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[2025] NSWSC 1426
General information, not legal advice.
Supreme Court of NSW
2025-12-01
Walton J
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Bailey v Kmar Engineering Pty Ltd (No 2) [2025] NSWSC 1426
Hearing dates: On the papers (submissions received 4, 7 and 11 of November 2025)
Date of orders: 1 December 2025
Decision date: 01 December 2025
Jurisdiction: Common Law
Before: Walton J
Decision: (1) The plaintiff shall have pre-judgment interest of $17,636.65. (2) KMAR shall have the costs of these proceedings concerning the issues of costs and pre-judgment interest as against the plaintiff, as agreed or in default of agreement, as assessed.
Catchwords: COSTS – Offer of compromise – Whether offer of compromise was reasonable – Where offer was conditional – Where offer was not more favourable than the order or judgment obtained – Indemnity costs refused
JUDGMENTS AND ORDERS – Interest – Pre-judgment interest – Where pre-judgment interest was not the subject of submissions nor particularised in schedule of damages – Where interest nonetheless claimed in statement of claim – Whether pre-judgment interest available in those circumstances – Pre-judgment interest ordered
Legislation Cited: Civil Liability Act 2002 (NSW)
Civil Procedure Act 2005 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Bailey v Kmar Engineering Pty Ltd [2025] NSWSC 1266
Calderbank v Calderbank [1975] 3 All ER 333
Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602
Fussell v Hanrahan t/as Dignan & Hanrahan Solicitors (No 2) [2025] NSWSC 129
Gemi 193 v Zhu [2025] NSWSC 295
L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1981) 151 CLR 590
Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344
Monteleone v Thorn (No 10) [2021] NSWSC 729
Rafferty v Time 2000 West Pty Ltd [2010] FCA 873
Sahade v Bischoff (No 2) [2016] NSWCA 45
Sahade v Bischoff (No 2) [2016] NSWCA 45
State of New South Wales v Avery (2016) 92 NSWLR 141
Vieira v O’Shea (No 2) [2012] NSWCA 121
WJT v Trustees of the Marist Brothers; WXC3 v Trustees of the Marist Brothers; GAC v Trustees of the Marist Brothers (No 4) [2025] NSWSC 1017
Texts Cited: Nil
Category: Costs
Parties: Mr Justin Bailey (Plaintiff)
KMAR Engineering Pty Ltd (First Defendant)
Representation: Counsel:
M Noakhtar (First Defendant)
Solicitors:
Santone Lawyers (Plaintiff)
Mills Oakley (First Defendant)
File Number(s): 2021/71170
Publication restriction: Nil
On 28 October 2025, the Court delivered reasons for judgment in these proceedings: Bailey v Kmar Engineering Pty Ltd [2025] NSWSC 1266 (“the primary judgment”). The plaintiff, Mr Bailey, was directed (at [423]) to file and serve short minutes reflecting the judgment.
Having determined Mr Bailey’s claims, the Court permitted the parties to verify whether the “Court’s calculations of damages in accordance with the parameters set in this judgment are in all respects, accurate” (at [421]). One such adjustment was made to the judgment sum which was subsequently ordered.
On 31 October 2025, orders were entered (“the orders”). They included judgment for Mr Bailey against KMAR in the sum of $1,481,354.44, and that the KMAR to pay the Mr Bailey’s costs on an ordinary basis, as agreed or assessed. There was no order concerning pre-judgment interest.
To that extent, the orders reflected the Court’s “preliminary view” (at [422]) that “KMAR should pay Mr Bailey’s costs on an ordinary basis”. If that position was not agreed, the Court permitted the parties to file “applications for costs and submissions as to costs”.
Subsequently, the first defendant, KMAR Engineering Pty Ltd (“KMAR”) sought a variation to the Court’s order for non-economic loss by application of the slip rule. In substance, KMAR contended that the Court’s orders for non-economic loss did not reflect its ruling that non-economic loss should be calculated at 30% of the most extreme case and that damages for non-economic loss should be corrected to $185,000, being 23% of the maximum amount that may be awarded for non-economic loss in accordance with s 16 of the Civil Liability Act 2002 (NSW) (“CLA”).
