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[2026] NSWSC 314
General information, not legal advice.
Supreme Court of NSW
2026-04-01
Bennett 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: Constantine v Pates (No 2) [2026] NSWSC 314
Hearing dates: On the papers
Date of orders: 1 April 2026
Decision date: 01 April 2026
Jurisdiction: Equity
Before: Bennett J
Decision: (1) Vacate order 2 (the costs order) made on 19 December 2025.
(2) The plaintiff is to pay the defendants’ costs:
(a) on the ordinary basis up to and including 28 July 2025; and
(b) on the indemnity basis from and including 29 July 2025 up to and including the delivery of judgment on 19 December 2025.
COSTS — Party/Party — Exceptions to general rule that costs follow the event — Calderbank offers — Defendants offer to give plaintiff substance of relief sought but for costs — Plaintiff does not accept offer — Defendants succeed at trial and proceedings are dismissed — Whether defendants should have special costs order in their favour — No issue of principle
Legislation Cited: Civil Procedure Act 2005 (NSW), s 98
Uniform Civil Procedure Rules 2005 (NSW), rr 7.29, 20.26, 42.2
Cases Cited: C&V Engineering Services Pty Ltd v Metropolitan Demolitions Pty Ltd (No 2) [2023] NSWCA 240
Calderbank v Calderbank (1975) 3 All ER 333
Constantine v Pates [2025] NSWSC 1589
Netdeen Pty Ltd t/as GJ Gardner Homes v Lindfield NSW Pty Ltd (No 2) [2025] NSWCA 218
Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276
Category: Costs
Parties: Christine Constantine (Plaintiff)
Stergos Pates (First Defendant)
Hygia Pty Ltd (Second Defendant)
Representation: Counsel:
GM McGrath (Defendants)
Solicitors:
Litigant in person (Plaintiff)
Culleton Lawyers (Defendants)
File Number(s): 2023/00143372
Publication restriction: Nil
I gave the principal judgment in these proceedings on 19 December 2025: Constantine v Pates [2025] NSWSC 1589 (Principal Judgment). Defined terms in the Principal Judgment are used here. This judgment also presumes familiarity with the Principal Judgment.
The Court ordered that the plaintiff’s Statement of Claim be dismissed. The Court also ordered the plaintiff to pay the defendants’ costs, in accordance with the usual rule that costs follow the event: Uniform Civil Procedure Rules 2005 (NSW) (UCPR).
After I pronounced the orders of the Court as set out at the end of the Principal Judgment, counsel for the defendants immediately rose and said the following (TR 19 December 2025 P1 L26-30):
“MCGRATH: Your Honour, there was a Calderbank letter from the defendant to the plaintiffs, which could, in your Honour’s discretion, justify a special order as to costs following the sending of that letter. So, the defendant would like to make an application for a special order for costs. Is that something your Honour would look at now or deal with in a different way?”
I responded by saying that I would not deal with the issue there and then but would instead make a series of orders for the parties to put on submissions and any supporting evidence as necessary. Given my judgment was delivered on the last day of term, I considered it would be appropriate to allow the parties some time into the new law term to make their submissions.
Following discussion with counsel for each of the parties who were there to take judgment, I made the following further orders:
“1. The defendants are to file and serve submissions and evidence in support of a special costs order (limited to five pages) on or by 4pm, 13 February 2026.
2. The plaintiff is to file and serve submissions and evidence in reply (limited to five pages) on or by 4pm, 27 February 2026.
3. The defendants are to file and serve submissions in reply (limited to five pages) on or by 4pm, 6 March 2026
4. The costs decision to be decided on the papers.”
In accordance with my orders, the defendants filed written submissions authored by Mr G McGrath of counsel on 30 January 2026 (DWS Costs) and an affidavit of Mr Michael Mandicos, the solicitor for the defendants, sworn 30 January 2026.
No submissions or evidence in reply have been filed by the plaintiff.
