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Texts Cited: Practice Note SC Eq 7

Category: Costs

Parties: Barbara Lea Keighran (plaintiff)
Michelle Irene Catherine Bishop (defendant)

Representation: Counsel:
E Young (plaintiff)
M Pringle (defendant)
Solicitors:
Drake & Associates (plaintiff)
Madison Marcus (defendant)

File Number(s): 2024/99268

Publication restriction: N.A.

JUDGMENT

1. This is another case concerning an application for a family provision order under the Succession Act 2006 (NSW) where parties incur significant costs to fight over a relatively modest estate.

2. At the beginning of the trial, I indicated to the parties that I was “very concerned about the legal expenses that have been incurred relative to the estate” and observed that having regard to the costs burden “often in these cases there’s disappointment for everybody”. Nevertheless, the trial proceeded. I delivered judgment in the substantive proceedings on 19 December 2025: see Keighran v Bishop [2025] NSWSC 1553.

3. In my earlier reasons, I observed (at [6]):

The costs that have been incurred in these proceedings are significant. The plaintiff’s costs up to and including the final hearing were estimated to be $255,000 (including GST and disbursements) and the defendant’s costs were estimated to be $194,040 (including GST and disbursements). It causes a deep sense of disquiet to learn that the legal fees incurred in fighting over an estate approximate the size of the estate.

The sense of disquiet remains.

4. By way of very high-level summary, the proceedings concerned a claim by the plaintiff, Barbara, for provision for her maintenance, education and advancement in life out of the estate and notional estate of her late husband, Allan, who died on 29 July 2023, aged 68. The defendant, Michelle, is the executor of Allan’s estate. Michelle is his eldest daughter and Barbara’s stepdaughter. Allan’s will, made about 3 weeks before he died, left everything to his 5 children in equal shares and nothing to Barbara. (I maintain the convention from my earlier reasons of referring to persons by their Christian names (given common surnames) without meaning any disrespect.)

5. The assets that were the subject of contest concerned a residence at Berkeley Vale and some superannuation payments. The Berkeley Vale residence had been owned by Barbara and Allan as joint tenants, but the joint tenancy was severed by Allan, taking effect 2 days before he died. The circumstances of that severance, and the late change to his will, are addressed in my earlier reasons. In the months before his death, while Allan was gravely unwell, a bitter feud developed between Barbara and 2 of Allan’s children, Bre-Allan and Michelle, largely concerning the care to be provided to Allan.

6. I noted in my earlier reasons that the Berkeley Vale property was said to be worth between $850,000 to $950,000, and was subject to a mortgage securing a loan of $250,074.11 (as at 24 July 2025). I observed that Allan’s net interest was worth approximately $300,000 to $350,000. This was the main asset in the estate.

7. I concluded that there should be a family provision order that provides Barbara with Allan’s interest in the Berkeley Vale property, but subject to a charge securing an obligation to pay to Allan’s estate an indexed amount of $125,000 when the property is sold (or sooner at Barbara’s discretion). Orders were made giving effect to my reasons on 26 February 2026.

8. The parties were given an opportunity to make submissions and adduce evidence on the question of costs. As I noted in my earlier reasons, the impact of any costs orders will be significant.

9. It is plain that it is strongly in the private interests of the parties and the public interest in the efficient use of scarce Court resources for cases such as this one to resolve long before they get to a hearing. Consensual resolution usually requires some willingness to compromise from all parties. That can be more difficult to achieve when, as in this case, there are strongly held views arising from the natural ties of kinship. Those circumstances make resolution more difficult, but not less desirable.

10. The threat of a costs order if the litigation is unsuccessful should be a powerful force pushing parties to resolve their dispute, particularly where the contest is over a modest amount compared with the legal expenditure. Parties to family provision cases should be under no illusion that they will be spared from costs orders by reason of their financial circumstances.

11. For any litigant who is willing to resolve a dispute on reasonable terms, and to secure costs protection if their offer is not accepted, the appropriate step is to issue an Offer of Compromise pursuant to r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW), or to make an offer of settlement in accordance with the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333.

12. In this case, Barbara seeks to rely on a Calderbank letter of 28 October 2024 and an Offer of Compromise issued by her on 18 August 2025. It was submitted for Barbara that each of her offers was “better than what she ultimately achieved by way of judgment”. Both offers contemplated the transfer of the Berkeley Vale property to Barbara on the basis that she would assume responsibility for the mortgage. In each case, the offer contemplated that the estate would retain all other assets, including the superannuation payments. It was submitted for Barbara that the Calderbank offer was superior to the outcome in the proceedings because the orders I made required her to pay $125,000 (indexed) and at the time of the offer, Allan’s share of the outstanding mortgage was $127,794.98. This submission is flawed. My orders of 26 February 2026 provided that Barbara was responsible for the mortgage repayments. There is no basis to compare the $125,000 charge with the $127,794.98 share of the outstanding mortgage because my orders contemplate that Barbara will be required to pay the $125,000 and also meet all of the mortgage obligations. This means that the result of the proceedings was worse for Barbara compared with the outcome had either of her offers been accepted by Michelle.

