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[2026] NSWSC 1169
Supreme Court of NSW
2026-09-25
McGrath J
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Haiyong Su v 5 Blackman Cres Macquarie Pty Ltd (No 2) [2026] NSWSC 1169
Hearing dates: On the papers
Date of orders: 25 September 2026
Decision date: 25 September 2026
Jurisdiction: Equity
Before: McGrath J
Decision: See [75]
Catchwords: COSTS — Party/Party — exceptions to general rule that costs follow the event — appropriate case in which a special costs order should be made to reflect the plaintiff’s failure on issues of significance in terms of scope and quantum — HELD — the defendant to pay 50% of the plaintiff’s costs of the proceedings on the ordinary basis
COSTS — Party/Party — the operation of r 42.34 of the UCPR does not prevent a costs order being made in favour of the plaintiff — HELD — the commencement and continuation of the proceedings in the Supreme Court rather than the District Court was warranted
COSTS — offers of compromise — lack of evidence on which the court could evaluate the offers made — no basis on which to conclude that it was unreasonable for the plaintiff not to accept the offers seven days before the trial was to commence was a reasonable period for the plaintiff to consider whether to accept the offer
Original judgment source is linked above.
Legislation Cited: Civil Procedure Act 2005 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Abdi v Abdi (No 2) [2022] NSWSC 582
Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333
Calvo v Ellimark Pty Ltd (No 2) [2016] NSWCA 197 at [8]–[10]
Commonwealth of Australia v Gretton [2008] NSWCA 117
Cretazzo v Lombardi (1975) 13 SASR 4
Firebird Global Master Fund II Ltd v Republic of Nauri (No 2) [2015] HCA 54
Hawkesbury District Health Service v Chaker (No 2) [2011] NSWCA 30
Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298
Kumaran v Employsure Pty Ltd (No 2) [2022] NSWCA 247
Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25
Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11
Redwood Anti-Aging Pty Ltd v Knowles (No 2) [2013] NSWSC 742
Wheatley v Lakshmanan (No 2) [2022] NSWSC 851
Noon v Bondi Beach Astra Retirement Village Pty Ltd (No 2) [2010] NSWCA 285
Category: Costs
Parties: Haiyong Su (Plaintiff/First Cross-Defendant)
5 Blackman Cres Macquarie Pty Ltd (Defendant/Cross-Claimant)
Danny Noumeir (Second Cross-Defendant)
Fadi Nihad Kamal (Third Cross-Defendant)
Representation: Counsel:
J Polese (Defendant/Cross-Claimant)
Solicitors:
Yingke Australia (Plaintiff/First Cross-Defendant)
Ad Valorem Law (Defendant/Cross-Claimant)
File Number(s): 2022/00346517
Publication restriction: Nil
This judgment concerns the issue of costs and final orders arising from my judgment in Haiyong Su v 5 Blackman Cres Macquarie Pty Ltd [2026] NSWSC 875 (Principal Judgment). This judgment assumes familiarity with and adopts the shorthand expressions and defined terms used in the Principal Judgment.
The proceedings involved a debt recovery claim brought by Mr Su (as lender) against 5 Blackman (as borrower) in respect of a secured short-term loan of $100,000 contained in the Deed of Loan between Mr Su, 5 Blackman and the third cross-defendant, Mr Kamal (also as borrower). The security provided in respect of the loan included a personal guarantee from Mr Noumeir and mortgages over real property owned by 5 Blackman.
Relevantly, the Repayment Date under the Deed of Loan was 8 August 2019. 5 Blackman obtained various extensions of time but ultimately defaulted on repayment. At the two-day hearing of the proceedings on 30 March 2026 and 1 April 2026, Mr Su sought to recover from 5 Blackman as much as $1,394,093.13 (on one permutation) as a result Mr Su’s purported entitlement to the Principal Sum ($100,000), interest accruing at the default rate of 3% per month (that is — 36% per annum, compounding) and the legal costs arising out of various enforcement measures undertaken by him in the ACT Supreme Court.
The proceedings also involved the Cross-Claim brought by 5 Blackman against Mr Su, Mr Noumeir and Mr Kamal seeking to set aside the Deed of Loan and the 5 Blackman Mortgage as unenforceable by Mr Su and to recover equitable compensation from Mr Noumeir on the alleged basis that he breached fiduciary duties owed to 5 Blackman and from Mr Kamal on the alleged basis that he knowingly received trust property.
At the commencement of the hearing, Mr Noumeir submitted to judgment on the Cross-Claim against him. Accordingly, on 30 March 2026, I made orders entering judgment in favour of 5 Blackman as against Mr Noumeir on the Cross-Claim.
In the Principal Judgment, I ultimately found in favour of Mr Su, but for a vastly lesser amount than almost all of the various permutations of the amounts sought by him. I made the following determinations in the Principal Judgment:
The Deed of Loan was binding and enforceable against 5 Blackman (see Principal Judgment at [164]-[182]).