On 6 March 2026, my Chambers received an email from Mr Mandicos, on behalf of the defendants. In that email, Mr Mandicos wrote as follows:
“The timetable requires that the defendant/applicant for a special costs order should reply to the plaintiff/respondent’s submissions today. However, the plaintiff/respondent has not served any submissions and inquiries reveal that the solicitors and counsel for the plaintiff/respondent are no longer acting. As there is no such submission it is not possible to provide any reply submission.
As we do not have solicitor or counsel contact details for Ms Constantine we will attend to sending a copy of this email to Ms Constantine via mail to her residential address.”
“No prior Notice of Intention was filed.”
“A notice of intention to file and serve this notice was filed on 04/ 02/ 2026 [sic] and served on Christine Constantine on 04/02/2026.”
There is no Notice of Intention to File Notice of Ceasing to Act on the file. However, in the file which was opened when the plaintiff filed a Notice of Intention to Appeal in relation to the orders I made on 19 December 2025 dismissing her claim, it appears Mr Lee did file the requisite Notice of Intention to File Notice of Ceasing to Act, on 4 February 2026.
Rule 7.29(1) of the UCPR provides that a solicitor who ceases to act for a party in any proceedings may file notice of the change. Subrule (1) is immediately qualified by sub-r (2), which says that except by leave of the court, a solicitor may not file or serve notice of the change (under sub-r (1)) unless the solicitor has filed and served on the client a notice of intention to file and serve the notice of change before specified time periods, depending on the status of the proceedings. Rule 7.30(a) then provides that a change for which notice is required to be given under div 7 of Pt 7 does not take effect as regards the court until the notice is filed. Given that the Notice of Ceasing to Act has not actually formally been filed in these proceedings, in light of its rejection for filing, there might be a question about whether, as far as the Court is concerned, Mr Lee has in fact ceased to act for the plaintiff in these proceedings.
I do not consider it necessary to resolve that question. Whatever the precise status between the plaintiff and her former solicitor may be with respect to each other and with respect to the Court, the fact remains that no submissions have been put on by the plaintiff.
The plaintiff was legally represented at the time judgment was delivered and I pronounced my orders. In fact, she was represented by counsel when judgment was delivered. Counsel for the plaintiffs was also, consequently, present when the timetable for submissions on costs was set. When the defendants’ submissions were filed, the plaintiff appears to still have been legally represented – the Notice of Intention to File Notice of Ceasing to Act was filed (albeit, technically, in the file for a different matter) after the defendants filed their written submissions on costs. The plaintiff could have made submissions on her own behalf as a self-represented litigant once her solicitor ceased to act, but she has made no effort to otherwise contact my Chambers or the Court generally. Taking these factors into account, I consider it appropriate to determine the defendants’ application for a special costs order notwithstanding the plaintiff has not provided any submissions. In my opinion, there is no good reason available not to do so.
“The plaintiff is to pay the defendants’ costs of the proceedings as agreed or assessed:
a. on the ordinary basis up to and including 28 July 2025, and
b. from and including 29 July 2025 up to and including the delivery of judgment on 19 December 2025 on the indemnity basis.”
The defendants submit that the basis for the special costs order was that the defendants emailed a letter making an offer of settlement to the solicitors for the plaintiff in accordance with the principles of Calderbank v Calderbank (1975) 3 All ER 333 on 28 July 2025 (the Calderbank offer, or the offer), the terms of which are set out below.
For the reasons which follow, the Court has determined that it should make a special costs orders in the terms propounded by the defendants.
On Monday, 28 July 2025, Mr Mandicos sent by email to Mr Lee a letter dated the same date, which contained the Calderbank offer giving rise to this application for a special costs order. The letter was also signed off by him.
Whilst it will contribute to the length of the judgment, it is convenient to set out the whole of the letter sent by Mr Mandicos on behalf of the defendants. The letter reads as follows:
“Without Prejudice Save as to Cost
Dear Mr Lee
PATES AND HYGIA ATS CONSTANTINE (2023/00143372)
We refer to the above proceedings.
