Cerneaz v Cerneaz & Anor (No 2) [2015] QDC 73

DISTRICT COURT OF QUEENSLAND CITATION: Cerneaz v Cerneaz & Anor (No 2) [2015] QDC 73 PARTIES: JOAN CERNEAZ (applicant) v MERISA NICOLE CERNEAZ AND MELINDA GAIL CERNEAZ, AS PERSONAL REPRESENTATIVES OF THE ESTATE OF SERGIO CERNEAZ (DECEASED) (respondents) FILE NO/S: 2499/13 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: District Court at Brisbane DELIVERED ON: 7 April 2015 DELIVERED AT: Brisbane HEARING DATE: 25 March 2015 JUDGE: Smith DCJA ORDER: 1. That the respondents’ costs of and incidental to the proceedings be assessed on an indemnity basis but are to be capped at $130,000. 2. The costs referred to in paragraph 1 be paid out of the estate of Sergio Cerneaz. 3. The applicant’s costs of and incidental to the proceedings be assessed on an indemnity basis but are to be capped at $100,000. 4. The costs referred to in paragraph 3 be paid out of the estate of Sergio Cerneaz. 5. Liberty to apply. CATCHWORDS: SUCCESSION – FAMILY PROVISION APPLICATION – whether should be assessed and paid from the estate of an indemnity basis – whether should be capped Uniform Civil Procedure Rules 1999 (Q) 681, 687, 700, 704 District Court Practice Direction 8 of 2001 Bladwell v Davis & Anor [2004] NSWCA 170 Bladwell v Davis [2003] NSWSC 882 -- 1 of 15 -- 2 Carroll v Cowburn [2003] NSWSC 248 Cerneaz v Cerneaz & Anor [2015] QDC 41 Collett v Knox [2010] QSC 132 Gill v Smith [2007] NSWSC 832 Jackson v Riley (unreported) NSWSC - 3701/1987 – 24 February 1989 – BC8902497 J and D Rigging Pty Ltd v Agripower Australia Ltd and Ors [2014] QCA 23 Jones v Jones [2012] QSC 342 Kozak v Matthews [2007] QSC 203 Lownds v Home Office (Practice Note) [2002] 1 WLR 2450 Magur v Brydon [2014] NSWSC 1931 Manly v Public Trustee [2007] QSC 388 Nesbit v Public Trustee [2003] QDC 370 Oshlack v Richmond River Council (1998) 193 CLR 72 Re McIntyre [1993] 2 Qd R 383 Sherborne Estate (No. 2) (Vanvalen v Neaves) (2005) 65 NSWLR 268 Singer v Berghouse [1993] HCA 35; (1993) 114 ALR 521; (1993) 67 ALJR 708 Underwood v Underwood [2009] QSC 107 Mr M Conrick for the applicant Ms D Pendergast for the respondents SOLICITORS: Rod Holloway & Co for the applicant Robbins Watson Solicitors for the respondents Introduction [1] This is the costs decision consequent upon judgment given on 27 February 2015.1 In that decision I ordered a legacy in favour of the applicant in the sum of $350,000. [2] The respondents submit, firstly, that their costs be paid out of the estate on an indemnity basis (estimated to be in the order of $162,417.282), and secondly submit that the applicant’s costs be capped at $55,000 or alternatively assessed on the standard basis. 1 Cerneaz v Cerneaz & Anor [2015] QDC 41. 2 This is $132,000 together with $30,000 for future costs. -- 2 of 15 -- 3 [3] The applicant submits that her costs should be paid from the estate, assessed on an indemnity basis in the sum of $140,000. [4] It is common ground between the parties that the value of the estate is $791,091.28.3 [5] Therefore total costs are alleged to be $302,417.28 – some 38% of the estate. The surprising aspect of the matter is that it was not a complex matter and there was only a two day trial. Evidence Respondents’ evidence [6] The respondents rely on the affidavit of Christine Ann Smyth sworn on 16 March 2015 (document 23). [7] The applicant served her application and supporting affidavits on the respondents on the 10 July 2013. The applicant failed to serve a draft directions order in accordance with District Court Practice Direction No 8 of 2001 at [6]. [8] At para 12 Ms Smyth says the applicant’s affidavit did not satisfactorily meet the requirements of District Court Practice Direction 8 of 2001 and failed to articulate the claim namely: (a) the basis of the deceased’s failure to properly provide for her; (b) the extent of household contents and contents of the shed; (c) incorrectly deposed there were no joint assets or bank accounts; (d) did not fully depose as to her health; (e) failed to identify her share holdings and expenses; (f) made adverse comments on the deceased’s relationship with the respondents. [9] The respondents set out the basis of these alleged deficiencies in a letter dated 21 July 2013 (Exhibit CAS-6); In addition it was alleged that the applicant failed to articulate the extent of the estate she was claiming. [10] The applicant responded by letter dated 30 July 2013 (Exhibit CAS-7). The respondents replied by letter dated 2 