Australian Military Bank Limited v Pike (No 3)

Cases Cited: Calderbank v Calderbank [1975] 3 All ER 333; 3 WLR 586
Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd (No 2) [2024] NSWCA 274
Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344
Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; 13 VR 435
Hanave Pty Ltd v Nomad Sydney (No2) [2024] NSWSC 805
Primus Telecommunications Pty Ltd v CCP Australian Airships Limited [2003] VSC 141
Elite Protective Personnel Pty Ltd & Anor v Salmon [2007] NSWCA 322
Alves v Patel [2005] NSWSC 841
Guerinoni v Dennis Castino trading as Castino & Co Chartered Accountants [2008] NSWSC 175

Category: Costs

Parties: Australian Military Bank (Plaintiff)
Kevin James Pike (First Defendant / First Cross-Claimant)
Nathan Pike (Second Defendant / Second Cross-Claimant)

Representation: Counsel:
A Crossland (First Defendant / First Cross-Claimant)
A Oakes (Second Defendant / Second Cross-Claimant)
Solicitors:
N Christiansen (Plaintiff)
Digital Age Lawyers (First Defendant / First Cross-Claimant)
W Advisers (Second Defendant / Second Cross-Claimant)

File Number(s): 2024/109487

Publication restriction: Nil

JUDGMENT

Introduction

1. On 7 November 2025, I delivered judgment in this matter (the Principal Judgment). In this judgment, I adopt the defined terms in the Principal Judgment. Amongst other orders made in the Principal Judgment, I made orders that:

(a) The money paid into Court pursuant to orders made by Andronos SC DCJ, together with interest, be paid to the Second Cross-Claimant (Nathan); (b) Set out a regime for the Parties to address the Court on the question of costs.

2. Nathan was the successful party in these proceedings. He now applies to the Court for orders that the First Cross-Claimant (Kevin) pay the costs of and incidental to the proceedings:

(a) Up to and including 30 August 2024 on an ordinary basis; and (b) Thereafter, on the indemnity basis.

3. In seeking those orders, Nathan accepts that if such orders were made, they would not apply to any costs incurred by Nathan in respect of the interpleader application heard by Andronos SC DCJ, or any costs of Nathan reimbursed by the AMB.

4. Kevin opposes Nathan’s application for indemnity costs for the period after 30 August 2024. He does not oppose a costs order in Nathan’s favour on the ordinary basis.

Offers

5. In making his application for indemnity costs, Nathan relies on an offer made by him on 23 August 2024 to resolve the proceedings (the “Offer”). The Offer contained the following terms:

(a) Each party to be paid 50% of the funds that, at that point, were still held with AMB and which were subsequently paid into Court; (b) All existing costs orders be vacated; (c) Each party to release the other in relation to claims relating to the account in which the funds were held, and such release to be documented in a short form deed of release.

6. The Offer was open for acceptance until 4pm Friday 30 August 2024, a period of 7 days. Although the Offer suggested it was made pursuant to both r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) and the principles in Calderbank v Calderbank, [1] Nathan’s application is not made under r 20.26 of the UCPR.

7. Prior to the Offer, Kevin had made an offer on 7 August 2024 (“Kevin’s First Offer”). Kevin’s First Offer was open for 14 days. Kevin made a second offer in response to the Offer (“Kevin’s Second Offer”). Kevin’s Second Offer was made a few hours prior to the expiration of the Offer, and being a counter-offer, involved rejection of the Offer. Kevin’s Second Offer was open for a period of 6 days.

Principles

8. There was no dispute between the parties concerning the principles relevant to the exercise of the Court’s discretion when dealing with an application for indemnity costs that is not brought pursuant to UCPR r 20.26.

