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Texts Cited: Nil

Category: Costs

Parties: Flip About Pty Ltd (Plaintiff/First Cross-Defendant)
Alamdo Holdings Pty Ltd (Defendant/Cross-Claimant)
Jim Tsaganas (Second Cross-Defendant)

Representation: Counsel:
D Meyerowitz-Katz (Plaintiff/First and Second Cross-Defendants)
J Potts SC / C Bannan (Defendant/Cross-Claimant)
Solicitors:
Newhouse & Arnold Solicitors (Plaintiff/First and Second Cross-Defendants)
Speed & Stracey Lawyers (Defendants/Cross-Claimants)

File Number(s): 2019/00329649

Publication restriction: Nil

JUDGMENT

1. I delivered judgment in these proceedings on 29 April 2026: Flip About Pty Ltd v Alamdo Holdings Pty Ltd [2026] NSWSC 431 (PJ or Primary Judgment). These reasons assume familiarity with, and maintain the same definition and abbreviations, as in the Primary Judgment.

2. At PJ [784], I directed the parties to confer to seek to agree orders to give effect to my reasons. I made directions for the provision of submissions if orders could not be agreed and provisionally listed the matter for further directions on 20 May 2026 (21 days after judgment) with a view to making final orders.

3. The parties then requested a series of adjournments to which I acceded in circumstances where there were a large number of issues agitated between the parties and determined in the Primary Judgment. The question of final orders was not straightforward.

4. It was not until 29 July 2026 that the parties were ready to attend a directions hearing to determine final orders. The parties’ healthy appetite for litigation continued. Little, if any, agreement was reached. Written submissions were provided prior to the hearing on 29 July 2026, and I permitted subsequent written submissions after the hearing on limited issues. The last submissions were received on 6 August 2026.

5. I set out below the remaining issues between the parties and determine those issues.

Correction to [270] and [388] of the Primary Judgment

6. The parties have rightly drawn to my attention an error at [270] of the Primary Judgment.

7. The paragraph is an introductory paragraph to whether the parties negotiated in good faith.

8. Paragraph [270] of the Primary Judgment reads:

I firstly set out the detailed chronology of the negotiations and then determine the issues. My ultimate conclusion is that both Alamdo and Flip About negotiated in good faith, but Flip About did not.

9. The second sentence does not make sense and contains an error.

10. As I make clear at PJ [389], Flip About did not, in my view, act in good faith in linking, during the negotiations, the issue of temporary rent relief due to COVID-19, and validity of the Market Rent Review Notice. These were distinct issues, arising under different circumstances and calling for separate consideration.

11. The second sentence of PJ [270] should read:

My ultimate conclusion is that Alamdo negotiated in good faith, but Flip About did not.

12. On reflection, PJ [388] also contains an error. The first sentence should read:

I am also satisfied that, on balance, Flip About did not act in good faith during the negotiations.

Calculation of Flip About’s damages

13. At PJ [782], I indicated that although I had determined that Alamdo’s conduct was not repudiatory and thus Flip About’s damages claim does not arise, there would be utility, should the matter go further, in the accounting experts of the parties (Mr Nguyen and Mr Hall) calculating the quantum of Flip About’s loss in accordance with these reasons. I indicated that if both parties agree that this should be done, they should cooperate for this to occur.

14. These observations were made against the background of me having determined the many issues on which the accounting experts disagreed.

15. Mr Hall subsequently prepared a new report calculating what he says is the outcome. Flip About sought in its written submissions, and at the hearing on 29 July 2026, to be excused from incurring the costs in carrying out this further work. I indicated at the hearing that I did not require the further work to be done.

16. As I made clear at the end of PJ [782], this further work was only to be done if both parties agreed. They did not. I can well understand one party not wanting to incur the costs of such a calculation at this stage. I have made the necessary findings for the calculation to be made should it be necessary.

Judgment on the Further Amended Statement of Claim

17. The parties were unable to agree as to what judgment should be entered on the further amended statement of claim (FASOC). Flip About contended that judgment should be entered in its favour, for a figure which varied during the submissions as I describe below. Alamdo contended that the FASOC should be dismissed.

18. Before dealing with this dispute, I deal with one issue raised by Flip About pursuant to an invitation extended at PJ [780] for either party to identify any issues that I have not determined in the Primary Judgment. The issue raised by Flip About concerns the discount rate that should be applied to Flip About’s damages in the period up to 11 October 2021.

