McFarlane v McFarlane [No 2]
[2025] VSCA 187
•19 August 2025
| -SUPREME COURT OF VICTORIA COURT OF APPEAL |
| S EAPCI 2024 0030 |
| ADAM PAUL MCFARLANE | Appellant |
| v | |
| HEATHER JEAN MCFARLANE (WHO IS SUED AS THE EXECUTRIX OF THE WILL AND ESTATE OF BRIAN HUGH MCFARLANE, DECEASED) [NO 2] | Respondent |
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| JUDGES: | McLEISH, KAYE and KENNY JJA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | On the papers |
| DATE OF JUDGMENT: | 19 August 2025 |
| MEDIUM NEUTRAL CITATION: | [2025] VSCA 187 |
| JUDGMENT APPEALED FROM: | McFarlane v McFarlane [2023] VSC 379 (Barrett AsJ) |
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COSTS – Family provision – Costs of trial – Application for provision refused at trial – Provision ordered on appeal in amount substantially less than initially sought – Substantial dispute at trial over property valuations ultimately not of significance to disposition of case – Whether modest success and valuation dispute justify order that defendant pay only half plaintiff’s costs – Plaintiff successfully invoked Court’s jurisdiction – No offer of compromise for relevant amount – Both parties took robust approach to valuation dispute – No basis for departure from usual order for costs.
COSTS – Costs of appeal – Provision ordered in amount substantially less than sought – Several grounds unsuccessful – Whether costs should be decided according to issues in appeal – Appellant succeeded on fundamental issue whether testator failed to discharge moral duty – No basis for departure from usual order for costs.
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| Counsel | |||
| Appellant: | Mr P Reynolds | ||
| Respondent: | Mr N McOmish | ||
Solicitors | |||
| Appellant: | Clancy & Triado | ||
| Respondent: | GR Legal | ||
MCLEISH JA
KAYE JA
KENNY JA:
On 7 July 2025, the Court granted leave to appeal in this matter and allowed the appeal. The parties were invited to file short submissions as to costs. These reasons should be read along with the Court’s reasons for its substantive orders.[1]
[1]McFarlane v McFarlane [2025] VSCA 163 (‘Reasons’).
The Court’s reasons explained that its provisional view was that there should be no order as to the costs of the trial, in circumstances where Adam was successful to a significantly lesser extent than he had sought, and a disproportionate amount of time and expense was spent addressing questions of value and repairs in respect of two properties, which turned out not to be important to the disposition of the case. In respect of the appeal, given Adam’s ‘relatively modest’ success, the Court’s provisional view was that Heather should pay half of Adam’s costs on the standard basis, and that Adam should pay Heather’s costs, if any, thrown away by virtue of the late amendment to his application for leave to appeal.[2]
[2]Ibid [105].
The parties subsequently filed short written submissions. They are in agreement that Adam should pay Heather’s costs (if any) thrown away by virtue of the amendment to his application for leave to appeal. The parties also agree that Heather should be granted an indemnity certificate in respect of her costs of the appeal under s 4 of the Appeal Costs Act 1998. The parties are otherwise in dispute.
Costs of the trial
It is convenient to deal with the costs of the trial, before turning to the appeal.
Adam submitted that the Court’s discretion as to costs is affected by the family provision context.[3] He submitted that, even when an application for family provision fails, it is not uncommon for there to be no order for costs, having regard to the detrimental effect an order for costs may have on the plaintiff.[4] Orders of this nature have been justified on the basis that the litigation was caused by the fact that the testator had arguably failed to make proper provision for the plaintiff, even though the court ultimately decided otherwise. In that context, costs may come out of the estate instead of being borne by the unsuccessful plaintiff.[5]
[3]Haertsch v Whiteway [No 2] [2020] NSWCA 287 [5]–[7] (Macfarlan, Meagher and Leeming JJA); Re Winter-Cooke [No 3] [2022] VSC 468 [23]–[32] (McMillan J).
[4]Singer v Berghouse (1993) 114 ALR 521, 522 (Gaudron J); [1993] HCA 35; Coombes v Ward [No 2] [2002] VSC 84 [19] (McDonald J); Sherborne Estate [No 2] (2005) 65 NSWLR 268, 279–80 [64]–[66] (Palmer J); Re Bull [No 2] [2006] VSC 226 [3] (Byrne J); Bartkus v Bartkus [2010] NSWSC 889 [24] (Ball J); Webb v Ryan [2012] VSC 431 [37] (Whelan J).
[5]Chapple v Wilcox (2014) 87 NSWLR 646, 680 [141] (Barrett JA, Gleeson JA agreeing at 682 [150]), quoted in Re Winter-Cooke [No 3] [2022] VSC 468 [29] (McMillan J).
Adam submitted that those considerations apply with even greater force to a successful plaintiff. He contended that, especially since the estate is large enough to cover the order for provision and both parties’ legal costs, he should not be deprived of the usual order for costs.