9. Recently, in Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd (No 2) (“Michael Hill Jeweller”), [2] the Court of Appeal identified (in a non-exhaustive way) matters that are relevant to the Court’s exercise of discretion when addressing an application for indemnity costs. In the case before it, as in this case, the relevant offer was made by way of a Calderbank letter. The Court said the following:

[5] … The offer did not comply with (and did not seek to invoke) the scheme for offers of compromise under the UCPR, r 20.26. Accordingly, under conventional principles, the appellant must satisfy the Court that it was unreasonable for the respondent to reject the offer, in order to justify a claim for costs on the indemnity basis from the day after the offer was made: see Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2). That principle flows from the fact that an application for indemnity costs involves a departure from the general rule that costs are to be assessed on the ordinary basis under UCPR, r 42.2.

[6] The Court in Miwa accepted six factors to be considered in determining whether the rejection of an offer was unreasonable:

“12 In Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; 13 VR 435 the Court of Appeal (Warren CJ, Maxwell P and Harper AJA) identified the factors relevant to determining whether the rejection of an offer was unreasonable as including the following:

(a) the stage of the proceeding at which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(c) the extent of the compromise offered;

(d) the offeree’s prospects of success, assessed as at the date of the offer;

(e) the clarity with which the terms of the offer were expressed;

(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.”

Submissions

10. With respect to the factors identified by the Court of Appeal referred to above, there was no suggestion by Kevin that the Offer was not a genuine compromise, nor that the Offer lacked any clarity. The Offer foreshadowed that an application for indemnity costs may be made in the event it was rejected.

11. The issues joined by the parties with respect to Nathan’s application were:

12. Whether the Offer was made at an such an early stage of the proceedings that, given the state of the proceedings and what was known at that point, it was not unreasonable for Kevin to reject the Offer. The offeree’s prospects at the time of the Offer is also relevant to this question; and

13. Whether the Offer was open for a reasonable time.

Nathan’s submissions

12. Nathan submits that although the Offer was made before either he or Kevin filed a cross-claim setting out their claim for the money paid into Court, the dispute between the parties had already been sufficiently ventilated such that Kevin had enough information to assess the Offer.

13. Nathan relies on two prior events. Firstly, the non-curial proceedings conducted by the Australian Financial Complaints Authority (“AFCA”). Secondly, the interpleader proceedings heard by Andronos SC DCJ.

14. With respect to AFCA, Nathan:

15. Notes that Kevin’s complaint was not accepted by AFCA because AFCA told Kevin that his “name is not on the term deposit as a signatory or joint account holder”;

16. Made a complaint to AFCA on 3 July 2023. AMB supplied AFCA with submissions. In short, AMB asserted that Nathan was not the owner of the relevant accounts with it. AFCA upheld Nathan’s complaint and concluded, amongst other things, that:

(a) Kevin, as Nathan’s father, was able to enter contracts on his behalf in 1989 as Nathan was a minor; (b) Nathan was the account holder of the relevant account and entitled to the funds held in the account;

3. Notes that Kevin became aware of AFCA’s determination prior to the Offer (and at least during the interpleader proceedings).

4. With respect to the interpleader proceedings, Nathan says:

5. That Kevin relied on an affidavit which ultimately stood as his principal affidavit at the final hearing before me. That affidavit included the 1989 Application;

6. That Kevin had Nathan’s affidavit in which Nathan:

(a) Said that Kevin suggested moving Nathan’s money to Australian Defence Credit Union from the institution that had held the money because “it would be easier for him to look after it for me …” and that Nathan agreed with Kevin; (b) Nathan included a document by which he said he made Kevin a signatory to his account. That document is known in the Principal Judgment as the “Authority Document”;

3. That Kevin had two affidavits from Ross Coldlwell, an officer of AMB. Those affidavits identified the then existing accounts in Nathan’s name and exhibited copies of statements and transaction reports dated April 2011 to June 2023 from multiple deposit accounts held by AMB and relevant to the interpleader proceedings.

4. Nathan also referred to my findings at [112] of the Principal Judgment in which I made, and referred to, findings with respect to the 1989 Application and the Authority Document. He says that those finding reflect matters that were within the knowledge of Kevin.