Mr Su failed to substantiate many of the costs he asserted to have incurred in seeking to enforce the Deed of Loan and the mortgages against 5 Blackman. Of the enforcement costs Mr Su could substantiate, he was unable to recover them because they had been unnecessary and unreasonably incurred in earlier proceedings in the ACT Supreme Court which were dismissed. Further, Mr Su was subject to an Anshun estoppel which prevented him from seeking to recover costs that he was ordered to pay 5 Blackman by the ACT Supreme Court (see Principal Judgment at [183]-[245]).
The default rates of interest which compound monthly under the Deed of Loan were unenforceable against 5 Blackman as a penalty (see Principal Judgment at [246]-[275]).
5 Blackman failed to prove that Mr Kamal knowingly received trust property and the Cross-Claim against him was dismissed on that basis (see Principal Judgment at [276]-[282]).
Based on the determinations in the Principal Judgment, I held that Mr Su was only entitled to recover $53,775.15 as at 9 March 2026 from 5 Blackman on the agreed calculations provided to me, being interest calculated at the Discount Interest Rate of 2% and no recovery of any enforcement costs. Mr Su and 5 Blackman have agreed that the amount owing (including interest) as at the date of this judgment is $60,559.56. I will order judgment in favour of Mr Su against 5 Blackman for that amount.
Further, I also held in the Principal Judgment that Mr Kamal was entitled to the dismissal of the Cross-Claim against him and, subject to any contrary submission, an order for costs in his favour against 5 Blackman.
In the Principal Judgment at [283]–[284], I ordered that the parties email my Associate a set of agreed short minutes of order to give effect to the Principal Judgment by 4pm on 30 July 2026, failing which they were to provide competing submissions of not more than two pages (12 font, 1.5 spacing) with respective proposed short minutes of order and any material on which they relied by 6 August 2026. In either case, I was to determine the orders to be made in chambers.
The parties failed to provide a set of agreed short minutes of order by 6 August 2026.
Following an extension to the timetable for the provision of submissions and proposed short minutes of order, on 11 August 2026, 5 Blackman provided written submissions and proposed short minutes of order and, on 13 August 2026, Mr Su provided written submissions and proposed short minutes of order.
During the course of the proceedings, 5 Blackman made two offers to settle the claims brought by Mr Su against 5 Blackman, each offer stated to be “without prejudice save as to costs”. Both of the offers were expressed to be made in accordance with the principles in Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333. Neither offer was accepted.
The first offer was made on 20 February 2025, by letter sent via email from Ad Valorem Law (solicitors for 5 Blackman) to Yingke Law Firm (solicitors for Mr Su) (20 February 2025 Offer). The 20 February 2025 Offer was in the following terms (emphasis in original):
…
We are instructed to make the following offer of compromise in full and final settlement of all claims brought against 5 Blackman in the Proceeding.
We note the following.
1. We are instructed that your client is indebted to our client pursuant to two costs orders made by the Supreme Court of the Australian Capital Territory. It is anticipated that the total amount of that debt, not including interest, is approximately $150,000.00 (approximately $46,000.00 in respect of the costs of the appeal proceedings, and approximately $110,000.00 in relation to costs of the proceedings at first instance) (Costs Orders).
2. The proceeds of sale of the properties located at 3 Blackman Cres Macquarie ACT 2614 and 5 Blackman Cres Macquarie ACT 2614 – approximately $488,000.00 – remain frozen pending the outcome and resolution of this Proceeding.
3. Your client has already recovered the Principal Amount of the Deed of Loan (being $100,000.00) and now sues only for interest and costs.
Offer
Our client makes the following offer.
- Our client will consent to the release to your client of $50,000.00 of the approximately $488,000.00 in frozen proceeds. The balance is to be paid to our client.
- Our client will release and discharge your client from its liability under the Costs Orders.
- The Proceeding is to be dismissed with no order as to costs with the intention that each party bears their own costs of and incidental to the Proceeding.
4. The parties will enter into a suitably-worded deed of release, by which the parties will grant to each other mutual releases from all claims the subject of the Proceeding.
This offer is made in accordance with the principles in Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333. It is open for acceptance for a period of 14 days from the date of this letter, after which point it shall lapse.
…
We refer to our previous letter of offer dated 20 February 2025 (Our Letter). Further to the matters contained in our letter, we are instructed to make the following offer, on a without prejudice, no admissions basis in full and final settlement of the Proceedings, that within 28 days of acceptance of this offer:
$80,000 be paid to your client from the funds currently held in court;
The balance of the funds in court to be paid to Our Client;
Our Client will release and forever discharge Mr Su, in respect of the costs orders obtained in the ACT proceedings, worth approx. $150,000;
That the above be entered as consent orders or alternatively, that the parties enter into a deed of settlement and release;
The parties to do all things necessary to effect the payment of funds out of court and to effect the settlement within 28 days or as reasonably practicable;
Our Client agrees to and consents to the approx. $139,000 sitting in trust to be paid ou[t] to your client;
The parties agree to forever discharge and release each other from all claims whatsoever, whether known or unknown and in respect of all matters set out in these proceedings;
The Amended Statement of Claim and Cross Claim be dismissed, with no order as to costs, with the intention that each party pay their own costs.
