Costs capped in FPA: Severe underestimation – Lesson learned

Cerneaz v Cerneaz (No 2) [2015] QDC 073

And another day brings another case on costs, but this case stood out to me and I’ll tell you why.

The case of Cerneaz v Cerneaz [2015] QDC 41 involved a FPA claim by a de facto spouse. The Court ordered a legacy in favour of the applicant in the amount of $350,000.00.

Today the Court was to determine costs for the matter.

By way of background, the applicant served her application and supporting affidavits on the respondent on 10 July 2013. The applicant failed to serve a draft directions order in accordance with the District Court Practice No 8 of 2011. The applicant’s documents were significantly lacking in detail and failed to articulate her case. As a result of the lack of information, a good deal more material had to be compiled and filed by the respondents and much correspondence was sent to and fro.

Mediation took place on 31 October 2013 and was unsuccessful.

With the exception of an offer to settle on 27 November 2013, the applicant took no further steps to progress her claim after mediation.

On 27 June 2014, the applicant filed an affidavit that addressed her health and income details.

The applicant’s initial affidavit material deposed that she was advised that costs up to final trial would be in the order of $40,000-$50,000.00. As of March 2015, the applicant’s costs far exceed that amount to the value of $140,045.74.

His Honour at para [68] considered that “the court should have regard to the practice direction when considering how to assess what costs order should be made.”

His Honour at para [70] confirms the position that the costs should have been made available to him at trial as it would of course be relevant to the exercise of the discretion at the second stage.

It is evident reading the remarks between the parties that the applicant did not place the requisite emphasis on the principles nor the process of her claim which was to her detriment. His Honour appeared to appreciate that the respondent persevered through the lacking detail and pressed for compliance with precedent and the relevant directions.

This case serves as a very important reminder to all practitioners that process should be respected so as to avoid unfavourable outcomes in general and in respect to costs. Perhaps it also serves as a reminder that all parties should be approaching the issues to resolve in a united matter to enable a resolution of any (if not all) the issues as early as possible (paras[67], [73] and [74]).

It also reminds us all that whilst you may have a genuine FPA claim, the process by which that claim should be run is entirely relevant to not only the second stage of Singer v Berghouse, but also determining costs.

I must comment and acknowledge the respondent solicitor, Christine Smyth of Robbins Watson Solicitors, in this case. It is clear from His Honour’s judgement that her respect of the principles and procedure and her perseverance to honour these was not overlooked. It is evident that skills and expertise in this area certainly do make a difference.

Read the case here.

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