Who Pays the Costs? Costs in Contested Will Proceedings in Victoria

The General Rule: Costs Follow the Event

The starting point in all Victorian civil litigation — including estate disputes — is that the unsuccessful party pays the successful party's costs. This is often expressed as "costs follow the event". In a family provision claim, if the applicant succeeds in obtaining further provision, the executor (or the estate) will usually be ordered to pay the applicant's costs. If the applicant fails, they will usually be ordered to pay the executor's costs.

The principle was clarified in a series of Victorian and High Court decisions that moved Part IV family provision claims away from the old "estate pays all" approach. The Court now treats these claims as adversarial litigation to which the ordinary costs rules apply, subject to the Court's discretion to vary the outcome where justice requires it.

Court Discretion Regarding Costs

The Supreme Court has a broad statutory discretion to make any costs order it considers just. Factors the Court commonly weighs include:

• The outcome. Who succeeded, and on what issues? A party who wins on some issues but loses on others may receive only partial costs, or no costs at all.
• The conduct of the parties. Unreasonable conduct — including delaying tactics, excessive discovery, refusal to mediate, or running arguments with no evidentiary basis — can attract adverse costs orders.
• Offers of compromise and Calderbank offers. A party who rejects a reasonable offer and then does worse at trial may be penalised in costs from the date the offer was made.
• The necessity of the litigation. Where the dispute arose from an ambiguity in the will, the deceased's own conduct, or a genuine doubt about the proper administration, the Court may be more inclined to order costs out of the estate.
• Proportionality. Costs must bear a reasonable relationship to the amount in dispute and the complexity of the issues. A $50,000 claim that generates $200,000 in costs will attract judicial scrutiny regardless of who won.

Costs in Family Provision Claims

Family provision claims under Part IV of the Administration and Probate Act 1958 (Vic) are now subject to the ordinary costs-follow-the-event principle. This represents a significant shift from historical practice and has important practical consequences for both claimants and executors.

For claimants, the key risk is that an unsuccessful claim can result in a personal costs order. The size of that order depends on the costs actually incurred by the estate, which can be substantial if the executor was forced to prepare for mediation, gather evidence and brief counsel. For executors, the risk is that an unreasonable defence — or an unreasonable refusal to settle — can result in the loss of the estate indemnity and a personal costs exposure.

For the factors the Court weighs in a family provision claim, see our guide to family provision claims in Victoria. For the strict time limits that apply, see our article on time limits for TFM claims.

Costs in Testamentary Capacity Disputes

Challenges to the validity of a will on the ground of lack of testamentary capacity are different from family provision claims. The proceeding is about the validity of the document itself, not the adequacy of provision. The costs framework reflects that difference.

Where a capacity challenge is brought genuinely — for example, where there is real medical evidence that the will-maker did not understand what they were doing — and the will is ultimately found to be invalid, the costs of the proceeding may be ordered out of the estate. The reasoning is that the litigation was necessary to determine the true will and the proper administration of the estate.

Where a capacity challenge is weak, speculative or driven by a beneficiary's disappointment rather than by genuine evidence, the unsuccessful challenger is likely to be ordered to pay costs personally. The Court looks carefully at the quality of the medical evidence, the solicitor's file notes, and whether the challenge was proportionate to the estate's size.

For more on the evidence and legal framework, see our guide to challenging testamentary capacity in Victoria.

Costs in Undue Influence Proceedings

Allegations of undue influence are serious and difficult to prove. Because the will-maker is deceased and cannot give their own account, undue influence claims rely heavily on circumstantial evidence — the circumstances of the will's preparation, the will-maker's vulnerability, the role of the alleged influencer, and the solicitor's file.

Where an undue influence claim succeeds and the will is set aside, the costs of the proceeding are usually paid out of the estate or by the party who propounded the invalid will. Where the claim fails, the applicant is at significant risk of a costs order. Because undue influence claims are often run alongside capacity challenges and family provision claims, the costs picture can become complex — different issues may attract different costs orders.

For the evidentiary framework and the patterns that attract challenge, see our guide to undue influence and suspicious circumstances in Victorian will disputes.

Costs in Probate Caveat Proceedings

Probate caveats sit at the intersection of procedural law and substantive validity disputes. A caveat is lodged to prevent a grant of probate from issuing while a genuine concern is investigated. The costs risks are significant and operate in both directions.

