Collappor8 Pty Ltd v City of Liverpool Chamber of Commerce & Industry Incorporated (No 2)

Category: Procedural rulings

Parties: Collappor8 Pty Ltd (Plaintiff)
City of Liverpool Chamber of Commerce & Industry Incorporated (Defendant)

Representation: Counsel:
M D Swanson (Plaintiff)
M Bennett (Defendant)
Solicitors:
Macpherson Kelley (Plaintiff)
Marsdens Law Group (Defendant)

File Number(s): 2023/00254722

Publication restriction: Nil

JUDGMENT

1. The principal judgment in this matter was delivered on 7 August 2025 (see Collappor8 Pty Ltd v City of Liverpool Chamber of Commerce & Industry Incorporated [2025] NSWDC 294) (‘the principal judgment’). The defendant was entirely successful in the proceedings.

2. The defendant has applied for an order for costs. The defendant seeks costs on the ordinary basis to 28 November 2023 and costs on an indemnity basis thereafter.

3. The defendant asks that the costs order be a gross sum costs order.

4. By email dated 28 August 2025, the liquidator of the plaintiff said that it did not oppose the making of the costs order sought by the defendant, but suggested that there should be an order that:

the Security for Costs held by the Court be drawn down at first instance in satisfaction or part satisfaction of any costs order made.

Principles

Indemnity costs

5. The Civil Procedure Act 2005 (NSW) (‘CPA’) provides, in s 98:

98 Courts powers as to costs

(1) Subject to rules of court and to this or any other Act—

(a) costs are in the discretion of the court, and

(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

6. The general rule is that costs follow the event (see Uniform Civil Procedure Rules 2005 (NSW) (UCPR).

7. It is well established that the purpose of an order for indemnity costs is not to punish the unsuccessful party, but to compensate the successful party in relation to its expenditure of costs when that party has been subjected to unreasonable expenditure by the unsuccessful party, usually on account of some relevant delinquency (see In the matter of Indoor Climate Technologies Pty Ltd [2019] NSWSC 356 at [8]).

8. Orders for indemnity costs are frequently made on account of an unreasonable failure, on the part of the party against whom an order for costs is sought, to accept a Calderbank offer. In Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd; In the matter of Combined Projects (Arncliffe) Pty Ltd (No 3) [2021] NSWSC 1537, Ward CJ in Eq (as she then was) said, at [72] – [74]:

72. Whether rejection of a Calderbank offer (or other offer of settlement) was unreasonable is an evaluative judgment to be made by reference to the terms of the offer and all the relevant surrounding circumstances (King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204 at [11]). It has been said that a finding of unreasonableness should not be made other than on clear grounds (Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [113]).

73. The factors to be taken into regard when considering whether the rejection or non-acceptance of the offer was unreasonable (summarised in Favotto at [20]-[30]) include: 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 (see Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 at [25] per Warren CJ, Maxwell P and Harper AJA; Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398 at [8] per Buchanan and Tate JJA and Sifris AJA; Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [12] per Basten JA (with whom McColl and Campbell JJA agreed).

74. Factors that in other cases have been found to be relevant in determining whether the rejection of a Calderbank offer was not unreasonable, and tending against such finding, have included: all relevant evidence not having been served at the time of the offer (Vale v Eggins (No 2) [2007] NSWCA 12 at [22]); the full parameters of the dispute remaining uncertain at the time of the offer (Precision Products (NSW) Pty Ltd v Hawkesbury City Council (2008) 74 NSWLR 102; [2008] NSWCA 278 at [192]); the offeror’s case changing after the making of the offer (South Eastern Sydney Area Health Service at [85]); the inclusion of conditions in the offer (Magenta Nominees Pty Ltd v Richard Ellis (WA) Pty Ltd (unreported, FCAFC, Spender, French and Lee JJ, 29 August 1995); and the issues in dispute in the proceedings being complex (MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236 at 242D).

Gross costs order

9. In Gabrielle v Abood (No 4) [2023] NSWCA 100, the Court said, at [6]:

6. The power to make a gross sum costs order provided by s 98(4)(c) of the Civil Procedure Act 2005 (NSW) is discretionary. Authority establishes that the discretion is not confined and may be exercised whenever the circumstances warrant its exercise; it should only be exercised when the Court considers that it can do so fairly between the parties, and that includes having sufficient confidence in arriving at an appropriate sum on the materials available; courts have typically applied a discount in assessing costs on a gross sum basis; and the court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or formal costs assessment: see Hamod v New South Wales [2011] NSWCA 375 at [813]-[820] and authority there cited.

