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[2026] ACTCA 3
procedural. The respondents’ applications for special costs were refused, and the $35,000 and $20,000 held in court were ordered paid to the first and second respondents, respectively.
2 cited instruments linked from this judgment.
The respondents had won the appeal and obtained a costs order, but that did not automatically entitle them to indemnity or other special costs because Mr Gang had rejected settlement offers. The court assessed whether rejecting each offer was unreasonable at the time, rather than treating the appeal’s weakness or the eventual result as decisive. It found the 2022 walk-away offers were not shown to have been unreasonably rejected. The 2023 offer was not a compliant offer of compromise under the rules because it included a contribution to costs, and its rejection was not shown to be unreasonable as a Calderbank offer either. The special-costs applications were refused. Separately, security funds were ordered paid out to the respondents.
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2,503 words · generated 07/10/2026
Gang v You (No 2) [2026] ACTCA 3 concerns the costs consequences of an unsuccessful appeal and, in particular, whether the respondents should receive special costs because Mr Gang rejected settlement offers. It does not reconsider the merits of the underlying appeal. McCallum CJ decided the costs applications on the papers, exercising the Court of Appeal’s appellate jurisdiction as a single judge under s 37J(1)(l) of the Supreme Court Act 1933 (ACT) [5].
The underlying dispute arose from Mr Gang’s business dealings with Mr You. Mr Gang operated a tiling company that performed contract work for a construction company operated by Mr You. He alleged that the parties had agreed to merge their businesses at a dinner in late March 2017 [1]. He also alleged that he sold his Giralang house to Mr You on terms that included an option to repurchase it within three years, although the written contract did not include that term. He said that he was tricked into directing the conveyancing solicitors to release $335,434.27 in sale proceeds to Mr You’s company, and alleged that the solicitors breached a fiduciary duty to protect him [2].
Crowe AJ dismissed Mr Gang’s claims and ordered him to pay the defendants’ costs. A later application for special costs by the second respondent was also rejected at first instance [3]. Mr Gang’s appeal was dismissed in Gang v You [2024] ACTCA 37, and the Court of Appeal ordered him to pay the respondents’ costs [4]. The respondents then applied for special costs, relying on Mr Gang’s rejection of earlier Calderbank offers and on a 2023 letter said to be both a Calderbank offer and an offer of compromise under the rules [4, 15–18].
The joint offer of 28 February 2022 proposed that the appeal be dismissed with no order as to costs, and that the respondents would not pursue or enforce existing costs orders. It also required Mr Gang to make no further claim to the Giralang property, provide vacant possession within eight weeks and end all litigation between the parties [6]. Mr Gang rejected the offer and proposed different terms, including transfer of the property to him in exchange for a payment calculated by reference to the sale price and the disputed settlement funds [10]. The respondents rejected his counter-offer and briefly reinstated their offer, which Mr Gang again rejected [11–12].
Mr You made another offer on 7 March 2023. Among other terms, it proposed dismissal of the appeal against him, payment to him of the $35,000 security for costs, a $7,000 payment by Mr Gang, vacant possession of the property and an agreement not to bring proceedings about the issues raised in the earlier proceedings [13]. It also proposed a $30,000 contribution towards Mr You’s costs [30]. The court refused special costs but ordered that the $35,000 security be paid to Mr You and the $20,000 security be paid to the second respondent [37].
The court began with the statutory and procedural costs framework. Costs are discretionary under r 1721(1) of the Court Procedures Rules 2006 (ACT). The ordinary basis is party and party costs, defined by r 1751. Rule 1752 provides for solicitor and client costs or indemnity costs, which have different assessment bases [19]. The judgment’s focus, however, was not simply whether the respondents had received a result more favourable than an offer. The decisive question for the Calderbank applications was whether Mr Gang’s rejection was unreasonable.
McCallum CJ endorsed the approach that the party seeking special costs bears the onus of showing that rejection of an offer was unreasonable. The mere fact that an offer was made and not accepted does not itself produce an award of indemnity costs [20]. The court drew on Hulanicki v Walton (No 2), which recognises both the public interest in reasonable compromise and the need for litigants to have ready access to justice without feeling unreasonably pressured to compromise [22]. Relevant considerations include the apparent strength of each side’s case at the offer date, when the offer was made, the time to consider it, the extent of the compromise, clarity of the terms and whether the offer foreshadowed an indemnity-costs application [22].
