Mersal v Georges River Council [2021] NSWDC 480 | Case summary

District Court of NSW|2021-09-10

irst Cross‑Defendant) Mr D Talintyre (Second Defendant / Cross‑Claimant) Mr R Perla (Second Cross‑Defendant)

Solicitors: Parramatta City Legal (Plaintiff) Mills Oakley Lawyers (First Defendant / First Cross‑Defendant) Lander & Rogers (Second Defendant / Cross‑Claimant) McCabe Curwood Lawyers (Second Cross‑Defendant) File Number(s): 2019/00326976 Publication restriction: N/A

BACKGROUND

On 13 August 2021, I entered a verdict and judgment on the Statement of Claim in favour of the first defendant ("the Council") and second defendant (MLC). The Amended Cross‑Claim brought by MLC against the Council as first cross‑defendant and the second cross‑defendant ("AHIGS") was dismissed.
I made directions for the service of submissions with respect to the costs of the proceedings. I have now received written submissions from each of the parties. The question of costs was to be decided on the papers unless any party requested an oral hearing. No party made such a request.
The parties have differing positions with respect to what they submit are appropriate costs orders having regard to various Offers of Compromise/Calderbank offers that were made to the plaintiff at various times. There was also an Offer of Compromise/Calderbank offer and an offer of contribution made by AHIGS on the cross‑claim.
Ultimately, the respective positions of the parties are (in summary): 1. The first defendant/first cross‑defendant (the Council): 1. The Council seeks an order that the plaintiff pay its costs on the ordinary basis up to and including 23 July 2020 (or alternatively up to 9, 16 or 21 July 2021), and on an indemnity basis from 24 July 2020 (or alternatively from 10, 17 or 22 July 2021); 2. The Council seeks an order that MLC pay its costs of the cross‑claim on the ordinary basis up to and including 27 August 2020, and then on an indemnity basis from 28 August 2020. 1. The second defendant/cross‑claimant (MLC): 1. MLC seeks an order that the plaintiff pay its costs on the ordinary basis up to and including 9 July 2021 (or alternatively 16 or 21 July 2021), and then on an indemnity basis from 10 July 2021 (or alternatively 17 or 22 July 2021); and 2. MLC seeks an order that the plaintiff pay the costs of the cross‑claim. 1. The second cross‑defendant (AHIGS): 1. AHIGS seeks an order that MLC pay its costs of the cross‑claim on the ordinary basis up to 28 November 2020 (or alternatively 1 July 2021) and on an indemnity basis from 29 November 2020 (or alternatively 2 July 2021); 2. AHIGS resists an order that the plaintiff pay any costs of the cross‑claim. 1. The plaintiff: 1. The plaintiff accepts that she must pay the costs of the proceedings on the ordinary basis. She resists any order with respect to indemnity costs. 2. The plaintiff resists an order that she pay any costs of the cross‑claim.
I propose to set out some relevant principles with respect to costs, including with respect to Offers of Compromise, Calderbank letters and costs of third parties (for example, cross‑defendants who are not a party to the proceedings). I will then set out some relevant chronological matters. I will then deal with the respective positions of the parties, making a determination as to what are the appropriate costs orders.
I will not repeat any of my factual findings unless relevant to the determination of any costs question. Those findings are contained in the principal judgment: Mersal v Georges River Council [2021] NSWDC 395.
The Court received an affidavit of Mr Amrit Joseph, sworn on 18 August 2021. That affidavit was served by MLC but is also, in part, relied upon by the Council as set out below. That affidavit attaches the Calderbank offer made to the plaintiff on behalf of MLC and the Council (not AHIGS) dated 9 July 2021 and the offers made on behalf of the defendants and AHIGS of 16 July 2021 and 21 July 2021.
The Court also received an affidavit of Ms Jessica Guindi, sworn on 20 August 2021 and served by AHIGS. That affidavit attaches an Offer of Compromise made by AHIGS to MLC on 27 November 2020, an offer to contribute sent to MLC on 30 June 2021 and the Calderbank offers made to the plaintiff on 16 and 21 July 2021.

RELEVANT PRINCIPLES

As is well established, the "usual rule" is that costs should follow the event (r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) ('UCPR')); Latoudis v Casey (1990) 170 CLR 534 at 566-7. Ordinarily, it is for the unsuccessful party to establish a basis for any departure from the general rule: Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 at [10].
In addition, UCPR 42.20(1) provides that if the Court makes an order for the dismissal of proceedings, the plaintiff must pay the defendant's costs of the proceedings to the extent that they have been dismissed, unless the Court orders otherwise.
Those rules equally apply to cross‑claims: UCPR 9.1. Notwithstanding those rules, the Court ultimately retains discretion to make any costs order which should be made: s 98(1) of the Civil Procedure Act 2005 (NSW).
It is open to the Court to order that an unsuccessful plaintiff pay not only the costs of a defendant/cross‑claimant, but also the costs of any cross‑defendants not directly pursued by the plaintiff, particularly in circumstances where a cross‑claim has failed purely due to the failure of the plaintiff's substantive case: Furber v Stacey [2005] NSWCA 242; Corbett v Nguyen (No 2) [2012] NSWSC 673. The principles relevant to such situations are outlined in Furber v Stacey [2005] NSWCA 242 at [30]‑[34] per Hodgson JA and [108]‑[11] per Einsetin J, which were recently confirmed by Gleeson JA (MacFarlan & Meagher JJA agreeing) in Drive My Car Rentals Pty Ltd v Gabriel [2021] NSWCA 73 at [94].

Offers of Compromise

Where an Offer of Compromise has been made by a defendant in compliance with the UCPR and that offer has been rejected, and the defendant later obtains a judgment no less favourable to that which was offered, the defendant is prima facie entitled to have the plaintiff pay its costs on an indemnity basis from the day after the date that the offer was made, unless the Court orders otherwise: UCPR 42.15A. That rule also equally applies to cross‑claims: UCPR 9.1.
In short, a prima facie entitlement to indemnity costs arises from the relevant date: Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [40] per McColl JA (with whom Gleeson JA and Sackville AJA agreed). For those principles to apply, any such offer must be made in accordance with the UCPR and constitute a "genuine" Offer of Compromise based on an objective assessment of "…the circumstances of the particular case at the time the offer was made rather than with the benefit of hindsight": Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [42]; Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NWSCA 368 at [33]. An offer which is made purely to trigger potential costs sanctions does not necessarily constitute a genuine Offer of Compromise.
Where such a prima facie entitlement arises, the onus is on the plaintiff to demonstrate why the Court should exercise its discretion to depart from that position: Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [29] and [45].
It should also be observed that, in some cases, a "walk away" offer of judgment for the defendant may constitute a valid compromise and therefore a "genuine" offer: Vagg v McPhee (No 2) [2012] NSWSC 187 at [30].