(“Offer”)
This offer will remain open for acceptance until 9am, Monday, 30 March 2026.
…
We will rely on this letter as an offer in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333 and Cutts v Head (1984) 1 All ER 597, to claim Our Client’s costs on the indemnity basis, should Our Client receive orders in their favour or that are more favourable or otherwise if your client is placed in a position that is less favourable than this Offer.
The date of 30 March 2026 on which the 23 March 2026 Offer was expressed to expire was the first day of the trial before me.
The balance of the 23 March 2026 Offer not quoted above contained the reasons put forward on behalf of 5 Blackman as to why Mr Su should accept it.
Mr Su claims to be entitled to the whole of his costs of the proceedings on an indemnity basis by asserting that they form part of the Money Owing under the Deed of Loan and are the fees of Mr Su’s own solicitors on a “full solicitor and own client basis” under the 5 Blackman Mortgage.
5 Blackman contends that an exception to the ordinary rule that costs follow the event arises such that it should not have to pay (or at least not pay the entirety) of Mr Su’s costs.
For the reasons set out below, subject to my consideration of each of the 20 February 2025 Offer and the 23 March 2026 Offer, I have determined that 5 Blackman should be ordered to pay 50% of Mr Su’s costs of the proceedings.
(1) Subject to rules of court and to this or any other Act—
(a) costs are in the discretion of the court, and
(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and
(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
(2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court.
(3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.
(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to—
(a) costs up to, or from, a specified stage of the proceedings, or
(b) a specified proportion of the assessed costs, or
(c) a specified gross sum instead of assessed costs, or
(d) such proportion of the assessed costs as does not exceed a specified amount.
…
The discretion to award costs under s 98 of the CPA is broad and the section itself is to be construed liberally: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, Gaudron and Gummow JJ at [21].
The discretion is, however, subject to the rules of court, including the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and must be exercised judicially and with regard to the principle that an award of costs is compensatory in nature, not punitive: Oshlack, Gaudron and Gummow JJ at [44].
Rules 42.1, 42.2, 42.4 and 42.5 of the UCPR relevantly provide:
42.1 General rule that costs follow the event
Subject to this Part, 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 the whole or any part of the costs.
42.2 General rule as to assessment of costs
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.
…
42.4 Power to order maximum costs
(1) The court may by order, of its own motion or on the application of a party, specify the maximum costs that may be recovered by one party from another.
…
42.5 Indemnity costs
If the court determines that costs are to be paid on an indemnity basis—
(a) in the case of costs payable out of property held or controlled by a person who is a party to the proceedings—
(i) in the capacity of trustee, executor, administrator or legal representative of a deceased estate, or
(ii) in any other fiduciary capacity,
all costs (other than those that have been incurred in breach of the person’s duty in that capacity) are to be allowed, and
(b) in any other case, all costs (other than those that appear to have been unreasonably incurred or appear to be of an unreasonable amount) are to be allowed.
In my opinion, underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs. Costs follow the event generally because, if a plaintiff wins, the incurring of costs was the defendant’s responsibility because the plaintiff was caused to incur costs by the defendant’s failure otherwise to accord to the plaintiff that to which the plaintiff was entitled; while if a defendant wins, the defendant was caused to incur costs in resisting a claim for something to which the plaintiff was not entitled: cf Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ. Departures from the general rule that costs follow the event are broadly based on a similar approach.
Generally the “event” is the event of the claim or counterclaim which is understood to refer to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219, Ward, Emmett and Gleeson JJA at [15], applied in Chandrasekaran v Western Sydney Local Health District (t/as Westmead Hospital) (No 2) [2024] NSWCA 21, Gleeson, Leeming and Adamson JJA at [11]. From this, it can be taken that the starting point in the exercise of the discretion to award costs is that a successful party in proceedings is entitled to their costs of the proceedings. Ordinarily, where a party is successful in respect of their claim or defence, they will generally be entitled to the whole of their costs of the proceedings, including the costs of an issue on which they have failed.
When the court exercises its discretion to award costs, a number of observations made in Oshlack by McHugh J at [67]–[68] should be kept in mind, as summarised below:
An award of costs rests on fairness between the parties, with the unsuccessful party generally bearing the liability for the costs of the proceedings.
The primary purpose of an award of costs is to indemnify the successful party, not to punish an unsuccessful party because, had the proceedings not been brought, the successful party would not have incurred the expense of them.
As a matter of policy, one beneficial by-product of the compensatory purpose may well be to instil in a party contemplating the commencement of proceedings a sober realisation of the potential financial expense involved.
Generally speaking, courts will avoid attempting to differentiate between particular issues on which the successful party may not have succeeded and will tend not to apportion costs between issues: Cretazzo v Lombardi (1975) 13 SASR 4, Jacobs J at 16.