The Court made an amended order in those terms on 10 November 2025, and in the result the total damages awarded by the Court was $1,425,154.44.
By email dated 4 November 2025 to the Court, Mr Bailey applied to vary the orders in accordance with an unsealed Notice of Motion (“the motion”) in which Mr Bailey sought to set aside the order with respect to costs (under the leave given by the Court) and pre-judgment interest.
Under the motion, Mr Bailey sought:
that KMAR pay Mr Bailey’s costs incurred before 3 July 2025 on an ordinary basis, and on an indemnity basis from 4 July 2025;
pursuant to s 100(1) of the Civil Procedure Act 2005 (NSW) (“CPA”), that interest be payable on the amount awarded for his past economic loss; and
“Interest on Costs”.
The Application was accompanied by an affidavit of Carmine Santone, a bundle of “Calderbank Offers” and (undated) written submissions.
Consistently with the motion, the submissions of Mr Bailey with respect to indemnity costs based on Calderbank offers was confined to the first offer made by Mr Bailey on 13 June 2025. Mr Bailey sought an award of indemnity costs from the date on which the first offer of compromise expired, being 3 July 2025.
As noted above, KMAR did not oppose an order for costs on an ordinary basis but opposed an award of indemnity costs and pre-judgment interest.
KMAR relied on the affidavit of Matthew Skelly dated 7 November 2025 and its annexures.
On 13 June 2025, Mr Bailey made an offer of compromise to the defendants, in writing. The document was sent to each of the defendants by email (“the first offer”).
Mr Bailey stated that the first offer consisted of the following:
That the offer was made pursuant to the principles set out in Calderbank.
That the offer of compromise was in the sum of "$1.76 million, inclusive of costs, disbursements, and statutory repayments to the workers' compensation insurer".
That the offer was made pursuant to the principles set out in Calderbank v Calderbank [1975] 3 All ER 333 (“Calderbank”) remained open from the date of the offer until "4:00pm on 3 July 2025".
That should the offer not be accepted, and the defendants fail to obtain a judgment more favourable than the terms offered, Mr Bailey would seek to recover costs "to the fullest extent permitted by law".
However, what was omitted in that description was the following component of the first offer:
“This offer is conditional on the resolution of the matter as between all parties, including the Second Defendant having a judgement in its favour with no order as to costs.
…
We note that the Second Defendant has accepted our client’s offer of a judgment in its favour with no order with respect to costs, subject to agreement with the First Defendant regarding the cross claim to be settled on a similar basis…”
KMAR was correct to submit that the first offer was explicitly conditional and required the agreement of each defendant. The offer also required KMAR and the third defendant, Haworth Transport Services Pty Ltd, to agree to judgment for the second defendant, MMM Logistics Pty Ltd.
By email dated 16 June 2025, KMAR notified Mr Bailey that it was unable to properly assess the reasonableness of the first offer.
As was summarised at [24]-[32] of the primary judgment, the proceedings changed after mid-June 2025. Before (and during) trial, the parties to the proceeding changed, reflecting changes to Mr Bailey’s claims against each defendant and the defendants’ cross-claims against each other.
The second and third offers were not the subject of any specific submissions by Mr Bailey in his primary submissions, and in any event, KMAR opposed any special costs order being made by reference to those orders.
As mentioned, Mr Bailey did not specifically rely on the second and third offers in his primary written submissions. They were not the subject of submissions, and the orders sought by Mr Bailey relied only on the “circumstances of the First Offer” as the basis for the Court departing from the ordinary rule regarding costs. However, as will be mentioned below, Mr Bailey did rely on them, in a different way, in reply.
On 14 August 2025, Mr Bailey made an offer of compromise to the defendants, in writing. The document was sent to the defendants by email (“the second offer”).
The second offer specified as follows:
That the offer was made pursuant to the principles set out in Calderbank.
That the offer of compromise was in the sum of "$1.76 million, inclusive of Mr Bailey’s costs and disbursements".
That the offer remained open from the date of the offer until "5pm on 15 August 2025".
That, should the offer not be accepted, and the defendants fail to obtain a judgment more favourable than the terms offered, Mr Bailey would seek to recover costs "to the fullest extent permitted by law".
It may be noted that KMAR was afforded less than 24 hours to consider the second offer.
