ADXG Pty Ltd v My Top Australia Pty Ltd (No 2)

Cases Cited: Balderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited (No 2) [2009] NSWCA 12
Bostik Australia Pty Limited v Liddiard (No 2) [2009] NSWCA 304
Calderbank v Calderbank [1975] 3 All ER 333
Craft Printing Limited v Dwyer (Costs) [2009] NSWDC 191
Entirity Business Services v Garsoft (No 2) [2011] FCA 334
Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375
In the matter of Yamari Ochre Pty Limited (in liq) (No 2) [2026] NSWSC 59
Lawrence v Gunner [2015] NSWSC 1229
Mega-top Cargo Pty Limited v Moneytech Services Pty Limited [2016] NSWCA 3
Miwa Pty Limited v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344
Nu Line Construction Group Pty Limited v Fowler [2012] NSWSC 816
Regency Media Pty Limited v AAV Australia Pty Limited [2009] NSWCA 368;
Singh v Singh (No 2) [2004] NSWSC 225
State of New South Wales v Stanley [2007] NSWCA 330

Category: Costs

Parties: ADXG Pty Ltd (First Plaintiff)
Andrew Daniel (Second Plaintiff)
Caroline Daniel (Third Plaintiff)
My Top Australia Pty Ltd (First Defendant)
Parisi Bathware Pty Ltd (Second Defendant)

Representation: Counsel:
J Raine, Solicitor (First, Second and Third Plaintiffs)
M Daniels (First and Second Defendants)
Solicitors:
Raine Litigation (First, Second and Third Plaintiffs)
Prominent Lawyers (First and Second Defendants)

File Number(s): 2024/00117008

Publication restriction: Nil

JUDGMENT

Introduction

1. In these proceedings I delivered reasons for judgment on 17 December 2025 ordering that the Amended Statement of Claim be dismissed and setting down a timetable for the filing and service of any submissions and evidence for any application for costs (Principal Judgment). These reasons concern the resolution of disputes between the parties as to the costs of the proceedings. They assume familiarity with the Principal Judgment and adopt defined terms set out in the Principal Judgment.

2. The parties sought extensions of time for the filing and service of submissions and affidavits as to costs on the basis that they were endeavouring to resolve such issues. Evidently, those endeavours failed and the parties have now had an opportunity to make written submissions in support of the costs orders they propose should be made.

3. Ultimately, the issues between the parties in relation to costs were as follows:

(a) f**irst, the successful Defendants, My Top and Parisi, sought their costs on the indemnity basis either for the whole of the proceedings, or alternatively from 1 October 2025 or 18 October 2025 on the footing that offers of compromise that they had made to resolve the proceedings were rejected; (b) second, the unsuccessful Plaintiffs, ADXG and Mr Daniel argued that the costs incurred by the Defendants in respect of certain evidence and issues agitated by them and abandoned during the hearing, should be discounted or disallowed; (c) third, the Plaintiffs also sought their costs in respect of a Notice of Motion filed by the Defendants on 1 August 2025 be summarily assessed.

4. In my Principal Judgment, I indicated that in the absence of any application by either party for a special costs order, it was my view that costs should follow the event, and that if the parties did not file submissions in accordance with the orders I made, then I proposed to order the Plaintiffs to pay the Defendants’ costs of the proceedings (Principal Judgment at [255]).

5. On the question of costs, the Defendants relied on an affidavit of Kristina Cruz sworn 19 February 2026 while the Plaintiffs relied on an affidavit of Justin Raine affirmed 27 February 2026. Ultimately, neither party took objection to reliance on this material.

The Offers of Compromise

6. The Defendants pointed to the rejection of two offers of compromise for asserting an entitlement to indemnity costs. Each of them was conveyed by their solicitors to the solicitor for the Plaintiffs.

7. The first offer was dated 30 September 2025 (September Offer). The September Offer conveyed the following offer:

(a) judgment in favour of the Defendants against the Plaintiffs; and (b) the Plaintiffs pay the Defendants’ costs of the proceedings.

8. The September Offer was purportedly made in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333 (Calderbank). The offer was open for acceptance until 14 October 2025 at 4pm.

9. The September Offer was made prior to an informal settlement conference which was held by the parties on 13 October 2025. Prior to that date the Plaintiffs themselves had made an offer of compromise for judgment in the amount of $275,000 (which was open for acceptance until 16 October 2025). That offer was rejected.