5. Nathan further relies on the fact that Kevin made the two offers referred to in paragraph [7] above as indicating that Kevin was able to form a view about his prospects to enable those offers to be made.

6. In short, Nathan submits that Kevin knew the material facts which underpinned their dispute, and which were relevant to the ultimate determination of the proceedings, namely:

7. That the relevant accounts were in Nathan’s name;

8. That Kevin was the one who had direct dealings with ADCU and AMB;

9. The 1989 Application;

10. The 1990 Document;

11. Nathan’s evidence of the conversation referred to in paragraph [15(2)(a)] above;

12. That Kevin asserted that he did not discuss the accounts with Nathan;

13. The bank statements and documents exhibited to Mr Coldwell’s affidavit.

14. Nathan submits that although 7 days is a relatively short period for the Offer to be open for acceptance, the evidence shows that Kevin was able to consider the Offer in that time. In this regard, Nathan relies on the fact that Kevin made a counter-offer before the expiration of the period in which the Offer was open, and that Kevin’s Second Offer was open for a shorter period. He also relies on the fact that Kevin did not seek an extension of time to consider the Offer.

Kevin’s submissions

20. Kevin’s principal submission was that the Offer was made so early in the proceedings that in the circumstances, his rejection of it ought not to be considered unreasonable. Kevin emphasises that Nathan has the burden of establishing that his rejection was unreasonable.

21. Kevin submits that:

22. Nathan’s submissions wrongly proceed on an implied assumption that Kevin ought to have known he was likely to fail in the proceedings or that it was relatively easy for Kevin to determine his prospects;

23. At the stage the Offer was made:

(a) No pleadings as between Nathan and Kevin had been filed and accordingly, he could not be sure how Nathan would put his case; (b) AMB had not yet produced the documents required by Andronos SC DCJ’s orders, namely:

(i) “Any documents in relation to:

(a) The establishment of; or (b) The creation of any authority in respect of”

the Term Deposit; and

(ii) “Any document recording the contractual rights and obligations in relation to the Term Deposit”.

3. As a result of (a) and (b), at the time of the Offer, Kevin did not know:

(a) The pleaded case which he had to meet; and (b) The scope and nature of the potential documentary evidence held by AMB which could touch upon the likely issues that would need to be determined;

4. At the date of the Offer, Kevin could reasonably have formed the view that he had a good case, as he was the person who had dealt with ADCU and then AMB over decades;
5. The fact Kevin made offers reflects nothing more than an attempt to commercially resolve the dispute, rather than being indicative of a cogent analysis of prospects;
6. The Court ought to be careful not to apply hindsight reasoning in assessing the reasonableness of Kevin’s rejection. The relevant time to assess that question is at the date of the Offer;
7. In considering the matter, the Court ought to recognise that the questions raised by the dispute were complex and that the case was complicated;
8. It is relevant that as at the date of the Offer, to Kevin’s knowledge, AMB (being the other contracting party) was asserting that Kevin was the relevant customer. This is said to be relevant notwithstanding that ACFA, to Kevin’s knowledge, rejected AMB’s position to Kevin’s knowledge;
9. 7 days was too short a time to keep the Offer open such that the Offer should not be seen as reasonably able to underpin an indemnity costs application.

Consideration

22. In my view, the fact that the Offer was open for only 7 days is not, in this case, a reason of itself to withhold an order for indemnity costs although it is one matter that the Court considers in the exercise of its discretion. The Offer was made after the AFCA’s determination and after the conclusion of the interpleader proceedings. That is, by that stage, Kevin had been engaged either directly or peripherally with the dispute concerning the account held by AMB. Kevin responded to the Offer within the 7-day period during which the Offer was open. By his counter-offer, he rejected the Offer. It was a serious matter to respond to the Offer and Kevin was able to do so without seeking any extension. Further, his Second Offer was open for a shorter period. These are relevant matters: Hanave Pty Ltd v Nomad Sydney (No2); [3] Primus Telecommunications Pty Ltd v CCP Australian Airships Limited; [4] Elite Protective Personnel Pty Ltd & Anor v Salmon. [5]

23. The more difficult question is whether, in the light of the matters raised by Kevin referred to above, Nathan has established that the rejection of the Offer was unreasonable.

