Executors are often placed under pressure to settle Testator’s Family Maintenance (TFM) claims to avoid the cost and uncertainty of litigation. A recent Victorian Supreme Court decision shows that not all claims warrant compromise and that courts are willing to protect estates against opportunistic litigation.
In Lennan v Chao (No 2) [2025] VSC 513, the plaintiff, a former domestic partner of the deceased, sought further provision from an estate worth around $2.8 million despite already receiving a $378,000 superannuation benefit from the deceased.
The plaintiff was in stable employment, earning a steady income, and had strong savings of more than $500,000. The Court found that he was financially secure, not maintained by the deceased during her lifetime, and that their relationship was relatively short. The plaintiff himself described much of it as “five years of dating.” His claim was dismissed after a four-day trial.
When costs were argued, the Court went further, describing the plaintiff’s case as an “extravagant claim.” The plaintiff had asked that the executors’ costs be paid from the estate. The Court rejected that outright. Instead, it ordered him to pay the executors’ costs personally (likely significant, at least $200,000) on a standard basis until the date of the defendants’ offer of compromise, and on an indemnity basis afterwards. The Court held that it was unreasonable to reject an offer of $150,000 plus costs. Had he accepted, the combined benefit he would have received from the deceased would have been almost identical to the “statutory legacy” (the guaranteed minimum amount the law provides to a surviving spouse or domestic partner if someone dies without a will).
Importantly, no other beneficiaries had any competing financial need, which further underscored that the claim lacked merit. The Court also noted that the plaintiff was not impecunious and could meet an adverse costs order, removing one of the common risks executors face when defending TFM claims.
The decision highlights the heavy costs consequences that can flow from pressing a weak TFM claim and turning down a sensible settlement offer.
What does this mean for executors?
• Do not fear defending weak claims. Since the 2014 reforms, there is no special leniency. Unsuccessful claimants should expect to pay costs.
• Use Calderbank letters and offers of compromise strategically. A well-pitched offer can provide real protection and may justify indemnity costs if unreasonably rejected.
• Need is central. Claimants in TFM matters in Victoria, even domestic partners, must show genuine financial need. A comfortable financial position can fatally undermine a claim.
Many TFM claims are, of course, best resolved through a pragmatic settlement to minimise cost and uncertainty. But this case shows that executors should not feel compelled to settle where the claim is weak.
Executors should not feel compelled to settle every TFM claim. Even where no other beneficiaries are in financial need, a claim can and should be defended if the claimant is financially secure, the relationship was limited, and there is no real evidence of need. In those circumstances, a sensible Calderbank offer can protect the estate and beneficiaries from the heavy costs consequences of litigation.
Authors:
Michael Bishop, Partner
Pointon Partners
Michael.Bishop@pointonpartners.com.au
+61 (03) 8625 8947
Carl Millington, Associate Partner
Pointon Partners
carl.millington@pointonpartners.com.au
+61 (03) 8625 8946
Pointon Partners, Melbourne, Australia