In respect of the Court’s preliminary view, Adam submitted that it is not to the point that the order for provision was ultimately significantly less than he had sought. He succeeded in invoking the Court’s jurisdiction. The only offer to settle made by Heather ($76,000 inclusive of $25,000 on account of costs) was much less than the amount ordered by the Court.
Adam submitted that Heather was responsible for the time and expense involved in addressing questions of property value at the trial. On four occasions, Adam invited Heather to agree to joint valuations. In correspondence sent to Heather on 18 August 2022 his solicitor said joint valuations ‘would benefit the Court’, ‘avoid … any argument around the values of the properties’ and ‘reduce legal fees’. Heather declined these requests, disputed the valuations relied on by Adam, and prevented Adam from obtaining a sworn valuation of the Mount Martha property by refusing access to it for that purpose.
Heather submitted that the Court’s preliminary view was correct. Adam initially sought provision in the amount of $400,000, far more than the order for $125,000 he ultimately obtained. In respect of the property valuation issues, the Court was correct to hold that there was no need for the associate judge to have made more specific findings than the ranges he determined.[6] Heather submitted that Adam pursued the issue with ‘unnecessary vigour’, even though his counsel said in closing submissions that ‘[g]iven the range between each party’s estimates, [the difference in the values asserted] may have little bearing on the Court’s ultimate conclusion’.
[6]Reasons [74].
Finally, Heather submitted that a greater costs burden would ‘further erode her limited capital sum’, which was already diminished by the costs of the proceeding and the looming costs of repairs to her properties. Meanwhile, Adam had many years of working life ahead of him, as did his wife, and they could expect to continue to earn a high income.
Having had the benefit of these submissions, we are persuaded that the usual order for costs should be made in respect of the trial. Adam is correct to emphasise that he successfully invoked the Court’s jurisdiction to obtain a substantial order for family provision. The fact that he obtained less than the amount sought is not, by itself, a reason to deny or reduce his entitlement to costs, in the absence of an offer of compromise by Heather of a relevant amount.
As to the fact that much time and expense was spent on property valuation issues that were ultimately of no importance, it is significant that Adam sought to have joint valuations obtained. In light of the reasonable position he took on this issue, it would not be just to deprive him of his costs in addressing these issues. We do not accept that the ‘vigour’ with which Adam pursued the valuation issues, after agreement on valuation was unable to be reached, warrants any different conclusion. It is plain enough that both parties took a robust approach to the valuation question.
The fact that costs would increase the financial burden on Heather is not a reason for denying Adam the usual indemnity given to a successful plaintiff. Rather, there is force in Adam’s submission that the litigation was brought about by Brian’s failure to make adequate provision to give effect to his moral duty to Adam, and that the estate should bear the costs accordingly.[7]
[7]See also Cottrell v Miglic [2025] VSCA 145 [160]–[165] (McLeish, Lyons and Kenny JJA).
Costs of the appeal
Adam submitted that, in real terms, his success in the appeal was significant. His application for provision succeeded and an order for indemnity costs against him was set aside. He should not be deprived of the usual order as to costs.
Adam submitted that the Court’s preliminary view that he should receive only half his costs would reduce his success to a Pyrrhic victory. He submitted that fairness demands that he be indemnified for incurring the cost and risk that attended his appeal. Adam contended that, if Heather obtained an indemnity certificate, she could end up being indemnified for the costs of the appeal to a greater extent than Adam. He submitted that the fairer result is to make the usual order that costs follow the event, with Heather being granted an indemnity certificate.
Heather submitted that the Court should maintain its preliminary position. Adam’s grounds of appeal were generally unsuccessful. Some were found to have no substance, and he advanced an argument about the way evidence in chief was adduced that the Court found unmeritorious.[8] Heather submitted that Adam’s ‘multiple failures’ meant that he ought to bear ‘a modest share’ of the costs burden.
[8]Reasons [73], [75].
Having given the matter further consideration, we do not think that this is a case where costs should be decided according to the issues in the appeal. While it is true that Adam failed on a number of grounds, and that some were found to be without substance, he succeeded on the central and fundamental issue of Brian’s failure to discharge his moral duty. The arguments which lacked merit were peripheral to that issue.
Again, although Adam did not obtain an order in the full amount he sought, there is no offer of compromise or other reason advanced by Heather for not making the usual order as to costs on that account.
Costs of the costs dispute
Heather also made submissions addressing the cost of the costs dispute, with reference to correspondence between the parties, and sought an order that Adam pay her costs of the costs argument, on the indemnity basis.
Since Adam has succeeded on the costs argument, those submissions fall away.
Conclusion
It will be ordered that:
(a)the appellant pay the costs of the respondent thrown away, if any, by reason of the application for leave to amend the application for leave to appeal made on 29 May 2025;
(b)the respondent otherwise pay the appellant’s costs of the appeal, including the application for leave to appeal; and
(c)in place of the orders made by the associate judge, it be further ordered that the defendant pay the plaintiff’s costs of the trial.
It will be recorded in ‘Other Matters’ that the Court grants the respondent an indemnity certificate in respect of costs pursuant to s 4 of the Appeal Costs Act 1998.
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