Calderbank Offers

In comparison, where an offer is made in accordance with the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333 and later rejected, and the offering party later obtains a judgment no less favourable than the offer, it does not automatically follow that the offering party is entitled to indemnity costs. In that situation, the onus is on the offering party to demonstrate that the rejection of the offer was unreasonable in all of the circumstances of the case and the Court retains a discretion in respect of which costs order is appropriate: Leichardt Municipal Council v Green [2004] NSWCA 341 at [19]; Jones v Bradley (No 2) [2003] NSWCA 258 at [12]; Russell v Edwards (No 2) [2006] NSWCA 52 at [8]; Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 at [7].
The principles applicable to whether or not the Court should exercise its discretion to award indemnity costs on the basis of the rejection or non‑acceptance of a Calderbank offer were recently summarised by Ward CJ in Eq in Jainti Pty Ltd v Fraser Panorama Pty Ltd (2) [2021] NSWSC 965 at [62]‑[64], where her Honour said: As to the consideration of Calderbank offers, the factors relevant to take into consideration are again well-known (and were summarised in Favotto Family Restaurants Pty Ltd v Chief Commissioner of State Revenue (No 2) [2020] NSWSC 519 at [20]-[30]). Relevantly, while the rejection of a Calderbank offer, in circumstances where it transpires that the final result in the proceeding is less favourable to the offeree, enlivens the discretion to award indemnity costs, it does not create a prima facie right to such an order (see Chief Commissioner of State Revenue v Platinum Investments Management Ltd (No 2) [2011] NSWCA 197 at [9]). In summary, the factors to which regard will be taken when considering whether the rejection or non-acceptance of the offer was unreasonable 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 Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398 at [8]; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 (Hazeldene's Chicken Farm) at [25]; Miwa at [12]).