19. In the Primary Judgment I determined that Alamdo was not liable to Flip About for damages. I then proceeded to consider the question of damages against the possibility that I was wrong in relation to the liability finding. At PJ [628], I determined that no loss was suffered by Flip About after Flip Take Two commenced trading on 11 October 2021. Accepting that Flip About would not have traded between 1 July 2021 and 11 October 2021 (due to COVID lockdowns), I was satisfied that, if I was wrong on the liability question, Flip About was entitled to damages for loss of profit in the period 10 November 2020 (when the Lease was terminated) to 30 June 2021.

20. I did not separately consider what discount for contingencies and vicissitudes should be applied to this figure. Neither party expressly invited me to do so.

21. Rather, the submissions that were advanced in relation to the appropriate discount for contingencies and vicissitudes, as I record at PJ [562] and following, were made in the context of a damages claim up to 30 April 2027. This was the context in which I considered the submissions at PJ [562] and following. I determined that an appropriate discount for exigencies and vicissitudes was 40%. This was, however, clearly in the context of a future damages claim up to 30 April 2027.

22. Flip About contends that if the period for damages is a much lesser period, in reality up to and including 30 June 2021, a lesser figure for exigencies and vicissitudes should apply. A figure of 10% is suggested. Alamdo contends that there is no unresolved issue as I have determined the submissions made by the parties at the hearing. There was, however, no suggestion that Alamdo would be prejudiced if I was to determine the issue should I think it necessary.

23. In circumstances where I determined in the Primary Judgment that Alamdo was not liable to Flip About for damages, the issue does not arise for the purposes of making final orders. In any event, in an attempt to determine all of the issues between the parties, should I be wrong on any of the issues I have determined, I propose to consider the issue.

24. The reasons why I chose a figure of 40% are set out at PJ [566]. It is apparent that a number of matters that I have referred to are matters that would arise after 30 June 2021, or have greater force the longer the period of time to which they apply.

25. In these circumstances it seems to me that there is some force in the contention put by Flip About that if the damages figure is confined to the period up to 30 June 2021, a much lower percentage figure for contingencies and vicissitudes than 40% is appropriate. Accepting that the selection of an appropriate figure cannot be scientific or mathematical in nature, nor susceptible to a detailed process of reasoning, it seems to me that a figure of 10% is appropriate for this lesser period.

26. I turn now to consider the competing positions in relation to what judgment should be entered on the FASOC.

27. In the draft proposed orders provided prior to the hearing on 29 July 2026, Flip About contended that judgment should be entered for the plaintiff against the defendant in the sum of $206,309.14 plus pre judgment interest. At the hearing on 29 July 2026, I pressed counsel for Flip About as to the basis on which it was contended that judgment should be entered for this amount in circumstances where, for the reasons set out in the Primary Judgment, I was not satisfied that Alamdo has repudiated the Lease. I said that I would be assisted by further submissions from Flip About as to the findings made in the Primary Judgment that establish the entitlement to the money judgment sought.

28. In the further submissions provided by counsel for Flip About dated 3 August 2026, Flip About no longer contended that it was entitled to a judgment in its favour for $206,309.14. It now only sought a judgment of $25,982.80 in its favour.

29. The following contentions were made in support of the revised figure.

30. Flip About’s FASOC filed on 28 May 2024 alleges at [32] and [42] that on 10 November 2020 Alamdo wrongfully re-entered the premises. At [58] of the FASOC it is alleged that Flip About has suffered loss and damage by reason of Alamdo’s actions.

31. At PJ [422], I found that Alamdo’s termination of the Lease was a breach of the Lease. While I went on to find that Alamdo had not repudiated the Lease and thus Flip About was not entitled to loss of bargain damages, that did not negate the finding that Alamdo had breached the Lease. Flip About should therefore be entitled to damages incurred as a result of the breach. Further, even if it had not established any damages on the evidence, it would be entitled to at least nominal damages.

32. Flip About contended that it had at least established some damage on the evidence. As I understood the evidence, the sum of $25,982.80 was calculated by reference to invoices evidencing costs apparently incurred by Flip About as a result of Alamdo’s breach of contract because they concerned the removal and storage of Flip About’s equipment from the Premises, and predated the incorporation of Flip Take Two. A schedule was attached to the further submissions identifying the seven invoices in question.

33. Alamdo made a number of responses in relation to this claim.

34. First and foremost, Alamdo contended that the claim did not arise, because no such standalone claim was pleaded or advanced at trial.