The respondents relied on Mr Gang’s loss at trial, the number and character of the appeal grounds, costs already incurred, and the eight-week period allowed to vacate the house [23]. The court did not treat the trial result as decisive. An appeal lay as of right, and that was relevant to the need not to constrain access to justice unreasonably [24]. The first offer was, in substance, a mutual walk-away arrangement. From Mr Gang’s perspective, the dispute concerned the loss of his business and home; accepting the offer would have involved an almost complete capitulation [25]. The court accepted that, with hindsight, the appeal was weak, but held that this did not establish that refusing the offer was unreasonable [25].
The second respondent’s position was no stronger. The trial judge had rejected that respondent’s earlier special-costs application and had found that the claim was not so obviously hopeless that pursuing it was delinquent. The trial judgment also identified unusual features bearing on whether the solicitors had acted for Mr Gang and whether a fiduciary duty had been breached [26]. McCallum CJ was not persuaded that it was unreasonable for Mr Gang to test the trial judge’s conclusions about the solicitors’ role on appeal [27].
The 2023 offer raised two distinct questions. First, it was not a compliant offer of compromise under r 1002. That rule, which applies in appeals through r 5001, requires an offer to meet specified requirements, including not including an amount for costs, subject to a stated exception [28–30]. The offer proposed that Mr Gang pay $30,000 towards Mr You’s costs, so it included an amount for costs and did not satisfy the rule [30–31]. Second, the court considered the letter as a Calderbank offer. It was less favourable to Mr Gang than the earlier offers, and although the court accepted that costs had increased in the meantime, the respondents still had to show that rejection was unreasonable [32–34]. They did not do so. The applications were therefore refused [35].
This judgment does not announce a new general rule replacing the existing Calderbank approach. It applies the approach described in Hulanicki: rejection is assessed in context, with the apparent strength of the cases and other circumstances at the time of the offer among the relevant considerations [22]. The judgment’s important clarification is its application of that approach to a weak appeal and a later result more favourable than an earlier offer.
The respondents argued that their result was more favourable than the February 2022 offer because the appeal was dismissed and the trial costs order remained intact [14, 17]. The court did not deny that comparison. It explained that the result was more favourable in that respect [14]. But the comparison did not displace the need to show unreasonable rejection. The decision therefore illustrates that an outcome comparison is relevant to the setting, but is not, by itself, the test for special costs on a Calderbank basis [20–25].
The judgment also distinguishes the standards of appellate review. The 2022 letter described the appeal as an appeal “in the strict sense” and relied on House v The King [7–8]. McCallum CJ explained that the appeal under s 37E of the Supreme Court Act 1933 (ACT) was by way of rehearing, requiring a real review and the judgment that ought to have been given at first instance, while still requiring error to be shown [7]. The House v The King standard applies to review of a decision involving a judicial discretion, rather than generally governing factual findings in this appeal [8]. That discussion explains why parts of the offer letter misstated the appeal framework, while recognising that it made a fair point about the appeal’s factual and credibility grounds [8–9].
For rule-based offers, the decision applies the express requirements of r 1002. A letter cannot gain the procedural status of an offer of compromise under that rule if it includes a costs amount contrary to the rule, unless the stated exception applies. The court found that the exception did not apply to the $30,000 costs contribution proposed here [30–31]. The letter could still be considered as a Calderbank offer, but its rejection remained subject to the separate reasonableness assessment [32–35].
The judgment also records the independent outcome concerning security. The funds were not awarded as special costs. The court stated that the respondents already had a present entitlement to release of the funds under the original costs order, and ordered their payment out [36–37].
At [20], McCallum CJ adopts the proposition that “[t]he mere fact that an offer was made but not accepted does not result in an award of indemnity costs”. The practical meaning within the judgment is that an offer’s rejection is not enough on its own. The party seeking special costs must establish why the rejection was unreasonable.
At [21], the judge states: “The critical issue is whether the respondents have established that it was unreasonable of Mr Gang not to accept any of the Calderbank offers.” This is the central question. The court did not decide the applications by asking only whether the respondents won the appeal or whether their offers were better than the eventual result.
At [22], the court lists factors relevant to reasonableness, including the offer’s timing, the time for consideration, the size of the compromise, the offeree’s prospects assessed at the offer date and the clarity of the offer. These are considerations rather than a mechanical checklist. The judgment places them within the wider requirement to consider all the circumstances.