RELEVANT CHRONOLOGICAL MATTERS

On 29 October 2016, the plaintiff played touch football for MLC at Peakhurst Park, a ground operated by the Council. The game was in a competition organised by AHIGS. The plaintiff was injured.
On 18 October 2019, the plaintiff commenced these proceedings. She sued the Council and MLC.
On 13 February 2020, the Council filed its Defence.
On 7 May 2020, MLC caused a subpoena for production to be issued to AHIGS. A copy of the subpoena was sent to the solicitors for the plaintiff and the Council.
On 19 May 2020, AHIGS produced documents which confirmed that it was responsible for the organisation of the interschool touch football competition in which the plaintiff was playing when she was injured. Those documents also confirmed that AHIGS had appointed a venue convenor on the day of the incident. Part of the duties of the venue convenor was to conduct a safety audit of the field prior to the games commencing. The venue convenor was required to, and did, complete a Venue Convenor's Declaration confirming that a pre‑match safety audit had been carried out prior to any matches being played on the day that the plaintiff was injured.
On 21 July 2020, MLC filed its Defence.
On 23 July 2020, the Council sent a letter to the solicitors for the plaintiff in the following terms: We refer to the report of Ian Burn dated 5 May 2020, served on behalf of your client. Your Mr Burn concluded in his report that the breach causative of your client's accident was the failure to inspect the field conditions at Peakhurst Park prior to your client's alleged accident. Such failure is said by Mr Burn to arise from our client's "inconsistent" conditions for use of the playing fields for both Sporting Associations and Schools, which did not require the Second Defendant School to inspect the field prior to your client's touch football match on 29 October 2016. We refer you to the Venue Convener's Declaration dated 29 October 2016 served in our earlier letter of even date which confirms an inspection and pre-match safety audit of Peakhurst Park and the playing conditions was carried out by the touch football convener and referees of AHIGS on the day of your client's alleged accident, independent of our client's direction. Having regard to the above, our client denies any liability to compensate your client for her claim. In an attempt to avoid any further expense, our client is willing to provide your client the opportunity to dispense with her claim as against our client. We enclose, by way of service, Offer of Compromise dated 23 July 2020. The enclosed offer is made pursuant to r 20.26 of the Uniform Civil Procedure Rules 2005 and is open for acceptance until 5pm on Thursday, 20 August 2020 after which time it will lapse. In the alternative, our client relies upon the offer in accordance with the principles of Calderbank v Calderbank [1975] 3 All ER 333. In the event your client either rejects or fails to respond to the offer, and our client is ultimately successful in its defence of the proceedings, our client reserves its right to rely on this letter in an application for indemnity costs against your client.
The terms of the Offer of Compromise were: 1. Judgment for the First Defendant against the Plaintiff. 2. No order as to costs.
On 29 July 2020, MLC filed its Statement of Cross‑Claim against the Council and AHIGS.
On 5 August 2020, the solicitors for the plaintiff wrote to the solicitors for the Council in the following terms in relation to the Council's Offer of Compromise/Calderbank offer: We refer to the above matter and previous correspondence, in particular, your letter of 23 July 2020 enclosing an offer of compromise in this matter. The offer advanced by the first defendant does not represent a genuine offer. It simply calls for a total capitulation of the of the plaintiff's claim against it. Furthermore, we put you on notice pursuant to r 20.26(4) of the Uniform Civil Procedure Riles 2005 that our client is unbale (sic) to assess the reasonableness of the offer because of a lack of particulars and documents. At the time of preparing his report, Mr Burn did not have the benefit of the Venue Convenor's Declaration dated 29 October 2016. That document was only brought to light on the production of documents under subpoena by AHIGS. The parties will now need to consider fresh expert liability evidence based on the documents produced by the Association. We were only made aware of the involvement of AHIGS in this matter recently. Until such time as AHIGS are joined to the proceedings and the issues surrounding their coordination of the event are properly ventilated, we will not be in a position to formally respond to your assertion that your client bore no responsibility for the state of the playing field. Accordingly, we consider your client's offer of 23 July 2020 to be defective. We will object to your client's reliance on the offer in any application for costs against our client.
On 21 August 2020, MLC filed an Amended Statement of Cross‑Claim.
On 27 August 2020, the solicitors for the Council wrote to the solicitors for MLC enclosing an Offer of Compromise dated 27 August 2020 in response to the service on the Council of the Amended Statement of Cross‑Claim by MLC. The terms of the Offer of Compromise were: 1. Judgment for the First Cross-Defendant against the First Cross-Claimant. 2. No order as to costs.
The letter stated: In making this offer, our client says that it is not liable to the Plaintiff in respect of her claim, and to your client in respect of the Cross-Claim, in circumstances where an inspection and pre-match safety audit of Peakhurst Park and the playing conditions was carried out by the touch football convener and referees of AHIGS on the day of the Plaintiff's alleged accident (as per the Venue Convener's Declaration dated 29 October 2016), independent of our client's direction. The enclosed offer is made pursuant to r 20.26 of the Uniform Civil Procedure Rules 2005 and is open for acceptance until 5pm on Thursday, 24 September 2020 after which time it will lapse. In the alternative, our client relies upon the offer in accordance with the principles of Calderbank v Calderbank [1975] 3 All ER 333. In the event your client either rejects or fails to respond to the offer and obtains an outcome at trial no more favourable than the terms of the offer, our client will produce the offer to the Court on the question of costs. Our client will seek that your client pays the costs of the proceedings on an indemnity basis from the date of the offer.
On 27 November 2020, AHIGS filed its Defence to the Amended Cross‑Claim. Also on that day, AHIGS sent a letter to MLC offering to resolve the Amended Cross‑Claim by way of judgment for AHIGS with no order as to costs. The offer was in the following terms: If the Plaintiff establishes an entitlement to damages, we do not consider her injuries arose out of any negligence on the part of the Second Cross-Defendant. We consider the Cross-Claimant will be unable to establish liability on the part of the Second Cross-Defendant based on the following: 1. Our client exercised no control over any alleged structural issues with the field. The First Cross-Defendant ought to have inspected the field to determine if upkeep or maintenance was required. 2. A proper inspection was conducted as to the adequacy of the field for touch football prior to play commencing. 3. The field was adequate for the purposes of school touch football. There are no other instances of falling into a depression on the alleged field by other children playing on the field. 4. Further, falling and injuring oneself playing sport ought to have been obvious to the Plaintiff. 5. In addition, our client supplied and displayed an appropriate risk warning to the participants in the touch football competition. 6. The Second Cross-Defendant denies the nature and scope of the duty which it is alleged it owed the Plaintiff. 7. Alternatively, any breach of duty of care was not causative of the Plaintiff's injuries. In an effort to avoid any further unnecessary costs, we are instructed the Second Cross‑Defendant will offer to settle the matter on the following terms: 1. Judgment in favour of the Second Cross-Defendant; 2. No order as to costs. We attach, by way of service, an Offer of Compromise dated 25 November 2020. This offer is conveyed in accordance with the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333 and s 131(2)(h) of the Evidence Act 1995 (NSW). In the event that this offer is not accepted and the Cross-Claimant fails to obtain a judgment against our client, we put the Cross-Claimant on notice that the Second Cross-Defendant intends to produce a copy of this letter to the Court in relation to the question of costs. Specifically, our client will seek that your client pays the costs of the proceedings on an indemnity basis from the date of this letter. The offer is open for acceptance for 28 days from the date of this letter.
An Offer of Compromise was enclosed with that letter, offering judgment in favour of AHIGS with no order as to costs.
On 22 June 2021, the Council filed its Defence to the Amended Cross‑Claim.
On 30 June 2021, AHIGS served and offer to contribute to MLC for judgment for MLC against AHIGS for the sum of $20,000 and AHIGS to pay MLC's costs of the cross‑claim as agreed or assessed. That offer was made in accordance with UCPR 20.32.
On 9 July 2021, the solicitors for MLC, on behalf of MLC and the Council (but not AHIGS) sent a letter to the plaintiff's solicitors offering to resolve the matter on the basis of payment to the plaintiff of $65,000 all inclusive. The offer was said to be "[i]n the spirit of compromise and an attempt to avoid the extensive costs of preparing the matter for the pending motion and hearing". It was contingent on the parties entering consent orders which dismiss the proceedings and the cross‑claim and finalise the settlement by way of deed. It said the offer was: "…made in accordance with the principles set out in Calderbank v Calderbank [1975] 3 All ER 333. As such, we reserve the right to bring this letter to the notice of the Court at a later date on the issue of costs if it is not accepted and the plaintiff does not achieve a more favourable outcome of its claim by way of a judgment."
The offer was open for acceptance until 4pm that day.
On 12 July 2021, the plaintiff filed an Amended Statement of Particulars.
On 13 July 2021, the Council, with leave of the Court, filed an Amended Defence.
On 16 July 2021, the legal representatives for MLC sent a letter to the plaintiff's solicitors on behalf of MLC, the Council and AHIGS, offering to resolve the matter on the basis of payment to the plaintiff of $70,000 all‑inclusive. The offer was contingent upon the parties entering into consent orders which dismissed the proceedings and the cross‑claim and upon the parties finalising the settlement by way of deed. Once again, the offer was said to have been made in accordance with the principles in Calderbank v Calderbank in the same terms as the letter of 9 July 2021. The offer was open until 2pm that day. The letter also said: In light of the liability hurdles the plaintiff faces, this offer is generous and should be considered. The plaintiff should not expect there will be any further offers conveyed.
On 19 July 2021, the hearing commenced. Also on this day, MLC, with leave, filed an Amended Defence.
On 21 July 2021, being day three of the hearing, the solicitors for MLC sent a letter to the solicitors for the plaintiff on behalf of MLC, the Council and AHIGS. That letter contained an offer to resolve the proceedings on the basis that there was judgment for the defendants against the plaintiff, each party was to bear their own costs with the cross‑claim to be dismissed and each party to bear its own costs. The offer was open until 2pm that day. The offer was said to be made in accordance with the principles of Calderbank v Calderbank.

THE PLAINTIFF & THE COUNCIL

The Council seeks the following orders: 1. That the plaintiff pay the costs of the Council as agreed or assessed on a party/party basis up to and including 23 July 2020 (or in the alternative, from 9, 16 or 21 July 2021). 2. That the plaintiff pay the costs of the Council as agreed or assessed on an indemnity basis from 24 July 2020 (or in the alternative, from 10, 17 or 22 July 2021). 3. That MLC pay the Council's costs of the cross‑claim as agreed or assessed on a party/party basis up to and including 27 August 2020. 4. That MLC pay the Council's costs of the cross‑claim as agreed or assessed on an indemnity basis from 28 August 2020.
I agree with the Council's submissions that an order that the plaintiff pay its costs of the proceedings is unexceptional. That is because costs should follow the event: see UCPR 42.1; Latoudis v Casey (1990) 170 CLR 534. Indeed, the plaintiff does not have anything to say against such an order: see [2] of the Plaintiff's Submissions on Costs. The question therefore is whether there should be any other type of order as sought by the Council.