August 2013 (Exhibit CAS-8) providing details of the deceased’s assets and liabilities as of the date of death, at that time the estate being worth approximately $760,000. [11] By letter dated 2 August 2013 the respondents again urged the applicant to articulate her claim (Exhibit CAS-9). The applicant responded on 6 August 2013 (Exhibit CAS-10). It is said at para 21 of Ms Smyth’s affidavit that the respondents incurred legal costs as a result of the applicant’s deficient material. [12] As a result of these alleged deficiencies the respondents were required to provide substantial affidavits in reply (court documents 5 and 6). Additionally, the applicants provided a joint affidavit (court document 4). These were served on 13 September 2013. Exhibit CAS-11 is a letter dated 17 September 2013 which informed the applicant as to some errors in the affidavit of Melinda. 3 This is $819,000 less $27,908.72 paid to Smith & Stanton Solicitors who are responsible for administration of the estate. It is to be noted there is an unquantified capital gains tax liability. -- 3 of 15 -- 4 [13] In a letter dated 18 September 2013 the respondents raised concerns of the applicant’s failure to disclose shareholdings (Exhibit CAS-12). [14] It is said in para 27 that the applicant failed to file and serve her further affidavit material in accordance with the executed directions order (see letter dated 30 September 2013, Exhibit CAS-13). The applicant served a further affidavit sworn 1 October 2013 (court document 7). It is alleged that the applicant again failed to properly articulate her claim and the provision sought from the estate. [15] A mediation took place on 31 October 2013 which was unsuccessful (para 30). [16] Following the mediation until the 13 June 2014 it is alleged the applicant took no steps to progress the claim other than to make an offer to settle on 27 November 2013 (para 31). The respondents sought the applicant’s position regarding the trial by letter dated 13 June 2014 (Exhibit CAS-14). [17] The applicant provided a further affidavit dated 27 June 2014 (court document 15). This affidavit was the first time the applicant raised any health issues, provided proper details as to income she was receiving, and details as to her share portfolio and living expenses (para 34). On 25 July 2014 the applicant served on the respondents the affidavit of Dr Pokarier (para 35). [18] By correspondence dated 6 August 2014 (CAS-15) the applicant advised there was no further material to file. [19] Ms Smyth alleges that as a result of the applicant’s allegations regarding the relationship between the deceased and the respondents, independent evidence was necessary (para 38). Also, it was considered prudent to source evidence from the solicitor who prepared the deceased’s will (para 39). [20] As a result the affidavits listed in para 40 were obtained. [21] The applicant served a further affidavit sworn 10 February 2015 (court document 21). [22] In para 45 Ms Smyth alleges that at the time of trial the respondents were of the understanding that the applicant was pressing her position with respect to the relationship between the respondents and the deceased. It was noted on day 1 of the trial the applicant conceded she would not press those assertions (para 45). [23] Following are details of the offers exchanged: Date Party making the Offer Amount Synopsis 18.06.2013 Applicant $420,000.00 The offer was open for 7 days only and lapsed after that time. -- 4 of 15 -- 5 03.10.2013 Applicant $435,000.00 The offer was open for 7 days only and lapsed after that time 11.10.2013 Respondents Crisp Order $300,000.00 OR Legacy in the amount of $210,000.00 The offer was open for 14 days and lapsed after that time. 05.11.2013 Respondents Formal Offer of Settlement for a legacy amount of $280,000.00 plus costs on the standard basis as agreed or failing which to be assessed The offer was open for 14 days and lapsed after that time. 26.11.2013 Applicant Variation of the Will so as to allow the purchase of substitute properties / retirement homes and hold proceeds of sale as income and vary amount for upkeep of the property OR A legacy of $375,000.00 The offer was open for 14 days and lapsed after that time. 09.02.2015 (received 10.02.2015) Applicant $392,000.00 plus costs on the indemnity basis The offer was open until 12 February 2015 and lapsed thereafter 12.02.2015 Respondents $290,000.00 legacy plus costs capped at $40,000.00 The offer was open until 13 