The mere fact that the issues on which a successful party fail are severable is not, without more, sufficient to warrant departure from the general rule: Hawkesbury District Health Service v Chaker (No 2) [2011] NSWCA 30, Allsop P, Beazley JA and Hoeben J at [14]. Special circumstances are required to depart from the general rule and there are good reasons not to encourage applications regarding costs on an issue-by-issue basis, involving apportionments based on degrees of difficulty of issues, time taken to argue them and the like: Firebird Global Master Fund II Ltd v Republic of Naur**u (No 2) [2015] HCA 53, French CJ, Kiefel, Nettle and Gordon JJ at [6]
Special circumstances may, however, arise where a successful party who has failed on particular issues may not only be deprived of their own costs on those issues but may also be ordered to pay the other party’s costs on those issues, and in this context the issue is not limited to a particular pleaded cause of action but may include any disputed question of fact or law: Cretazzo, Bray CJ (with whom Zelling and Jacobs JJ agreed) at 12.
In such circumstances, a special costs order may be made reflective of the successful party’s success on individual issues as “a matter of impression, based upon matters such as the severability of the issues, the reasonableness of reliance upon the issues, and the extent to which the issues incurred expending additional costs and time”, involving an “assessment of fairness” having regard “to the extent to which an issue contributed to the cost of the trial, and the extent to which it was arguable”: Calvo v Ellimark Pty Ltd (No 2) [2016] NSWCA 197, Ward, Gleeson and Leeming JJA at [8]–[10], applied in Kumaran v Employsure Pty Ltd (No 2) [2022] NSWCA 247, Gleeson, Leeming and Kirk JJA at [12]–[14].
An additional provision requiring consideration in the present case is that contained in r 42.34 of the UCPR, which limits the recovery of costs for a plaintiff in circumstances where the judgment obtained is less than $500,000 and the proceedings could have been commenced in the District Court. Rule 42.34 states:
42.34 Costs order not to be made in proceedings in Supreme Court unless Court satisfied proceedings in appropriate court
(1) This rule applies if—
(a) in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and
(b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants.
(2) If the proceedings could have been commenced in the District Court, an order for costs must not be made unless the Supreme Court is satisfied that the commencement and continuation of the proceedings in the Supreme Court was warranted.
[19] Had the claim under the loan agreement been the only claim the plaintiffs made, then I accept that the plaintiffs should not have recovered any of their costs in respect of that claim if brought in this Court as the claim could have been brought in the Local Court. But r 42.34(2) refers to this Court’s being satisfied that the commencement and continuation of “the proceedings” in this Court was warranted, not to its being satisfied that the commencement and continuation of the particular claim on which the plaintiff succeeded in this Court was warranted.
[20] Unless the Court was satisfied that the plaintiff was not warranted in commencing and continuing the proceedings other than the successful claim at all, then I do not think that r 42.34 applies. Although the plaintiffs were unsuccessful in the balance of their claims, it does not follow that commencement and continuation of the proceedings in this Court rather than the District Court was not warranted. Had the proceedings been commenced in the District Court it is likely that they would have been transferred to this Court by reason of the claims for equitable relief that the plaintiffs made. I do not think that r 42.34 affects the decision as to costs.
Mr Su submits that he was the successful party in the proceedings, albeit for a considerably lesser sum than the amount claimed, and the proceedings were nevertheless required and reasonably commenced in circumstances where 5 Blackman denied that it was bound by the Deed of Loan and the 5 Blackman Mortgage. Accordingly, Mr Su contends that he succeeded on the claim and merely faltered on the issues of the interest rate and the enforcement costs as matters of quantum within the single claim. Mr Su says that as the defence failed, the general rule is that costs should follow the event.
Mr Su does, however, accept that the issues of the interest rate and enforcement costs on which he was unsuccessful might moderate his recovery of costs but also points to the numerous contentions on which 5 Blackman was unsuccessful, such as that Mr Su had been paid in full, Mr Su failed to mitigate and the many unpleaded allegations which were not permitted and rejected.
Mr Su contends that even if the event in the proceedings could be characterised as mixed success, it is not appropriate to apportion the costs between issues for the following reasons:
The general practice is not to apportion costs between issues, citing Cretazzo and Firebird.
The operation of the various clauses of the Deed of Loan and the 5 Blackman Mortgage that relate to enforcement costs apply to these proceedings because those costs fall within the definition of ‘enforcement costs’ as they were for the recovery of outstanding monies owed to a mortgagee. Clause 12 of the Deed of Loan and cl 19.1 of the 5 Blackman Mortgage operate to oblige 5 Blackman to pay or reimburse Mr Su for all costs incurred in connection with the enforcement of the 5 Blackman Mortgage and default under the Deed of Loan. The costs of these proceedings therefore form part of the “Money Owing” under the Deed of Loan which are payable on a “full solicitor and own client basis” under the 5 Blackman Mortgage.
By the Defence to ASOC, the Cross-Claim and the unpleaded arguments, 5 Blackman sought to attack the mortgagee’s rights, such that the proceedings would be considered as an example of a mortgagee defending its rights and preserving its security. In relation to this point, Mr Su submits that he should be awarded his costs on the indemnity basis.