35. Whilst it is alleged at [32] of the FASOC that Alamdo re-entered, it is alleged at [34], however, that the actions of Alamdo in re-entering the Premises constituted a repudiation, and at [35] that Flip About accepted that repudiation. Flip About does not refer to this distinction. Accordingly, the claim for damages at [58] is said to be “by reason of [Alamdo’s] actions” – namely its repudiation of the Lease.

36. Alamdo says that no claim for damages was made for breach of the Lease as opposed to repudiation.

37. Furthermore, Alamdo contends that if Flip About is able to run the claim, it fails on the facts. This is principally because Ms Tsaganas confirmed in cross-examination that the invoices were all Flip Take Two invoices even if issued to Flip About.

38. I have determined that Flip About should not be permitted to raise the point at this late stage.

39. The claim now sought to be made is not pleaded in the FASOC. A fair reading of the pleading is to the effect that the only claim being run in relation to breach of the Lease, is a repudiation claim.

40. Further, putting to one side the pleading, the point does not appear to have been raised at all during the running of the hearing, let alone clearly identified at the outset.

41. I do not accept the submissions made by Flip About in its reply submissions that an alternative loss claim was made by Flip About and was never abandoned. The passage relied upon in opening by Flip About, at T 26.48, was simply to confirm that Flip About’s primary position was that the Court should adopt Mr Nguyen’s scenario A (which used Flip Take Two as a proxy) rather than scenario B (which used Flip About figures but with assumed growth rates). Senior counsel for Flip About simply noted that the figures for scenario B appeared in Mr Nguyen’s report if the Court concluded that Flip About was wrong to propound scenario A.

42. I certainly did not understand these observations at the time they were made, nor do I now understand them, as propounding an alternative claim of the kind which Flip About seeks to rely upon for the judgment which it seeks on the FASOC.

43. Finally, I accept Alamdo’s contention that if the claim is to be examined on the facts, it fails. No evidence was given by Ms Tsaganas in relation to particular invoices. She agreed in cross-examination, however, when questioned about the invoices at a general level, that the costs were incurred by Flip Take Two, even though some of the invoices might have been addressed to Fip About.

44. There is simply no basis in the evidence to conclude that the invoices were expenses of Flip About.

45. For these reasons I reject Flip About’s contention that judgment should be entered in its favour on the FASOC. I accept Alamdo’s contention that the appropriate order on the FASOC is:

46. Further amended statement of claim filed on 28 May 2024 is dismissed.

Judgment on cross-claim

46. The next issue to be determined is what judgment is to be entered on the cross-claim.

47. Flip About accepted that, in view of the Court of Appeal’s decision in Croc*’*s No 2 and the Court’s findings in these proceedings in relation to the validity of the Market Rent Review Notice, Alamdo is entitled to a judgment in its favour for outstanding rent.

48. There was, however, a dispute as to quantum.

49. Alamdo contended that there should be judgment in its favour for the sum of $93,628, together with interest on that sum of $73,544.61.

50. On the other hand, Flip About contended that the appropriate figure for judgment was $62,594.06 plus pre-judgment interest at Court rates.

51. The issue between the parties in relation to the judgment amount (as opposed to interest) centred on whether the rent accrued on a daily basis. Flip About contended that although under the terms of the Lease, the rent was payable monthly in advance, the clause cannot possibly entitle Alamdo to charge rent in respect to a part of a month during which the Lease was not in effect. It was said that such a construction would be manifestly uncommercial. The figure propounded by Alamdo for outstanding rent included the entire amount of the rent for November 2020, notwithstanding that the Lease came to an end on 10 November 2020.

52. Neither party referred me to any authority in respect of their respective positions.

53. Clause 5(3) of the Lease provides:

The Lessee shall pay to the Lessor in advance on the first day of each calendar month during the year of the period set out in number 4 of the Lease Schedule one twelfth of the annual rent payable in accordance with number 9 of the Lease Schedule.

54. The argument now propounded by Flip About bears some resemblance to that argued in Ocelota Ltd & Ors v Water Administration Ministerial Corporation & Anor (2000) 9 BPR 17,527; [2000] NSWSC 370, where it was contended, in respect of a provision of a lease materially the same as cl 5(3), that a term should be implied to the effect that, when rent is paid in advance, and the lease is terminated without fault by the lessee, there should be refunded to the lessee so much of the pre-paid rent as was referrable to any period after the termination of the lease.