On 15 August 2025, Mr Bailey made a further offer of compromise, addressed only to KMAR, in writing. The document was sent to KMAR by email (“the third offer”).
The third offer provided as follows:
That the offer was made pursuant to the principles set out in Calderbank.
That the offer of compromise ~as in the sum of "$1.725 million, inclusive of Mr Bailey’s costs and disbursements".
That the offer remained open from the date of the offer until "5pm on 18 August 2025".
That, should the offer not be accepted, and the defendants fail to obtain a judgment more favourable than the terms offered, Mr Bailey would seek to recover costs "to the fullest extent permitted by law".
KMAR made submissions as to the applicable principles in considering Mr Bailey’s application for indemnity costs which may be accepted for the purposes of determining the issues in this judgment.
The applicable principles on the exercise of the Court’s statutory costs direction under s 98 of the CPA are well-known. They include that costs orders are compensatory and not punitive in nature, and, the general rule (see r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”)) is that costs follow the event.
KMAR also accepted that the following principles summarised by Davies J in Fussell v Hanrahan t/as Dignan & Hanrahan Solicitors *(*No 2) [2025] NSWSC 129 at [20] – [23] (“Fussell”), were relevant:
“[20] If a Calderbank offer is made, but not accepted, the Court's discretion to make a special order is enlivened. The 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: Lawrence v Gunner; Gunner v Lawrence [2015] NSWSC 1229 at [26] per Stevenson J, cited with approval by Black J in Re A/safe Security Products Pty Ltd atf A/safe Trust (in Iiq) [2016] NSWSC 575 at [8] and Hong v Gui [2022] NSWSC 598 at [7].
[21] The relevant question is whether the offeree's failure to accept the offer, in all the circumstances, warrants a departure from the ordinary rule as to costs: Novelly v Tamqia Pty Ltd (No 2) [2024] NSWCA 209 at [8].
[22] Factors relevant to the question of whether a rejection of an offer is unreasonable include whether the offeree had an adequate opportunity in terms of time and information to enable it to consider and deal with the offer: Novelly v Tamqia at [9]. What must be considered is the reasonableness of the offeree's rejection or non-acceptance of the offer, having regard to the relevant circumstances at the time that the offer fell to be considered: Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 816 at [11] per Ward J (as her Honour then was). When undertaking this inquiry, the Court may have regard to the analysis of the legal issues which the recipient could have performed at the time of the offer, based on the information available to them: Hong v Gui at [8].
[23] Three other matters should be noted. First, the onus is on the party making a Calderbank offer to satisfy the Court that it should exercise the costs discretion in its favour: Commonwealth of Australia v Gretton [2008] NSWCA 117 at [46]; Evans Shire Council v Richardson *(*No 2) [2006] NSWCA 61; (2006) 14 BPR 26,639 at [26]. Secondly, a test of unreasonableness should not be upheld other than on clear grounds: Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at 113. Thirdly, a factor relevant to the reasonableness of rejection is whether any or what conditions have been placed on the offer: Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2006] NSWSC 583 at [73]-[74], where acceptance of the offer in that case was tied to the offeree releasing all claims made by it in other proceedings.”
“[24] The considerations relevant to determining whether a refusal of a Calderbank offer is unreasonable were comprehensively stated in Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344 (“Miwa”) (at [12]), based on Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No. 2) (2005) 13 VR 435; [2005] VSC 298 (“Hazeldene's”) (at [25]). The Victorian Court of Appeal (Warren CJ, Maxwell P and Harper AJA) in Hazeldene’s stated the following factors were relevant considerations in determining whether the rejection of a Calderbank offer was unreasonable: the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree's prospects of success, assessed as at the date of the 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. Ward J (as her Honour then was) also discussed the principles in A v N [2012] NSWSC 549 (“A v N”) (at [14]–[19]).