February 2015 and lapsed thereafter 17.02.2015 Applicant $392,000.00 plus costs on the indemnity basis [24] As to the applicant’s legal costs, it is pointed out that in her affidavit sworn 10 July 2013 the applicant deposed at para 27 that she was advised that costs up to and at final trial would be in the order of $40,000 to $50,000. -- 5 of 15 -- 6 [25] Under cover of correspondence dated 11 February 2015, the respondents sought from the applicant an indication of the costs (CAS-23). The applicant by correspondence dated 11 February 2015 (CAS-24) stated for the purposes of settling the matter they were prepared to limit their costs to $65,000. The respondents informed the applicant of the estate’s position on 13 February 2015 (CAS-25). The affidavit of the respondents sworn 16 February 2015 provided an up-to-date estate position (para 53). [26] On 6 March 2015 the respondents’ solicitors made an offer to the applicant as to payment of costs (CAS-26 para 55). This was an offer that the estate pay the applicant’s costs on a standard basis from the date she filed her application to 13 December 2013, and thereafter on an indemnity basis. This offer was rejected (see CAS-28 – letter from the applicant’s solicitor dated 6 March 2015). At that point the respondents’ solicitors by letter dated 6 March 2015 (CAS-28) advised they would not oppose the applicant’s request for costs to be paid from the estate on an indemnity basis to be assessed. On 9 March 2015 the applicant’s solicitor wrote to the respondents’ solicitor (CAS-29) advising that costs totalled $140,045.74 and made an offer that the respondents pay the entirety of that amount. There is no doubt that this sum clearly far exceeded anyone’s expectations up until that point. [27] Given the size of the applicant’s claim for costs, the respondents withdrew their proposal for a consent order (see CAS-30 para 58). [28] As to the respondents’ legal costs, the respondents’ solicitors act for two respondents, one of whom resides in Woorabinda and the remoteness of her accommodation has caused frustration in terms of communications. [29] Exhibit CAS-31 is a breakdown of the respondents’ costs totalling $27,908.72 for general probate administration costs and expenses, and $132,417.28 for legal costs concerning the claim. [30] Ms Smyth in a further affidavit sworn on 17 March 2015 (document 24) says that on 18 February 2015 a verbal offer was made by the respondents to the applicant that the applicant receive 40% of the estate together with costs capped at $65,000. [31] There is a further affidavit from Ms Smyth sworn 25 March 2015 which sets out an up to date financial position. Applicant’s evidence [32] The applicant relies on an affidavit of Rodney Charles Holloway sworn 19 March 2015 (document 26). Exhibit RCH-1 is a bundle of correspondence between the parties which shows that at times the respondents were dilatory. [33] Mr Holloway says that he always intended to have the firm’s costs independently assessed and did not in the course of the litigation keep an itemised list of costs. He says that Mr Graham has assessed costs as at 23 November 2013 at $52,997.67. His assessment as at 6 March 2015 is $141,145.74 (para 9). [34] Michael Graham has sworn an affidavit on 10 March 2015 (document 25). His certificate of assessment of the applicant’s costs as at 26 November 2013 is $52,997.67 (Exhibit MAG-1). -- 6 of 15 -- 7 [35] In Mr Graham’s second affidavit sworn 19 March 2015, he assesses costs as at 5 March 2015 at $141,145.74 (Exhibit MAG-2). Submissions Respondents [36] The respondents in written submissions (document 23) submit that: (a) the discretion to order costs and to stipulate the mechanism by which the quantum is determined is broad; (b) each case depends on its own facts; (c) the court retains the discretion to award costs either on a standard basis, indemnity basis or indeed capped costs (r 687); (d) rule 700(2) provides that usually trustees have their costs paid out of the fund held by the trustee on an indemnity basis (see r 704); (e) family provision cases stand apart from cases in which costs follow the event and depend on the overall justice of the case; (f) although the applicant was successful in obtaining an order for further provision, in all of the circumstances costs should be capped because: (i) the court was unaware of the quantum of costs at the time the hearing occurred and indeed the court was aware at the time of the hearing that her costs were