10. The purpose of a gross sum costs order was explained in Hamod v State of New South Wales [2011] NSWCA 375 at [817] – [818] as follows:

817. The exercise of the power conferred by s 98(4) is particularly appropriate where the costs have been incurred in lengthy or complex cases and it is desirable to avoid the expense, delay and aggravation likely to be involved in contested costs assessment. This may arise either from the likely length and complexity of the assessment process: Beach Petroleum NL v Johnson (No 2) at 120; Charlick Trading Pty Ltd v Australian National Railways Commission ; Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006; or from the likelihood that the additional costs of formal assessment would disadvantage the successful party because of the likely inability of the unsuccessful party to discharge the costs liability in any event: Harrison v Schipp ; Sony Entertainment (Aust) Ltd v Smith (2005) 215 ALR 788 at [90], [194]-[195]; Hadid v Lenfest Communications Inc [2000] FCA 628.

818. The power may also be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings: Leary v Leary [1987] 1 WLR 72; [1987] 1 All ER 261; Sony Entertainment (Aust) Ltd v Smith; Microsoft v Jiang (2003) 58 IPR 445; [2003] FCA 101; Ritchie's Uniform Civil Procedure NSW at [s 98.60]).

Evidence and consideration

11. The defendant’s application was supported by an affidavit of Mr Roland Blackstone, a solicitor at Marsdens Law Group (‘Marsdens’), the solicitors for the defendant. Exhibit RB-1 to the affidavit was provided. The affidavit was filed on 15 August 2025.

Indemnity costs

12. The letter of 28 November 2023 containing the settlement offer from the defendant to the plaintiff, was provided at pp 1-4 of RB-1. The offer was to pay the plaintiff the sum of $37,000 within 28 days of acceptance of the offer in exchange for the discontinuance of the proceedings with no order as to costs and a bar to any future proceedings relating to the same subject matter. The offer was open until 4pm on 12 December 2023 and was expressed to be an offer pursuant to the principles in Calderbank v Calderbank [1975] 3 WLR 586. The letter said, among other things:

13. The reasons why it would be unreasonable for your client to reject this offer are:

13.1 your client would be saved time, cost and effort in continuing to litigate the matter;

13.2 the offer provides certainty as to the matters in dispute; and

13.3 for the reasons canvassed above, there is a very real risk that your client will be wholly unsuccessful if the matter proceeds to hearing.

13. The offer of 28 November 2023 was not accepted.

14. A further offer was made by letter dated 7 March 2025 (see RB-1 pp 5 – 9). The defendant offered to pay to the plaintiff $10,000 within 7 days of entry into a Deed of Settlement and Release, a further $10,000 within 2 months of entry into the Deed and a further $10,000 within 4 months of entry into the Deed. The parties were to take all steps necessary to have the proceedings dismissed without a costs order, and any existing costs orders were to be vacated. The plaintiff was to agree not to bring any future proceedings relating to the same subject matter.

15. In the letter, the same reasons why it would be unreasonable to reject the offer were set out. The defects in the plaintiff’s case were also set out accurately and in some detail.

16. The offer of 7 March 2025 was not accepted.

17. The defendant argued that the following further factors weigh in favour of an order for costs on an indemnity basis from 28 November 2023:

18. The defendant has been put to extraordinary expense by way of legal costs in defending a claim against which it had no proper basis,

19. The plaintiff’s conduct of its case was unreasonable in that:

(a) The plaintiff frequently failed to comply with the directions of the Court, contrary to s 56 of the CPA. When ordered to pay $30,000 by way of security for costs into Court, the plaintiff did not comply with the timeframe for payment set by the Court and further procedural steps were necessary before the payment was made. When the plaintiff was given the opportunity to file an amended Statement of Claim, it failed to do so within the timeframe allowed. When ordered to produce documents under a Notice to Produce, the plaintiff failed to do so within the time ordered, and did not appear at the subsequent directions hearing. The plaintiff did not serve its evidence in the timeframe ordered by the Court. Subsequently, the plaintiff’s evidence in reply was filed about six weeks late and some 6 days before the trial. All of these incidents resulted in extra costs and delay for the defendant (see Mr Blackstone’s affidavit at [50], [55], [61], [65], [67] and [69]). (b) The plaintiff’s invoicing practices, which were the subject of the proceedings, were not consistent with the contract between the plaintiff and the defendant. Work covered by the grant based fee was often also charged by invoice, purportedly by the hour, work was charged for which had not been the subject of a quote, contrary to the terms of the contract, and the plaintiff purported to raise its charging rates contrary to the contract (see primary judgment [45], [129], [145], [147], [148], [200] and [201]). (c) The clockify invoices which were produced six days before the trial were obviously unreliable, having vague or blank task descriptions, duplicated entries and other inconsistencies (see primary judgment [163], [200] and [201]). (d) Evidence that much of the work charged had been carried out was not provided. Many of the invoices were only produced after the termination of the contract, and were not produced contemporaneously with the work allegedly performed (see primary judgment [149]). (e) Ms Johnson clearly misunderstood the role and function of the defendant as a not for profit entity and further misunderstood the purpose of grant funding (see primary judgment [182]).