[25] The determination of whether rejection of an offer was unreasonable is an evaluative judgment to be made by reference to the terms of the offer and all their relevant surrounding circumstances: King Network Group (at [11]). The test of unreasonableness should not be upheld other than on clear grounds: Chaina v Alvaro Homes Pty Limited [2008] NSWCA 353 (at [113]). The discretion to award indemnity costs may be refused where the litigation changes, for example: where all the relevant evidence has not been served before the offer, Vale v Eggins (No. 2) [2007] NSWCA 12 (at [22]); where the full parameters of the dispute were still uncertain at the time of the offer: Equity 8 Pty Limited v Shaw Stockbroking Limited [2007] NSWSC 503 (at [42]); or, where the offeror’s case changes after the offer: South Eastern Sydney Area Health Service v King [2006] NSWCA 2 (at [85]). And the filing of other pleadings such as a Cross-Claim after the offer may make it more difficult to show that rejection was unreasonable: Rolls Royce Industrial Power (Pacific) Limited v James Hardie & Co Pty Limited (2001) 53 NSWLR 626; [2001] NSWCA 461.
[26] Although a Calderbank offer may be made on an inclusive-of-costs basis, the failure to clearly separate out the costs component risks a finding that the evaluation of the reasonableness of the offer is impossible: Rockcote Enterprises Pty Limited v FS Architects Pty Limited *(*No. 2); Carelli v FS Architects Pty Ltd (No. 2) [2008] NSWCA 205 (at [51]).
[27] More complex issues may render it difficult to show that rejection of the offer was unreasonable: Nationwide News Pty Limited v Naidu; ISS Security Pty Ltd v Naidu (2007) 71 NSWLR 471; [2007] NSWCA 377.
[28] To assess the reasonableness of non-acceptance of an offer, the Court must evaluate what was disclosed in the material in the proceedings at the time of service of the offer: Castro v Hillery [2003] 1 Qd R 651 (“Castro”), (at [72]); [2002] QCA 359. This assessment of reasonableness must be made without the benefit of hindsight: Miwa (at [11]).”
“[24] If the purpose of a Calderbank letter is to offer to bring litigation to an end it should be couched in such terms as enable the offeree to make a carefully considered comparison between the offer made and the ultimate relief it is seeking in all its aspects….”
As to the question of reasonableness, I further note the following:
As a “matter of principle … it is the offeror which must persuade the court that the rejection of the offer was, in the circumstances at the relevant time, unreasonable”: Miwa Pty Ltd v Siantan Properties Pte Ltd *(*No 2) [2011] NSWCA 344 at [16] (per Basten JA, McColl and Campbell JJA agreeing).
The inquiry regarding the reasonability of an offeree’s rejecting a Calderbank offer “assumes that the offer was capable of acceptance by the offeree”: Vieira v O’Shea *(*No 2) [2012] NSWCA 121 at [10] (per Handley AJA, Basten JA and Meagher JA); Sahade v Bischoff *(*No 2) [2016] NSWCA 45 at [23] (per Basten JA, Gleeson JA and Beech-Jones J). The Court of Appeal has applied that reasoning to a Calderbank offer made jointly to multiple parties and approved authority to the effect that indemnity costs were inappropriate “where a joint offer is made to independent parties and it was not open to one party to accept the offer unless the other also accepted”: Sahade v Bischoff *(*No 2) [2016] NSWCA 45 at [23] (per Basten JA, Gleeson JA, and Beech-Jones J), citing Rafferty v Time 2000 West Pty Ltd [2010] FCA 873 (per Besanko J).
Mr Bailey made the following submissions in support of indemnity costs based on the first offer:
“[19] The First Offer is, as set out above, a Calderbank offer and as such the Plaintiff submits that the court ought to consider that the discretion to make an order outside of the ordinary is enlivened.
[20] The judgement, together with costs, was more favourable to the plaintiff than the offer set out in the First Offer.
[21] The Defendant was afforded the period from 13 June 2025 until 3 July 2025 to consider the First offer, and the refusal to accept the offer was unreasonable.
[22] The offer was a genuine attempt to reach a negotiated settlement of the matter before the additional costs arising from the conduct of the hearing were incurred.
[23] The expert evidence of the Plaintiff and the Defendants had been provided, as had the Amended Statement of Particulars setting out the calculations and the basis for the amounts claimed in the proceedings, a reasonable time before the offer lapsed.
[24] Despite the above, it was not until 8 August 2025 that the First Defendant filed an amended defence to the proceedings.”
“[12] The costs of the plaintiff in the proceedings were in the amount of $362,777.01.