55. Hodgson CJ in Eq rejected such a contention. At [77], Hodgson CJ in Eq stated:

I consider I am bound by Ellis v Rowbotham, and cases following and approving it, to hold that where the lease provides for rent payable in advance, that rent is to be treated as having accrued in full and being payable in full at the date payment is required; so that there is no room for application of a provision providing for rent to be considered as accruing from day to day.

(See also Huntley Management Limited (ACN 089 240 513) v Australian Olives Limited (ACN 078 885 042) (2010) 186 FCR 430; [2010] FCAFC 98 at [29].)

56. In light of these authorities, I do not accept the position advanced by Flip About.

57. Judgment should thus be entered for the amount contended by Alamdo - $93,628.

58. The disagreement with respect to interest was based on what rate should be used. Alamdo contended for a contractual rate of 14.18%. Flip About contended for interest at Court rates.

59. Clause 24(12) of the Lease provided for interest to be paid by the Lessee to the Lessor on any amounts overdue. The clause stated that the rate of interest “shall be the rate per annum two per centum (2%) above the Bank overdraft rate, current from time to time for loans in excess of $100,000. Where used in this sub-clause the expression “the Bank” shall mean the Lessor’s Bank from time to time.”

60. Alamdo’s accounting expert, Mr Hall, was instructed to calculate pre-judgment interest on two alternative basis – applying simple interest at the rate of 14.18%, and applying Court rates. Alamdo put no evidence forward at the hearing to make good what appeared to be its case that its relevant bank interest rate was 12.18%. It sought to remedy that deficiency at the hearing on 29 July 2026 by seeking to tender a one page document titled “Net Bank - Account Information”. The document stated that the “excess debit interest rate” was 12.18% per annum. The account holder was identified as “Alamdo Holdings Pty Limited”.

61. Flip About objected to the tender of the document.

62. I indicated that I would deal with the objection in my final reasons.

63. In my view the document should not be admitted into evidence. This was a matter which, if it was going to be proved, should have been proved at the hearing. This did not occur, and no explanation was given as to why not. In any event, it is far from clear that the document which Alamdo sought to tender proves that the relevant rate is 12.18%. There is nothing on the face of the document to indicate that such rate is applicable, as the Lease requires, to loans in excess of $100,000.

64. Interest is thus payable at Court rates.

65. Interest on $93,628 from 10 November 2020 to 16 September 2026, is $36,315.60. Judgment should therefore be entered for $129,943.60.

Costs of the proceedings

66. The parties were also a fair way apart on costs.

67. In its short minutes of order provided prior to the hearing on 29 July 2026, Alamdo contended that the appropriate costs order was:

The plaintiff/cross claimant be awarded costs on an ordinary basis to 8 January 2025 and on the indemnity basis thereafter.

68. It did not state who should be paying those costs, but presumably it was the cross defendants, being both Flip About and Mr Tsaganas. Implicit in the order is that it covered all costs of the proceedings.

69. The submissions provided along with the proposed orders, sought indemnity costs from 11 December 2024.

70. In its short minutes of order provided prior to the hearing on 29 July 2026, Flip About contended that the appropriate costs orders were:

3 The defendant/cross claimant is to pay 30% of the plaintiff’s/first cross defendant’s costs of the proceedings.

4 The cross claimant is to pay 70% of the second defendant’s costs of the proceedings.

71. The first of these orders was subsequently no longer pressed in that Flip About no longer sought a costs order in its favour. The revised position was that because there had been mixed successes and failures, the appropriate order would be that each party bear its own costs. It was separately contended that Alamdo should pay 70% of Mr Tsaganas’ costs of the cross claim.

72. I deal first with the claim for indemnity costs based on the failure to accept the offers made on 10 December 2024, or 12 August 2025.

73. The 10 December 2024 offers were made by separate letters from Alamdo’s solicitors to the solicitors for Flip About and the solicitors for Mr Tsaganas, each copied to the other. The substantive offer made in each was similar, but not identical terms.

74. Dealing first with the offer to Mr Tsaganas, the relevant offer is extracted below:

Notwithstanding the strengths of its case for the reasons outlined above, Alamdo wishes to spare the parties, and the Court, the considerable time and expense that will be involved in a contested final hearing of this matter.

