O’Driscoll v Encore Aviation Pty Ltd (No 2)

Catchwords: COSTS – offer of compromise -unreasonable non-acceptance – solicitor not able to advise – result due to matters known to plaintiff
COSTS – severable issues – plaintiff won but not on all issues – reduction in plaintiff’s costs

Legislation Cited: Civil Procedure Act 2005 (NSW) s 98
Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law s 60
Legal Profession Act 2004 (NSW) s 338
Limitation Act 1969 (NSW) s 14
Uniform Civil Procedure Rules 2005 (NSW) rr 20.26, 42.1, 42.15

Cases Cited: Abdi v Abdi (No 2) [2022] NSWSC 582
Atton v National Mutual Life Association of Australasia (No 2) [2007] NSWSC 348
Ballam v Ferro (No 2) [2022] NSWSC 1358
Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304
Calderbank v Calderbank [1975] 3 All ER 333
D Capital 2 Pty Ltd v Western (No 2) [2022] NSWSC 1283
Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219
E Group Security Pty Ltd v Chief Commissioner of State Revenue (No 2) [2021] NSWSC 1296
Elite Protective Personnel Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373
Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298
James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296
King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204
Leichhardt Municipal Council v Green [2004] NSWCA 341
Meres v Meres (No 2) [2017] NSWSC 523
MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236; (1996) 140 ALR 707
Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd (No 2) [2024] NSWCA 274
Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344
Morgan v Johnson (1998) 44 NSWLR 578
Morris v McEwen (2005) 92 SASR 281; [2005] SASC 284
Mount Arthur Coal Pty Ltd v Duffin [2021] NSWCA 49
O’Driscoll v Encore Aviation Pty Ltd [2025] NSWSC 1536
Ofria v Cameron (No 2) [2008] NSWCA 242
Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368
Ryan v Workers Compensation Nominal Insurer (No 2) [2020] NSWCA 129
Waterman v Gerling (Costs) [2005] NSWSC 1111

Category: Costs

Parties: Proceedings 2021/103314
Philip Gregory O’Driscoll (Plaintiff)
Encore Aviation Pty Ltd (First Defendant)
Encore Helicopter Maintenance Pty Ltd (Second Defendant)
Proceedings 2021/106215
O’Driscoll Aviation Pty Ltd (Plaintiff)
Encore Helicopter Maintenance Pty Ltd (First Defendant)
Encore Aviation Pty Ltd (Second Defendant)

Representation: Counsel:
Proceedings 2021/103314
R McIlwaine SC and R Quickenden (Plaintiff)
T Brennan SC and H Cooper (Defendants)
Proceedings 2021/106215
G Nell SC (Plaintiff)
T Brennan SC and H Cooper (Defendants)
Solicitors:
Proceedings 2021/103314
AC Lawyers (Plaintiff)
Norton White Lawyers (Defendants)
Proceedings 2021/106215
HWLE Lawyers (Plaintiff)
Norton White Lawyers (Defendants)

File Number(s): 2021/103314; 2021/106215

JUDGMENT

1. HIS HONOUR: On 17 December 2025, I entered judgment (O’Driscoll v Encore Aviation Pty Ltd [2025] NSWSC 1536 (“the Principal Judgment”) as follows:

2. For the first plaintiff (the personal injury plaintiff) in the sum of $55,250.00 (that is, the plaintiff in proceedings 2021/103314);

3. For the second plaintiff (the corporate plaintiff) in the sum of $429,944.09 (that is, the plaintiff in proceedings 2021/106215); and

(3) I ordered the defendants to pay both plaintiffs costs.

2. The parties are agreed that the amount of the judgment in favour of the second plaintiff should be increased to allow for pre-judgment interest. I will amend order (2) accordingly.

3. The defendants also seek a variation of both costs orders.

4. The defendants seek that costs be payable on a different basis, being:

5. As against the first plaintiff, it says that it served an offer of compromise on 18 August 2022, offering to pay the first plaintiff the sum of $200,000 plus costs. The defendants say that the first plaintiff did not achieve a more favourable result and thus the costs provisions set out in r 42.15 of the Uniform Civil Procedure Rules 2005 (NSW) (“the UCPR”) apply. The defendants also rely on an offer in accordance with Calderbank v Calderbank [1975] 3 All ER 333 (“the Calderbank offer”) served on the same day, that is, 18 August 2022; and

6. As against the second plaintiff, the defendants assert that the second plaintiff was unsuccessful in most of the aspects or issues in the case and the Court should depart from the usual order and require the second plaintiff to pay 80 per cent of the defendants’ costs of the proceedings and the defendants to pay 20 per cent of the second plaintiff’s costs.