At [25], the court says: “It does not follow that it was unreasonable of Mr Gang not to accept a ‘walk away’ resolution of his claim against the first respondent at that point.” In plain English, a weak case does not automatically make refusal of a broad settlement reasonable or unreasonable. The nature of the compromise and the litigant’s perception of the dispute mattered in the assessment.
At [31], the court concludes that the 2023 letter “was not an offer of compromise in accordance with the rules” because it included an amount for costs. That is a rule-compliance finding, not a conclusion that the letter could not be considered at all. The court separately assessed it as a Calderbank offer [32–34].
At [35], the court states that “the applications for special costs orders must be rejected.” The result is confined to these applications and the material described in the judgment.
The decision is relevant where a party seeks indemnity or other special costs after the opposing party rejects a Calderbank offer, particularly where the applicant relies on a later judgment that appears more favourable than the offer. The judgment indicates that the result comparison does not remove the need to prove unreasonable rejection. The circumstances at the offer date remain important [20–25].
It is also relevant where the offeree lost at first instance but exercised a right of appeal. The court treated the availability of an appeal as part of the context, not as a guarantee that the appeal was strong or that every rejection was reasonable [24–27]. Here, the appeal ultimately failed, but the court did not infer from that result alone that the earlier refusals were unreasonable.
The case also addresses offers framed simultaneously as Calderbank offers and offers of compromise under court rules. Where an offer includes an amount for costs, the text and exceptions in the applicable rule require close attention. In this case the $30,000 costs contribution meant that the 2023 letter did not qualify under r 1002, although the court still considered whether it was unreasonable to reject it as a Calderbank offer [28–34].
The decision does not establish that a “walk away” offer will generally be reasonable or unreasonable, nor does it set a fixed monetary threshold for a special-costs award. Its reasoning is tied to the particular offer terms, the history of the dispute, the appeal rights and the information described in this judgment.
The judgment does not discuss any later judicial treatment of Gang v You (No 2), and the supplied text does not provide decisions after it applying, distinguishing or criticising its reasoning. It would therefore be unsupported to describe a later line of authority or claim that the decision has been adopted by later courts.
The authorities identified in this judgment instead show the sources on which McCallum CJ relied. Hulanicki v Walton (No 2) supplied the framework for assessing whether rejection of a Calderbank offer was unreasonable [22]. Marhaba v Chen (No 2) was cited for the proposition that the applicant bears the onus and that rejection alone does not establish entitlement to indemnity costs [20]. The discussion of Australian Capital Territory v Crowley and Minister for Immigration and Border Protection v SZVFW explained the nature of the appeal and the standard of review [7–8]. House v The King was distinguished as concerning review of a decision involving judicial discretion [8].
These relationships describe the reasoning in this judgment, not subsequent treatment of it. Any account of later citations would require sources beyond the judgment text supplied here.
The judgment does not give an exhaustive account of how each Hulanicki factor should be weighted. It lists relevant considerations but does not prescribe a formula or indicate that any single factor will ordinarily be decisive [22]. The balance will depend on the offer and the case as they stood when the offer was made.
It also does not determine the broader circumstances in which a result is sufficiently more favourable than a Calderbank offer to support special costs. The court accepted that the appeal outcome was more favourable to the respondents than the 2022 offer in one respect, but held that the comparison did not establish unreasonable rejection in this case [14, 20–25]. The judgment does not set out a general method for comparing offers involving different non-monetary terms.
The 2023 letter failed to qualify as an offer of compromise because it included a costs amount. The judgment identifies the rule’s exception but does not explore its operation in circumstances different from those before it [29–31]. Nor does it decide what other defects might prevent an offer from complying with r 1002.
Finally, the judgment does not revisit the merits of the appeal or establish a general threshold for when an appeal is too weak to justify rejecting an offer. Its conclusion is narrower: a weak appeal did not, on the circumstances described, establish that rejection was unreasonable [25, 27, 33–35].