We are instructed to advise the first defendant and second defendant agree to full and final settlement of the matter on the following basis:
1. The first defendant to provide a duly executed transfer to the plaintiff of his right and interest in the property known as X XXXXX Avenue, Kingsgrove, folio identifier X/X within 14 days.
2. Proceedings are otherwise dismissed.
3. There be no order as to costs to the intent that each party bear his, her or its own costs of the proceedings and of the transfer.
While acceptance of the offer would create a binding agreement, we propose the parties enter into a deed of settlement documenting the above agreement and including full mutual releases.
The above offer is open for acceptance until 5pm, 25 August 2025, following which it shall automatically lapse.
This offer is made in accordance with the principles in Calderbank v Calderbank (1975) 3 All ER 333 (as developed in subsequent cases). If your client does not accept this offer and the matter proceeds to hearing and our clients obtain judgement in equivalent or better terms, we reserve the right to tender this letter as to the question of costs and will seek such costs on an indemnity basis for both the first and second defendant.
We will await your response.
Yours faithfully,
Michael Mandicos” (bold, italics and capitalisation as per original)
In his affidavit, Mr Mandicos says he sent the letter to the plaintiff’s solicitor using the email address from which he had received and to which he had sent correspondence “numerous times previously”.
No response to this offer was received.
As is uncontroversial, s 98(1) of the Civil Procedure Act 2005 (NSW) gives the Court a broad discretion with respect to costs, though that discretion is to be exercised judicially: Netdeen Pty Ltd t/as GJ Gardner Homes v Lindfield NSW Pty Ltd (No 2) [2025] NSWCA 218 (Stern and Ball JJA, Griffiths AJA); Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276 at [136] (McColl JA, Sackville AJA and Adamson J agreeing).
Rule 42.2 of the UCPR provides that unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis. The defendants apply for an “order otherwise” under r 42.2 (DWS Costs [15]).
The relevant principles were conveniently summarised by the Court of Appeal (Kirk, Adamson and Stern JJA) in C&V Engineering Services Pty Ltd v Metropolitan Demolitions Pty Ltd (No 2) [2023] NSWCA 240 (C&V Engineering) at [28]-[32]. For convenience, I will set out those paragraphs of their Honours' judgment below:
“[28] Subject to the rules of court, costs are in the discretion of the court: Civil Procedure Act, s 98. UCPR, r 42.1 provides that if the Court makes any order as to costs, the court is to order that costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.
[29] There is no presumption that a party who does not accept a Calderbank offer and does not obtain a more favourable judgment will necessarily pay indemnity costs from the date of that offer: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19] (Santow JA, Bryson and Stein JJA agreeing); Tati v Stonewall Hotel Pty Ltd (No 2) [2012] NSWCA 124 at [9] (Bathurst CJ, Allsop P and Beazley JA agreeing).
[30] The relevant principles on an application for indemnity costs following a Calderbank offer are well established. Success on such an application depends upon whether the offer was a genuine offer of compromise and whether the offeree acted unreasonably in all the circumstances in refusing the offer, tested as at the time the offer is made and not with the benefit of hindsight resulting from a known outcome recorded in a judgment: Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8], [11] (Basten JA, McColl and Campbell JJA agreeing); Krolczyk v Winner t/as J Winner Building Services [2022] NSWCA 196 at [217] (Griffiths AJA, White and Kirk JJA agreeing).
[31] The party seeking an indemnity costs order bears the onus of demonstrating that the other party’s failure to accept a Calderbank offer was unreasonable in all the circumstances.
[32] As recently set out by Ward CJ in Eq (as her Honour then was) in E Group Security Pty Ltd v Chief Commissioner of State Revenue (No 2) [2021] NSWSC 1296 at [59]-[60], the factors to be taken into regard when considering whether the rejection or non-acceptance of an offer was unreasonable include:
(1) the stage of the proceeding at which the offer was received;
(2) the time allowed to the offeree to consider the offer;
(3) the extent of the compromise offered;
(4) the offeree’s prospects of success assessed as at the date of the offer;
(5) the clarity with which the terms of the offer were expressed; and
(6) whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.”