Mr Su submits that r 42.34 of the UCPR does not assist 5 Blackman for two reasons:
5 Blackman was the reason the proceedings were transferred to this court because it sought equitable relief in the Cross-Claim that the District Court could not grant; and
in any event, Mr Su seeks a declaration charging the funds held in the ACT Supreme Court as security for its judgment debt and costs, being equitable relief that would arguably have not been available in the District Court.
5 Blackman submits that Mr Su is, in substance, the unsuccessful party insofar as he pressed a claim “swollen … to as much as $1,394,093.13” (see Principal Judgment at [3]) and recovered only $53,775.15, representing less than 4% of the sum claimed. 5 Blackman says that the difference between the sum claimed and the sum obtained in the Principal Judgment was the product of Mr Su raising the following two issues that dominated the trial and on each of which he failed:
Mr Su’s failed attempt to recover interest under the Deed of Loan at the default interest rate which was an unenforceable penalty (inflating interest by “nearly 350%”: see Principal Judgment at [267]–[275]).
Mr Su’s failed attempt to recover enforcement costs in their entirety, which were unsubstantiated in part and otherwise “unnecessarily and unreasonably incurred” (see Principal Judgment at [8(2)]) and, in any event, Mr Su failed to recover those enforcement costs because they were the subject of an Anshun estoppel (see Principal Judgment at [221]–[225], [230]–[236]).
Consequently, 5 Blackman contends that Mr Su’s sole success in establishing the enforceability of the Deed of Loan was a discrete and limited issue. 5 Blackman submits that the court ought to make a costs order that reflects the relative success on the distinct issues raised at the trial and that the disparity between the sum claimed and the sum recovered is directly relevant to such a costs order.
5 Blackman also contends that r 42.34 of the UCPR applies in these circumstances to prevent an order for costs being made in favour of Mr Su, notwithstanding the fact the proceedings were transferred to this court on the application of 5 Blackman on the Cross-Claim, because that provision turns exclusively on the amount recovered, which is $53,775.15, an amount which lies within the jurisdiction of the Local Court. 5 Blackman says that these proceedings would have always been transferred to this court because Mr Su sought to claim the inflated amount of $1,394,093.13, of which it only recovered less than 4%.
The practical result of the Principal Judgment is that Mr Su recovered an amount of $53,775.15 as at 9 March 2026 on his claim against 5 Blackman. This would be considered the “event” from which costs would follow under the application of the general rule in r 42.1 of the UCPR. I consider that the general rule should not apply in the present case because the issues on which Mr Su failed in the Principal Judgment were of such significance in terms of their scope and quantum that this is an appropriate case in which a special costs order should be made to reflect Mr Su’s failure on those issues.
The issues on which Mr Su failed were his claims for default interest and enforcement costs. Those issues were the ones which gave rise to the extravagant inflation of Mr Su’s claim. In my opinion, applying the criteria set out in Calvo:
both of those issues are severable;
his reliance on them was not reasonable having regard to the comprehensive basis on which they failed, as stated in the Principal Judgment; and
those issues required the expenditure of additional costs and time such that it would be unfair to 5 Blackman for Mr Su to recover his costs associated with those issues.
In my impressionistic view, the time and costs devoted to those issues in the evidence, the submissions and the trial were about double what would otherwise have been involved if Mr Su had not pursued these unsuccessful issues. On that basis, I consider that the order for costs of Mr Su as the successful party in the proceedings should be limited to 50%.
My view in this regard is bolstered when I consider Mr Su’s claim to be entitled to indemnity costs for the whole of the proceedings on the basis that they are the enforcement costs recoverable by him under the Deed of Loan and the 5 Blackman Mortgage. In the Principal Judgment at [187]–[192], I set out the legal principles on which a mortgagee may recovery its enforcement costs against a mortgagor, making particular mention that there is a qualification to the general rule that a mortgagee is entitled to recover the costs of enforcing a mortgage that the costs must be incurred properly and not unnecessarily. For the reasons I have stated above, I regard the costs incurred by Mr Su in relation to the issues on which he failed in the proceedings were incurred unnecessarily and are not recoverable by him. I consider that 50% of Mr Su’s costs of the proceedings were unnecessarily incurred.
I reject the argument of 5 Blackman that the operation of r 42.34 of the UCPR prevents any costs order being made in favour of Mr Su. On 8 February 2023, the proceedings were transferred from the District Court to this court on the oral application of 5 Blackman, as the proceedings included a claim for equitable relief made by the Cross-Claim which could not have been dealt with by the District Court. Applying the reasoning stated in Redwood, I am satisfied that the commencement and continuation of the proceedings in this court rather than the District Court was warranted. Contrary to the submissions of 5 Blackman, it is unhelpful to engage in a counterfactual analysis as to whether these proceedings would have been transferred to this court from the District Court but for the Cross-Claim. As noted in Redwood, the relevant inquiry under r 42.34 of the UCPR is whether the commencement or the continuation of the proceedings in this court was warranted, not merely whether continuation of the claim on which Mr Su succeeded in this court was warranted.