Accordingly, our client by this letter offers to resolve the entirety of the proceeding on the following basis:

1. Your client pays to our client the sum of $100,000.00.

2. Upon payment of that sum to our client:

a. the parties will file consent orders providing for the entire proceeding, including the cross-claim, to be dismissed with no order as to costs; and

b. the parties mutually release each other from all claims the subject of this proceeding.

This offer is contingent upon the plaintiff also consenting to order 2 above. Following that consent, the offer is made on the basis that it will become immediately binding upon acceptance, irrespective of whether the parties later enter a further settlement deed supplementing its terms.

This offer will remain open for acceptance for a period of 28 days following the date of this letter, after which time it will automatically lapse and cease to be capable of acceptance.

An offer in similar terms has today also been provided to the plaintiff. In the event both parties accept the offer, our client will agree to an order being entered for $100,000 to be joint and severally payable by both your client and the plaintiff.

(Emphasis added.)

75. The offer to Flip About is extracted below:

Notwithstanding the strengths of its case for the reasons outlined above, Alamdo wishes to spare the parties, and the Court, the considerable time and expense that will be involved in a contested final hearing of this matter.

Accordingly, our client by this letter offers to resolve the entirety of the proceeding on the following basis:

1. Your client pays to our client the sum of $100,000.00.

2. Upon payment of that sum to our client:

a. the parties will file consent orders providing for the entire proceeding, including the cross-claim, to be dismissed with no order as to costs; and

b. the parties mutually release each other from all claims the subject of this proceeding.

This offer is made on the basis that it will become immediately binding upon acceptance, irrespective of whether the parties later enter a further settlement deed supplementing its terms.

An offer in similar terms has today also been provided to the second cross-defendant. In the event both parties accept the offer, our client will agree to an order being entered for $100,000 to be payable joint and severally by both your client and the second cross-defendant.

76. Each of the letters contained a detailed analysis of the issues in the proceedings and how Alamdo contended they would be decided.

77. By the time of the 12 August 2025 letter, Flip About and Mr Tsaganas were represented by the same set of solicitors. The offer was contained in a letter from Alamdo’s solicitors to the solicitors for Flip About and Mr Tsaganas. The offer was expressly made to both Flip About and Mr Tsaganas and expressly stated to be contingent on each of them accepting the terms of this offer. The substantive offer made on 12 August 2025 was in the following terms:

Accordingly, our client by this letter offers to resolve the entirety of the proceeding on the following basis:

1. Our client pays to your client, Flip About Pty Ltd, the sum of $200,000.00.

2. Upon payment of that sum to your client:

a. the parties will file consent orders providing for the entire proceeding, including the cross-claim, to be dismissed with no order as to costs; and

b. the parties mutually release each other from all claims the subject of this proceeding.

This offer is made on the basis that it will become immediately binding upon acceptance by both Flip About Pty Ltd and Jim Tsaganas, irrespective of whether the parties later enter a further settlement deed supplementing its terms.

This offer will remain open for acceptance for a period of 7 days following the date of this letter, after which time it will automatically lapse and cease to be capable of acceptance.

78. The circumstances in which a failure to accept a Calderbank letter will ground an indemnity costs order are well understood. I summarised them in the following terms in Joudo v Joudo (No 2) [2024] NSWSC 469 at [12]-[15]:

[12] The relevant principles in relation to costs are not in dispute. Section 98 of the Civil Procedure Act 2005 (NSW) provides that, subject to the rules of Court, costs are within the discretion of the Court. The discretion is a broad one. UCPR r 42.1 provides that “if the court makes any order as to costs the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to whole or any part of the costs”.

[13] In circumstances where one party seeks indemnity costs by reason of the rejection of a Calderbank offer, it is clear that the rejection does not give rise to a presumption that the offeree should pay the offeror’s costs on an indemnity basis: SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 (SMEC Testing); Jones v Bradley (No 2) [2003] NSWCA 258 per Meagher, Beazley and Santow JJA at [8]-[9]. Instead, the question is whether the rejection of the offer, in all the circumstances, justifies departure from the usual rule that party-party costs follow the event: SMEC Testing per Giles JA at [37]. The party seeking indemnity costs on the basis of such an offer must show that it was a genuine offer, which was capable of acceptance, and that it was unreasonable for the offeree not to accept it: E Group Security Pty Ltd v Chief Commissioner of State Revenue (No 2) [2021] NSWSC 1296 per Ward CJ in Eq at [61].

