Separovich v Ferrao (No 2)

In *Separovich v Ferrao (No 2)*, the New South Wales Court of Appeal considered an appeal concerning costs orders made in proceedings under the *Property (Relationships) Act 1984*. The appellant sought to challenge a costs order made by McLaughlin AsJ, which had been delivered without prior submissions from the parties on the issue of costs.

The primary legal issues before the Court of Appeal were whether the trial judge had erred in making a costs order without allowing the parties an opportunity to make submissions, and whether the trial judge had correctly exercised their discretion regarding costs, particularly in light of an offer of compromise. The Court also had to determine the appropriate costs order for the appeal itself, considering a further offer of compromise made in relation to those proceedings.

The Court of Appeal held that the appellant had not been denied procedural fairness. It noted that the Uniform Civil Procedure Rules 2005 provided mechanisms, such as an application under UCPR 36.16, for parties to seek to make submissions after judgment. The Court found no error in the trial judge's exercise of discretion, affirming the starting point that costs follow the event under UCPR 42.1. The offer of compromise made at first instance was not considered as it had not been brought to the trial judge's attention. However, an offer of compromise made in respect of the appeal proceedings was relevant, as the outcome of the appeal was more favourable to the offeror.

Consequently, the Court of Appeal dismissed the appellant's appeal against the costs order made at first instance. The Court ordered that the appellant pay the respondent's costs of the appeal, with those costs to be assessed on the ordinary basis up to and including 11 October 2010, and thereafter on an indemnity basis, reflecting the successful offer of compromise made in relation to the appeal.