Lord v Craig [2026] NSWSC 17
CML Lawyers | Estate & Succession Planning
February 2026
Overview
A recent decision of the NSW Supreme Court has provided important guidance on the court’s power to impose prospective costs capping orders in family provision proceedings. In Lord v Craig [2026] NSWSC 17, Justice Hmelnitsky made a costs capping order at an interlocutory stage, limiting the maximum professional legal costs and disbursements recoverable by any party to $22,500 (including GST). This decision reinforces the principle that the interests of justice — and the preservation of a modest estate for its intended beneficiaries — must not be sacrificed to unrestrained legal expenditure.
Background Facts
The deceased passed away on 28 May 2024, leaving a will that appointed the defendant as executrix and bequeathed the entire estate to her. The net estate was modest, valued at approximately $135,674, comprising two bank accounts. The defendant distributed the estate shortly after the deceased’s death.
The plaintiff, one of five children of the deceased, commenced family provision proceedings under the Succession Act 2006 (NSW), claiming to have received no benefit from the estate. By the time the matter came before the court on an interlocutory basis, the parties had already incurred approximately $62,416 in legal costs — equating to approximately 46% of the net estate — with costs to a hearing expected to consume the estate entirely.
“Legal costs already incurred amounted to 46% of the net estate, with costs to hearing projected to exhaust the estate entirely.”
Legal Framework
The court’s power to make a costs capping order derives from several sources operating concurrently:
UCPR r 42.4 — expressly empowers the court to order that costs recoverable by one party from another are not to exceed a specified maximum amount, and that such an order may be made at any stage of the proceedings.
Civil Procedure Act 2005 (NSW), s 98(4) — provides the court with broad discretion to make orders as to costs, including orders capping recoverable costs.
Succession Act 2006 (NSW), s 99 — specifically applicable to family provision proceedings, reinforcing the court’s jurisdiction to control costs in this context.
Civil Procedure Act 2005 (NSW), s 60 — the overarching purpose of civil procedure legislation to facilitate the just, quick, and cheap resolution of the real issues in dispute.
Key Legal Principles
The decision in Lord v Craig establishes and affirms several important principles for family provision litigation in NSW.
- Costs Capping Orders Are Permissible at an Interlocutory Stage
The court confirmed that there is no procedural impediment to making a prospective costs capping order before trial. UCPR r 42.4 expressly contemplates that such orders may be made “at any stage of the proceedings.” The court rejected any suggestion that costs capping was reserved solely for final hearing, finding that early intervention was not only permissible but often necessary to prevent irreversible depletion of a modest estate.
- The Evaluative Judgment Standard — No Fixed Percentages
Critically, the court held that a costs cap must not be fixed by reference to a rule of thumb or predetermined percentage of the estate. Instead, the appropriate cap must be derived from an evaluative judgment based on all relevant circumstances. This requires the court to have sufficient evidence before it to make a considered and reasoned assessment. This principle preserves flexibility and ensures the cap reflects the genuine complexity and nature of the particular proceedings.
- Proportionality Is a Foundational Principle
The court emphasised that proportionality of legal costs is fundamental in family provision litigation. Where an estate is modest, the court must be especially vigilant in preventing costs from eclipsing the available benefits. The objective of a family provision application — to ensure adequate provision is made for eligible persons from the estate — is fundamentally frustrated if legal costs consume the estate before any order for provision can be given effect. The court referenced the overarching purpose under s 60 of the Civil Procedure Act 2005, namely the just, quick, and cheap resolution of disputes.
“The objective of family provision proceedings is fundamentally frustrated if legal costs consume the estate before any order for provision can take effect.”
- Costs Caps Are Revisitable — The ‘Special Reasons’ Gateway
The court confirmed that a costs capping order made at an interlocutory stage is not immutable. Under UCPR r 42.4, the court retains the power to vary the cap at the final hearing if there are “special reasons” and it is in the “interests of justice” to do so. This ensures that legitimate and unforeseen complexity in the litigation is not penalised by a cap set earlier in proceedings with incomplete information. Parties who consider the cap inadequate must demonstrate such special reasons; the mere fact that legal costs have exceeded the cap will not suffice.
- Appointment of Defendant to Represent the Estate
The court also exercised its power under UCPR r 7.10(2)(b) to appoint the defendant to represent the estate of the deceased for the purposes of the proceedings, with the consequential effect under UCPR r 7.10(3) that the orders made would bind the estate. This procedural step is relevant in cases where the estate has been fully distributed, as it ensures that any orders for provision have a mechanism for enforcement against the estate’s assets.
The Court’s Order
Having regard to the modest size of the estate, the disproportionate level of costs already incurred, and the likely exhaustion of the estate if proceedings continued unchecked, the court made the following key orders:
Costs cap: The maximum professional legal costs and disbursements recoverable by any party from any other party or from the estate shall not exceed $22,500 (including GST).
Settlement conference: The parties were directed to participate in an informal settlement conference on or before 12 March 2026.
Review: The matter was stood over to 19 March 2026 for review before the Registrar in Probate.
Defendant’s undertaking: The defendant and her legal representatives proposed, and the court noted, a limit on indemnity claims for legal costs to a maximum of $20,000 without prior court approval.
Practical Implications for Family Provision Proceedings
This decision has significant implications for legal practitioners and parties involved in family provision proceedings in NSW, particularly where an estate is modest in size.
Parties to family provision litigation involving modest estates should now anticipate that the court may impose a costs cap at an early, interlocutory stage. This is not a punitive measure but a protective one — designed to preserve the estate for the benefit of eligible persons. Practitioners should structure their costs and litigation strategy with proportionality in mind from the outset, as demonstrated costs already in excess of 40–50% of the estate are likely to attract the court’s attention.
The decision also highlights the utility of the informal settlement conference mechanism as a cost-effective resolution pathway. In proceedings where the estate is limited, early and genuine engagement in settlement discussions — preferably before costs reach the levels observed in Lord v Craig — is strongly advisable.
Finally, solicitors should be mindful of their obligations to advise clients of the risk of disproportionate costs. A client’s legitimate claim for provision may ultimately yield little benefit if the legal costs required to prosecute it approach or exceed the value of the estate itself. Early, frank costs disclosure and a realistic assessment of the estate’s size are essential elements of sound advice in this area.
Conclusion
Lord v Craig [2026] NSWSC 17 is a timely reminder that proportionality of costs is not merely a principle to be acknowledged in the abstract — it is a practical constraint that the NSW Supreme Court will actively enforce through costs capping orders, even at an interlocutory stage. The decision provides a clear legal framework for the exercise of that power and confirms that the court’s evaluative judgment, rather than any mechanical formula, governs the fixing of an appropriate cap.
For parties and practitioners in NSW family provision proceedings, the message is clear: commence proceedings and manage costs with the size of the estate firmly in mind, or risk the court intervening to do so.
This article is prepared by CML Lawyers Pty Ltd for general information purposes only and does not constitute legal advice. For advice specific to your circumstances, please contact our office.
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