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JUDGMENT

1. THE COURT: On 20 December 2022 the Court delivered its principal judgment in this matter, granting leave to appeal but dismissing the appeal "with costs": Bonanno v Finamore [2022] NSWCA 276. On 3 January 2023, within the 14 days permitted for a motion seeking to vary an entered order, the respondents sought an order for costs to be assessed on an indemnity basis after 23 August 2022, that being the day on which they served an offer of compromise under the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 20.26 as applied in this Court by r 51.47. The proposed amended form of order 2 was: "Dismiss the appeal with costs, such costs (including the costs of the motion to vary the earlier order) to be assessed on the ordinary basis up to and including 23 August 2022 and thereafter on an indemnity basis."
2. UCPR r 42.15A, taken in conjunction with r 51.48, provides that a defendant obtaining an outcome no less favourable than an unaccepted offer of compromise is entitled to costs on an indemnity basis from the day following the day on which the offer was made, unless the court "orders otherwise".
3. In written submissions filed on 6 February 2023, in accordance with directions given by the Registrar, counsel for the respondents submitted that the offer complied with the requirements of the UCPR, including a submission, supported by evidence, that it involved a "compromise". The respondents stated that the costs of the appeal incurred at the date the offer was made was a little under $18,000.
4. An offer will not validly engage the costs consequences under r 42.15A unless it provides a "compromise" by offering "to forego something of substance": Fabre v Liu (No 2) [2015] NSWCA 312 at [6]-[7]; Ryan v Workers Compensation Nominal Insurer (No 2) [2020] NSWCA 129 at [11].
5. By written submissions filed on 13 February 2023, counsel for the appellant noted that the Court had a broad discretion to "otherwise order" and submitted that the Court should do so. The reasons why the Court should otherwise order appeared at pars 8-17 of the written submissions. They were proceeded by some introductory paragraphs and succeeded by two brief sentences of conclusion. At par 18, the appellant "further submitted that the amount of $17,893.43 does not amount to an amount of substance". Whether that proposition was intended to assert that there was no offer of compromise which engaged the rules is unclear. It did not expressly do so: such a submission would have rendered that which had just been dealt with at some length otiose. A challenge to the existence of a valid offer was logically the first issue.
6. Nevertheless, if it were assumed that the phrase "not an amount of substance", were intended to cast doubt on the existence of a valid offer, this Court would be called on to address a complex issue without assistance from the appellant, or a reply from the respondents. It would first be necessary to have regard to the chronology of events. The substantive orders made by Robb J in the Equity Division were entered on 25 March 2022. A notice of appeal was filed some three months later on 21 June 2022. The appellant's written submissions (prior to amendment) were dated 23 August 2022 and no doubt served on that day. The respondent immediately served its offer of compromise. The offer of compromise stated that it remained open for 28 days, being for a period which terminated on 20 September 2022. The appeal was listed for hearing less than five weeks later, on 25 October 2022. The respondent's written submissions were filed on 23 September 2022, very shortly after the expiration of the period during which the offer of compromise remained open.
7. In describing the offer to forego a little under $18,000 as of no substance, the appellant relied upon the estimate of costs incurred by the respondent as at the date on which it filed the offer of compromise. However, if the offer had been accepted 28 days after it was made, as it permitted, the costs would have been (and on the evidence were) a very much larger sum.
8. Absent recent submissions explaining why the offer involved no genuine compromise, in my view this Court should accept that it did. In any event the circumstances relevant to that issue were also relevant to the question whether the Court should otherwise order. As this Court (Spigelman CJ, Beazley and McColl JJA) explained in Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368: "28 It will rarely be the case that a decision needs to be made as to whether or not an 'offer' answers the description of an 'offer of compromise' within the rules. To the extent that the element of compromise is absent, the Court will be more likely to 'otherwise order'."
9. On the basis that the offer satisfied the requirements of UCPR r 20.26, it is then necessary to determine on what basis the Court should otherwise order. The appellant's written submissions in that regard assumed that the appropriate test was one of the "reasonableness" of his non-acceptance of the offer.
10. The appellant referred to a number of authorities, one group of which dealt with the question as to whether an offer made prior to trial continued to operate with respect to an appeal and are of limited assistance for present purposes. The cases also dealt with an earlier emanation of the rule.
11. The test of reasonableness of non-acceptance is an issue which arises directly in relation to a Calderbank offer, not turning upon the application of the rules of Court. A number of cases commonly relied on in this context dealt with the rule at a time when the offer was required to be exclusive of costs.
12. The Court in Regency Media noted that the power to otherwise order was not subject to any particular constraint such as a demand for special or exceptional circumstances, but was rather a discretion "that has to be exercised having regard to all the circumstances of the case": at [15]; see also Leach v The Nominal Defendant (QBE Insurance (Aust) Ltd) (No 2) [2014] NSWCA 391 at [46]-[48] (McColl JA).
13. The reasonableness or unreasonableness of the offeree's conduct in not accepting an offer is not determinative of the issue as to whether the Court should otherwise order. Nor does it necessarily limit the Court's approach to one which is objective in character. That is not to say that speculation as to the state of knowledge or motives of the parties should be indulged in, but merely to emphasise that all the circumstances of the case may be relevant.
14. In the present case, the following factors should be taken into account, namely (i) the approximate amount of the appellant's claim (a little over $500,000); (ii) the timing of the offer (including whether there was unnecessary delay, or the offer was made well before the commencement of the hearing); (iii) the opportunity of the parties to assess the strength of their relative positions prior to the expiration of the offer; (iv) the benefit to the offeror foregone if the offer were accepted; and (v) other material circumstances.
15. An important consideration is that, although the amount which would have been foregone by the offeror had the offer been immediately accepted would have been small relative to the amount in issue, the amount foregone if the offer were accepted late in the day might well have been considerable. That figure might need to be assessed not only by reference to recoverable costs in the event of success, but also costs which would have to be paid in any event and would not be recoverable from the other party. A respondent's offer may often (and legitimately) be guided by unrecoverable costs likely to be incurred in litigation.
16. It is necessary for the Court to be affirmatively satisfied as to the reasons why it should otherwise order: given the circumstances referred to above, and the absence of any persuasive submissions from the appellant, the Court is not so satisfied.
17. In these circumstances the following order should be made: 1. Vary order (2) made on 20 December 2022 so that it provides: (2) Dismiss the appeal with costs, such costs (including the costs of the motion to vary this order) to be assessed on the ordinary basis up to and including 23 August 2022 and thereafter on an indemnity basis.