10. The second offer relied upon by the Defendants was dated 17 October 2025 (October Offer). The October Offer conveyed an offer in the following terms:

“1. The Defendant (sic) to pay rectification costs for the stairs between the ground floor and the first landing in the amount of $6,000.

2. The Defendant (sic) to supply sufficient ‘Absolute Black’ slabs. These additional slabs are from the same batch of the Plaintiffs’ order (Batch 2 from Italy).”

The October Offer was also purportedly made in accordance with the principles in Calderbank. It was made on Friday 17 October 2025, by email at 4.47pm, and was expressed to be open for acceptance until Monday 20 October 2025 at 9am.

11. The hearing commenced before me on 20 October 2025.

Should an order for indemnity costs be made in favour of the Defendant?

12. The parties did not dispute the principles concerning the assessment of costs where a Calderbank offer is made but not accepted. In Lawrence v Gunner [2015] NSWSC 1229 at [26], Stevenson J stated that:

“If a Calderbank offer is made, but not accepted, the Court’s discretion to make a special order is enlivened. The Court’s discretion is an open one, but is commonly enlivened if (a) the party that made the offer achieves a better result than the amount offered, (b) the offer was a genuine offer of compromise, and (c) it was unreasonable of the offeree not to accept: for example Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2*)* [2011] NSWCA 344 at [7]-[8].”

See also Herning v GWS Machinery Pty Limited (No 2) [2005] NSWCA 375 at [4]-[5].

13. The Plaintiffs were unsuccessful in their claims under contract and for misleading and deceptive conduct under the Australian Consumer Law. Accordingly, the Court should consider whether the offer made represented or “formed part of a genuine attempt to reach a negotiated settlement”: Balderstone Hornibrook Engineering Pty L**imited v Gordian Runoff Limited (No 2) [2009] NSWCA 12 at [19].

14. The onus is on the Defendants to prove that the rejection of a Calderbank offer was unreasonable having regard to the relevant circumstances at the time: Nu L**ine Construction Group Pty Limited v Fowler (Nu Line) [2012] NSWSC 816 at [49]. The response of the offeree must be assessed at the time it was made, and not with the benefit of hindsight resulting from a known outcome, recorded in a judgment: Miwa Pty Limited v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [11].

15. Relevant factors in determining whether an offer is reasonable include the stage at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromised offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it: see Nu Line at [50]; In the matter of Yamari O**chre Pty Limited (in liq*) (No 2)* [2026] NSWSC 59 at [11]-[12] per Black J.

16. In my opinion the September Offer did not involve any genuine element of compromise on the part of the Defendants. The Plaintiffs submitted, and I accept, that this offer was tantamount to offering a complete capitulation by the Plaintiffs, without any compromise on the part of the Defendants. It did not reflect any meaningful attempt to resolve the proceedings on balanced or negotiated terms: Mega-top Cargo Pty Limited v Moneytech Services Pty Limited [2016] NSWCA 3 at [5]. An offer requiring the offeree to capitulate and pay costs, does not involve any element of compromise and therefore should not be treated as a genuine offer: Singh v Singh (No 2) [2004] NSWSC 225 at [11]-[14]; Regency Media Pty Limited v AAV Australia Pty Limited [2009] NSWCA 368 at [16].

17. As I have stated above, the reasonableness of a rejection of an offer of compromise must be assessed at the time it was made, and not with the benefit of hindsight. In this regard, I think it is important to observe that, at the time that the September Offer (and for that matter the October Offer) was made, the Defendants, so far as the evidence reveals, had not served two important affidavits that they ultimately relied upon at the hearing:

(a) the first of these was an affidavit of Mr Franco Parisi whose affidavit was sworn on 21 October 2025 and was filed during the hearing. It was read without objection. Mr Parisi gave evidence that an additional 19 porcelain slabs from the same manufacturer and production as the Batch 2 porcelain slabs had been ordered from Fondovalle and were being stored in good condition in a warehouse in Sydney: see Principal Judgment at [33]; (b) the second was an affidavit of Mr Federico Battaglia sworn and filed online on (Saturday) 18 October 2025. Mr Battaglia was the Chief Operating Officer of the Defendants and his affidavit was read without objection on the third day of the hearing. Mr Battaglia’s evidence corroborated, in certain respects, the evidence that Ms Caronna gave of her conversation with Mr Brough at 11.30am on 25 August 2023. The communications with Fondovalle that were the subject of Mr Battaglia’s evidence also confirmed the steps that Ms Caronna said that she had taken both before and after she received the communications on 24 August 2023 from Mr Brough and Mr Daniel: see for example, Principal Judgment at [112]-[123].