The Council's Submissions

The basis of the submission that the plaintiff should pay the Council's costs on an indemnity basis from 24 July 2020 is the Offer of Compromise made by the Council to the plaintiff pursuant to UCPR 20.26 on 23 July 2020. In the Offer of Compromise, the Council offered to compromise the action against the plaintiff on the basis that there was judgment for the Council with no order as to costs. In the alternative, the Council relies on that offer in accordance with the principles of Calderbank v Calderbank. The terms of the letter enclosing the offer are set out at [25] above.
The Council submits that, as the offer was made in accordance with UCPR 20.26, there are no reasons why the entitlement to indemnity costs pursuant to UCPR 42.15A should not apply. It submits that the offer was made a year before the trial and in circumstances where the plaintiff was not locked into a trial having incurred significant costs. As such, it submits the offer was a genuine compromise for the plaintiff before she incurred significant costs.
Alternatively, the Council submits that the plaintiff should pay its costs on the indemnity basis from the date of either that offer taken as a Calderbank offer, or alternatively the Calderbank offers made on behalf of both defendants on 9, 16 and 21 July 2021 respectively. The terms of those offers are set out above.
The Council said the following at [6]‑[7] of its written submissions: [6] A statement of relevant principles in respect of both Offers of Compromise satisfying R 20.26 and alternatively expressed as "Calderbank offers" is stated in Leichhardt Municipal Council v Green [2004] NSWCA 341: 18. The New South Wales Court of Appeal appears to have accepted that a Calderbank offer is a legitimate alternative to an Offer of Compromise under the statutory rules. That conclusion is implicit in the reasoning of the Court in Jones v Bradley (No 2) [2003] NSWCA 258 at [5]. Thus a party may elect between the two procedures in making an Offer of Compromise. 19. There are some distinctions between the two procedures in their attendant costs consequences. A key difference is that where an Offer of Compromise has been made under the Rules, a prima facie entitlement arises in the relevant party to have costs awarded in accordance with the appropriate Rule. This entitlement, though subject to the Court's discretion to prevent substantial injustice in exceptional cases, will rarely be interfered with: District Court - Practice Note 42; Supreme Court - Hillier v Sheather (1995) 36 NSWLR 414 and Morgan v Johnson (1998) 44 NSWLR 578. By contrast, the costs consequences attendant under general law upon an Offer of Compromise made in a Calderbank letter lie within the discretion of the Court, to be exercised having regard to all the relevant circumstances of the case: SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37] per Giles JA; affirmed in Jones v Bradley (No 2) (supra) at [9] per curiam. It is not the case that unaccepted offers of compromise by Calderbank letter should give rise to a prima facie presumption of indemnity costs if the offer is not bettered. [30] An offer of judgment for the defendant on the basis that costs are not awarded is a valid compromise (Vagg v McPhee (No 2) [2012] NSWSC 187 at [30]"It is evident that the plaintiffs' claim always contained speculative elements and that in the circumstances, the walk-away Offer of Compromise made in October reflected a genuine compromise. Its rejection triggered the operation of the Rule. The plaintiffs have not established exceptional circumstances permitting the Court's discretion to be exercised in their favour. It follows that the orders which the defendants sought must be made"). [7] In Vagg, Schmidt J held that a "walk away" offer could be a valid compromise for both Calderbank offers and Offers of Compromise under R 20.16. Schmidt J stated of Leichhardt v Green: [18] That was a case concerned with a Calderbank offer, as was Miwa Pty Ltd v Siantam Properties Pty Ltd (No 2), on which reliance was also placed. The Rules in relation to offers of compromise operate differently to the principles which apply to Calderbank offers. In the case of a Calderbank offer an onus falls on the offeror to convince the Court that it should exercise its discretion in the offeror's favour, the offeree having acted unreasonably in rejecting the offer (see Jones v Bradley (No 2) [2003] NSWCA 258; Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 per Giles, Ipp and Tobias JJA at [26]. ) The offeror must also show that the offer was a genuine compromise (see Leichhardt Municipal Council v Green , at [21] - [24], [36] per Santow JA (Stein JA agreeing) and Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [4] - [5] per Handley, Beazley and Basten JJA). In considering a Calderbank offer, the Court strives to achieve fairness in the result (see the discussion in Commonwealth v Gretton [2000] NSWCA 118). [19] The provisions of Rule 42.15A operate quite differently, even though it should be noted, that even in the case of a Calderbank offer a "walk-away" offer can be a "genuine Offer of Compromise" (see Leichhardt Municipal Council v Green [2004] NSWCA 341 at [36]; and GIO General Ltd v ABB Installation and Service Pty Ltd [2000] NSWCA 118 at [36];)
The Council submits that, in the circumstances, the offer that costs are not awarded constituted a valuable compromise to the plaintiff's claim. The Council submits that the plaintiff's reasons for not accepting the offer in the letter of 5 August 2020, insofar as they concern issues involving MLC and AHIGS and the availability of expert evidence, is irrelevant.