The application in respect of the first plaintiff

5. It will be apparent from the Principal Judgment that the first plaintiff sought a substantial sum in respect of the injuries said to have been caused by the helicopter crash the subject of the proceedings. In particular, the first plaintiff maintained that he suffered from a severe psychiatric injury, being the development of post-traumatic stress disorder (“PTSD”), and that as a result of that injury, he has and will continue to suffer significant loss.

6. I rejected much of the first plaintiff’s damages case. I did so for a number of reasons, but essentially because:

7. I was unable to accept the evidence of the expert psychiatrist retained by the first plaintiff, Dr Allnutt, because his opinion was based upon an incorrect history and failed to have regard to relevant information;

8. Contemporaneous medical reports prepared and obtained for purposes unrelated to these proceedings were quite inconsistent with the first plaintiff’s claims in these proceedings;

9. The first plaintiff had denied the existence of any psychological injury arising from the 2018 helicopter crash when providing a history for different purposes, such as maintaining his pilot licence during the Civil Aviation Safety Authority (“CASA”) medical examinations (on six separate occasions) and reporting to the Canadian fund in respect of benefits arising from the 2005 accident.

10. Having rejected his claim of injury, the first plaintiff was not entitled to substantial damages. Damages were also reduced on account of contributory negligence.

11. The defendants rely upon an offer of compromise and Calderbank offer dated 18 August 2022, in the following terms:

Offer of Compromise

“Pursuant to rule 20.26 of the Uniform Civil Procedure Rules 2005 (NSW), the Defendant offers the Plaintiff to settle the whole of this proceeding on the following basis:

1 The Defendant will pay, and the Plaintiff will accept AUD200,000 in full and final settlement of the Plaintiff’s claim;

2 The Defendant will pay the Plaintiff’s costs as agreed or assessed; and

3 The Plaintiff, on payment of the sum of AUD200,000 in accordance with paragraph 2 [sic], and subject to the obligation to pay the costs in accordance with paragraph 2 [sic], will discontinue proceeding No. 2021/00103314 in the District Court of New South Wales.

This offer of compromise will remain open until 5.00pm on Friday, 16 September 2022, and can be accepted in writing prior to that time.”

Calderbank Letter

“Please find enclosed, by way of service, an offer of compromise to the Plaintiff made pursuant to Rule 20.26 of the Uniform Civil Procedure Rules 2025 (NSW).

If for any reason the offer does not comply with the requirements of the Rules, the offer is intended to be made in accordance with the principles of Calderbank v Calderbank [1975] 3 WLR 586 and will be relieve [sic] upon by the Defendant on the question of costs.”

9. Using the language of r 42.15 of the UCPR, the first plaintiff did not obtain a judgment more favourable to him than the terms of the offer.

10. The first plaintiff seeks to resist the defendants’ application on a number of bases, being:

11. The overwhelming issue at trial was liability. Much of the hearing time and preparation costs related to liability and the first plaintiff was successful on liability. In these circumstances, making the order sought by the defendants would be punitive;

12. The offer of compromise and Calderbank offers were not able to be fairly assessed by the first plaintiff at the time they were made. In effect, the first plaintiff submits that his failure to accept the offer was not unreasonable in the all the circumstances of the case;

13. The offer of compromise was not in proper form, having regard to r 20.26 of the UCPR;

14. The Calderbank offer was ambiguous and the result of the proceedings would have been uncertain should the offer have been accepted;

15. There were other factors impacting upon the discretion, such as the need to pursue the proceedings in the Supreme Court once the second plaintiff had commenced its proceedings and the fact that the original defence did not include contributory negligence impacted upon the facts and circumstances known to the first plaintiff at the time of the service of the offer. I assume the first plaintiff is submitting that as the defendants had not yet pleaded contributory negligence, that was a factor not known to the first plaintiff at the time the offer of compromise was made.

