Charity avoids $230,000 costs order in estate dispute

In the recent decision of Wright v Wright [2016] QDC 74, the Royal Children’s Hospital Foundation (“CHF”) was very nearly disadvantaged to the tune of $230,000 when the Court considered making an adverse costs order against it.

In Wright, the deceased’s Will gifted a pension benefit (worth approximately $630,000) to CHF and the balance of his estate (worth approximately $1.1 million) to his two siblings. His Will made no provision for his two adult children, so they made an application against the estate for further provision.

The Court ultimately decided that the deceased’s children should receive $350,000 and $400,000 respectively.

CHF took no active part in the proceedings, other than the executor representing it’s common interest in the terms of the Will being upheld.

On the issue of costs, the Court initially considered that all parties costs in the matter, which were in excess of $230,000, should be paid solely out of the gift to CHF.

In coming to this conclusion, the Court commented:

“Taking into account the evidence of the relationship of the siblings with the deceased and their future needs and giving weight to the testator’s implicit desire to provide [for them, their shares] should not be depleted by the costs of the proceeding. I have already accepted the worth of the Foundation’s work, but no particular connection between the deceased and the charity was established. The interests of justice require that the incidence of the orders to be made in favour of the applicants not fall rateably on the whole of the estate. This would most simply be achieved by an order that the costs of the proceeding be paid from the Foundation’s share of the balance of the estate.”

CHF subsequently made submissions to the Court against this proposal and it was revised, such that the costs of the proceeding will instead fall rateably on all three beneficiaries under the Will.

In moving from his original decision, the Judge commented:

“I would have thought that where a charity has such a large bequest at stake it would take particular interest in pursuing and preserving the bequest. In the end, I am persuaded to move from my original consideration. It seems to me reasonable for a charity, or other beneficiary, to allow the executor to conduct litigation on behalf of all beneficiaries. This could, among other benefits, keep litigation less complex and less expensive.”

This saga highlights the difficulties facing not-for-profit organisations that are caught in estate disputes and particularly, the contentious decision that they must make in deciding whether or not to actively partake in such proceedings.

While an attempt to preserve costs in litigation should always be commended, failing to take any action and having no representation can prove detrimental.

Ultimately, where a not-for-profit is entitled to receive a large bequest under a Will that is disputed, it should consider being independently represented in the matter to ensure that its interests are protected as far as possible.

For more information or advice in relation to estate disputes, please contact a member of our team today.

Authors

Kellie Keenan is a Director at Bennett & Philp Lawyers
Greg Moroney is a Special Counsel at Bennett & Philp Lawyers
Charlie Young is a Senior Associate at Bennett & Philp Lawyers

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