The offer involved the defendants effectively capitulating and giving the plaintiff the principal relief she sought in her Statement of Claim, namely a transfer back to her of the first defendant’s share of the property. The final judgment of the Court was that the Statement of Claim against them was dismissed: the defendant was wholly successful. Clearly, the defendants obtained a judgment better than the terms of their offer to settle the proceedings. Furthermore, in circumstances where the defendants effectively offered to capitulate, clearly, I must also accept the defendants’ submission that there was a genuine offer of compromise.
I also accept the defendants’ submissions that it was unreasonable in all of the circumstances, as at the time of the offer, for the plaintiff to reject the defendants’ offer. I will address why I reach that conclusion principally by reference the factors identified by the Court of Appeal in C&V Engineering at [32], albeit not in the order listed by the Court of Appeal. Of course, as the defendants acknowledge at [18] of DWS Costs, the factors the Court can take into account in assessing whether the plaintiff’s non-acceptance of the defendants’ offer was unreasonable are not limited to those factors listed by the Court of Appeal. However, the defendants fashioned their submissions by reference to those factors (albeit sourced from a different judgment) and it is not apparent to me what other factors would be relevant in the circumstances of this particular case.
The extent of the compromise offered, the third factor listed in [32] of C&V Engineering at [32], was significant in this case. I agree with the defendants when they characterise their offer as offering “everything the plaintiff wanted other than costs” (DWS Costs [26] and [28]).
The defendants say they were not able to identify a similar case addressing a situation where a defendant “has capitulated on the substance of the claim rather than incur additional costs of trial, prevailed and sought costs on a Calderbank letter” (DWS Costs [30]). That is unsurprising. It cannot be often that a party rejects an offer as generous as the defendants’ was in this case and incur the additional costs of a final hearing, where the only apparent marginal benefit to doing so would be to also obtain the costs order she sought.
The defendants submitted that this is “the single strongest factor” the court should take into account (DWS Costs [26]). I accept that this factor significantly weighs in favour of a special costs order. Even without taking into account what ultimately happened in these proceedings, if the defendants offer had been accepted, the plaintiff would have got what she wanted, and further costs referable to a trial would be avoided. Instead, further costs were incurred and the plaintiff achieved a much worse result.
The fact the defendants offered to capitulate on everything bar costs could arguably justify the defendants’ special costs order all on its own. However, considering the other factors relevant to assessing the unreasonableness of the plaintiff’s non-acceptance of the defendants’ offer makes it even clearer that non-acceptance was unreasonable.
Addressing the second, fifth and sixth factors listed in [32] of C&V Engineering at [32]:
The plaintiff was given 28 days to consider her offer. As the defendants’ submissions observe, at [25] of DWS Costs, this mirrors the minimum period of time that an offer of compromise under the UCPR must be kept open for acceptance in the case of an offer made two months or more before the date set down for the commencement of the trial (see UCPR r 20.26(5)(a)). I consider this an ample amount of time in which the offer could be considered and dealt with. I accept the defendants’ submission this weighs in favour of a special costs order.
I accept the defendants’ submission that the terms of the offer were clear (DWS Costs [34]). There is no ambiguity about the terms of the offer. I therefore also accept the defendants’ submission this weighs in favour of a special costs order.
The letter in which the offer is contained foreshadowed an application by the defendants for indemnity costs in the event the plaintiff rejected it. The defendants expressly reserved their right to tender the letter on the question of costs and expressly stated that “costs on an indemnity basis for both the first and second defendant” would be sought if the plaintiff rejected the defendants’ offer, and judgment on equivalent or better terms was obtained by the defendants. I accept the defendants’ submission this weighs in favour of a special costs order.
As to the first factor listed in [32] of C&V Engineering at [32], the defendants say that the offer was submitted at a time when the pleadings were closed, the primary affidavits were served and an outline of the competing cases as to the construction of the deed were clear (DWS Costs [23]). Thus, they submit that the plaintiff had the information she needed to assess the strength of the competing arguments (DWS Costs [23]).