The Plaintiff's Submissions

The plaintiff submits that there are two bases for the Court refusing to order indemnity costs in respect to these offers. It says these apply whether the offers are considered as offers of compromise or Calderbank offers. The first basis is because the offers did not represent a genuine compromise. Second, the plaintiff refers to UCPR 20.26(4) and her letter of 5 August 2020 to the Council stating why she was unable to assess the reasonableness of that offer.
The plaintiff referred to Dr Leo Shanahan v Jatese Pty Ltd [No 2] [2018] NSWSC 1306, where Hammerschlag J said at [19]: "As to the offers of compromise, in my view, this is a case where the Court should not order indemnity costs because they did not involve genuine offers of compromise, but called for capitulation. The offers called for a verdict for the majority and no order as to costs at an early stage of the proceedings before defences were on and at a time at which one would not expect any significant expenditure on costs legitimately or reasonably to have been incurred…"
The plaintiff accepted in the present case that the first defendant had, at the time of the service of the Offer of Compromise, filed a Defence but, she says, not much more had happened. No medical or liability evidence had been served by the first defendant. The plaintiff submits the offer was made at the time at which one would not expect any significant expenditure on costs to have been made.
The plaintiff accepts that, in some circumstances, "walk away" offers can constitute genuine offers to compromise but refers to the decision of the Court of Appeal in Fabre v Lui [2015] NSWCA 312, where the Court stated at [7]: "While the respondents' offer to bear their own costs could constitute a compromise, that will not be so when no significant costs have been incurred…"
Secondly, the plaintiff refers to her solicitors' letter of 5 August 2020 challenging the validity of the offer. The solicitors referred to the report of Mr Burn, a liability expert which had then been served by the plaintiff, noting that he did not have the benefit of the Venue Convener's Declaration. That document was only provided on production of documents pursuant to a subpoena by AHIGS on 19 May 2020. The plaintiff's solicitors suggested that, in those circumstances, fresh liability evidence would need to be prepared. The plaintiff submits that the question of apportionment of liability between the first and second defendant and the possible joinder of AHIGS was a relevant factor in the plaintiff considering the reasonableness of the walkaway offer in the Offer of Compromise. She submits that the Offer of Compromise was therefore not effective.
Insofar as that offer purports to also take effect as a Calderbank offer, the plaintiff refers to the long line of authorities that a party seeking to rely upon a Calderbank offer bears the onus to satisfy the Court that it should exercise its discretion to award costs on the indemnity basis. Calderbank offers will only justify such an order if they constitute a genuine offer which was unreasonable to not accept. Here, for the reasons set out above with respect to the Offer of Compromise, the plaintiff submits that the offer was not an offer of genuine compromise but sought capitulation by the plaintiff.
Additionally, the plaintiff refers to the authorities that indicate that an offeree must be provided with an appropriate opportunity to consider and deal with the offer. She submits that, in this case, the offer was not open for a reasonable time.
In relation to the Calderbank offers of 9, 16 and 21 July 2021, the plaintiff submits that she did not have a reasonable period to consider and deal with those offers. She says that the offers were made and left open as follows: 1. 9 July 2021 - offer emailed at 12:31pm and expired at 4:30pm on the same day; 2. 16 July 2021 - offer emailed at 11:08am and expired at 2pm the same day; and 3. 21 July 2021 - Offer emailed at 1:10pm and expired at 2pm the same day.
Further, the plaintiff submits that those offers did not meet the general requirements of Calderbank offers and the defendants have not demonstrated that it was unreasonable for the plaintiff not to have accepted them.

Consideration

In my opinion, the submissions of the plaintiff should be accepted up to the Calderbank offer of 21 July 2021. From that time, in my opinion, the plaintiff acted unreasonably in rejecting the offer in that letter.
In respect to the Offer of Compromise, I accept the plaintiff's submissions that at the time of the offer on 23 July 2020, there had most likely not been significant costs incurred in respect to the proceedings. Additionally, that offer did seek total capitulation by the plaintiff at that time. I infer it was made to trigger costs consequences. I accept that the issue of the Venue Convenor's Declaration impacted upon the ability of the plaintiff to accept or properly consider the offer. I therefore do not accept that UCPR 42.15A should operate so that the Council should have its costs on an indemnity basis from the day following that offer.
Additionally, insofar as that offer constituted a Calderbank offer, I agree for the same reasons that the Council has not demonstrated why it would have been unreasonable for the plaintiff to refuse the offer at that time. Whilst the letter is in a form which attempts to explain why the Council considered the plaintiff's case to be weak, it did seek total capitulation at a time when it cannot be said significant costs had been incurred or the positon of all relevant parties to the proceedings was clear.
The Calderbank letter of 9 July 2021 (see [36] above) refers to a telephone discussion of that day between the solicitors for MLC and the solicitors for the plaintiff. It also refers to an informal settlement conference which the parties attended on 18 June 2021. No details of the issues discussed at that settlement conference were included in the letter, including any reasons why the defendants say the plaintiff should resolve the matter. No other evidence was put before me as to any of those matters.
The letter merely says: In the spirit of compromise and an attempt to avoid incurring the extensive costs of preparing the matter for the pending motion and hearing, the defendants offer to resolve the plaintiff's claim for $65,000.00 all inclusive.
I consider that the offer was not made with sufficient clarity setting out why the plaintiff ought reasonably accept it. All that was said was that an acceptance of the offer would avoid incurring additional costs. So much is obvious, however, in my opinion that is not enough in the circumstances to discharge the onus to prove that the plaintiff acted unreasonably in rejecting that offer.
Further, the offer was made available for acceptance only up until 4:30pm that day. It was only open for acceptance for 4 hours. In my opinion, insufficient time was allowed for the plaintiff to consider and accept or reject that offer.
The Calderbank offer of 16 July 2021 made on behalf of both the defendants and AHIGS (see [40] above) is in very similar terms to the 9 July 2021 offer. The offer was increased to $70,000 all‑inclusive and open until 2pm the day the offer was made. At this time, all of the evidence had been completed and the trial was scheduled to commence on 19 July 2021. I accept in those circumstances liability questions may have been live in the parties' minds. The letter states: In light of the liability hurdles the plaintiff faces, this offer is generous and should be considered. The plaintiff should not expect there will be any further offers conveyed.
The letter does not set out what the "liability hurdles" were said to be. This should have been clearly included in the letter so that the plaintiff could properly consider those matters and take advice upon them in an assessment as to whether or not she should accept the offer.
Additionally, the timeframe in which the offer was left open was, in my opinion, unreasonable.
The offer of 21 July 2021, being on day 4 of the hearing, was for judgment for the defendants with each party to bear their own costs and the cross‑claim to be dismissed, with each party to bear their own costs. The offer was said to be made on behalf of the defendants and the cross‑defendants. It was left open until 2pm that day. It sought judgment against the plaintiff and the cross claim being dismissed. Whilst no further details as to why the offer should be accepted were made in the letter, by that stage of the trial the "liability hurdles" referred to in the Calderbank letter of 16 July 2021 must have been patent to the plaintiff. It did have a real and substantial element of compromise as the defendants and cross-defendant were offering to forego their costs of the whole of the proceedings and the cross-claim.
I consider the defendants (and in this instance, the second cross‑defendant (AHIGS)) have discharged the onus to prove that it was unreasonable for the plaintiff to reject this offer.
In all the circumstances, I consider the appropriate order with respect to the Council is that the plaintiff pays the Council's costs of the proceedings on the ordinary basis as agreed or assessed up to 21 July 2021 and on the indemnity basis from 22 July 2021.

MLC & THE PLAINTIFF

MLC seeks the following orders with respect to the costs of the proceedings: 1. The plaintiff pay the costs of MLC as agreed or assessed on a party/party basis up to and including 9 July 2021, or in the alternative, up to 16 or 21 July 2021. 2. The plaintiff pay the costs of the second defendant as agreed or assessed on an indemnity basis from 10 July 2021, or in the alternative, from 17 or 22 July 2021. 3. The plaintiff pay the costs of the cross‑claim as agreed or assessed on a party/party basis up to and including 9 July 2021, or in the alternative, up to 16 or 21 July 2021. 4. The plaintiff pay the costs of the cross‑claim as agreed or assessed on an indemnity basis from 10 July 2021, or in the alternative, from 17 or 22 July 2021.