18. The evidence of both these witnesses, it seems to me, changed the evidentiary landscape and strengthened the Defendants’ case on liability and quantum such that I do not consider the rejection of the September Offer as unreasonable having regard to the relevant circumstances at the time it was made.

19. For these reasons the Plaintiffs’ failure to accept the September Offer should not attract an order for indemnity costs.

20. The October Offer, unlike the September Offer, did, it seems to me, involve a genuine element of compromise. The Defendants offered that they would pay rectification costs for the stairs between the ground floor and the first landing in the amount of $6,000 and would supply additional ‘Absolute Black’ slabs from Batch 2 of the Plaintiffs’ original order from Italy.

21. The underlying complaint of the Plaintiffs in these proceedings concerned the colour variations between the two batches of porcelain slabs. The Batch 1 porcelain slabs had been installed on the First Floor (upper level) common areas (including the laundry) and on the steps from the First Floor to the Ground Floor, and then on the steps to the Lower Ground Floor. The Batch 2 slabs had been installed on the Ground Floor: see [22] of Principal Judgment.

22. The terms of the October Offer for rectification were limited to the stairs “between the ground floor and first landing”. As the Plaintiffs pointed out, this represented only part of the Batch 1 installation and did not constitute an offer to settle the entirety of the claim.

23. The offer was made just before the close of business on Friday 17 October 2025 and remained open only until 9am the following Monday morning. This allowed 2 clear days, over the weekend. Having regard to the nature of the proposal in the October Offer, the period within which it was capable of being accepted was, in my opinion, inadequate to allow proper consideration and advice to be obtained by the Plaintiffs; see Entirity Business Services v Garsof**t (No 2) [2011] FCA 334 at [8]-[9] and C**raft Printing Limited v Dwyer (Costs) [2009] NSWDC 191 at [24].

24. Further, the October Offer must also be considered at the time it was made. Again, the Plaintiffs did not, I infer, have the affidavit of Mr Parisi at the time the offer was made. The evidence of Mr Parisi is of significance for present purposes because, at the time the October Offer was made, it would not have been clear to the Plaintiffs that the Defendants in fact had sufficient Batch 2 slabs in Australia to undertake the proposed replacement works.

25. The Plaintiffs also submitted that the proposal contained in the October Offer would not have resolved their underlying concern with the colour variation between the slabs. On its face the proposal contained in the October Offer would not have resolved the underlying colour variation issue but would instead have relocated it to the first-floor landing. The proposal contained in it was only a partial replacement of the Batch 1 slabs. Coupled with the shortness of the acceptance period and the absence of evidence as to the availability of sufficient replacement slabs, I do not consider rejection of the proposal contained in the October Offer to have been unreasonable.

26. For these reasons I do not consider that the rejection by the Plaintiffs of the October Offer should attract any adverse costs consequences.

27. The Defendants’ claim for indemnity costs of the proceedings was based on the Plaintiffs’ failure to accept the September Offer or, alternatively, the October Offer. I do not consider that the Plaintiffs’ failure to accept either of these offers should attract an adverse costs order. It follows that the Defendants’ claim for a special costs order must fail. Subject to the next issue to be addressed, the Defendants are entitled to their costs on the ordinary basis.

Should Defendants be entitled to recover costs incurred in relation to evidence and issues abandoned at hearing?

28. The Plaintiffs submitted that costs incurred by the Defendants in respect of certain evidence and issues agitated and abandoned by them should be disallowed or discounted.

29. The issues which the Defendants agitated and abandoned, as I understood the Plaintiffs’ submission on costs, involved contentions that even if there was a difference in the colour or consistency between the batches, both batches were of acceptable or merchantable quality. These issues were agitated in the Defendants’ opening submissions in some detail ([3(c)], [4]-[8] and [12]) and invoked the operation of ss 54 and 64 of the Australian Consumer Law.