16. The defendants submit that I should reject all of these matters as providing any basis for overcoming the usual rule (UCPR r 42.15).

Determination

12. Whilst the offer of compromise and Calderbank offers are expressed in similar terms, the principles which apply are not identical. Specifically, where r 42.15 of the UCPR applies, the onus is on the plaintiff to convince the court that costs orders ought not be made in accordance with r 42.15(2): Ryan v Workers Compensation Nominal Insurer (No 2) [2020] NSWCA 129 at [7] (Leeming, Payne and White JJA).

13. The ordinary rule as to costs in r 42.1 of the UCPR is displaced by r 42.15 of the UCPR and indeed the “event” for the purposes of assessing costs is the making of the offer. The onus is on the first plaintiff to establish that a different order should be made, that is, other than as set out in r 42.15.

14. On the other hand, although the same general approach applies to Calderbank offers, as the making of a Calderbank offer is not governed by any particular rule, the onus remains on the offeror, in this case, the defendants, to establish that it was unreasonable for the first plaintiff not to have accepted the offer (see Abdi v Abdi (No 2) [2022] NSWSC 582 at [26]–[27] (Ward P); Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19] (Santow JA)).

15. The process of determining what costs order should be made following the service of an offer of compromise made under the UCPR has been described as a two-stage process (see Ballam v Ferro (No 2) [2022] NSWSC 1358 at [100] (Hallen J); D Capital 2 Pty Ltd v Western (No 2) [2022] NSWSC 1283 at [119] (Meek J); Meres v Meres (No 2) [2017] NSWSC 523 at [43]-[44] (Hallen J)).

16. The first stage of the process is to determine whether the offer of compromise can be relied upon, meaning that it is in the required form, it represents a compromise, and that the first plaintiff obtained a judgment no more favourable than the offer.

17. The second stage is to consider whether the court should “otherwise order”, as set out in r 42.15(2) of the UCPR. It follows that when the first stage of the process is satisfied, the default position is that prescribed by the rule. Only if the court is convinced that it should otherwise order should the rule not apply.

18. Plainly, the defendants’ offer was a compromise, that is, a compromise on their part, because it offered to pay the first plaintiff $200,000 and pay his costs. Further, in my view, the offer was in proper form, in the sense that:

19. It specified an amount that the defendants would pay;

20. It specified the defendants would pay the first plaintiff’s costs as agreed or assessed; and

21. It identified proposed orders for disposal of the claim, in that the first plaintiff would file a notice of discontinuance, the effect of which would be that proceedings would be discontinued. This was a neutral way of finalising the proceedings, but in my view, the offer satisfied the requirements of r 20.26.

22. This is not a case in which the offer left unresolved the orders the court would make if the offer were accepted (see, for example, Mount Arthur Coal Pty Ltd v Duffin [2021] NSWCA 49 at [78]-[80] (Payne JA, with whom Meagher and Gleeson JJA agreed)).

23. The first stage of the process being satisfied, the presumption that the costs will be varied in accordance with r 42.15 of the UCPR applies. The question is whether I should otherwise order.

24. I do not consider the fact (which I accept) that a greater amount of time and costs was spent on liability than damages and that the first plaintiff succeeded on liability should mean that I otherwise order. True it is that the first plaintiff won but the point of his case was to obtain damages. He did not recover a greater amount than he had already been offered. The first plaintiff’s submission that I should otherwise order because he won on liability rather detracts from the general principles which apply to offers of compromise, the rationale behind r 42.15.

25. This was explained by Mason P in Morgan v Johnson (1998) 44 NSWLR 578 at 581-582, and includes:

26. To encourage proper compromise of litigation, the private interests of individual litigants and the public interest in the prompt and economical disposal of litigation;

27. To oblige the offeree to give serious thought to the risk involved in non-acceptance;

28. That the prima facie consequence of non-acceptance will be that the rule will be enforced against the non-accepting party;

29. It is common knowledge that litigation is inescapably chancy; and

30. The discretion to displace the rule is a judicial one, requiring the private and public purposes of the rule to be borne in mind.