in the order of $60,000; (ii) the estimate of costs is so different to the costs assessment provided; (iii) the estate is relatively modest; (iv) if the costs as assessed by Mr Graham are to be paid, the respondents as residuary beneficiaries would receive nothing from their father’s estate4; (v) the deceased went to considerable lengths to balance his second wife’s entitlement to the estate against the moral claim of his daughters; the court considered the quantum of the applicant’s costs in reaching its decision, which estimate is about one half of the actual costs now claimed by the applicant; (vi) the original claim was deficient in a number of respects; (vii) the material filed by the applicant was relatively modest in comparison with the material filed by the respondents; (viii) the applicant claimed the relationship between the respondents and the father was unsatisfactory and it was not until after lunch on the first day of the trial that counsel indicated that this would not be pursued; (ix) a number of offers were made in this matter; although the offer made in November 2013 involved an option whereby the respondents would pay $375,000 inclusive of costs, there was no quantification of costs until after the court delivered its judgment. [37] The respondents point out that the applicant seeks care and consideration in the amount of $13,374.05, an uplift fee of $14,488.55, and counsel’s fees in the sum of 4 This submission was corrected on 25 March 2015- see [38 (a)] infra. -- 7 of 15 -- 8 $55,988.80. It is pointed out that the costs agreement has not been provided by the applicant. It is further pointed out that the offer made in November 2013 cannot be considered a proper offer as the terms of the offer were not clear in the sense that costs were not specified, the claim was deficient in particularity, the offer did not represent a genuine compromise, and in the circumstances the rejection was reasonable. [38] In oral submissions to the court the respondents submit: (a) It is not correct to say that the respondents would receive nothing as alleged in para 16(e) of their submissions- in fact they would receive $166,500. (b) They oppose the suggestion that their costs be capped relying on the decision of Magur v Brydon [2014] NSWSC 1931. (c) That the estimate of costs in the respondents joint affidavit (document 4) was a reasonable one. (d) The court should be loath to interfere as between solicitor and client as the court is not privy to communications between them. (e) The respondents were left in a position where they had to respond to the issues raised by the applicant. (f) The offer of $375,000 could not genuinely be considered as costs were not specified. (g) In terms of the applicant’s costs one should have regard to District Court Practice Direction 8 of 2001. (h) The assessment of the applicant’s costs is on the Supreme Court scale (when it should not be) and there is no basis for the care and consideration amount or the uplift fee. Applicant’s submissions [39] The applicant has provided a chronology of events. [40] It is pointed out that there was an offer to settle by the respondents on 11 October 2013 of a Crisp order of $300,000 or a legacy of $210,000 with the applicant to bear her own costs. Further by fax on 11 February 2015 the applicant’s solicitor offered to cap his costs at $65,000 including GST and counsel’s fees. [41] It is further submitted that the respondents are continuing to agitate matters which went nowhere at trial (para 3). [42] Further, it is submitted as to the allegation that there was no quantification of the applicant’s claim it is not the practice for applicants to set out in their affidavits a specific quantified amount and in any event the respondents were advised in effect of the claim by the offers made. [43] It is submitted the correspondence in Mr Holloway’s affidavit shows that on occasions the respondents were dilatory with the provision of material and in responding to letters. [44] The applicant submits in written submissions dated 19 March 2015: (a) She has succeeded in securing further provision. -- 8 of 15 -- 9 (b) The usual order is that a successful applicant is awarded costs on an indemnity basis.5 (c) Matters of discretion include the rejection of better offers than the award made. (d) The applicant has not engaged in any conduct which would lead to a deprivation of the usual order. (e) The offer by the applicant on 18 June 2013 of $420,000 inclusive is