13. Michelle relied on an Offer of Compromise issued by her on 7 August 2025. This offer reflected a weak form of a Crisp arrangement, by which Barbara would have a form of life estate over Allan’s share of the Berkeley Vale property, but with a provision that could enable the property to be sold and for the proceeds to be used to pay a “Refundable Accommodation Deposit” or equivalent if Barbara requires entry into an aged care facility. It was not a true life estate because the interest was lost if Barbara remarried or permanently vacated the premises. The offer contemplated that the estate would contribute 50% of the mortgage repayments until the mortgage was discharged or the property was sold.

14. From the commencement of the trial, Michelle’s position was that a Crisp order was the appropriate outcome in this matter. I concluded that a Crisp order was not appropriate. The reasons are set out at [99] of my earlier judgment. Among other reasons, I concluded that a Crisp order was inappropriate given Barbara’s age (54 years). I concluded that the only way to make adequate and proper provision was by Barbara taking the Berkeley Vale property in fee simple. I also concluded that that interest should be subject to a charge to secure payment of $125,000 (indexed) to the estate when the property was sold.

15. I consider that it was a superior outcome for Barbara to have the Berkeley Vale property in fee simple with the obligation to pay $125,000 upon sale, compared with the highly conditional life estate reflected in the Offer of Compromise. In purely financial terms, comparison of the Offer of Compromise with the outcome in the proceeding is not straightforward. The value of the so-called life estate would depend on things such as Barbara’s life expectancy, expected interest rates and the value of occupation of the Berkeley Vale property for an indeterminate time. It is by no means obvious that the offer was better in financial terms. Given the value of Allan’s half share (unencumbered), there is a reasonable basis to suppose that the offer was less attractive when looked at through a purely financial lens. However, the non-financial elements of the offer mean that it was reasonable for Barbara to reject it. In my earlier judgment, I stated (at [99]) that one of the reasons for declining to make a Crisp order was that it “may deny Barbara the independence, self-respect and autonomy she deserves”. The same is true of Michelle’s offer. The offer would, in practical terms, constrain Barbara’s freedom to make decisions as to how to manage her affairs. The condition that the life estate would be lost if she remarried is especially obnoxious.

16. It follows that:

(a) the result in the proceedings was less favourable to Barbara than the compromises she had made by way of a Calderbank letter and her Offer of Comprise; but (b) the result was more favourable to Barbara than the Offer of Compromise made to her by Michelle.

That is, the result in the case fell between Barbara’s offers and Michelle’s offer. In those circumstances, the various offers are of no relevance. Neither party demonstrated a willingness to settle the proceedings on terms that were less favourable to themselves than they achieved in the contested proceedings. Neither party secures any costs protection by reason of any offer to settle the proceedings.

17. I reject Barbara’s submission that I should order that Michelle (as executor) should pay Barbara’s costs on the ordinary basis up to 28 October 2024 and on an indemnity basis thereafter. I also reject Michelle’s submission that Barbara should pay Michelle’s costs on the ordinary basis up to 7 August 2025 and on an indemnity basis thereafter.

18. The outcome of the proceedings was that Barbara was successful in obtaining a family provision order. The general rule is that costs follow the event: see r 42.1 of the UCPR. But the Court retains a discretion: see s 98 of the Civil Procedure Act 2005 (NSW).

19. It is often said that costs in family provision cases generally depend on the “overall justice of the case”: see Singer v Berghouse [1993] HCA 35; 114 ALR 521 at 522 (Gaudron J). The Court of Appeal has observed that the “overall justice of the case” is “not remote from costs following the event”: Jvancich v Kennedy (No 2) [2004] NSWCA 397 at [11] (Giles JA; Handley and McColl JJA agreeing). Nevertheless, family provision cases call for additional “liberality and discrimination” in considering whether to exercise the discretion to override the usual rule: Chapple v Wilcox (2014) 87 NSWLR 646; [2014] NSWCA 392 at [138]-[139] (Barrett JA; Basten and Gleeson JJA agreeing).

20. The appropriate order is that Michelle as executor is to pay Barbara’s costs in the proceedings with that obligation to be discharged by the revocation of the charge that was established by order 2 of the orders I made on 26 February 2026. The consequence is that Barbara will have the Berkeley Vale property free of any charge. In monetary terms, the value of the order is approximately $125,000. That is a reasonable sum in all of the circumstances.

21. In exercising my discretion in this case, I have taken into account, in particular, the following matters:

22. While Barbara was successful in obtaining a family provision order, she secured less than what she sought in the proceedings. She did not succeed in relation to the claims for the superannuation payments and her success in relation to the Berkeley Vale property was qualified by the obligation to pay $125,000 (as indexed) to the estate.

