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

The Discretionary Costs Framework

In the Supreme Court of Victoria, the power to award costs is conferred by section 24 of the Supreme Court Act 1986 (Vic). The Court's discretion is exercised in accordance with the Supreme Court (General Civil Procedure) Rules 2025 and the overarching purpose of the Civil Procedure Act 2010 (Vic), which requires the Court and the parties to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.

The exercise of that discretion is not mechanical. The Court considers matters such as the outcome of the proceeding, the conduct of the parties before and during the proceeding, offers of compromise and Calderbank offers, the necessity of the litigation, proportionality between the costs incurred and what was in dispute, and compliance with the overarching obligations in the Civil Procedure Act. The Court may make a costs order in favour of a party, against a party, on different bases for different issues, in favour of or against a party's legal practitioner, or against a non-party. The Court may also reserve costs, make no order as to costs, or order that costs be paid from a fund such as the estate.

Bases on Which Costs May Be Ordered

Where the Court orders one party to pay another party's costs, and the amount is not agreed, the amount is assessed by the Costs Court. The order may specify one of a number of bases:

• Standard basis. The party receives costs that were reasonably incurred and reasonable in amount. Doubtful items are generally resolved against the party seeking recovery. This is the default basis when the order does not specify otherwise.
• Indemnity basis. The party receives all costs except those that were unreasonably incurred or unreasonable in amount, with doubtful items generally resolved in favour of the party seeking recovery. The Court may order costs on the indemnity basis in the exercise of its discretion, for example where a party's conduct is found to have been unreasonable, or as a consequence of the operation of a formal offer or a Calderbank offer.
• Another basis. The Court may direct that costs be assessed on another basis it considers appropriate, or fix costs in a specified amount, or cap costs for a stage of the proceeding.

Even a successful inter-party costs order will ordinarily leave a gap between the client costs owed by a party to their own lawyer and the inter-party costs recovered from the other side. That gap needs to be factored into any decision about whether to litigate.

Inter-Party Costs, Client Costs and Estate Reimbursement

Three separate concepts are commonly confused and should be kept distinct.

Inter-party costs are the costs one party is ordered by the Court to pay another party. The amount is assessed on the basis directed by the Court.

Client costs are the costs owed by a party to their own lawyer under the retainer and costs agreement. These are payable regardless of the outcome of the proceeding, subject to any assessment of the lawyer's bill.

Executor reimbursement and indemnity from the estate is a distinct right of an executor or administrator to be reimbursed and indemnified out of estate assets for costs properly incurred in the due administration of the estate. The right depends on the executor having acted reasonably, in good faith and within the scope of the office. It is not automatic. An executor who acts outside the scope of the office, in breach of duty, for personal advantage or in an unreasonable way may have some or all of their costs disallowed, and may face a personal costs order.

Kinds of Estate Proceeding and Their Costs Considerations

Part IV family provision proceedings

A proceeding for an order under Part IV of the Administration and Probate Act 1958 (Vic) is treated as adversarial litigation for costs purposes. The Court applies the discretionary framework described above and considers the same range of factors, including the parties' conduct, offers and settlement efforts, proportionality, and the reasonableness of the position each party took. The outcome for costs depends on the facts of the particular proceeding.

For the substantive framework governing eligibility and provision, 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.

Probate validity, revocation and caveat proceedings

Proceedings about whether a will was validly made, whether a grant should be revoked, and whether a caveat against a grant should be discontinued or upheld are governed by the Supreme Court (Administration and Probate) Rules 2023, including Order 8 for caveats. The Court's costs discretion applies. Where the proceeding was reasonably necessary to determine the true will or the proper administration of the estate, the Court may order that costs be paid out of the estate. Where a party has pursued or resisted the proceeding without reasonable grounds, personal costs consequences may follow.

Construction, rectification and directions

Applications to construe a will, to rectify a will under section 31 of the Wills Act 1997 (Vic) or to obtain directions on a matter of administration are often necessary to enable the executor or administrator to proceed. Costs of these proceedings may be ordered out of the estate where the application was reasonably brought, or may be ordered otherwise; the outcome depends on the character of the issue, the parties' conduct and the terms of any order the Court makes.