Accordingly, subject to my consideration of the 20 February 2025 Offer and the 23 March 2026 Offer below, Mr Su is only entitled to recover 50% of his costs of these proceedings. I consider that those costs be paid on the ordinary basis.
As stated above, costs will generally follow the event and be assessed on the ordinary basis unless the court orders otherwise or the UCPR otherwise provides: rr 42.1 and 42.2 of the UCPR.
Offers of compromise expressed to be made in accordance with the principles established in Calderbank do not result in “automatic” costs consequences. Rather, they operate as a guide to how this court may exercise its broad discretion as to costs, together with all the other relevant circumstances of the case. So much was observed in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 by Giles JA at [37]:
… The making of an offer of compromise in the form of a Calderbank letter (from Calderbank v Calderbank (1976) Fam 93), where the offeree does not accept the offer but ends up worse off than if the offer had been accepted, is a matter to which the court may have regard when deciding whether to otherwise order, but it does not automatically bring a different order as to costs. All the circumstances must be considered, and while the policy informing the regard had to a Calderbank letter is promotion of settlement of disputes an offeree can reasonably fail to accept an offer without suffering in costs. In the end the question is whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure …
[44] Two general ‘rules’ have emerged relating to Calderbank offers, namely, that to justify the making of an order for costs on an indemnity basis, the offer must be a genuine offer of compromise, which it is unreasonable for the appellant not to accept: Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [4]-[5]; Leichhardt Municipal Council v Green at [21]-[24], [36]. However, as this Court (Santow, Bryson JJA, Stein AJA) pointed out in Leichhardt Municipal Council v Green at [8], the ‘common law principles’ that have been developed in relation to costs “operate merely as guides to how the discretion might appropriately be exercised”. The principles or rules to which I have just referred fall within that category.
[45] The discretion is to be exercised having regard to all the relevant circumstances in the case. The question that had been raised in Leichhardt Municipal Council v Green was whether there had been a genuine offer of compromise. As the Court said at [21]:
“There is little appreciable difference between saying that an offer should not in the court’s discretion attract costs sanctions in the circumstances and saying that an offer is not a genuine offer of compromise in the circumstances. Both depend upon a value judgment of the offer and the conduct of the parties in the circumstances of the claim.”
To warrant an order of costs on an indemnity basis, a Calderbank offer must embody a genuine compromise and the party seeking to rely on it must show that it was unreasonable for the unsuccessful party not to accept it. That is an evaluative judgment to be made by reference to the terms of the offer and all the relevant circumstances at the time the offer was made: Abdi v Abdi (No 2) [2022] NSWSC 582, Ward P at [28], citing King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204, Young JA (with whom Campbell and Hodgson JJA agreed) at [11]; Wheatley v Lakshmanan (No 2) [2022] NSWSC 851, Ward CJ in Eq at [97]–[99].
The relevant reasonableness or otherwise is not to be determined with hindsight. The merits and weaknesses of the relevant claim are to be considered prospectively as at the time of the offer: Noon v Bondi Beach Astra Retirement Village Pty Ltd (No 2) [2010] NSWCA 285, Giles, Macfarlan and Young JJA at [11]; Gretton, Beazley JA (with whom Mason P agreed and Hodgson JA substantially agreed) at [78].
In Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311; [2013] NSWCA 188, Bathurst CJ (with whom Beazley P, McColl and Emmett JJA agreed) at [42] concluded that the essence of a Calderbank offer is an intention that the offer (or the circumstances in which it was conveyed) indicated that it would be relied on in relation to costs, should a verdict more favourable than the offer be achieved, stating:
In the present case all that there was, were the offers of compromise, the second seeking a greater amount by way of settlement than the former. There was nothing in either of the offers to indicate that they were intended to have effect other than as offers under r 20.26. Further, there was nothing in the correspondence with which the offers were enclosed or in the surrounding circumstance to indicate they would be relied on in relation to the question of costs should a verdict more favourable than the offer be achieved. Such an indication, in my opinion, is the essence of a Calderbank offer.
A finding that rejection or non-acceptance of a Calderbank offer was unreasonable should not be made other than on clear grounds: Abdi, Ward P at [28], citing Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353, Basten JA (with whom Giles JA and Young CJ in Eq agreed) at [113].
In Hazeldene*’*s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298, Warren CJ, Maxwell P and Harper AJA at [25] summarised the relevant factors in determining whether the rejection or non-acceptance of a Calderbank offer was unreasonable, including:
the stage of the proceeding at which the offer was received;
the time allowed for the offeree to consider the offer;
the extent of the compromise offered;
the offeree’s prospects of success, assessed at the date of the offer;
the clarity with which the terms of the offer were expressed; and
whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it.
These factors were cited with approval in Abdi, Ward P at [29] and Wheatley, Ward CJ in Eq at [98].
In Abdi, Ward P at [27]–[30] provided the following comprehensive statement of the principles relating to an award of indemnity costs following the rejection or non-acceptance of a Calderbank offer:
[27] The party seeking the special costs order bears the onus of demonstrating that the rejection of the offer was “unreasonable” in all the circumstances of the case (see Leichhardt Municipal Council at [19]; Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26] per Giles, Ipp and Tobias JJA).