higher than order ultimately made but within the range of reasonable possibilities and indeed the respondents would have been better off accepting this. (f) Similar submissions are made as to the offer of $435,000 made on 3 October 2013. (g) The applicant also relies of course on the offers made on 26 November 2013 and in February 2015. (h) It is submitted the respondents’ offers were miserly – a Crisp offer for $300,000 or a legacy of $210,000 on 11 October 2013, $280,000 plus costs on the standard basis on 5 November 2013 and $290,000 plus costs of $40,000 on 12 February 2015. (i) It is submitted the reference in Annexure A of the respondents’ affidavit sworn 16 February 2015 to the costs of $45,000 to $60,000 is to the respondents’ costs to finalise the claim. (j) If the respondents’ costs are such that proper provision from the estate could not be made to the applicant and for her costs the respondents’ costs should be capped. (k) The respondents’ costs are disproportionate to the value of the applicant’s claim. (l) The costs of litigating fruitless issues were not reasonably incurred. (m) The applicant has focussed these proceedings on attaining secure accommodation for herself. The respondents were specifically referred to Collett v Knox [2010] QSC 132. Despite this, a strike out application was threatened. The respondents have taken issue with all the applicant has said. (n) As to the suggestion that costs be capped at $55,000, there is no agreement in this regard. If reference was made to the estimate of $40,000 to $50,000 the fact is there were many matters in dispute between the parties. The actuality is the attempt to settle costs was $65,000 four days before the trial. This offer in any event did not include the costs of preparation immediately before the trial or the costs of the trial itself. The offer was not accepted. (o) It is submitted the offer of $375,000 inclusive of costs was clear in its terms. (p) It is submitted that while costs of $140,000 may seem high this is a direct consequence of how the respondents ran their case. (q) If the estate is reduced to an extent that the respondents will not receive anything, this is the respondents own fault in failing to accept any of the earlier offers. (r) Any delay alleged on the part of the applicant is rejected. [45] In oral submissions to the court the applicant submitted: 5 Re McIntyre [1993] 2 Qd R 383 at 388 and Nesbit v Public Trustee [2003] QDC 370 at [13]. -- 9 of 15 -- 10 (a) The applicant’s solicitor did not obtain a cost assessment before trial because of the cost. Also, the solicitor did not keep an itemised list of costs. (b) There could have been counter offers by the respondents at an early stage of the proceedings.It was the applicant not the respondents who sought a resolution early on. The early offers were not unreasonable. (c) The respondents filed large affidavits late in the proceedings. (d) After an analysis of the offers the applicant has been proved to have acted reasonably. (e) There is no proper basis to deny the applicant indemnity costs. (f) The costs are certified to be reasonable. Principles and rules [46] Rule 681(1) provides: “Costs of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court orders otherwise.” [47] Rule 687 provides: “(1) If, under these rules or an order of the court, a party is entitled to costs, the costs are to be assessed costs. (2) However, instead of assessed costs, the court may order a party to pay another party – (a) a specified part or percentage of the assessed costs; or (b) assess costs to or from a specified stage of the proceedings; or (c) an amount for costs fixed by the court; or (d) an amount for costs to be decided in the way the court directs.” [48] Rule 700 provides: “(1) This rule applies to a party who sues or is sued as a trustee. (2) Unless the court otherwise orders, the party is entitled to have costs of the proceeding, that are not paid by someone else, paid out of the fund held by the trustee.” [49] Further r 704 provides: “If a party who sues or is sued as a trustee is entitled to be paid costs out of a fund held by the trustee, a cost assessor must assess the costs on the indemnity basis, unless the court orders otherwise.” [50] It is clear there is a wide discretion on the issue of costs and each case depends on its own facts. -- 10 of 15 -- 11 [51] Gaudron J in Singer v Berghouse [1993] HCA 35; (1993) 114 ALR 521; (1993) 67 ALJR 708 at [6] noted that family provision cases