31. It is difficult to see how these principles could be properly applied by a finding that because the first plaintiff succeeded on liability, r 42.15 should not apply.

32. Similarly, the “other discretionary factors” referred to by the first plaintiff in his submissions do not provide a basis for ordering otherwise.

33. The fact that the first plaintiff was required to transfer his case to the Supreme Court is of no consequence. He chose to do so. It could hardly be said that he was forced to litigate his case in the Supreme Court by virtue of the pursuit of the proceedings by the second plaintiff or that in some way he was compelled to not accept the offer of compromise/Calderbank offer because of the involvement of the second plaintiff.

34. Similarly, whilst the damages were reduced on account of contributory negligence and the defendants had not yet pleaded contributory negligence as at the date of the offer of compromise, that later amendment to plead contributory negligence is ultimately of no significance. That is because, in determining whether the court might order otherwise, it is up to the first plaintiff to establish it was not unreasonable to reject the offer at the time. That is assessed objectively and regard must be had to the position at the time, rather than looking at the result and working backwards with hindsight: Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [33] (Spigelman CJ, Beazley and McColl JA).

35. The first plaintiff’s claim was a claim for damages at large. Contributory negligence was not an issue at the time, but it could hardly be asserted that it was not unreasonable for the first plaintiff not to have accepted the offer because he was unaware of contributory negligence being raised at that time.

36. The most substantial point raised by the first plaintiff relates to the position he and his solicitor were in at the time the offer was made. He points to the following factors:

37. His solicitor, Mr Christopoulos, had just assumed conduct of the matter and was starting to obtain the necessary evidence.

38. The defendants were aware of this. Mr Christopoulos only assumed conduct of the matter in May 2022 and the offer was served at a time (August 2022) when the first plaintiff must have known that he did not have the material necessary to provide proper advice about the offer. This is said to be so because orders made by the District Court in the matter on 27 June 2022 provided a timetable for the service of evidence, including accounting evidence by 30 September 2022, and expert medical evidence and liability evidence, by 30 November 2022. The first plaintiff submits that the defendants served an offer after these orders, but before the time for service of evidence (although of course the first plaintiff had failed to comply with earlier orders for service of evidence).

39. In his affidavit, Mr Christopoulos identifies when he obtained evidence in accordance with the court orders and when the defendants served evidence. As he says, no expert liability reports had been served by any party at the time of the offer of compromise and he was not in a position to advise the first plaintiff either as to acceptance or rejection of the offer. He merely informed the first plaintiff orally of the offer.

40. Having said that, the defendants submit that Mr Christopoulos does not say in his affidavit that he had no evidence at the time of the offer of compromise, limiting his statements to the evidence that was obtained thereafter.

41. Mr Christopoulos was not required for cross-examination. I would not infer that his affidavit was drafted in such a way to disguise the fact that he had other evidence at the time. Plainly, Mr Christopoulos had the former solicitor’s file and such information as was contained therein. The proceedings had been commenced by the first plaintiff on 14 April 2021.

42. The point raised by the first plaintiff is of some significance. I have some sympathy for Mr Christopoulos’ position, he having recently come into the matter, finding a lack of compliance by the previous solicitors with court orders and then endeavouring to obtain evidence.

43. The question which thus arises is the extent to which the state of knowledge of the solicitor for the first plaintiff at the time of the making of the offer by the defendants is relevant or important. The first plaintiff emphasises the importance of legal advice and representation and says that in circumstances in which his solicitor could advise him about the offer, it was not unreasonable for him not to have accepted the offer.

44. In making this submission, the first plaintiff seeks to benefit both from his own inaction and what must be his own failure to instruct his solicitors as to significant and relevant matters.

45. In Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [12], the Court of Appeal cited with approval the observations of the Victorian Court of Appeal in Hazeldene*’*s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298, in relation to matters which might be relevant in assessing whether it was reasonable for an offeree not to have accepted an offer as follows:

“(a) the stage of the proceeding at which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(c) the extent of the compromise offered;

(d) the offeree’s prospects of success, assessed as at the date of the offer;

(e) the clarity with which the terms of the offer were expressed;

(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.”

See also Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd (No 2) [2024] NSWCA 274 at [6] (Bell CJ, Payne JA and Basten AJA).