30. Importantly, reliance on these specific statutory provisions had not been pleaded and the manner in which they might afford a defence to the Plaintiffs’ claims was not self-evident. Objection had been taken by the Plaintiffs on reliance on these issues. During the course of the opening, counsel for the Defendants was given an opportunity to consider his clients’ position and stated to the Court after a short adjournment:

“After careful consideration and discussion, the first and second Defendants will not press those submissions in relation to the Australian Consumer Law, which means certain portions of those submissions should be deleted. We’ll give you the paragraph numbers.” (T14/31)

The paragraphs of the opening submissions which the Defendants subsequently indicated were not pressed, are those I have referred to in [29] above.

31. Further, the Defendants, at the hearing, abandoned reliance on the following evidence:

(a) expert reports of Colin Cass dated 27 August 2025 and 14 October 2025. The first report sought to establish that such colour difference as was perceived between the batches, was within a tolerance which would allow both batches to be traded as “merchantable quality” within the meaning of relevant standards and codes. Several detailed objections to this evidence had been taken by the Plaintiffs. The second report, although styled as supplementary, went to matters of quantum; and (b) an affidavit of Evan Westley-Smith sworn 15 August 2025. This evidence concerned an inspection of Mr Daniel’s home after the tiles had been installed in the company of Mr Daniel, Mr Brough and Ms Caronna and a discussion that took place during that inspection.

32. On the third day of the hearing following argument on the Plaintiffs’ objections to the admissibility of Mr Cass’ reports and a short adjournment, counsel for the Defendants, indicated to the Court:

“On the record, the defendants will abandon both reports of Mr Colin Cass. We don’t seek to rely on those reports.” (T173/18)

In relation to the second of Mr Cass’ reports, counsel had fairly conceded that it was served late and the Plaintiffs did not have a sufficient opportunity to respond to it (T172/6). I was told that the Court had made directions that the Defendants file any such evidence by 5 September 2025. In relation to the second report of Mr Cass, the Defendants had plainly not complied with that direction by some measure. No explanation was proffered for the lateness of that report.

33. Rule 42.1 of the Uniform Civil Procedure Rules (UCPR) provides that costs ordinarily follow the event “unless it appears to the Court that some other orders should be made”. Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the Court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18].

34. Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. However, it may be appropriate to apportion costs or deprive a successful party of costs where a particular issue or group of issues is dominant or separable: see Bostik Australia Pty Limited v Liddiard (No 2) (Bostik Australia) [2009] NSWCA 304 at [38]. A separable issue can relate to any disputed question of fact or law on which a party fails notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter.

35. The Plaintiffs submitted that the costs incurred in relation to the preparation of the evidence of Mr Cass and Mr Westley-Smith and the arguments concerning acceptable or merchantable quality on the footing of the Australian Consumer Law were abandoned at the hearing and should not be recoverable by the Plaintiffs because they did not contribute to the determination of the proceedings and the incurring of costs to prosecute these matters was wasted.

36. The Defendants submitted that they were “within their rights” to argue that the porcelain slabs were “an exact objective match” in colour, shade and tone. I accept that the Defendants were entitled to test the Plaintiffs’ claim that the porcelain slabs from Batch 1 and Batch 2 did not match; however the defences that they were entitled to raise ought, in the usual way, be pleaded and the evidence that they sought to rely upon should comply with the rules of evidence and any directions the Court might make for their service. The Defendants’ submissions in relation to costs failed to explain the circumstances of the abandonment of the evidence and the legal issues raised by ss 54 and 64 of the Australian Consumer Law.

37. The practical effect of the abandonment of Mr Cass’ evidence on the third day of the hearing was that two expert reports had been prepared, finalised and served and that time and resources had been expended by both parties in addressing issues of admissibility, methodology and foundation. Written and oral submissions were required in relation to those issues, notwithstanding that the Defendants ultimately did not rely upon or advance any of Mr Cass’ opinions at trial. In those circumstances, the work undertaken in relation to the expert reports did not contribute to the determination of the proceedings and was a waste of time and costs.

38. If the Defendants had wished to agitate the issues of acceptable or merchantable quality through the operation of the provisions of the Australian Consumer Law, those contentions and the relevant provisions should have been pleaded. There was no explanation why this had not been done. I had some reservations about the applicability of the relevant provisions of the Australian Consumer Law which were relied upon. In any event, after consideration the Defendants abandoned them on the first day of the hearing.