MLC's Submissions

MLC submits that there is no basis to depart from the general rule that costs should follow the event with respect to the plaintiff's claim. The plaintiff does not challenge such an order.
With respect to orders that the plaintiff pay its costs on an indemnity basis as set out above, MLC submits that, despite any uncertainty occasioned by the costs inclusive nature of the first two Calderbank offers, the outcome of the case is dictated that, by any measure, the plaintiff has not achieved a more favourable outcome by way of judgment. It submits that the offers were made at a time in the proceedings when the plaintiff had access to all of the documentary evidence. It submits that at that time, she was well placed to consider whether it was reasonable to accept any of the offers made. In the case of the last offer, the plaintiff had the benefit of knowing what evidence had been admitted at the trial.
MLC submits that the unreasonableness of the plaintiff in rejecting the offers was heightened by two aspects of the case: 1. That at the time those offers were made, the plaintiff knew that she could call no evidence from anyone who had seen the alleged pothole, including herself; and 2. That on any view of the medical evidence, any entitlement to damages was modest, as subsequently found by the Court.
MLC submits that the Court should find that the first two Calderbank offers represented a sensible compromise of the risks the plaintiff faced as to the issues of liability and quantum and should have been accepted. In the alternative, it submits that the last offer was made at a time when it had become clear from the evidence adduced at trial that the plaintiff was not going to discharge her onus of proof as to threshold factual matters such that she would almost certainly failed in her claim and consequently should have been accepted.
In respect to the cross‑claim orders, MLC refers to the power of the Court under UCPR 42.1 to make such orders as to costs as it appears to the Court the justice of the case may require (see Hooker v Gilling (No 2) [2007] NSWCA 214 at [24]) and in accordance with the dictates of fairness: see Oshlack v Richmond River Council (1998) 193 CLR 72 at [67]. In particular, MLC refers to the principle that, where the nature of the plaintiff's claim made it reasonable for the defendant to cross‑claim against another party, and the cross‑claim fails solely by reason of the failure of the plaintiff's claim, a Court may order that the plaintiff pay not only the costs of the defendants/cross‑claimants, but also the cost of the cross‑defendants: see Furber v Stacey [2005] NSWCA 242 at [31]; Corbett v Nguyen (No2) [2012] NSWSC 673 at [7].
MLC submits that it is plain that the cross‑claim was defensive in nature. It says that, based on the facts known to all of the parties long before the trial, that Council and AHIGS had assumed some responsibility for the condition of the playing surface of Peakhurst Park. MLC noted that it led no evidence against either cross‑defendant and made no submissions requiring any further reply other than those the plaintiff had made. It submits the cross‑claim was a natural and reasonable product of the plaintiff suing it since there was always the possibility, depending on the evidence led at trial (which was unknown to MLC as no witness statements had been exchanged), that the Court would find that one or other of the cross‑defendants had failed to discharge their duty of care to the plaintiff. This possibility could have arisen from a systemic failure, or a casual act of negligence by one of the people charged with the systems of maintenance and inspection put in place by either of the cross‑defendants.
MLC submits that: "…the basic justice that a successful party should be compensated for expenses it has incurred because it has been obliged to litigate by the unsuccessful party" means that it should be entitled to the costs of the cross‑claim. It submits that, had the plaintiff not sued MLC and joined AHIGS instead, the cross‑claim would not have arisen. It submits a prudent plaintiff would have either joined AHIGS as a defendant given its undoubted duty of care to the plaintiff and involvement in organising, running and inspecting the playing surface; or ensuring that the plaintiff's pleadings were explicit as to the reliance on any non - delegable duty of care said to have been owed by MLC and livening the provisions of s 5Q of the Civil Liability Act 2002 (NSW) with respect to any acts or omissions of AHIGS. As the plaintiff did neither, MLC was forced to maintain its defensive cross‑claim through to judgment.
MLC submits that its cross‑claim failed because the plaintiff failed to establish various threshold factual matters in her own case and consequently it could not establish any negligence in either of the Council or AHIGS, despite a concerted attempt to do so in evidence and submissions.
MLC submits that by requiring all parties to incur the expenses of the trial in circumstances where the plaintiff knew, or should have known if properly advised, that her prospects of success on the evidence she intended to (and did) adduce were slight, amounted to a failure by the plaintiff to assist the Court to further the overriding purpose of the Civil Procedure Act 2002 (NSW) and the UCPRs. As a result, it submits that it is only just that the plaintiff also bears the costs of the cross‑claim.

Plaintiff's Submissions

The plaintiff submits that, in respect to the Calderbank offers, the same principles apply as mentioned above with respect to those offers vis‑a‑vis the Council.
In respect to the cross‑claim, the plaintiff submits that there was a substantial identity of interest between the second defendant and AHIGS as second cross‑defendant. This can be gleaned from the actual conduct of the trial. She submitted that Council and AHIGS joined forces on the only issue capable of giving rise to a conflict of interest between them, that is, the rights and responsibilities of Ms McPherson as a venue convener on the day of the plaintiff's accident. The plaintiff submits that the questions put to Ms McPherson under cross‑examination by Counsel for MLC were designed to elicit answers that corresponded precisely to the interests of MLC and AHIGS, namely, that she inspected the field prior to the game in accordance with the usual practice and that she had no reason to depart from that usual practice. The plaintiff submits that the questions put to Ms McPherson in cross‑examination by counsel for MLC did not seek to impugn her role or limit the exposure of MLC in any way.
Additionally, the plaintiff submits that there were no questions put by either of Counsel for MLC or AHIGS to any witnesses that were designed to sheet liability to the other. Rather, the cross‑examination was squarely aimed at defeating the plaintiff's claim.
The plaintiff submits that MLC owed a non‑delegable duty of care to the plaintiff. So much, it is said, is "trite". She submits that MLC made the forensic decision to join AHIGS notwithstanding the position of law that it was vicariously liable for the acts and omissions of AHIGS. It did so in order to seek indemnity from AHIGS. In those circumstances, it is submitted, it was not necessary for the plaintiff to join AHIGS to the proceedings. She says her case was deliberately framed as against MLC as the school authority and the Council.
In the circumstances, the plaintiff submits that she should not be ordered to pay AHIGS' costs when she brought no proceedings against it and sought no relief against it. Alternatively, she submits that an appropriate order for costs would be that she is only ordered to pay 25% of the costs of the cross‑claim against AHIGS with MLC to pay the balance.