[13] The amount specified, inclusive of the costs and disbursements incurred by the plaintiff.
[14] Together with the award of the court in the amount of $1,481,354.44, the amount of the award plus costs incurred exceeds the amount specified in the First Offer.
[15] In accordance with the offer, the Plaintiff seeks an award of indemnity costs as against the First Defendant from the date on which the first offer of compromise expired, being 3 July 2025.”
However, that submission needs to be adjusted in the light of the amendments to the orders for non-economic loss which result in the relevant judgment sum for comparison with the first offer to be $1,425,154.44 plus $362,777.01, being a total sum of $1,787,931.45.
While Mr Bailey made a submission in reply, he did not engage with that amendment to the judgment sum. The following submissions were made in reply:
“At D1[10(d)] the first defendant complaints that the offer was conditional, pointing to the fact that the offer was not capable of being accepted independently. This is not a matter that operates against the costs orders sought2. Rather than “conditional”, the offer ought be characterised attempting to bring about the settlement of the dispute in its entirety.
4. The Calderbank offer having been sent on Friday the 16th of June 2025, was followed by materials filed on the second business day thereafter, providing full particularisation of injury suffered and the loss and damage claimed, bringing the total amount of the claim to above $2,200,000. By way of compromise, the Calderbank offer was in the nature of 20% less than the amount so claimed.
5. The first defendant’s characterisation of the proceedings DS[37]-[38] is illustrative.
a. “the parties to the proceedings changed” - Plaintiff submits this reflects attempt by the plaintiff to settlement of matters between the plaintiff and defendants, and the consent to the First Defendant to those applications,
b. “reflecting changes to the plaintiffs claims against each defendant” - the statement of claim was not amended by the plaintiff after 28 July 2023, and the particulars of loss and damage were filed 17 June 2025. The First offer of compromise remained active until 3 July 2025,
c. “the defendants cross claims against each other”, after the closing of the First Offer on 3 July 2025, to the claims relating to first defendant were:
i. A new cross claim filed by the First Defendant on 1 August 2025 against the Second and Third Defendant, seeking indemnification,
ii. a defence filed by the First Defendant after 4pm on Friday, 8 August 2025, to a cross claim filed on 30 January 2024,
iii. a defence filed by the First Defendant after 4pm on Friday 8 August 2025, by the First defendant to the First Amended Statement of claim filed on 28 July 2023.
6. In the alternative, the Second Offer and Third Offer were made at a time after Plaintiff had resolved disputes with the other defendants, with the consent of the First Defendant.
7. The circumstances set out in the offer were clear, the entirety of the dispute between the Plaintiff and each of the defendants be resolved, together with the from the perspective of the Plaintiff, the claim and subsequent cross claims ought be resolved so as to enable the resolution of the applicant claim the defendants and the cross claim relating to the second defendant (because of the implications of that claim to the as to the liability between the plaintiff and the second defendant).
8. In DS @[65] it is claimed that its defence was affected by the cessation of proceedings against the third defendant, however, the first defendant consented to the application to dismiss the proceedings against the third defendant.
9. The unreasonableness in refusing the offer, and further the action taken following the offer, to expand the proceedings after consenting to release of parties.
10. Finally, the refusal, and unreasonableness, is identified by reference to prospects of success, or prospects as to the loss or damage, but to the capacity to share or be indemnified for that damage.
11. The offer, inclusive of costs, was a compromise on the amount set out in the amended particulars filed in the matter setting out the total amount claimed. At the time of the First Offer, the First Defendant had neither filed a defence in relation to the amended statement of claim or a defence to the cross claim.
12. The only criticism as to quantification appears to be a single day that was set down for hearing but subsequently vacated, resulting in an inadvertent recording of attendance on that day. Allowing for its removal, the total costs will equal $357,017.01.”
The fundamental difficulties confronting Mr Bailey’s application for indemnity costs, with respect to the first offer, are as follows:
As earlier mentioned, the first offer was explicitly conditional. That offer was a Calderbank offer made on an all-inclusive basis to the three defendants who were parties to the proceedings. The first offer explicitly referred to the cross-claims. It follows that the defendants could not have reasonably accepted the first offer without agreements being reached between the defendants. There were multiple offerees with interrelated claims such that KMAR was, in my view, unable to properly consider the offer when it was made. It also properly sought but did not receive clarification.