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Source: the ACT Courts (www.courts.act.gov.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY COURT OF APPEAL
Case Title: Gang v You (No 2) Citation: [2026] ACTCA 3 Hearing Date: On the papers Decision Date: 13 February 2026 Before: McCallum CJ Decision: 1) The respondents’ applications for special costs are refused. 2) The sum of $35,000 paid into Court pursuant to the orders of Justice McWilliam made on 24 March 2022 is to be paid out of court to the first respondent, Jin Ho You. 3) The sum of $20,000 paid into Court pursuant to the orders of Justice McWilliam made on 24 March 2022 is to be paid out of court to the second respondent, Colquhoun Murphy Lty Ltd trading as Colquhoun Murphy Lawyers. Catchwords: CIVIL LAW – APPEAL - Costs – appellant ordered to pay respondents’ costs – respondents seeking special costs order – respondents seeking indemnity costs - reasonableness of rejecting a Calderbank offer – where respondent received a judgment more favourable than the terms offered – where weakness of appeal does not render Calderbank rejection unreasonable Legislation Cited: Court Procedures Rules 2006 (ACT) r 1002,1721(1), 1751, 1752, 5001 Supreme Court Act 1933 (ACT) s 37E, 37J(1)(I) Cases Cited: Australian Capital Territory v Crowley [2012] ACTCA 52; 7 ACTLR 142 Calderbank v Calderbank [1975] All ER 333 Gang v You (No 3) [2021] ACTSC 318 Gang v You (No 4) [2022] ACTSC 2 Gang v You [2024] ACTCA 37 House v The King (1936) 55 CLR 449 Hulanicki v Walton (No 2) [2015] ACTCA 45 Marhaba v Chen (No 2) [2024] ACTSC 288 Minister for Immigration and Border Protection v SZVFW [2018] HCA 30 Parties: Yeong Suk Gang (Appellant) Jin Ho You (First Respondent) Colquhoun Murphy Pty Ltd Trading as Colquhoun Murphy Lawyers (Second Respondent) Representation: Counsel J Jang (Appellant) B Ellis (First Respondent) E Reilly (Second Respondent) Solicitors Jacobs Legal (Appellant) Mills Oakley (First Respondent) Moray & Agnew (Second Respondent) File Number: ACTCA 63 of 2021
Decision Under Appeal: Court: ACT Supreme Court Before: Crowe AJ Date of Decision: 15 December 2021 Case Title: Gang v You (No 3) Citation: [2021] ACTSC 318 Court File Number: SC 430 of 2018 McCALLUM CJ: Introduction
Yeong Suk Gang brought proceedings in the Supreme Court against Jin Ho You arising out of their business dealings. Mr Gang operated a tiling company which had performed contract work for a construction company operated by Mr You. Mr Gang contended that Mr You approached him with a suggestion that the two companies should merge and that an oral merger agreement was reached at a business dinner in a Chinese Restaurant in late March 2017.
Mr Gang further contended that he later sold his house in Giralang to Mr You on terms that were to include an option to repurchase it within 3 years, when in fact the contract included no such term. He contended that he was tricked by Mr You into directing the solicitors acting on the conveyance to release the proceeds of sale ($335,434.27) from their trust account to Mr You’s company when Mr Gang should have received those proceeds. Mr Gang further contended that the solicitors breached a fiduciary duty to protect him from that outcome. The firm of solicitors was the second defendant in the proceedings.
Mr Gang’s claims against both Mr You and the solicitors were dismissed at first instance: Gang v You (No 3) [2021] ACTSC 318 (Crowe AJ). The orders in that judgment included an order that the plaintiff pay the defendants’ costs. The second respondent subsequently sought a special costs order but that application was rejected by Crowe AJ: Gang v You (No 4) [2022] ACTSC 2.
Mr Gang’s appeal from the judgment of Crowe AJ was dismissed: Gang v You [2024] ACTCA 37. The Court of Appeal (comprised of myself, Loukas-Karlsson J and Sullivan J) ordered the appellant to pay the respondents’ costs. Upon the publication of that judgment, the respondents sought an opportunity to apply for special costs orders and directions were made accordingly. Pursuant to those directions, each respondent has filed submissions seeking indemnity costs from various dates based on Mr Gang’s rejection of each of a series of Calderbank offers and an alleged offer of compromise. Mr Gang has not responded to those submissions.