Consideration

For the reasons outlined above with respect to the Council, I do not accept that MLC has demonstrated why it was unreasonable for the plaintiff to reject the Calderbank offers of 9 and 16 July 2021. It was unreasonable for the plaintiff to reject the Calderbank offer of 21 July 2021.
The points made by MLC with respect to the weaknesses in the plaintiff's case and the like were not addressed in the first two letters of offer. In my opinion, they should have been such that the offers were made with sufficient clarity to explain why they should have been accepted.
Further and in any event, for the reasons above, I do not consider that the first two offer letters were left open for a reasonable time. It was not unreasonable of the plaintiff to reject them when she did.
I do not accept they were given for a true compromise, rather to elicit costs consequences.
In relation to the letter of 21 July, I repeat what I said in [ ] above. The plaintiff acted unreasonably in rejecting that offer.
In relation to the cross‑claim, I do not accept that the plaintiff should be ordered to pay the costs of the cross‑claim up to the date of the joint Calderbank offer of 21 July 2021. That offer was also made on behalf of AHIGS and dealt with the cross-claim and the costs of the cross-claim.
Save for the costs incurred post 21 July 2021, I accept the plaintiff's submissions on the cross- claim issue. The manner in which MLC conducted its case was to support the actions of AHIGS as a method of defeating the primary claim by the plaintiff (for example, with respect to the inspection of the fields by the venue convenor and the AHIGS requirement of the Risk Warning).
I have also had regard to the submissions made by AHIGS (set out below) which deal with the costs of the cross‑claim. I agree with those submissions that, in circumstances where MLC ought to have accepted AHIGS' offer(s) (which were unknown to the plaintiff), it would not be just to order the plaintiff to pay MLC's costs of the cross-claim.
The plaintiff will be ordered to pay MLC's costs of the proceedings on the ordinary basis as agreed or assessed up to 21 July 2021 and on the indemnity basis from 21 July 2021. The plaintiff will also pay the costs of the cross-claim on the indemnity basis from 22 July 2021. I otherwise refuse MLC's application that the plaintiff pay the costs of the cross‑claim.

AHIGS' Submissions

AHIGS submits that there is no basis for the Court to order that the plaintiff pay its costs. It referred to Drive My Car Rentals Pty Ltd v Gabriel [2021] NSWCA 73 at [94], where the Court of Appeal confirmed that the principles to be applied in relation to costs of a third party claim are as discussed in Furber v Stacey, supra. An application of those principles to the present case shows that it was open to MLC to defend the plaintiff's claim on the basis that: 1. AHIGS was responsible for convening the touch football competition; and 2. AHIGS provided the Venue Convener who was required to carry out the particular responsibilities with respect to inspection of the ground without it being necessary for MLC to file the cross‑claim. AHIGS says that it was open to MLC to plead that it had delegated any duty of care it owed to the plaintiff to AHIGS without filing the cross‑claim. As such, it cannot be said that the cross‑claim was "inevitable".
Additionally, AHIGS submits that the matter is complicated by the fact of its relying on Offers of Compromise and offers of contribution made by it to MLC. On the assumption that the Court finds that one or both of those offers entitles AHIGS to have its costs paid on an indemnity basis from a particular point of time, it submits it would be unjust to require the plaintiff to pay those costs in circumstances where she had no part in the non‑acceptance by MLC of those offers.
In relation to those offers, AHIGS relies on an Offer of Compromise dated 27 November 2020 and an offer to contribute dated 30 June 2021. The terms of those offers are set out above at [32]‑[35].
In reliance on those offers, AHIGS submits that MLC should pay its costs of the cross‑claim on an indemnity basis from 28 November 2020 or alternatively, from 1 July 2021.
AHIGS submits that MLC's evidence on costs establishes that, by 19 May 2020, it was aware that the Venue Convener had signed a declaration that a pre‑match safety audit of Peakhurst Park playing fields had been conducted prior to the relevant touch football game being played.
AHIGS submits that its Offer of Compromise was in accordance with UCPR 20.26. The offer expired on 29 December 2020. As AHIGS has obtained an order on the cross‑claim that is no less favourable than the offer, it submits that UCPR 42.15A applies.
AHIGS accepts that, in order for an Offer of Compromise to attract an indemnity costs order, it must involve "a genuine Offer of Compromise" and not be made merely to trigger the cost consequences under the rules: Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [16]. The question of whether the offer represents a real compromise is determined objectively according to the circumstances of the particular case at the time the offer was made, rather than with the benefit of hindsight: Leach v The Nominal Defendant [2014] NSWCA 391 at [42]; Regency Media, supra at [33].
In this case, the cross‑claim was filed on 27 August 2020. AHIGS submits it is therefore open to the Court to infer that, as at the date of the making of the Offer of Compromise, some three months later and in circumstances where the plaintiff's claim against MLC had been on foot since October 2019, AHIGS had incurred significant costs. Those costs included AHIGS considering all of the material served as at that date, investigating the plaintiff's claim, investigating MLC's allegations of negligence against it and appearing at directions hearings and preparing generally.
AHIGS submits that it was not otherwise a party to the proceedings and has incurred significant costs in defending MLC's claim against it. It was willing to forego the potential recovery of those costs, which was a matter of substance amounting to a real compromise. It submits that the onus is on MLC to demonstrate why the Court should depart from the consequence of its rejection of the Offer of Compromise and, in this case, there is no such reason to depart from the usual order.
Alternatively, AHIGS relies on the terms of the Offer of Compromise as being a Calderbank offer. It accepts it has the onus to establish that it was unreasonable for MLC to reject that offer in all of the circumstances. It submits that in this case, for the reasons on which it relies for the purposes of the Offer of Compromise, it was unreasonable for MLC to reject this offer.
In the further alternative, AHIGS relies on the offer to contribute which was in the sum of $20,000 plus costs. It submits that that offer complied with UCPR 20.32 and relies on the operation of UCPR 42.18.
AHIGS submits that MLC should be ordered to pay its costs of the cross‑claim on the ordinary basis up until 28 November 2020 and thereafter on an indemnity basis, or alternatively up until 1 July 2021 and thereafter on an indemnity basis.