stand apart from cases in which costs follow the event. Costs in such a case depend on the overall justice of the case. [52] In Sherborne Estate (No. 2) (Vanvalen v Neaves) (2005) 65 NSWLR 268 where Palmer J referred to the importance of proportionality of costs. His Honour with reference to the NSW UCPR noted at [29]: “It seems to me that UCPR 42.4 and its precursor, SCR Pt 52A r.35A, were designed to put into the Court’s hands a brake on intemperate and disproportionately expensive conduct of proceedings. The power conferred by the Rule is not brought into play only if one of the parties invokes it: the Court itself may exercise the power on its own motion whenever it sees the need. This is because the policy of the law, enshrined in CPA s.56(1), is to facilitate the just, quick and cheap resolution of the real issues in proceedings. By s.56(2), the Court not only may, but must, give effect to that policy whenever it exercises any power conferred upon it by the Act or the Rules – indeed, even when the parties themselves do not wish to conduct the proceedings quickly or cheaply. [30] Proportionality of costs to the value of the result is central to the just and efficient conduct of civil proceedings: see e.g. Lownds v Home Office (Practice Note) [2002] EWCA Civ 365; [2002] 1 WLR 2450 per Lord Wolfe CJ.” [53] McMeekin J in Manly v Public Trustee [2007] QSC 388 at [114] noted that the costs (amounting to $180,000) were out of proportion to the work and difficulty involved in the case. His Honour also noted that there was little point to litigation in modest estates. The beneficiaries received costs on the standard basis. As noted earlier His Honour described the costs of $75,000 for the applicant and $80,000 to $90,000 for the beneficiaries being out of proportion to the work and difficulty involved (the estate was worth $380,000). His Honour also noted that executors do have a duty to uphold the will (see [114]). [54] In Carroll v Cowburn [2003] NSWSC 248 Young CJ in Eq observed at [36] that practically speaking the court has little control over costs in family provision matters. His Honour considered a general guideline might be to cap costs at the amount of the legacy received although his Honour declined to cap costs in that case. [55] In Gill v Smith [2007] NSWSC 832 the plaintiffs received legacies of $100,000 each with costs capped at $40,000. [56] In Underwood v Underwood [2009] QSC 107 Jones J fixed quantum of the costs of a number of parties to the litigation. [57] In Jones v Jones [2012] QSC 342 where costs were said to be $430,000 McMeekin J ordered costs be fixed at $185,000. [58] In Collett v Knox [2010] QSC 132 McMeekin J said at [166]: “Second, the assumption that Mr Knox makes is that the court has no power to supervise or limit the executors in their expenditure of estate funds on litigation of this type. That assumption I examine -- 11 of 15 -- 12 more closely below. As a general proposition I consider it accurate to assert that before embarking on expensive litigation the executors need to give careful consideration to what amounts they will expend and how best they should discharge their duties. Resort to generalisations that executors are entitled or obligated to uphold the will may provide no guidance at all in some cases. In my view this is such a case. Consistent with that view is the observation of Holmes JA in Underwood & Anor v Sheppard, a case involving family provision claims: ‘The learned judge’s observation that the obligation to consider the impact of costs on the estate applied with greater force to the executors than to the beneficiaries is unimpeachable. Executors bear a fiduciary duty to which they must have regard in conducting litigation affecting the estate; beneficiaries do not.’” [59] In Magur v Brydon [2014] NSWSC 1931 Robb J noted that it would be unwise and impracticable for the court to act as a “policeman” in relation to costs (see [148]). [60] I also note that whilst costs are truly discretionary, the discretion must be exercised judicially (see Oshlack v Richmond River Council (1998) 193 CLR 72 at p 84). Discussion [61] I gave judgment in this case on the basis that the applicant’s costs were in the order of $45,000 to $60,000 (see [155] of the primary judgment) and the respondents’ costs were $27,908.72 for general administration costs and $102,184.92 to defend the claim, a total of about $190,000. [62] I also note Joan in her affidavit filed 10 July 2013 (document 