[14] In Miwa Pty Limited v Siantan Properties Pte Limited (No 2) [2011] NSWCA 344 (Miwa (No 2)), Basten JA (with whom McColl and Campbell JJA agreed) at [12] adopted the following list of factors identified by the Victorian Court of Appeal in Hazeldene’s Chicken Farm v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298, as the factors relevant to a consideration of whether the rejection of an offer was unreasonable:

(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 an indemnity costs in the event of the offeree’s rejecting it.

[15] It is clear that the question of unreasonableness must be assessed at the time that the offer was made, and not with the benefit of hindsight resulting from a known outcome, recorded in a judgment: see Miwa (No 2) at [11]. It is also clear that determining unreasonableness should not entail a detailed investigation into the state of preparation or knowledge of the offeree as at the date of the offer.

79. In the present case, Flip About and Mr Tsaganas raised a threshold issue as to whether the two letters were valid offers for relevant purposes given that it was contended that the offers were made to multiple parties and were not capable of acceptance by any one of them, without also being accepted by the other. Reliance was placed on the following passage from Sahade v Bischoff (No 2) [2016] NSWCA 45 (Bischoff) at [23] (Gleeson JA; Basten JA and Beech-Jones J agreeing):

This reasoning also applies if the offer of compromise is treated as a Calderbank offer. The inquiry as to whether it was unreasonable for the unsuccessful offeree to have rejected a Calderbank offer assumes that the offer was capable of acceptance by the offeree: see Vieira v O’Shea (No 2) [2012] NSWCA 121 at [10] and the authorities there cited. Here, the joint offer was not an offer “capable of acceptance” by either appellant. In Rafferty v Time 2000 West Pty Ltd [2010] FCA 873; 87 IPR 593, Besanko J concluded that it was not appropriate to make an order for indemnity costs based on offers of compromise relying upon the principles in Calderbank 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: at [21] and [33].

(Emphasis added.)

80. Alamdo contended that the 10 December 2024 offers were not contingent on each of them being accepted by both Flip About and Mr Tsaganas. No such submission was made in relation to the later letter as it is obviously stated to be contingent on both accepting.

81. The position in relation to the 10 December 2024 offers is not entirely clear. The offer made to Flip About does not contain any express contingency. The offer made to Mr Tsaganas is expressly contingent on Flip About consenting to order 2 of the proposed offer, which includes the entire proceedings, including the cross-claim to be dismissed with no order as to costs, and the parties mutually releasing each other from all claims the subject of the proceedings.

82. In circumstances where both offers were sent at the same time, copied to the other party and one is expressly stated to be contingent on agreement to at least part of the offer by an independent party, the offers are to be regarded, in substance, as joint offers, each of which is contingent on acceptance by the other. That is how they would likely have been understood.

83. Alamdo also contended that Flip About and Mr Tsaganas should not be regarded as independent parties for the purposes of the application of the principles set out in Bischoff. I do not agree. They are separate parties to the proceedings and the evidence amply demonstrated that, at the time that the offers were made, Mr and Mrs Tsaganas had been divorced for many years, and Mr Tsaganas had no role in the operations of Flip About.

84. I am not satisfied, in the circumstances, that the 10 December 2024 offers are valid offers.

85. In any event, even if it could be said that, strictly construed, the offer made to Flip About was not contingent upon acceptance of all or part of it by Mr Tsaganas, there is a real lack of clarity as to whether the two offers are contingent. This lack of clarity as between the two offers, is a basis on which I would not regard the rejection of the offers as being unreasonable so as to ground an indemnity costs order. I am also not satisfied that, in all of the circumstances, the rejection of the offers was unreasonable.

86. I am also not satisfied that the 12 August 2025 offer is a valid one for present purposes. Again, it was made to independent parties and was contingent on each of them accepting the terms of the respective offers made to them.

87. Having rejected reliance on the Calderbank offers, I now turn to consider what costs orders should be made.

88. The relevant principles were not in dispute.

89. It is convenient to refer to what was said by Ward, Emmett and Gleeson JJA in Doppstadt Australia Pty Ltd v Lovic**k & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [14]-[19]:

[14] The starting position is s 98 of the Civil Procedure Act 2005 (NSW) which provides that, subject to the rules of court, costs are in the discretion of the Court including, by whom, to whom, and to what extent costs are to be paid. Next, reference should be made to the Uniform Civil Procedure Rules 2005 (NSW) r 42.1 which provides that, if the Court makes any order as to costs, it should be in terms that costs follow the event unless the circumstances justify some other order.