MLC's Submissions

MLC submits that the "walk away" offer made by AHIGS on 27 November 2020 should not attract an indemnity costs order. It says it was not unreasonable for it to reject that offer in all of the circumstances. It says that, at the time it was made, AHIGS had only filed its Defence to the Cross‑Claim on the same day that the offer was made. Accordingly, it submits that AHIGS could not have incurred much in the way of costs at that stage of the proceedings, thereby robbing the offer of any genuine compromise value.
In respect to the offer to contribute, MLC submits that in circumstances where the cross‑claim failed entirely due to the failure of the plaintiff's claim, such an offer to contribute does not factor into the Court's assessment of responsibility for the costs of the cross‑claim. MLC would have been no better off by accepting AHIGS' offer and may well have been much worse off if the plaintiff had established that AHIGS was negligent.

Consideration

Save for the pried post 21 July 2021, I accept AHIGS' submissions. At the time of service of its Offer of Compromise, AHIGS had incurred costs in considering all of the material served on it as cross‑defendant. They would not have been insignificant. Further, the Venue Convenor's Declaration had been produced in May of that year, showing the steps AHIGS had taken with respect to the inspection of the fields. MLC indeed relied heavily on this document in defence of the plaintiff's claim.
Further, for the reasons AHIGS gives, MLC did not inevitably need to cross‑claim against it. It could have raised the relevant matters in its Defence to the claim brought by the plaintiff. As I have observed, that is effectively how (at least in part) MLC conducted its defence to the plaintiff's claim against it.
As I have decided above, the plaintiff acted unreasonably in rejecting the other parties' Calderbank offer of 21 July 2021. Accordingly, MLC is to pay AHIGS' costs of the cross‑claim as agreed or assessed up to 27 November 2020 and then on the indemnity basis from 28 November 2020 to 21 July 2021 (noting that the plaintiff is to pay the costs of the cross-claim on the indemnity basis from 22 July 2021).

The Council's Submissions

The Council submits that MLC should pay its costs of the cross‑claim following the usual rule the costs follow the event.
The Council also relies on an Offer of Compromise dated 27 August 2020 to seek an order that MLC pay its costs of the cross‑claim on an indemnity basis from 28 August 2020. The letter enclosing that offer is set out at [31] above.
The Council submits that the affidavit of Mr Joseph sworn 18 August 2021 and relied upon by MLC does not provide any reasons for MLC having cross‑claimed against it. The Council notes that MLC's case was, in fact, conducted on a basis which was inconsistent with any liability on the part of the Council; namely, that the alleged pothole did not exist and nor could it have been detected upon reasonable inspection.
The Council submits that MLC's submissions that the cross‑claim was defensive in nature cannot be accepted in circumstances where it repeated the plaintiff's claim against the Council, yet disputed the plaintiff's claim. It submits that the cross‑claim against the Council in circumstances where MLC disputed the plaintiff's claim was a "knee-jerk" response. This is supported by the submissions made by MLC that the Council's offer was made "before the plaintiff had served any expert evidence as to liability and before MLC had obtained any expert evidence as to liability and quantum".
Accordingly, the Council submits it was unreasonable for MLC not to have accepted the Council's offer and that it should be ordered to pay Council's costs on an indemnity basis from the day following the offer.

MLC's Submissions

MLC submits that the offer made by the Council on 27 August 2020 should not result in an indemnity costs order against it for the costs of the cross‑claim. It submits that it was not unreasonable for it to reject the Council's offer in all of the circumstances as it was made before the plaintiff had served any expert evidence as to liability and before she had obtained any expert evidence as to liability and quantum.
MLC submits that the offer was made on the very same day the Amended Statement of Cross‑Claim had been filed and served and before the Council had filed any Defence to that Amended Cross‑Claim. Thus, it had been made before the pleadings had been closed and the full parameters of the dispute were known. The offer was never renewed and MLC submits it could not have known at the time of the offer what evidence was to be given by the plaintiff or the witnesses to be called by the Council or AHIGS.
Further, MLC somewhat ironically submits that the Council's offer involved no genuine compromise, no benefit to MLC and effectively required a total capitulation by MLC in circumstances where no evidence had been served and the pleadings had not closed. It submits the Council had conceded almost nothing by way of its own costs in making such an offer, since any consideration of MLC's cross‑claim was no doubt informed by the Council's own investigations of the plaintiff's near identical claim against it.
Further, MLC submits that for a "walk away" offer to successfully trigger the indemnity cost mechanisms under the UCPR, the cross‑claim "would have to approach something of the character of being frivolous or vexatious": see Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [31]; cited and followed in Leach, supra at [51]‑[53]. It submits that the cross‑claim was neither.

Consideration

I accept MLC's submissions. True it is that MLC eventually ran the case against the plaintiff in a manner that could be thought to be inconsistent with its cross‑claim against the Council. However, at the time the offer was made, MLC submits that it could not have known the extent or nature of the evidence to be relied upon by the plaintiff or the Council with respect to liability. The position is different here to that as between AHIGS and MLC. The issue of liability between those parties is removed from that as between Council and MLC. Had the Council renewed its offer to MLC later when the issues as to liability were clearer, the result may have been different. However, the offer was not renewed.
Further, I accept that the offer in essence required total capitulation by MLC at a very early stage of the proceedings. Again, at a later time, a walk away offer may have been viewed differently, but in my opinion, at the time it was made, it was not a genuine compromise. I infer it was made to generate costs consequences.
For those reasons, MLC is to pay the Council's costs of the cross‑claim as agreed or assessed up to 21 July 2021. Thereafter, the plaintiff is to pay the costs of the cross-claim on the indemnity basis.

ORDERS

For the above reasons, the orders of the Court will be: 1. The plaintiff is to pay the costs of the Council and MLC of the proceedings, on the ordinary basis as agreed or assessed up to 21 July 2021 and on the indemnity basis from 22 July 2021. 2. MLC is to pay the costs of the Council of the cross‑claim, on the ordinary basis as agreed or assessed up to 21 July 2021. 3. MLC is to pay the AHIGS' costs of the cross‑claim as agreed or assessed on the ordinary basis up to 27 November 2020 and then on the indemnity basis from 28 November 2020 to 21 July 2021. 4. The plaintiff is to pay the costs of the cross-claim on the indemnity basis from 22 July 2021.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 September 2021

Civil Procedure Act 2002(NSW)

Uniform Civil Procedure Rules 2005(NSW)rr 9.1, 20.26, 20.26(4), 20.32, 42.1, 42.15A, 42.18, 42.20(1)

Mersal v Georges River Council

At a glance

Court

Decision date

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Judgment (23 paragraphs)

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Legislation Cited (5)

Cases Cited (29)