[28] Whether rejection of a Calderbank offer (or other offer of settlement) was unreasonable is an evaluative judgment to be made by reference to the terms of the offer and all the relevant surrounding circumstances (King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204 at [11] per Young JA with whom Campbell and Hodgson JJA agreed). It has been said that a finding of unreasonableness should not be made other than on clear grounds (Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [113] per Basten JA with whom Giles JA and Young CJ in Eq agreed).
[29] The factors to be taken into regard when considering whether the rejection or non-acceptance of the offer was unreasonable (summarised in Favotto at [20]-[30]) include: the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree’s prospects of success assessed as at the date of the offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it (see Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 at [25] per Warren CJ, Maxwell P and Harper AJA; Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398 at [8] per Buchanan and Tate JJA and Sifris AJA; Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [12] per Basten JA with whom McColl and Campbell JJA agreed).
[30] Factors that have been found to be relevant in determining whether the rejection of a Calderbank offer was not unreasonable, and tending against such finding, have included: all relevant evidence not having been served at the time of the offer (Vale v Eggins (No 2) [2007] NSWCA 12 at [22] per Beazley JA); the full parameters of the dispute remaining uncertain at the time of the offer (Precision Products (NSW) Pty Ltd v Hawkesbury City Council (2008) 74 NSWLR 102; [2008] NSWCA 278 at [192] per Allsop P with whom Beazley and McColl JJA agreed); the offeror’s case changing after the making of the offer (South Eastern Sydney Area Health Service at [85] per Hunt AJA); the inclusion of conditions in the offer (Magenta Nominees Pty Ltd v Richard Ellis (WA) Pty Ltd (unreported, FCAFC, Spender, French and Lee JJ, 29 August 1995); and the issues in dispute in the proceedings being complex (MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236 at 242D per Lindgren J). …
5 Blackman contends that the cash component of each of the 25 February 2025 Offer ($50,000) and the 23 March 2026 Offer ($80,000) exceeded Mr Su’s entitlement at the time. In making this submission, 5 Blackman reasons that at the time of the 20 February 2025 Offer Mr Su was entitled to only $41,569.94 (as that was the interest that had accumulated as at that date based on the sum awarded in the Principal Judgment) and at the time of the 23 March 2026 Offer Mr Su was entitled to $53,775.15 (as that was the interest that had accumulated as at that date based on the sum awarded in the Principal Judgment). Consequently, on this reasoning, 5 Blackman submits that neither offer had been “bettered” by the sum awarded in the Principal Judgment.
5 Blackman submits that Mr Su’s rejection of each offer was unreasonable and an award of indemnity costs to 5 Blackman should follow for the periods after each offer, failing which 5 Blackman should be awarded its costs on the ordinary basis.
Mr Su submits that neither the 25 February 2025 Offer or the 23 March 2026 Offer assists 5 Blackman.
In respect of the 20 February 2025 Offer, Mr Su says that the judgment betters that figure because the offer was for $50,000 (before costs are considered).
In respect of the 23 March 2026 Offer, Mr Su submits that while the sum awarded in the Principal Judgment is less than the $80,000 offered, it was offered on terms that Mr Su abandon his claim, bear his own costs and release “all claims whatsoever”. Accordingly, Mr Su says that it would only be more favourable to Mr Su if the court denies Mr Su his enforcement costs of these proceedings.
In any event, Mr Su contends that his refusal of the 20 February 2025 Offer and the 23 March 2026 Offer was not “unreasonable” because neither offer provided for the payment of any of the plaintiff’s costs and the second offer expired on the morning of the first day of the trial.
The 20 February 2025 Offer was for:
5 Blackman to pay $50,000 to Mr Su from the $480,000 held by the ACT Supreme Court pursuant to the Trust Order made in the ACT Proceedings on 21 November 2021;
the balance of that amount to be paid to 5 Blackman;
Mr Su to be released from liability to pay the costs of 5 Blackman in the ACT Proceedings and the ACT Appeal Proceedings;
these proceedings to be dismissed with no order as to costs; and
a deed of release to be entered into with mutual releases of all claims.
The $50,000 cash component of the 20 February 2025 Offer was not better for Mr Su than the outcome of $53,775.15 under the Principal Judgment. But the real problem is that, on the evidence before me, I am unable to assess whether Mr Su is worse off by the outcome in the Principal Judgment than he would have been had he accepted the 20 February 2025 Offer. This is because I have no evidence of the amount of the costs of 5 Blackman in the ACT Proceedings and the ACT Appeal Proceedings (beyond the assertion in the 20 February 2025 Offer that they were about $150,000) and I have no evidence of the amount of Mr Su’s costs in these proceedings at the time the 20 February 2025 Offer was made. Without knowing those matters, it is not possible to determine the worth of the 20 February 2025 Offer compared to the outcome under the Principal Judgment because the 20 February 2025 Offer was both releasing Mr Su from having to pay 5 Blackman’s costs in the ACT Proceedings and the ACT Appeal Proceedings and preventing him from recovering any of the costs he had incurred in these proceedings.