23. Barbara’s legal costs of $255,000 (including GST and disbursements), estimated up to the end of the trial, appear high relative to the size of the estate. I recognise that costs have not been assessed and that Barbara contends that part of her costs is explained by the need to address in evidence various scandalous issues that had been raised by Michelle in evidence (but which were not pressed at trial).

24. The estate has very little by way of available assets. That is principally because of amounts paid out by Michelle or with her authority as executor. Those payments have been made, in the main, for Bre-Allan’s benefit (including amounts transferred shortly before Allan died). It may be that the estate has rights to recover amounts on account of funds wrongly paid out by Michelle (as Barbara alleges). But that is a matter of complexity and it was not specifically the subject of the dispute before me for determination.

25. I have had regard to the needs and circumstances of Barbara and the beneficiaries (which are addressed in my earlier reasons).

26. I have taken into account the relations between the parties and the fact that it is desirable that their legal relations come to an end as soon as possible.

27. There was no explicit application by Michelle for an indemnity for her costs as executor. It was implicit in some of her submissions in reply that Michelle anticipated an indemnity from the estate. Those submissions relied on what Hallen J observed in Ciric v Ciric [2015] NSWSC 313 at [131]. In that paragraph, his Honour observed:

In Foley v Ellis, Sackville AJA, at [88], noted that Singer v Berghouse “strongly suggests that the court cannot consider the propriety and adequacy (or inadequacy) of any testamentary provision for an applicant in isolation from the resources and needs of other claimants on the deceased’s bounty. These claimants include other beneficiaries entitled to a share of the deceased’s estate, whether or not they themselves have made a claim under the Family Provision Act”.

Michelle’s submissions also referred to Practice Note SC Eq 7, but not much of relevance flows from that Practice Note for present purposes.

23. In Pang v Fong (No. 2) [2014] NSWSC 1924, Robb J observed (at [51]):

The defendant to a family provision application is usually not an ordinary private litigant who is defending the proceedings in his or her own interests. The defendant, as executor, has a positive duty to uphold the will, and to put before the court the evidence that is available for that purpose, and can be obtained in a way which is proportionate to the value of the estate and the nature of the issues. The executor is the representative of the beneficiaries, who are not usually welcome as parties. The executor’s circumstances may range from the case where the executor is entitled to the whole estate under the will, so that in a real way the executor defends the application in his or her own interests, to the case where the executor derives no benefit under the will. In cases where there are a number of beneficiaries, even where the executor is one, the executor will have to represent the interests of the other beneficiaries as well…

I referred to this and other relevant authorities in Robinson v Glennon (No 2) [2025] NSWSC 1120 at [8]-[10].

24. In this case, Michelle had a duty to represent the beneficiaries and to put evidence as to their circumstances before the Court. She should recover her costs of doing so from the estate on the usual indemnity basis. However, the executor’s right to an indemnity does not provide an invitation to conduct acrimonious and costly litigation, especially when the estate is a modest one. The trial in these proceedings was conducted by counsel with efficiency and courtesy. However, there were many issues explored in detail in the affidavit evidence, which would have taken a considerable amount of time and expense to prepare, but which were not pressed at the trial.

25. If the Berkeley Vale property goes to Barbara free of any charge, the estate will have no interest in the property. There will be an insufficient sum available in the estate for Michelle to meet her costs. There is currently about $20,000 that is available. In the days just prior and just after Allan’s death, approximately $130,000 was transferred out of his bank account. Michelle arranged for Allan’s car to be given to Bre-Allan, which appears to have had a net value of $20,000. It is likely that but for the steps taken or authorised by Michelle, the estate would have had assets (mainly cash in a bank account) of around $170,000. That is an amount that should have been sufficient to enable her to fund her costs of the litigation.

26. I do not propose to make any orders concerning Michelle’s costs as I was not asked to do so. Her circumstances do not lead me to conclude that the orders that I propose to make are not appropriate.

27. I expect that Michelle will be disappointed by the result. Barbara is likely to be disappointed too. After receiving less than she claimed in the proceedings, the benefit of the costs order will fall well short of covering her costs. This is another case where the incidence of legal costs means that there is likely to be disappointment for everybody. Things may have been different if either or both parties had made offers to settle the proceedings on more generous terms.

28. I make the following orders:

29. The defendant, in her capacity as executor, is to pay the plaintiff’s costs of the proceedings.

30. Order (1) is to be and will be discharged by revocation of Order 2 of the orders made on 26 February 2026.

31. Order 2 made on 26 February 2026 is vacated.

32. Within 42 days of the date of these orders, the parties are to do all acts and things and execute all documents necessary to give effect to Order (3).

33. The parties have liberty to apply on 7 days’ written notice to my Associate for directions as to the implementation of these orders.

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Amendments

30 June 2026

[27] - Removed "from" in second sentence