2) estimated final costs at between $40,000 to $50,000 after the trial (see para 27). [63] Despite this, it is now clear that the applicant’s claim is in the order of $140,000 and the respondents’ claim totals $162,417.28 (which includes an estimated extra $30,000 to finalise the matter). [64] The respondents in their joint affidavit (document 4) estimated their total costs after a trial to be between $102,556.75 and $152,556.75. [65] The total claimed costs then is about $300,000 from an estate worth $791,000. I consider this is excessive, particularly considering this was only a two day trial. [66] There is no valid explanation as to why the now claimed figures by the applicant were not placed before me at trial. [67] In my view the purpose of the practice direction is to ensure the court (and the other side) is appropriately advised of the quantum of costs so that resolution may occur and of course as noted below the costs are relevant to any order made. The objects of the practice direction are noted at [2] to be: “The objects of this Practice Direction are to reduce cost and delay by– (a) making information available at the earliest practicable date so that a realistic assessment of prospects can be made by all parties; -- 12 of 15 -- 13 (b) encouraging the early consensual resolution of applications; (c) minimising the number of appearances necessary to dispose of Family Provision applications”. [68] I consider the court should have regard to the practice direction when considering how to assess what costs order should be made. [69] I note that the respondents’ counsel attempted to raise the issue of costs in her address (T2-30). Objection was taken by the applicant’s counsel to a submission about delay and it was agreed to leave the parties to provide material on the question of costs after the result (T2-32.5). [70] Costs of course are a relevant matter to be considered in the exercise of the discretion at the second stage (see Bladwell v Davis [2003] NSWSC 882 at [11]6). If the size of the figures now being debated were placed before me at the trial, this may well have made a difference to the amount awarded to the applicant. [71] I find on the material that the applicant’s claim was insufficiently particularised and deficient in the respects alleged by the respondents up until later in the proceedings (in particular her affidavits filed on 2 October 2013 – document 7 and 31 October 2014 – document 15). [72] Significant matters of omission were pointed out in the letter from the respondents’ solicitors to the applicant’s solicitor dated 21 July 2013 (CAS-6). [73] Much of the material related to the relationship between the parties and the deceased. It was only on day 1 of the trial that the applicant made the concessions contained in Exhibits 1 and 2. Much of this could have been resolved earlier if those concessions had been made earlier. [74] On the other hand it was not a one way street, the respondents could equally have agreed on these issues in advance of the trial as well. Issues like this could well have been resolved at the mediation even if the entire dispute could not be resolved. [75] In this regard the comments of McMeekin J at [171] in Collett v Knox (supra) are apposite: “Finally, a worrying aspect is the way in which the litigation was conducted. Despite this being a modest estate a three day trial was undertaken, principally on the issue of Mr Collett’s status to apply. Twenty years ago Cohen J of the NSW Supreme Court7 expressed this view in relation to family provision litigation in small estates, with which I agree: ‘In my opinion the legal profession in both branches has an obligation to reduce the costs of litigation as much as possible when the amounts in dispute are so small. If the parties cannot reach a compromise then it seems to me that by consultation their legal advisers, both solicitors and counsel, should seek to find all means of defining the 6 This was not disapproved in Bladwell v Davis & Anor [2004] NSWCA 170. 