36. In other cases, regard has been had to the complexity of the issues in the case (see MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236; (1996) 140 ALR 707) and the small amount in issue (Ofria v Cameron (No 2) [2008] NSWCA 242).

37. Whether an offeree’s failure to accept an offer was unreasonable is an evaluative judgment having regard to the offer itself 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] (Young JA, with whom Hodgson an Campbell JJA agreed); E Group Security Pty Ltd v Chief Commissioner of State Revenue (No 2) [2021] NSWSC 1296 at [58] (Ward CJ in Eq)).

38. In undertaking that evaluation, I regard a number of matters as particularly important, including:

39. The proceedings were commenced in April 2021. During the period May 2021–February 2022, the court made orders on three separate occasions for the first plaintiff to serve his evidence. He did not.

40. Mr Christopoulos filed a notice of change of solicitor on 3 June 2022. On 27 June 2022, Judicial Registrar Howard of the District Court again made orders requiring the first plaintiff to serve his evidence. The dates for service of that evidence were 30 September 2022 and 30 November 2022, respectively.

41. As set out in the affidavit of Mr Christopoulos, the first plaintiff arranged and ultimately obtained extensive evidence, but none of the expert evidence served on damages was obtained until after the expiry of the offer of compromise.

42. The defendants arranged their own medico-legal examinations, including examinations from Dr Lee, psychiatrist, as well as examinations by an orthopaedic surgeon, Dr Coolican, a neurologist and an occupational therapist.

43. The report of the neurologist was not served until trial. The defendants served the reports of Dr Coolican and Dr Lee on 17 January 2024. Further, the defendants did not file an amended defence to plead contributory negligence until 23 July 2025.

44. It seems apparent Mr Christopoulos would not have been in a position to give full and proper advice to the first plaintiff, based on the expert evidence, as it had not all been obtained by the time of the expiry of the offer. Further, the defendants had not served any evidence on damages even though it was in their possession. For example, the defendants had not served the report of Dr Lee, who cast doubt on the nature of the first plaintiff’s complaints. I am not suggesting that the defendants failed to comply with court orders, but they had medical evidence which was relevant to the damages the first plaintiff might recover which it did not serve until after the expiry of the offer of compromise. It also had medical evidence favourable to the plaintiff’s case which it did not serve.

45. The point that arises in this case is really whether, when considering whether it was not unreasonable to reject the offer, significant weight should be given to the position of the solicitor representing the first plaintiff, irrespective of the first plaintiff’s own knowledge as to matters which ultimately impacted upon the amount he received. That is, can or should a party avoid the consequences of rejecting an offer of compromise by relying on the lack of complete or nearly complete knowledge by his solicitor?

46. I have already identified the reasons why the first plaintiff only received a small amount. All of those reasons reflect what he said and did. They did not reflect any failure or oversight by his solicitors to obtain and adduce evidence.

47. He must have known what he said to CASA (and had said four times prior to the offer of compromise being made). He must have known that he was saying different things to different experts depending on the purposes of being reviewed by them, that is, whether for the Canadian insurer or for this case, or for the purposes of maintaining his pilot licence. He must have known that he was continuing to seek benefits from the Canadian fund on the basis of statements that the 2018 crash did not cause any real disability.

48. The question of unreasonableness must be assessed objectively. The first plaintiff’s submission that the offer of compromise could not be fairly assessed at the time it was made is really a submission that because his new solicitor had not had an opportunity to obtain evidence, the offer could not be fairly assessed.

49. The defendants referred to two cases which would not support a deviation from the usual orders. In A**tton v National Mutual Life Association of Australasia (No 2) [2007] NSWSC 348 (a life insurance case), Gzell J rejected the plaintiff’s submission that the rules should not be followed because evidence had not been put on by the defendants prior to the offer being made. His Honour observed that it was the plaintiff’s evidence which would form the basis of his case and it was the plaintiff who was uniquely placed to know what evidence he would be giving. In that case, the defendants succeeded, having regard to discrepancies between the plaintiff’s evidence and other documentation in his possession.