Executor removal and administration proceedings

Proceedings under section 34 of the Administration and Probate Act 1958 (Vic) or related provisions of the Trustee Act 1958 (Vic) to remove or replace an executor or trustee are fact-specific. Costs orders vary widely and depend on the reasons for the application, the reasonableness of the executor's conduct and the parties' positions in the proceeding.

Offers, Compromise and Calderbank Offers

Offers to settle are an important feature of the costs landscape.

Formal offers of compromise under Order 26 of the Supreme Court (General Civil Procedure) Rules 2025 operate according to the terms of that Order. Where an offer is made and not accepted and the offeree does not obtain a judgment more favourable than the offer, the prescribed costs consequences in Order 26 apply subject to the Court's powers under the Rules to order otherwise. Timing, form and the default entitlements are set out in the Order.

Calderbank offers are without-prejudice offers made expressly on the basis that the offer may be referred to the Court on costs. Calderbank offers do not engage the prescribed consequences of Order 26 but may support an application for indemnity costs from the date of the offer if the Court finds that the rejection of the offer was unreasonable in all the circumstances known at the time.

The weight given to any offer depends on the state of the evidence when the offer was made, the terms of the offer, the time allowed for consideration and the parties' subsequent conduct.

Executor Reimbursement and Personal Costs Orders

An executor or administrator has a right of reimbursement and indemnity from estate assets for costs properly incurred in the due administration of the estate. That right is grounded in the general law and recognised by the Trustee Act 1958 (Vic). It supports the executor in obtaining legal advice, responding to reasonable claims and taking steps to protect and administer the estate.

The right is not unqualified. Where costs are incurred through misconduct, breach of duty, unreasonable defence, personal advantage or a conflict of interest that has not been properly managed, some or all of those costs may be disallowed, and the Court may make a personal costs order against the executor. An executor who is uncertain about the proper course may seek directions from the Court under the applicable rules and, if the application is reasonably necessary, may be protected in costs.

A beneficiary who intervenes in a proceeding does not have an automatic right to be indemnified from the estate. The beneficiary's position on costs depends on the necessity of intervention, the position taken and the outcome. A legal practitioner may in a limited category of case face a costs order under section 29 of the Civil Procedure Act 2010 (Vic) or the Court's inherent jurisdiction, but only after being afforded procedural fairness.

Security for Costs

The Court may order a party to give security for another party's costs under section 1335 of the Corporations Act 2001 (Cth) where the plaintiff is a corporation, under Order 62 of the Supreme Court (General Civil Procedure) Rules 2025 or in the exercise of the Court's inherent jurisdiction. The order is discretionary. Relevant considerations include the applicant's ability to satisfy a costs order, residence outside Australia, the merits of the proceeding, any delay in applying and the risk that the order would stifle a genuine claim.

Court-Referred Dispute Resolution

Under Part 4.3 of the Civil Procedure Act 2010 (Vic), the Court may refer a proceeding, or any part of it, to mediation or another form of appropriate dispute resolution. Whether mediation is ordered in Part IV or other estate proceedings, and when it is ordered, depends on the case. A party's willingness to engage in reasonable dispute resolution is one of the matters that may be taken into account when the Court considers costs.

Managing Costs Risk

The most reliable ways to manage costs risk in a contested estate proceeding are practical and preparatory rather than formulaic:

1. Obtain specialist advice at an early stage, before positions harden and before significant costs have been incurred.
2. Identify the correct proceeding — Part IV, probate validity, construction, executor removal or another category — and confine the case to the real issues in dispute.
3. Preserve and disclose relevant evidence, including medical records, solicitors' files, banking and accounting records, and communications relevant to the deceased's arrangements.
4. Consider offers of compromise and Calderbank offers on a properly considered basis, and respond to offers from other parties within the time allowed.
5. Participate meaningfully in any Court-referred dispute resolution and be prepared to explain the position taken and the basis for it.
6. Keep the work proportionate to the amount and issues in dispute, and revisit that assessment as the proceeding progresses.

None of these steps guarantees an outcome, but each supports the position a party will present when the Court comes to exercise its costs discretion.

Our estate litigation team advises claimants, executors and beneficiaries on costs exposure in Victorian estate proceedings from the first conversation. We also assist with probate and estate administration where a dispute is closely tied to the administration process.

Frequently Asked Questions