The Statement of Claim was filed in May 2023. The Defence had been filed in July 2023, about two years before the offer. The Registrar in Equity made the order listing the matter for hearing on 16 July 2025, 12 days before the offer. In light of the usual practice of this Court, I infer that on 16 July 2025, the matter was ready for hearing, as far as the evidence was concerned. In any event, save for one affidavit made on 23 September 2025, the last of the affidavits which were in the Court Book were made in July 2024, about a year before the offer was made. This would suggest that the defendants are accurate in submitting that the “primary” affidavits had been served by the time the offer was made.
Given what was set out in the previous paragraph, I accept the defendants’ characterisation as to the stage of the proceedings at the time of the offer.
The proceedings were at an advanced stage at the time the offer was made. I consider that they were at a stage such that the plaintiff could meaningfully assess her prospects of success. Additionally, in any event, the case was principally one about the construction of a legal document. While some factual matters no doubt could play a part in a Court’s construction task, as at the time of the offer, it cannot be said that the plaintiff’s case depended on the assessment of factual matters, witness credibility and like matters such that she would have trouble assessing her prospects of success at that time. Accordingly, I accept the defendants’ submissions that the timing of when the offer weighs in favour of a special costs order.
Finally, as to the fourth factor listed in [32] of C&V Engineering: the defendants submitted, at [33] of DWS Costs, that:
“even though reasonable persons might disagree about how strong the plaintiff’s case was, nothing in the litigation suggested the plaintiff was so likely to win that it made sense to reject an offer that essentially gave them what they wanted, apart from costs.” (emphasis in original)
I accept that submission. As I said above, the plaintiff’s case was principally one about the construction of particular clauses in a contract. Reading the Deed, the plaintiff’s construction of the clause which was the centrepiece of the dispute, cl 6(a), is not the only available way of reading it. As at the time of the offer, the defendants’ construction of cl 6(a) could have been considered reasonably open to a court coming to construe the clause. I do not think that, reasonably assessed, the plaintiff’s prospects of success were so high that she might be described as certain to succeed.
The precise “level” of the plaintiff’s prospects of success is unnecessary to consider in the circumstances of this case. Even if I assume in the plaintiff’s favour that her prospects of success assessed as at the time of the offer could be characterised as “high”, I do not think the plaintiff’s prospects of success should meaningfully tend against a special costs order. This is because, as the defendants emphasised, the defendants’ offer involved almost complete capitulation, except on costs. As at the date of the offer, it could not be said the plaintiff would be so certain to win such that she would be justified in proceeding to trial to also get her costs back (on top of the relief she ultimately sought, being the transfer back to her of the first defendant’s interest in the Kingsgrove Property). Given that reality, I accept that once the extent of the compromise offered is considered, as well as the other relevant contextual factors as to the timing and form of the offer, an assessment of the reasonableness of the plaintiff’s non-acceptance could not be meaningfully altered by a conclusion as to the plaintiff’s prospects of success.
Even having what might be characterised as having a strong case surely cannot make it reasonable to put an opposing party to the expense of a trial when that other party is willing to give you the substance of what you want.
The defendants offered to virtually capitulate and avoid the expense of a trial by so doing. Almost all of the other factors usually considered on an application of this kind in assessing the reasonableness or not of the plaintiff’s non-acceptance of the offer point in favour of a special costs order.
Acknowledging the plaintiff has not made any submissions, there is nothing I can identify in the circumstances of this case which would permit the Court to even countenance the conclusion that the plaintiff’s non-acceptance of the defendants’ Calderbank offer was not unreasonable.
The defendants should have their special costs order.
For the reasons set out above, I make the following orders:
Vacate order 2 (the costs order) made on 19 December 2025.
The plaintiff is to pay the defendants’ costs:
(a) on the ordinary basis up to and including 28 July 2025; and (b) on the indemnity basis from and including 29 July 2025 up to and including the delivery of judgment on 19 December 2025.
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Amended [19] to anonymise reference to address.
Constantine
Pates
(2015) 91 NSWLR 190