[15] Depending on the nature of the litigation the “event” may be characterised in more than one way. The authorities were reviewed by Ward J in Australian Receivables Ltd v Tekitu Pty Ltd [2011] NSWSC 1425 at [24]-[26], [54]-[60]. Generally the “event” refers to the event of the claim or counterclaim, as the case may be, and may be understood as referring to the practical result of a particular claim: Windsurfing International Inc v Petit [1987] AIPC 90-441 at 37,861-37,862 (Waddell J).

[16] Here, if one looks at the appeal, the appellants were unsuccessful on liability, interest, and costs but succeeded in respect of the damages awarded. Ignoring for the moment the respondents’ success on the cross-appeal (on the failure to mitigate loss issue), the appellants were successful in reducing three components of the damages awarded, the most significant of which was a substantial reduction in the estimated profit of a Peterson machine by reducing the period of calculation from 12 to 7.5 months. In monetary terms the amount of damages assessed by the primary judge, before taking into account failure to mitigate loss, was reduced from $381,703.20 to $216,424.32: see Lovick & Son Developments Pty Ltd & Anor v Doppstadt Australia Pty Ltd & Anor (No 2) [2012] NSWSC 1579 at [39]-[40] and [349] principal reasons. However, the respondents succeeded on their cross-appeal on the failure to mitigate loss issue. As a consequence the reduction in the second respondent’s damages by one third by the primary judge was set aside. In monetary terms the appellants succeeded overall in reducing the award of damages in favour of the second respondent (Engineering) by approximately $38,000. The first respondent (Developments) was totally unsuccessful on its cross-appeal on damages.

[17] The usual circumstance in which a court will deprive the successful party of the costs relating to an issue on which the successful party lost is when that issue is clearly dominant or separable: Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [64] (Campbell JA). See also Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; 254 ALR 328 at 330-331 (Mahoney JA).

[18] The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this Court in Elite Protective Service Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373, and summarised in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (Beazley, Ipp and Basten JJA), as follows:

· Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v PC Henderson (Australia) Pty Ltd.

· In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal.

· If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27].

· Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed).

· A separable issue can relate to “any disputed question of fact or law” before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].

· Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272

[19] Where there has been a mixed outcome in the proceedings, and it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, in general such an exercise will be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the Court: James v Surf Road Nominees Pty Ltd (No 2) at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22. In our view, such an exercise is not warranted in the present case, particularly having regard to:

(1) the multiple sub-issues (on which there was some mixed success for each of the parties) raised by the primary issues of liability and damages; and

(2) the substantial degree of overlap between the liability issue and the failure to mitigate loss issue so far as both concerned the operation and performance of the Doppstadt shredder - that is, whether the failures of the Doppstadt shredder were due to operator error and failure to service and maintain the shredder in accordance with the Doppstadt operator manual, or because the shredder did not perform as represented by the appellants. The respondents’ success on the issues of liability and failure to mitigate was outweighed by the appellants’ success on the damages issue.

(Emphasis added.)

90. Alamdo’s primary position was that costs should follow the event and that it was not necessary to go further and assess the issues one by one. Alternatively, if regard was had to the outcome on the various issues, Alamdo succeeded on far more issues than Flip About. It was contended that Flip About put in issue matters that were responsible for substantial legal costs and on which it failed. Conversely, it was contended that the issues on which Flip About were successful were either the result of a concession by Alamdo, involved little Court time and expense, or did not impact the practical result.

91. On the other hand, Flip About did its own analysis of the issues to contend that each party has had mixed successes and failures. Ordering costs on an issue by issue basis was said to be unnecessarily complex and thus it is appropriate to adopt the approach of high level apportionment as a matter of impression and evaluation.

92. It was contended that the successes and failures have been approximately even, and thus the appropriate costs order is that each party should bear its own costs. While Alamdo has achieved a judgment in its favour, it has succeeded on what, is in substance a local court debt claim, and failed on its damages claim, the quantum of which was in excess of $1 million.

93. Flip About also sought to place reliance on the costs outcome in the Croc*’s litigation where the Court of Appeal ultimately determined that there be no order as to costs of the amended commercial list statement with the intention that each party should bear its own costs: Croc’*s Franchising Pty Ltd v Alamdo Holdings Pty Ltd (No 3) [2023] NSWCA 316 at [10]-[21].

94. I do not regard it as appropriate to approach the costs of the proceedings on the simple basis that there was one event on which Alamdo succeeded such that it should have its costs.