A caveator who lodges without reasonable grounds, who fails to support the caveat when warned off, or who pursues a hopeless case at hearing can be ordered to pay the costs of the grant applicant and the estate. Conversely, an executor or applicant for probate who unreasonably resists a genuine caveat, or who rushes to distribution while a valid dispute is pending, may be ordered to bear costs personally or to compensate the estate for losses caused by haste.

For the procedure and strategic considerations, see our guide to probate caveats in Victoria.

Estate-Funded Litigation

Executors and administrators are entitled to an indemnity from estate assets for costs properly incurred in the administration of the estate. That indemnity extends to the costs of defending reasonable claims and, in some cases, to the costs of bringing proceedings necessary to protect the estate — for example, to recover assets or to obtain directions from the Court.

The indemnity is not unlimited. It does not cover costs incurred through misconduct, negligence, or unreasonableness. An executor who defends a family provision claim without merit, who delays the administration for personal advantage, or who litigates against beneficiaries without proper grounds may find that some or all of their costs are disallowed and that they are personally liable for the shortfall.

The estate indemnity also does not extend to beneficiaries who intervene in proceedings for their own benefit. A beneficiary who hires their own lawyer to oppose a family provision claim does so at their own risk; if the claimant succeeds, the beneficiary may be ordered to pay the claimant's costs or may be unable to recover their own costs from the estate.

Personal Costs Orders Against Parties

Personal costs orders are the Court's mechanism for penalising unreasonable litigation conduct. They can be made against:

• Claimants who bring weak or speculative claims, who refuse reasonable settlement offers, or who conduct the litigation in a manner that drives up costs without corresponding benefit.
• Executors who defend claims without reasonable grounds, who fail to account, who are in conflict of interest, or who use estate assets to fund personal litigation.
• Beneficiaries who intervene unreasonably, who fund or encourage weak claims or defences, or whose conduct worsens the dispute.
• Legal representatives in rare cases where lawyers have acted improperly or have caused costs to be incurred through negligence or misconduct.

The threshold for a personal costs order is high. The Court does not make them lightly. But they are a real risk in estate litigation, and they are one of the reasons why costs advice is obtained before any significant step is taken.

Calderbank Offers and Settlement Offers

A Calderbank offer is a without-prejudice offer made "save as to costs" — meaning it cannot be shown to the Court while the proceeding is on foot, but can be revealed for costs purposes after judgment. The purpose is to encourage settlement by creating a costs incentive to accept reasonable offers.

The mechanism is simple. If a defendant offers $300,000 and the claimant rejects it, then goes to trial and is awarded only $200,000, the claimant has done worse than the offer. The Court may order that the claimant pay the defendant's costs from the date the offer was made — even though the claimant technically "won" the proceeding.

Formal offers of compromise under the Supreme Court rules operate similarly but with more rigid procedural requirements. Both mechanisms are used regularly in Victorian estate litigation and are central to the strategic advice we give from the outset of any matter.

Mediation and Costs Consequences

Almost all contested estate matters in the Supreme Court of Victoria are referred to compulsory mediation. The Court expects parties to arrive prepared, with proper instructions, reliable estate accounts and a genuine willingness to explore settlement.

The costs consequences of mediation can be significant. A party who unreasonably refuses to attend mediation, who attends but makes no genuine attempt to settle, or who rejects an offer at mediation and then achieves a worse result at trial may face adverse costs orders. Conversely, a party who makes reasonable settlement efforts, who frames their position clearly, and who mediates in good faith is usually protected even if they do not ultimately settle.

Mediation costs — including the mediator's fee, venue and the costs of preparation — are usually recoverable as part of the costs of the proceeding if a party succeeds. Where the matter settles, the settlement terms usually address how those costs are to be borne.

For a detailed guide to how mediation works in Victorian estate disputes, see our article on mediation in estate litigation in Victoria.