24. In my view, Kevin’s characterisation of Nathan’s submissions as suggesting that he ought to have known he was going to fail, or that his case was weak, is a mischaracterisation. The gravamen of Nathan’s submission is not that Kevin ought to have formed that view, but rather that, at the date of the Offer, sufficient information was available to Kevin to assess the reasonableness of the Offer. I accept that Kevin was aware of the matters referred in paragraphs [15] and [18] above as at the date of the Offer. Kevin was also aware that Nathan was a minor when he signed and submitted the 1989 Application.

25. Further, Kevin was aware that Nathan had, as at the date of the Offer, relied for his position on the fact that the relevant account was in his name. He was also aware that AFCA determined the matter on the basis that Kevin, as parent, had authority to open an account for Nathan and further, that AFCA highlighted that the 1989 Application expressed the membership by way of a trust in favour of Nathan. He was also aware that Nathan asserted the conversation referred to in paragraph [15] above in relation to the opening of an account at ADCU and Kevin’s “looking after” of the account for Nathan.

26. It is true that Kevin did not have the benefit of a pleading from Nathan in these proceedings as at the date of the Offer. However, I consider that there was sufficient information to enable him to understand broadly the way Nathan was asserting ownership of the relevant account. The fact that in a pleading Nathan may have chosen to frame his case in a different way is a relevant factor in assessing the reasonableness of Kevin’s rejection, but it cannot be determinative in my view.

27. I accept, as Kevin emphasises, that not all relevant documents were known to have been produced by the date of the Offer. AMB had yet to comply with Andronos SC DCJ’s orders in that regard. However, Kevin did not lead any evidence (from himself or his solicitor) of an expectation that any such production would likely change the evidentiary landscape in a way that could have materially affected his consideration of his prospects. This is particularly relevant given the production already made by AMB via the affidavit of Mr Coldwell referred to in paragraph [15] above and Kevin’s dealings with ADCU and AMB over many years. Of course, it was always possible that production by AMB pursuant to the Court’s orders could have produced a materially important document, however, at the time of the Offer that would have been a speculative prospect.

28. In Alves v Patel, [6] Justice Adams said at [14]:

… The notion that Calderbank offers can safely be ignored without costs consequences just because the offeror’s case is not ready for trial or all pre-trial requirements as to service of reports or supply of particulars have not been completed cannot be right: much will depend on a commonsense approach to the case and the particular circumstances at the time of the offer.

29. In a similar vein, the Court of Appeal in Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2), [7] when dealing with the issue of the timing of an offer, said :

It is not in doubt that 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 … However, that factor should not entail a detailed investigation into the state of preparation or knowledge of the offeree as at the date of the offer. The expense and use of resources which settlement is intended to avoid include those involved in the assessment and preparation of a case (emphasis added).

30. Although the facts the subject of these decisions were different to the present facts, these authorities support the proposition that the fact that an offer is made at a time at which pleadings have not been filed, or that documents remain to be produced, is not, of itself, a reason to deny an application for indemnity costs. In some cases, the absence of pleadings, or the absence of document production may be fatal to an application for indemnity costs. However, each application turns on its own facts. Further, as the Court of Appeal noted in Miwa, the very costs of assessing and preparing a case are part of the costs which a settlement is intended to avoid.