This judgment determines those costs applications. In determining the applications, I am exercising the appellate jurisdiction of the Court of Appeal as a single judge, as allowed under s 37J(1)(l) of the Supreme Court Act 1933 (ACT). Offers made by the respondents
The first offer was a Calderbank letter (named after Calderbank v Calderbank [1975] All ER 333) dated 28 February 2022 sent jointly on behalf of both respondents. The offer was expressed to be open for acceptance for a period of 28 days. The offer was that, if Mr Gang agreed to have the appeal dismissed with no order as to costs, the respondents would agree to not pursue and enforce the costs order made by Crowe AJ or any other outstanding costs orders. The offer included terms that Mr Gang would agree to make no further claim against the property in Giralang; that he would provide vacant possession of the property within eight weeks of acceptance of the offer and that all litigation between the parties would cease. The letter noted that the effect of the offer was that each party would bear its own loss with respect to the subject matter of the proceedings at first instance and the appeal. The letter reasoned that the notice of appeal merely sought to re-agitate the original pleadings and argued that the Court of Appeal would not come to a different finding.
The Calderbank letter asserted that the appeal was an appeal stricto sensu (meaning “in the strict sense”). That was incorrect. As stated in the appeal judgment at [7], an appeal under s 37E of the Supreme Court Act 1933 (ACT) is in the nature of a rehearing, albeit that error must still be shown. In determining such an appeal, the Court is required to conduct “a real review of the trial” and the judge’s reasons and give “the judgment which in its opinion ought to have been given in the first instance”: Australian Capital Territory v Crowley [2012] ACTCA 52; 7 ACTLR 142 at [5]. The difference between an appeal in the strict sense and an appeal by way of rehearing is explained in the judgment of Gageler J (as the Chief Justice then was) in Minister for Immigration and Border Protection v SZVFW [2018] HCA 30 at [31].
Inconsistently with the assertion that the appeal was an appeal in the strict sense, the Calderbank letter also referred to House v The King (1936) 55 CLR 449 at 505 and asserted that the primary judge’s decision did not entail error of the kind identified in that case. That reflected an incorrect understanding of the standard of appellate review to be applied in determining Mr Gang’s appeal. The principles in House v The King reflect the understanding of the standard of review that is to be applied in an appeal from a judgment that turns on “what can be characterised as a ‘discretion’ committed to the court of which the primary judge was a member”: SZVFW at [37]. The findings of the primary judge were made in the exercise of any such discretion. The standard of review to be applied in the present appeal was the correctness standard, not the deferential standard applicable to an exercise of judicial discretion articulated in House v The King: see generally SZVFW at [35]-[50]
Despite those misstatements, the letter went on to make a fair point about the apparent strength of the appeal. It was noted that there were numerous grounds of appeal which primarily raised questions of fact or the credit of witnesses. The letter reminded the appellant in that context of the restrictions on appellate interference with factual conclusions based on credibility.
In any event, by letter dated 31 March 2022, Mr Gang rejected the offer, arguing that it was not a reasonable compromise. Mr Gang’s letter made a counter-offer to discontinue the appeal with no order as to costs if the respondents would agree not to pursue and enforce their costs orders and if the first respondent would transfer title of the Giralang property to Mr Gang in exchange for $414,565.73 reflecting the sale price of the property less the amount of $335,434.27 which Mr Gang alleged ought to have been transferred to him at settlement.
By letter dated 4 April 2022, the respondents rejected the counter-offer and reinstated their offer of 28 February 2022 until 8 April 2022. The letter specified that, after 8 April 2022, the offer was withdrawn and would not be reinstated.
By letter dated 13 April 2022, Mr Gang again rejected the offer.
By letter dated 7 March 2023, the first respondent, Mr You, made a further offer expressed to be both a Calderbank offer and an offer of compromise under the rules. The offer proposed that the appeal be dismissed against the first respondent; that an amount of $35,000 that had been paid into Court by way of security for costs be paid to the first respondent; that undertakings given by the first respondent concerning the Giralang property be discharged forthwith; that Mr Gang pay Mr You the sum of $7000 within 14 days; that Mr Gang provide vacant possession of the Giralang property within eight weeks and that Mr Gang agree not to commence any proceedings in any jurisdiction in respect of the issues raised in any of the previous proceedings between the parties. The basis articulated for the offer was that the appeal proceedings had “no prospects of success”.
As already noted, the Court of Appeal dismissed the appeal and ordered the appellant to pay the respondents’ costs. The effect of those orders was to leave intact the costs order made at first instance. In that respect, the Court of Appeal’s judgment was more favourable to the respondents than the terms of their offer dated 28 February 2022.