The same position applies in respect of the 23 March 2026 Offer as the same two integers are also contained within it and once again there is only an assertion of approximately $150,000 as the amount of the 5 Blackman’s costs in the ACT Proceedings and the ACT Appeal Proceedings.
In those circumstances, I cannot conclude that it was unreasonable for Mr Su not to accept each of the 20 February 2025 Offer and the 23 March 2026 Offer. As a result, neither the 20 February 2025 Offer nor the 23 March 2026 Offer can be relied upon to ground an indemnity costs order in 5 Blackman’s favour from the date of each offer respectively.
For completeness, in my view the seven days as the time provided under the 23 March 2026 Offer for Mr Su to accept it does not support a finding that it was reasonable for Mr Su to reject it. I consider that seven days immediately before the trial was to commence was a reasonable period for Mr Su to consider whether to accept the 23 March 2026 Offer in circumstances where all the evidence and submissions were on and the effect of the acceptance of the offer would be to avoid the costs of the trial. There would have been no point for the offer to remain open past the commencement of the trial, as the purpose of the 23 March 2026 Offer had necessarily failed by that time.
5 Blackman claims that the whole of Mr Su’s conduct in the proceedings was unreasonable, unnecessary and improper because:
at the time $100,000 was paid by Mr Kamal to Mr Su on 27 November 2020, Mr Su was only then entitled to $16,389.71 but he maintained that he was owed $103,000, which was about $87,000 more than he was truly entitled; and
at the time Mr Su commenced proceedings in the District Court on 17 November 2022, he was only entitled to around $24,354.25, which was about $80,000 more than he was claiming.
5 Blackman submits that based on this characterisation of Mr Su’s conduct, Mr Su should pay the costs of 5 Blackman or at the very least be disentitled to costs between 17 November 2022 to 20 February 2025.
I reject this argument. In the Principal Judgment I found that Mr Su was entitled to $53,775.15 as at 9 March 2026 under the Deed of Loan and in this judgment I have found that Mr Su is to be paid 50% of his costs of these proceedings. At all times, 5 Blackman resisted Mr Su’s claims in their entirety and was ultimately not successful in doing so. I have denied Mr Su the recovery of 50% of his costs of the proceedings in respect of the issues on which he was unsuccessful and which I regard as being unnecessarily incurred. No further reduction of his costs is justified.
As there has been no submission to the contrary, I will order that 5 Blackman pay Mr Kamal’s costs of the Cross-Claim, although I note that Mr Kamal was self-represented at the trial. I note that 5 Blackman agrees to the making of such an order.
As the only surviving allegations made against Mr Kamal under the Cross-Claim were determined to have failed in the Principal Judgment, I will making an order which dismisses the Cross-Claim against Mr Kamal. I note that 5 Blackman agrees to the making of such an order.
The Cross-Claim against Mr Su should also be dismissed.
Mr Su seeks a declaration from this court that the proceeds of sale held by the ACT Supreme Court pursuant to the Trust Order made on 22 November 2021 are charged in favour of Mr Su as security in favour of the judgment sum to be ordered pursuant to the Principal Judgment and the unassessed costs orders to be made pursuant to this judgment. 5 Blackman seeks an order from this court as to the manner in which those proceeds of sale are to be paid out by the ACT Supreme Court. I consider the manner in which those proceeds are dealt with is entirely a matter for the ACT Supreme Court and I have no intention of interfering with the jurisdiction and powers of the ACT Supreme Court with respect to them. I will direct that a copy of this judgment and the orders made pursuant to it be provided to the Chief Justice of the ACT Supreme Court.
5 Blackman also seeks various orders concerning the discharge of restraining orders made by the District Court on 17 and 22 November 2022 and the enforcement of an undertaking as to damages given by Mr Su to the District Court on each of those occasions. Neither of those matters were the subject of the Principal Judgment and if 5 Blackman wishes to pursue them, it will need to make the appropriate application with supporting evidence.
I make the following orders:
Judgment for the plaintiff against the defendant in the sum of $60,559.56.
Order the defendant to pay 50% of the plaintiff’s costs of the proceedings on the ordinary basis.
The cross-claim is dismissed as against the first cross-defendant and the third cross-defendant.
Order the cross-claimant to pay the first cross-defendant’s costs of the cross-claim.
Order the cross-claimant to pay the third cross-defendant’s costs of the cross-claim.
Direct that copies of the reasons in the judgment delivered on 23 July 2026, these reasons and the final orders be provided to Chief Justice McCallum of the Supreme Court of the Australian Capital Territory.
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Haiyong Su
5 Blackman Cres Macquarie Pty Ltd (No 2)
[2015] HCA 54
[1998] HCA 11
[2026] NSWSC 875
[2011] VSCA 398
(1975) 13 SASR 4
(2005) 13 VR 435
(2019) 265 CLR 164
(1998) 193 CLR 72
(1995) 36 NSWLR 77
(2013) 84 NSWLR 311
(2008) 74 NSWLR 102
(1996) 70 FCR 236