95. Approached from a high level, Flip About sought to recover substantial damages from Alamdo by reason of a repudiation of the Lease or breach of statutory duty. It failed on both of these causes of action. It also failed on causation after the incorporation of Flip Take Two. On the question of quantification of loss, which did not arise because of my findings on the anterior issues, it succeeded on a number of issues. The fact is, however, that it failed on the claims advanced.

96. By its cross-claim, Alamdo sought to recover substantial amounts against both Flip About and Mr Tsaganas for outstanding rent and damages. Alamdo was only successful in recovering outstanding rent. The claim for damages was foreclosed by reason of the decision of the Court of Appeal in Croc*’*s No 1. Alamdo was never going to succeed at first instance on these issues but not insignificant costs were incurred in litigating them.

97. As the Primary Judgment reveals, a very large number of issues were agitated between the parties.

98. Some assessment of the substantial issues can be gleaned from what occurred at the hearing which lasted five full days.

99. Ms Tsaganas was extensively cross-examined, principally in connection with whether Flip About negotiated in good faith and also on Flip About’s damages claim. It was found that Flip About did not negotiate in good faith.

100. Flip About also called several witnesses to prove that the Market Rent Review Notice was not served. They were cross-examined. Flip About was ultimately not successful on this issue.

101. Several witnesses were also called by Flip About – Mr Knight and Mr Kean – about what occurred at the mediation. I ultimately determined that Alamdo did negotiate in good faith.

102. Mr Maurici was cross-examined for a considerable period, on a number of issues. These included whether he posted the Market Rent Review Notice, whether Alamdo negotiated in good faith, and whether Alamdo had failed to mitigate its loss. On each of these issues, Alamdo succeeded.

103. The evidence of the forensic accountants also occupied some time, although as I recorded at PJ [492], the evidence was given efficiently for which the parties are to be commended. My impression is that Flip About fared little better than Alamdo on these contested issues, although it was not necessary to quantify the loss because of my findings on the anterior issues.

104. Having regard to these matters and adopting a broad brush approach as a matter of impression and evaluation, I am of the opinion that Flip About should pay Alamdo’s costs of the proceedings, subject to a deduction of 25% to take account of the issues on which Alamdo did not succeed. Those issues include that Alamdo ultimately accepted that Flip About was an impacted lessee. More importantly, Alamdo could not succeed on a number of issues litigated because they were foreclosed by the decision in Croc*’*s No 1. Central among these was Alamdo’s damages claim. Not insignificant costs were incurred in litigating these issues.

105. In terms of the cross-claim as between Alamdo and Mr Tsaganas, the only substantive issue that was litigated as set out at PJ [762]-[778], was one of construction. Mr Tsaganas lost on this issue. He denied he was liable in the guarantee and was not successful. I do not accept the contention advanced on behalf of Mr Tsaganas that he should be regarded as having been largely successful such that Alamdo should pay 70% of his costs of the proceedings.

106. In these circumstances, the appropriate order on the cross-claim is that Mr Tsaganas pay Alamdo’s costs of the cross-claim as between the two, as agreed or assessed.

Release of security money

107. Alamdo’s solicitors currently hold $10,000 in their trust account which was paid to them as security for costs. Further, the Court holds $135,000 that was paid into Court as security for Alamdo’s costs.

108. The parties did not agree as to whether those monies should be paid out now. As I understood the debate, it depended on what costs orders I ultimately make in the proceedings. Obviously, if I accepted Flip About’s primary position that each party pay their own costs of the proceedings, the monies should not be paid to Alamdo, but rather should be returned to Flip About. I did not understand Flip About to contend that if I was to make a substantial costs order in Alamdo’s favour (as I am proposing to do), the monies should not be released.

109. In my view, the monies should be released now, and I will make orders to this effect.

Final orders

110. The Court orders that:

111. Further amended statement of claim filed on 28 May 2024 is dismissed.

112. There be judgment for the cross claimant against the cross defendants on the cross claim in the amount of $129,943.60.

113. The plaintiff/first cross defendant pay 75% of the defendant/cross claimant’s costs of the proceedings including the cross-claim as agreed or assessed.

114. The second cross defendant pay the cross-claimant’s costs of the cross-claim as agreed or assessed.

115. The sum of $10,000 currently held on trust by the defendant’s solicitor be released to the defendant.

116. The sum of $135,000 currently held by the Court be released to the defendant.

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