Special costs orders sought
Mr You seeks the following orders: (a) that the appellant pay his costs of and incidental to the appeal on a party and party basis up to 28 March 2022 and on an indemnity basis or alternatively a solicitor and client basis on and from 29 March 2022; or (b) that the appellant pay his costs of and incidental to the appeal on a party and party basis up to 8 April 2022 and on an indemnity basis or a solicitor and client basis on and from 9 April 2022.
The second respondent joins in the application for order (a).
The basis for seeking those orders is that Mr Gang rejected the two Calderbank offers and that the respondents received a judgment more favourable than the terms of those offers in that they retained the benefit of their costs orders obtained at first instance. The dates in the orders reflect the dates on which those respective offers expired.
Alternatively, the first respondent seeks an order that the appellant pay his costs of and incidental to the appeal on a party and party basis up to 6 April 2023 and on an indemnity basis or a solicitor and client basis on and from 7 April 2023. That aspect of the application is based on the letter dated 7 March 2023 which included both a Calderbank offer and an alleged offer of compromise under the rules.
Principles to be applied
The starting point is that the costs of a proceeding are in the discretion of the court: r 1721(1) of the Court Procedures Rules 2006 (ACT). Costs are ordinarily assessed on a party and party basis (“all costs that the registrar considers were fair and reasonable for the attainment of justice or for enforcing or defending the rights of the party whose costs are being assessed”): r 1751. However, the court has a discretion to order that costs be assessed on a solicitor and client basis (“all costs reasonably incurred and of a reasonable amount” having regard to costs allowable under the rules and charges ordinarily payable by a client to a solicitor or the work”) or on an indemnity basis (“all costs other than costs unreasonably incurred”): r 1752.
In the written submissions, the first respondent initially contended that, having obtained a judgment more favourable than the terms of the offer dated 28 February 2022, Mr You has a “presumptive entitlement to a special costs order” and that there is “no compelling reason to displace this presumption here”. However, elsewhere in the written submissions, it appears to be accepted that, in the case of the Calderbank letters, the issue is whether it was unreasonable for the offeree not to accept the offer. That is the correct approach. As stated by McWilliam J in Marhaba v Chen (No 2) [2024] ACTSC 288 at [39] (a decision relied upon by the first respondent for a different proposition): “[t]he mere fact that an offer was made but not accepted does not result in an award of indemnity costs (or other costs order, as was sought here). The party seeking the order bears the onus of establishing the entitlement based on the rejection of an offer of compromise being unreasonable” [citations omitted].
The critical issue is whether the respondents have established that it was unreasonable of Mr Gang not to accept any of the Calderbank offers.
In Hulanicki v Walton (No 2) [2015] ACTCA 45, this Court said at [13]-[14]: The acceptance of reasonable offers of compromise is in the interests of litigants and the public; it minimises the personal and financial costs to litigants and it enables the courts to focus resources on claims that are not amenable to compromise. “The non-acceptance of a Calderbank offer is a factor, in some cases a strong factor, to be taken into account on an application for indemnity costs”. On the other hand, it is critical that litigants have ready access to justice and do not feel unreasonably constrained to compromise cases. When a Calderbank offer has been made, the issue is whether it was unreasonable to reject the offer, considering all the circumstances of the case, including the apparent strength of each party’s case at the time that the offer was made. In Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) the Victorian Court of Appeal noted that other matters that should be taken into consideration when evaluating the reasonableness of a rejection are: (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 indemnity costs in the event of the offeree’s rejecting it. [citations omitted] Calderbank offers
Alleged offer of compromise
The letter dated 7 March 2023 was explicitly framed as an offer of compromise under the rules as well as being a Calderbank offer. The relevant rule is r 1002, which applies in appeals by force of r 5001.
The requirements of an offer of compromise under r 1002 are specified in r 1002(2) as follows: An offer under this rule must— (a) identify— (i) the claim or part of the claim to which it relates; and (ii) the proposed orders for disposal of the claim or part of the claim including, if a monetary judgment is proposed, the amount of the judgment; and (b) if the offer relates only to part of the proceedings, include a statement— (i) for an offer by the plaintiff—stating whether the remainder of the proceedings will be abandoned or pursued; or (ii) for an offer by a defendant—stating whether the remainder of the proceedings will be defended or conceded; and (c) not include an amount for costs or state that it is inclusive of costs; and (d) state that the offer has been made in accordance with this part; and (e) state the period of acceptance.
