors counted against an order requiring Mrs Craig to pay the whole of the defendants' costs:
- Mrs Craig was successful on the issue of whether leave should be granted if she had an arguable case.
- There was considerable duplication in the arguments by the lawyer representing the Executor and the lawyer representing the second, third and fourth defendants. Notably, Mrs Craig should not be required to pay two sets of legal costs where the argument presented by the two sets of lawyers was essentially the same.
- In negotiations between the parties the second, third and fourth defendants unreasonably required Mrs Craig to surrender at least some control of her choice of a retirement facility.
Having regard to the above factors, Mitchell J made the orders above as, in His view, those were fair cost orders in all of the circumstances. In effect, the orders were designed to burden Mrs Craig with paying the complete costs of one party defending the application.
If you are considering making an application under the Family Provision Act 1972 (WA), ensure you receive advice in respect of the cost orders which could eventuate from that application. For a general summary on the time limits for making a claim on an estate, please refer to our October Legal Update.
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