39. In these circumstances I consider that the costs of preparing and propounding the reports of Mr Cass were not reasonably incurred for the purpose of the proceedings and some allowance should be made for their recoverability. Likewise, the costs associated with preparing and agitating the claims of merchantable or acceptable quality based on the Australian Consumer Law should also be discounted. I consider that the costs incurred by the Defendants in relation to both these matters are sufficiently separable and any order for costs should reflect some disentitlement to recover them.

40. The evidence of Mr Westley-Smith is, I think, in a different position. The evidence was brief (2 pages, 9 paragraphs long) and addressed an inspection of the premises and a discussion between the parties who attended that inspection. The issue of what might be perceived as inconsistencies in the perception of the two batches of tiles was in issue in the affidavit evidence that had been filed by the Plaintiffs, although the weight of that evidence might have been affected by the view of the premises that the parties asked me to take on the second day of the hearing. In these circumstances I do not think that the costs associated with the preparation of the evidence of Mr Westley-Smith were unreasonably incurred for the purpose of the proceedings such that they should be disallowed.

41. The Plaintiffs submitted that the Court should make an order disallowing the Defendants’ costs in respect of Mr Cass’ reports and should order a percentage discount of the Defendants’ costs in respect of the arguments raised in the Defendants’ opening that were abandoned. I think that the preferable course is to order a percentage discount of the Defendants’ costs in respect of both the expert evidence of Mr Cass and the issues raised in the Defendants’ opening submissions rather than making separate orders in respect of those costs. The Defendants accepted that the approach to apportionment of costs involved matters of impression and evaluation, in other words, a ‘broad brush’ evaluation; mathematical precision in this discourse is illusory: see Bostik Australia at [38].

42. The expert evidence and the issues that were abandoned by the Defendants did take up some time at the hearing (which occupied 4 days, including a view of the premises where the tiles had been installed). The time taken to ventilate the submissions and evidence that were abandoned was not prolonged. However, the costs incurred in relation to the preparation of the expert evidence of Mr Cass, including the provision of instructions to the expert, and the preparation of the opening submissions must have involved work undertaken prior to the hearing and would have absorbed some time and effort of the practitioners charged with those tasks. The Plaintiffs had also prepared written submissions in reply on the admissibility of Mr Cass’ evidence.

43. In the circumstances, adopting a broad-based approach I consider a 15% discount to the Defendants’ costs as appropriate in these proceedings.

Costs of the Defendants’ Notice of Motion filed 1 August 2025

44. The Plaintiffs sought a summary assessment of the Notice of Motion filed by the Defendants on 1 August 2025 in the amount of $2,662.

45. So far as I can tell, the Defendants filed a Notice of Motion on 1 August 2025 seeking an extension of time to serve its lay evidence and also its expert evidence. The motion was listed on 6 August 2025 and adjourned to 12 August 2025. On 6 August 2025 the Court ordered that the Defendants pay the Plaintiffs’ costs of that date as agreed or assessed, and on 12 August 2025 the Court ordered the Defendants to pay the Plaintiffs’ costs of the Notice of Motion as agreed or assessed.

46. There is no evidence before me of the costs incurred or the work performed by the Plaintiffs on 6 August 2025, or of and incidental to the Defendants’ Notice of Motion filed 1 August 2025. However, the Defendants did not contest the quantum of the professional costs sought by the Plaintiffs pursuant to orders made on 6 and 12 August 2025, being an amount of $2,662. The Defendants accepted that these costs should be set-off against any award of costs to which they were entitled.

47. In these circumstances, I am prepared to make an order for costs in an amount sought by the Plaintiffs in relation to the Defendants’ Notice of Motion filed 1 August 2025, which order will include the Plaintiffs’ costs of 6 August 2025.

Conclusion

48. For the reasons set out above, I will make the following orders in relation to costs:

49. The Plaintiffs pay 85 percent of the Defendants’ costs of the proceedings (other than the Defendants’ costs of the Defendants’ Notice of Motion filed by them on 1 August 2025).

50. The Defendants pay the Plaintiffs’ costs of the Notice of Motion filed on 1 August 2025 in the amount of $2662.

**********