Conduct That May Increase Costs Exposure

Certain kinds of conduct are known to attract adverse costs orders in Victorian estate litigation:

• Distributing the estate before the expiry of the Part IV time limit. An executor who distributes and then faces a successful claim may be personally liable for the shortfall and for the costs of the proceeding.
• Failing to preserve estate assets. Selling, transferring or encumbering estate assets while a dispute is pending can attract costs orders and other sanctions.
• Running multiple unconnected claims. A claimant who brings a family provision claim, a capacity challenge and an undue influence claim — and succeeds on only one or none — may find that their costs exposure is increased because they forced the estate to defend multiple fronts.
• Excessive or unnecessary discovery. Estate litigation does not justify the same level of documentary discovery as large commercial disputes. Parties who demand excessive categories of documents, or who refuse reasonable requests, can be penalised.
• Unreasonable refusal to settle. A party who rejects an offer that is later shown to have been better than their trial result will usually pay the other side's costs from the date of the offer.

Security for Costs Considerations

In some cases, the Court may order a claimant to give security for costs — typically a deposit or a bond — to guarantee that the defendant's costs will be paid if the claim fails. Security for costs is more commonly sought in commercial litigation than in estate disputes, but it can arise where:

• the claimant is resident outside Australia and may not be able to satisfy a costs order;
• the claimant is impecunious and there is a real risk that costs will not be recoverable;
• the claim is brought by a company or other entity with limited assets; or
• there is evidence that the claimant is dissipating assets to avoid a future costs liability.

The Court balances the claimant's right to access justice against the defendant's legitimate interest in being able to recover costs if they succeed. The order is discretionary and the Court may refuse security where it would stifle a genuine claim.

Practical Guidance for Executors

If you are an executor facing a claim against the estate, the following steps will help you manage costs risk:

1. Obtain independent legal advice early. The lawyer should act for the executor, not for the beneficiaries personally. Conflicts of interest must be managed carefully.
2. Do not distribute prematurely. Wait until the Part IV time limit has expired, or until any claim has been resolved, before making final distributions.
3. Consider the merits objectively. An executor who defends a claim unreasonably — where the claim is clearly strong — risks losing the estate indemnity and being ordered to pay costs personally.
4. Keep proper records. Costs disputes often turn on whether the executor acted reasonably. Detailed file notes, correspondence and estate accounts are essential.
5. Explore settlement. Mediation and negotiated settlement are usually cheaper and faster than trial. An executor who unreasonably refuses mediation may be penalised in costs.
6. Consider Calderbank offers. Where the claim has weaknesses, a well-timed offer can protect the estate's position on costs.

For more on the executor's duties and how to manage disputes, see our guide to executor disputes in Victoria.

Practical Guidance for Applicants

If you are considering bringing a family provision claim or challenging the validity of a will, the following guidance will help you assess and manage costs risk:

1. Assess the estate. Is the estate large enough to justify the costs of a proceeding? A $50,000 estate that generates $80,000 in costs is not a sensible target.
2. Get realistic advice on prospects. A lawyer experienced in estate litigation can assess the strength of your claim, the likely range of outcomes, and the costs exposure if you lose.
3. Understand the worst case. If your claim fails, you may be ordered to pay the estate's costs in addition to your own. That risk must be factored into any decision to proceed.
4. Consider settlement early. The majority of estate disputes settle. An early, well-prepared approach — with a clear position and supporting evidence — often produces a better outcome than a contested hearing.
5. Be careful with offers. Rejecting a reasonable Calderbank offer and then doing worse at trial can be very expensive. Every offer must be assessed against the realistic range of outcomes.
6. Watch the time limit. Family provision claims must usually be commenced within six months of the grant of probate. Missing the time limit can extinguish an otherwise strong claim and leave you with costs liability.

When Early Legal Advice Can Reduce Costs Risk

The single most effective way to reduce costs risk in estate litigation is to obtain specialist advice early — before positions harden, before correspondence becomes hostile, and before the costs of a proceeding have been incurred.

Early advice can:

• clarify whether you have a viable claim or defence, saving the costs of a fruitless proceeding;
• identify the realistic range of outcomes, so that settlement discussions are grounded in reality rather than emotion;
• frame the right proceeding — a family provision claim, a validity challenge, an executor dispute, or a combination — avoiding the costs of running the wrong case;
• preserve evidence — medical records, solicitor files, banking records, witness statements — before they are lost or memories fade; and
• set up the costs position properly from the outset — including the use of offers, the timing of mediation, and the management of the estate indemnity.

Our estate litigation team advises both claimants and executors on costs exposure from the first conversation. We also assist with probate and estate administration where the dispute is closely tied to the administration process. For a broader overview, see our pillar guide on estate litigation lawyers in Melbourne.

Frequently Asked Questions