The first offer was not on equal or better terms than the judgment entered by the court after the amendments referred to earlier. There are two reasons for this factor:
(a) The premise of Mr Bailey’s submissions is that the Court should proceed upon the basis of his costs being $362,777.01 (including his costs and disbursements). However, this reflects an indemnity basis and past the dates of each offer, including the cost of the trial. The figure appears as the “total costs including disbursements” in Annexure A in the affidavit of Mr Santone. (b) Significantly, if the figures in Annexure A are adopted up to but not including 13 June 2025, when the first offer was made, Mr Bailey’s total costs were $97,293.96 (including GST). As KMAR pointed out, the first offer reflected an offer of $1,662,706.04 plus indemnity costs. This is not on equal or better terms than the judgment, as I have outlined the proper effect of the judgment above.
I agree with the submission of KMAR that the terms of the first offer lacked clarity. There are numerous elements to the first offer. However, the position was more complicated by the requirement that the defendants also agree to judgment in favour of the second defendant, with no costs order. The first offer (and other offers) were also complicated by an element concerning the third defendant, as the workers compensation insurer. In effect, any reduction in repayments under s 151Z of the Workers Compensation Act 1987 (NSW), which were agreed between Mr Bailey and the third defendant would change the true value of the first offer for KMAR and other offers.
In reply, Mr Bailey sought to rely on the second and third offers, in circumstances where his primary submissions merely identified the contents of the second and third offers with no direct submissions made as to those offers and no orders sought on the basis of those offers. In that sense, KMAR has been deprived of a proper opportunity to deal with issues concerning the second and third offers.
In any event, there were similar issues as to the first offer, infecting the second and third offers. For example:
The second offer was jointly made to all defendants and was made with an unreasonably short time to respond, namely, less than 24 hours.
The second offer was not capable of acceptance by KMAR without the agreement of the third defendant.
The second offer was addressed to the second defendant, despite the fact that Mr Bailey had already discontinued proceedings against the second defendant.
The third offer was made only to KMAR, but its value was contingent on the third defendant’s position regarding repayment of workers compensation benefits. That is, the third offer was made noting that “the third defendant may reduce their payback”, with attendant adjustments to the value of the offer.
In those circumstances, I reject Mr Bailey’s application for indemnity costs. The order made by the Court on 31 October 2025 shall thereby stand.
“[25] Section 100(1) of the Civil Procedure Act 2005 provides:
In proceedings for the recovery of money *(*including any debt or damages or the value of any goods), the court may include interest in the amount for which iudgment is given, the interest to be calculated at such rate as the court thinks fit -
(a) on the whole or any part of the money, and
*(*b) for the whole or any part of the period from the time the cause of
action arose until the time the judgment takes effect.
[26] The Award of pre-judgement interest is "an award in the nature of damages. The award is an integral element in compensating the plaintiff for the injuries he or she has sustained. Accordingly, the award of damages is compensatory in character and is designed to compensate the plaintiff for being kept out of money theoretically due to him or her from a time prior to the delivery of a judgment.
[27] In the present circumstances, the plaintiff seeks an order for interest in respect of damages for past economic loss. The Defendant has had the advantage of not paying the amounts for past economic loss until the date of judgment5, rather than on and from the time the losses were suffered by the plaintiff. The plaintiff has had the detriment of not having the amount of the past economic loss, in circumstances in which the Plaintiff was homeless and relied on the kindness of others, allowing him to stay at their homes.” (footnotes omitted)
In reply, Mr Bailey submitted that:
Interest was claimed in the Further Amended Statement of Claim filed on 28 July 2023 (“FASOC”) and was not sought or referred to in the schedule of damages, because any such reference to interest is dependent upon award of a sum on account of past economic loss.
Contrary to KMAR’s submissions, there is authority for the Court granting interest on past economic loss in circumstances where the claim for interest was included in a statement of claim but not otherwise referenced, as the claimant is unable to calculate the precise amount of interest: See Monteleone v Thorn *(*No 10) [2021] NSWSC 729 (per Cavanagh J) (“Monteleone”).