18. In all of the circumstances of the making of the offers, and having regard to the findings made in the primary judgment, it was unreasonable of the plaintiff to reject both the offer of 28 November 2023 and the offer of 7 March 2025.

19. The defendant has established an entitlement to an order for indemnity costs from 28 November 2023. The defendant is entitled to an order for costs on the ordinary basis up to and including 28 November 2023.

Gross sum costs order

20. The defendant seeks a gross sum costs order between $77,221.61 and $86,286.14, which takes into account a discount of 10-20% for the indemnity costs and 35% for the party/party costs, plus the costs of the costs application at $3,850.

21. The defendant argued that a gross sum costs order would be appropriate for the following reasons:

22. The defendant has been put to extraordinary expense in paying costs in the context of a claim for which there was no proper basis,

23. The procedural defaults of the plaintiff in the course of the pre-trial stage unnecessarily contributed to the costs of the proceedings (see [16(2)] above),

24. The plaintiff’s failure to respond to Marsdens’ persistent requests for further particulars of the statement of claim in August and September of 2023 also caused expenditure on the defendant’s part which should not have been necessary.

25. The plaintiff abandoned parts of its claim on the second day of the hearing, namely some charges which were duplicated and charges claimed at rates which were not chargeable under the contract.

26. A costs assessment would cause the defendant to incur further costs in circumstances where the plaintiff is in liquidation.

27. The rates set out in paragraph 28 and the schedule provided at paragraph 31 of Mr Blackstone’s affidavit, together with invoices provided at pp 18 – 103 of Exhibit RB-1 are sufficient to enable a fair and appropriate assessment of the quantum of costs the plaintiff should pay to the defendant. The invoices include a detailed narrative of the work to which they relate. The schedule is as follows:

| Date | Invoice Number | Amount | | 31 August 2023 | ALJ173429 | $ 4,474.80 | | 28 September 2023 | ALJ173429 | $ 4,744.30 | | 31 October 2023 | ALJ173429 | $ 6,712.20 | | 29 November 2023 | ALJ173429 | $ 2,794.00 | | 18 December 2023 | ALJ173429 | $ 2,807.20 | | 29 February 2024 | 381060 | $ 5,426.30 | | 27 March 2024 | ALJ173429 | $ 1,069.20 | | 30 May 2024 | ALJ173429 | $ 1,790.80 | | 27 June 2024 | 386431 | $ 1,592.80 | | 29 July 2024 | 387545 | $ 5,104.00 | | 29 August 2024 | 388939 | $ 3,638.80 | | 25 September 2024 | 389951 | $ 5,447.20 | | 31 October 2024 | 391649 | $ 4,571.60 | | 28 November 2024 | 392765 | $ 6,828.80 | | 19 December 2024 | ALJ173429 | $ 6,274.40 | | 31 January 2025 | 394854 | $ 2,235.20 | | 28 February 2025 | 396206 | $ 4,794.90 | | 31 March 2025 | 397615 | $ 24,984.30 | | 30 April 2025 | 398700 | $ 4,765.20 | | Total | | $100,056.00 |

7. The costs incurred before 28 November 2023 amount to $18,821.30 and the costs incurred after 28 November 2023 are $81,234.70.

8. In his affidavit, Mr Blackstone sets out, in detail, six instances where considerable legal work was done by Marsdens for the defendant in relation to these proceedings at no charge in the 2023/2024 financial year, and a further seven instances in the 2024/2025 financial year. The work performed without charge was worth $46,704.00.

9. Counsel fees for Mr Bennett amount to $37,015.00 inclusive of GST. This work was charged at $400 per hour (plus GST) and at a daily rate of $3,500 (plus GST). These are reasonable rates for a junior barrister.

10. Further costs in the sum of approximately $3,850.00 have been incurred in relation to this costs application.

11. For the reasons put forward by the defendant, I am satisfied that I can make a gross sum costs order which is fair between the parties and which is an appropriate sum. The defendant submitted that the costs are justified on the evidence and are apparently reasonable. I agree.

12. I apply a discount of 30% to the costs incurred prior to 28 November 2023 which are to be awarded on a party/party basis. That results in a sum of $13,174.91. I apply a discount of 10% to the costs incurred after 28 November 2023 which are to be awarded on an indemnity basis. That results in a sum of $73,111.23 with respect to the costs set out in the table at [21] above and the sum of $3,465.00 in relation to the costs application. Counsel fees in the sum of $37,015,00 will be awarded.

Orders

24. The following orders will issue:

25. The plaintiff is to pay the defendant’s costs of the proceedings in the sum of $89,751.14, together with counsel fees in the sum of $37,015.00, being a total of $126,766.14.

26. The sum of $30,000 paid in to Court on behalf of the plaintiff as security for costs on 22 March 2024 pursuant to the order of Judge Olsson on 22 February 2024 is to be drawn down in partial satisfaction of this costs order and paid to the defendant.

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