7 Jackson v Riley (unreported) NSWSC - 3701/1987 – 24 February 1989 – BC8902497. -- 13 of 15 -- 14 real issues and confining the evidence in relation to them. Where cross-examination will be unlikely to alter the substance of a witnesses’ evidence it should be dispensed with. The heavy expense of bringing those witnesses from distant places should be actively avoided... it requires everyone in all cases to look somewhat further than [fighting for one’s client's interests] and to look at what the final issue will be. Because everybody has stood by their respective clients so well there is practically nothing to be argued about. The plaintiff and the principal beneficiary will have to bear the heavy expense of the litigation with little left for them at the end. It is most regrettable and I think it shows up the need for early consultation and early advice to clients as to what at the end they will be facing.’” [76] I further find that the offer made of $375,000 inclusive could not be genuinely considered by the respondents at that time in light of the state of the evidence. Also of course the respondents as executors did have a general responsibility (not at all costs of course) to uphold the wishes of the testator. His wishes were made clear to Mr Smith at meetings which the applicant attended. [77] Despite Mr Graham’s evidence, the fact is at the time the $375,000 offer was made I do not consider the respondents could have contemplated that the applicant’s costs were $52,000. Bearing in mind the assertion made by Joan in her affidavit filed 10 July 2013 at para 27 it is hard to imagine that the respondents would have thought the applicant’s costs were anywhere near that amount at that point. At that point there were two affidavits from Joan (documents 2 and 7), a joint affidavit from the executors of 23 pages (document 4), an affidavit of Merisa (document 5) and an affidavit of Melinda (document 6). I note that a mediation occurred on one day on 31 October 2013. [78] In these circumstances it cannot be unequivocally said the respondents were unreasonable in not accepting this offer (see J and D Rigging Pty Ltd v Agripower Australia Ltd and Ors [2014] QCA 23 at [5]-[6]). [79] There is some doubt as to whether that part of the UCPR dealing with offers to settle applies to Family Provision Applications (see Underwood v Underwood (supra) at [39] and Kozak v Matthews [2007] QSC 203). [80] In any event the offer was also not expressed to be one under the rules. [81] But regardless, the goal posts changed later (to offers higher than the ultimate award), as can be seen from the history of the offers. However there is no doubt the offer should have been seriously considered by the respondents. Indeed they made no offers between November 2013 and February 2015. [82] In all of the circumstances, in the exercise of my discretion bearing in mind the size of the estate, I do consider this is a case where costs should be capped for both sides. [83] Bearing in mind the estimate of costs made by the applicant originally (a matter everyone worked on) and taking into account this was a two-day trial only, the -- 14 of 15 -- 15 applicant’s costs should be capped at $100,000 which in my view is a significant sum in itself for such a trial. [84] It is my view, bearing in mind that the respondents did have to respond to a number of allegations by the applicant (not ultimately the focus at trial) and the fact there were two respondents, that the respondents’ costs should be capped at $130,000.8 [85] I consider an extra $30,000 (as compared to the applicant’s costs) adequately compensates the respondents for the additional costs of the second client and for any delay occasioned by the applicant and for future costs relevant to the proceedings (as distinct from the administration of the estate). [86] In my respectful opinion the above figures more rather reflect the work and difficulty associated with this matter. They also reflect proportionality amounting to a little over 29% of the total estate. [87] The total then would be $230,000 leaving an estate of $561,091.28. Deducting the legacy of $350,000, this leaves $211,091.28 for the respondents, which I consider reflects the justice of the case. [88] I will allow liberty to apply on the form of orders and/or as to any errors in calculation. [89] I therefore make the following orders: 1. That the respondents’ costs of and incidental to the proceedings be assessed on an indemnity basis but are to be capped at $130,000. 2. The costs referred to in paragraph 1 be paid out of the estate of Sergio Cerneaz. 3. The applicant’s costs of and incidental to the proceedings be assessed on an indemnity basis but are to be capped at $100,000. 4. The costs referred to in paragraph 3 be paid out of the estate of Sergio Cerneaz. 5. Liberty to apply. 8 This fits in with the respondents’ estimate at para 7 of the affidavit filed 18 September 2013 (document 4). -- 15 of 15 --