Rule 1002(3)(a)(ii) creates an exception to r 1002(2)(c) where an offer proposes an order that the defendant pay a stated amount for the plaintiff’s costs. That was not the offer made here. The first respondent proposed that the appellant pay $30,000 towards the first respondent’s costs. The letter stated at paragraph 11: The payment by the appellant of $30,000 in addition to the payment out of court of the security in the sum of $35,000 constitutes a significant compromise by the first respondent in the recovery of its legal fees across the appeal proceeding, undertaking proceeding and trial proceeding.
The offer thus included “an amount for costs” and accordingly was not an offer of compromise in accordance with the rules.
As a Calderbank offer, the letter offered Mr Gang less by way of compromise than the offers made the previous year. It may be accepted that, during the intervening period, Mr You would have incurred additional legal costs. The offer reflected that and in effect renewed the previous offer on terms less favourable to Mr Gang, that is, requiring Mr Gang to contribute $65,000 towards Mr You’s costs.
The first respondent submitted that it was unreasonable for Mr Gang to refuse the offer for the reasons given in respect of the earlier Calderbank offers (set out at [23] above). To repeat, whilst I accept that the appeal was weak, I am not persuaded that it follows that it was unreasonable not to accept the offer.
Separately, the first respondent submitted that the letter of 7 March 2023 “gave the appellant the opportunity to discontinue the appeal for nominal costs to the first respondent”. Again, however, it does not follow that it was unreasonable not to accept the offer.
For those reasons, I have concluded that the applications for special costs orders must be rejected.
Payment out of the funds held as security for costs
Orders
I certify that the preceding thirty-seven [37] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice McCallum. Associate: Date:
Gang
You
(1936) 55 CLR 449
The respondents’ applications for special costs were refused, and the $35,000 and $20,000 held in court were ordered paid to the first and second respondents, respectively.
The first respondent submitted that it was unreasonable for the appellant to reject the Calderbank offers made in 2022 given: (a) the appellant’s wholesale defeat at trial before Crowe AJ (including on issues of his and certain of his witness’ reliability); (b) the nature and volume of the grounds of appeal (including the need to make and succeed on an application to adduce new evidence for the appeal); (c) the significant costs already incurred by the first respondent to be paid by the appellant under the trial decision but which the first respondent would forgo; and (d) the eight weeks offered for the appellant to vacate the house (rather than immediately following the appeal judgment).
As to the appellant’s “wholesale defeat” in the hearing at first instance, it must be noted that an appeal lay from that judgment as of right. The right of appeal is an aspect of the consideration referred to in Hulanicki v Walton that litigants must have ready access to justice and not feel unreasonably constrained to compromise cases.
As acknowledged in the first respondent’s written submissions, the first Calderbank offer proposed a mutual “walk away”. That was in circumstances where, according to Mr Gang’s perception of events, he had lost his business and his home to Mr You. Acceptance of the offer at that point would in effect have been an almost complete capitulation. It may be accepted, in hindsight and based on the judgment of the Court of Appeal, that the appeal was weak. It was certainly not framed as helpfully as it might have been. However, it does not follow that it was unreasonable of Mr Gang not to accept a “walk away” resolution of his claim against the first respondent at that point.
The second respondent’s claim based on the Calderbank offer is no stronger. As already noted, the primary judge rejected an application by the second respondent for indemnity costs following the trial. His Honour stated at [21](2): I do not accept that the plaintiff’s claim against the second defendant was so obviously hopeless that it was delinquent, in the relevant sense, for him to wish to have his day in court. There were some unusual features of this case which might well have led those advising the plaintiff to consider that he had an arguable case based on the proposition that the second defendant did act as his solicitor in the conveyance of the Giralang property. I referred to those at [364] of my 15 December 2021 judgment. In particular, the charging of fees to the plaintiff and the contents of the internal settlement checklist were matters of concern. It should also be noted that I did find that the second defendant owed the plaintiff a fiduciary duty in relation to the handling of the settlement monies. The circumstances were such that, again, it was not unreasonable for the plaintiff to consider that he might succeed in establishing a breach of that duty. While ultimately I concluded that the second defendant had not breached the duty, it does not seem to me that the prospect of that outcome was such as to render the plaintiff’s rejection of the settlement offers sufficiently unreasonable.
While the appeal was brought with the benefit of the primary judge’s ruling and reasons, it remains the case that there were some unusual features of the case. I am not persuaded that it was unreasonable of the appellant to test the primary judge’s conclusions concerning the role of the solicitors in the conveyance in an appeal.