The ordinary method of calculation of interest on past economic loss is to use the average rates of interest in s 100 of the CPA for half of the period on the entire amount or for the full period on half the amount: WJT v Trustees of the Marist Brothers; WXC3 v Trustees of the Marist Brothers; GAC v Trustees of the Marist Brothers *(*No 4) [2025] NSWSC 1017 (per Chen J). The average being 6.125% over the whole period and $288,398 being half of the past economic loss, therefore totalling $17,636.65.
As Mr Bailey accepted, an award of pre-judgment interest is in the nature of damages, and is designed to compensate Mr Bailey. Mr Bailey bears the onus of establishing his entitlement and extent of the interest.
As to pre-judgment interest, the following findings are made:
KMAR submitted that Mr Bailey’s application was made without him complying with r 6.12(6) of the UCPR which states that a claim for interest up to judgment “must be specifically pleaded”: State of New South Wales v Avery (2016) 92 NSWLR 141 at [54] (Sackville AJA). However, that submission should not be accepted because interest was claimed in the FASOC.
Pre-judgment interest was not particularised in Mr Bailey’s Schedule of Damages or Statement of Particulars. The question of interest was not addressed in written or oral submissions.
The Court’s judgment did not consider the issue of interest, as the issue of interest was not raised by Mr Bailey. Accordingly, no such award was made, as reflected in the extant orders.
Leave granted to the parties pursuant to the primary judgment was limited to the issue of costs, and any applications were to be filed “for costs and submissions as to costs”. No leave was given with respect to interest. However, in my view, the issue raised by Mr Bailey as to interest does not involve a re-opening of Mr Bailey’s case as the parties have been fully heard, and no issues of procedural fairness arise. In any event, whilst leave was not given to raise the issue of interest in the primary judgment, the orders of the Court made on 31 October 2025 (being the orders made in consequence of the judgment) gave the parties leave to “apply for different orders as to costs and interest within 7 days of the publication of this judgment”.
The case relied upon by Mr Bailey as to this issue, is Monteleone, where Cavanagh J, after initially refusing any amount for interest for past economic loss because no such amount was included in the plaintiff’s schedule of damages and no submissions were made about interest, ultimately amended his judgment as to that issue pursuant to the slip rule. His Honour held that, in circumstances where interest was claimed in the statement of claim (at [14]):
The failure by counsel to refer to it during submissions was an omission resulting from the inadvertence of the plaintiff’s legal representative: L Shaddock & Associates Pty Ltd v Parramatta City Council *(*No 2) (1981) 151 CLR 590 at 594.
His Honour’s failure to refer to the statement of claim rather than simply Mr Bailey’s schedule of damages and submissions may also be viewed as an accidental slip or omission.
In circumstances where there was otherwise no dispute that the plaintiff would have been entitled to interest on past economic loss, his Honour was satisfied that the sum agreed for interest should be added to the judgment (at [15]).
In my view, an award for pre-judgment interest, confined to past economic loss, should be made in accordance with the aforementioned principles.
In circumstances where it is not contended that Mr Bailey would not otherwise be entitled to pre-judgment interest with respect to past economic loss, I accept that Mr Bailey should receive pre-judgment interest as to past economic loss. I also accept Mr Bailey’s formula, in this respect, and hence the amount of $17,636.65 is awarded.
The Court confirms its preliminary view that costs of the proceedings, other than that part of the proceedings concerning the issue of costs and pre-judgment interest, should be awarded in favour of Mr Bailey as against KMAR for ordinary costs.
The Court makes an order for pre-judgment interest of $17,636.65.
KMAR should have costs for that part of the proceedings concerning costs and pre-judgment interest.
Accordingly, the Court confirms the orders made on 31 October 2025, as amended, and further orders as follows:
The plaintiff shall have pre-judgment interest of $17,636.65.
KMAR shall have the costs of these proceedings concerning the issues of costs and pre-judgment interest as against the plaintiff, as agreed or in default of agreement, as assessed.
**********
Bailey
Kmar Engineering Pty Ltd
(1981) 151 CLR 590
(2016) 92 NSWLR 141
(2005) 13 VR 435
(2001) 53 NSWLR 626
(2007) 71 NSWLR 471