31. Here, apart from the matters in paragraphs [15] and [18] above, and the matters identified in paragraphs [24]-[25] above, Kevin also knew at the date of the Offer, that Andronos SC DCJ, in determining the interpleader application, stated at paragraph [43] that in his view the claims of both Nathan and Kevin as framed before him and on the material before him, were “sufficiently cogent and arguable to satisfy the test in r 43.2” of the UCPR [8] . His Honour, in making that finding was referring to the requirement, as explained by Barrett J in Guerinoni v Dennis Castino trading as Castino & Co Chartered Accountants [9] at [15], that the competing claims identified in an interpleader application must be “… something that goes beyond bald assertion and shows, even in the absence of evidence, a cogent or arguable basis for the existence of a legal claim.”

32. The Offer, in substance, was an offer to split the disputed funds evenly; objectively, the offer valued the claims as one in which each party was exposed to a real risk of loss. In my view, as at the date of the Offer and before any findings were made by a Court on the substantive causes of action, objectively, Kevin’s prospects were not sufficiently good such that rejection of the Offer would not be unreasonable. He was aware that AFCA had accepted Nathan’s position and that the Court, in determining the interpleader proceedings, considered each party had a cogent and arguable basis for his claim. Acceptance of the Offer, whilst resulting in the sacrifice of an opportunity to succeed in the proceedings and obtain the full payment of the disputed funds, would have secured 50% of those funds and have avoided the costs incurred in the proceedings from the date of the acceptance of the Offer. As at the date of the Offer, the proceedings must have been understood as one in which the outcome was very likely to be binary – that is, an all or nothing result.

33. In my view, having regard to the matters in paragraphs [24]-[27] and [31], Kevin had sufficient information to enable him to reasonably assess the Offer. I also take into account in this regard that, during the interpleader proceedings, Kevin was represented by a firm of solicitors and counsel who remained his representatives in the substantive proceedings, and further that at the date of the Offer, he was, at least, represented by the same firm of solicitors. However, my judgment should not be understood as making any implied criticism of Kevin’s legal representatives.

34. Having taken into account all the matters advanced on behalf of both parties and having had regard to the ultimate result in the proceedings in which Nathan secured an outcome substantially more than the Offer, in my view, this is an appropriate case in which an order for indemnity costs should be made. Considering the matter as at the date of the Offer, I am satisfied that it was unreasonable for Kevin to reject the Offer.

Costs of the Application

35. Nathan submits that he should have his costs of the application for indemnity costs on an indemnity basis. He says that if the Offer had been accepted, then the application would not have been required.

36. I am not prepared to accede to Nathan’s submission in this regard. In my view, the costs of the application are discrete and there is no conduct of Kevin in relation to the application to warrant an order for indemnity costs in relation to it.

Orders

37. For the above reasons, I make the following orders:

38. Subject to Orders 2 and 3, the First Defendant/First Cross-Claimant (Kevin Pike) is to pay the Second Defendant/Second Cross-Claimant’s (Nathan Pike’s) costs of and incidental to the proceedings as agreed or assessed:

(a) Up to and including 30 August 2024, on an ordinary basis; and (b) Thereafter, on an indemnity basis.

2. Order 1 does not apply to any costs incurred by the Second Defendant/Second Cross-Claimant (Nathan Pike);

(a) In respect of the interpleader application determined on 9 August 2024 (with orders made on 20 August 2024); or (b) Any costs incurred by Nathan which were reimbursed by the Australian Military Bank Limited.

3. Order 1 does not apply to the costs of the application for indemnity costs. The First Defendant/First Cross-Claimant (Kevin Pike) is to pay the Second Defendant/Second Cross-Claimant’s (Nathan Pike’s) costs of the application for indemnity costs, on an ordinary basis.

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Endnotes

[1975] 3 All ER 333; 3 WLR 586.

[2024] NSWCA 274.

[2024] NSWSC 805.

[2003] VSC 141 at [14].

[2007] NSWCA 322 at [149].

[2005] NSWSC 841.

[2011] NSWCA 344 at [11].

Australian Military Bank Ltd v Pike [2024] NSWDC 350.

[2008] NSWSC 175 at [7].

Amendments

08 December 2025

8/12/25 - Formatting amendments

08 December 2025

8/12/25 - Amendment to cover-sheet.