50. Similarly, in Morris v McEwen (2005) 92 SASR 281 at [77]; [2005] SASC 284, White J (with whom Debelle J agreed) said:

“It is to be expected that in every case where solicitors for a party receive an offer, expressed to be open for only a limited time, that those solicitors will, in the proper exercise of their professional duty, make all reasonable efforts to obtain their client's instructions with respect to the offer within the time stipulated. If they do not, and the offer lapses, the solicitors may expose themselves to an action in professional negligence from their own client.”

46. In this case, the first plaintiff was uniquely in a position to know that the instructions he was providing about the state of his mental health and its causal connection with the 2018 accident were inconsistent with that which he was asserting in other places and to other persons.

47. Regard should be had to pars [395]–[416] of the Principal Judgment. There were quite a number of medical reports in the period 2020–2021 which were all based on information provided by the first plaintiff at that time, all of which are quite inconsistent with the idea that the first plaintiff was suffering PTSD as a result of the 2018 accident.

48. At the time the offer of compromise was made, the first plaintiff could know and understand that:

49. The instructions he was providing to his solicitors (having regard to the pleadings) were not consistent with that which he was saying to other health professionals;

50. He was continuing to fly and held a full pilot licence based on his statements to CASA that he suffered from no psychological symptoms;

51. The amount of the offer, that is, $200,000, was not derisory or small or insignificant. It represented a substantial payment to him, plus payment of his legal costs; and

52. Although he had not complied with earlier orders for service of evidence, and he had recently instructed new solicitors, the proceedings had been on foot for over 12 months prior to the offer being made. There would likely be substantial costs and disbursements incurred going forward if the matter did not resolve at that time.

53. Whilst I accept that Mr Christopoulos has been placed in a very difficult position by the conduct of his client, I am unable to accept that the asserted lack of expert evidence is sufficient to displace the usual order anticipated by r 42.15.

54. To otherwise order in the circumstances of this case would be contrary to the policy behind the offer of compromise regime and would have the effect of precluding a defendant or either party from protecting itself in respect of incurring substantial costs by way of an offer of compromise, because of the subjective position of the other party, assessed retrospectively.

55. The offer of $200,000 plus costs was not derisory and reflected a real compromise. The reason that Mr Christopoulos may not have been in a position to advise is because of earlier breach of court orders by the first plaintiff and what must have been the failure of the first plaintiff to disclose relevant information to him. Further, this is not a case in which there was only a small difference between the offer and the result. The offer was made 16 months after the proceedings commenced and at a time when the parties were facing the incurring of substantial costs to prepare the matter for hearing.

56. All the matters to which I have referred cause me to reject the first plaintiff’s submissions that r 42.15 should not be applied and that I should otherwise order. The judgment will be amended to reflect r 42.15 and the serving of the offer of compromise.

57. It is not necessary that I say anything about the Calderbank offer.

Application for variation of the order for costs in favour of the second plaintiff

54. The second plaintiff obtained a substantial judgment. I ordered that the defendants pay the second plaintiff’s costs.

55. Pursuant to a motion filed on 5 January 2026, the defendants seek to vary the orders made in favour of the second plaintiff as follows:

“1. Orders 2 to 3 made by Justice Cavanagh on 17 December 2025 be vacated and in lieu thereof the following orders be made:

In the proceeding of O’Driscoll Aviation Pty Ltd (ACN 123 623 567) v Encore Helicopter Maintenance Pty Ltd (ACN 609 868 920) & Anor (No 2021/00106215):

a. Judgment for the Plaintiff against the Third Defendant in the sum of $627,732.41 (which comprises damages of $429,944.09 and pre-judgment interest in the sum of $197,788.32);

b. The proceeding against the First Defendant be dismissed;

c. Order the Third Defendant to pay 20% of the costs of the plaintiff;

d. Order the Plaintiff to pay 80% of the costs of the defendants.”

56. While proposed orders (1a) and (1b) are by consent, proposed orders (1c) and (1d) are not agreed. They are to the effect that the defendants should only pay 20 per cent of the costs of the second plaintiff despite the second plaintiff succeeding in the action and that the second plaintiff should pay 80 per cent of the costs of the defendants.

57. The basis of this application is that, according to the defendants, the second plaintiff was not successful on almost every aspect of the case it pursued. It succeeded on one point only, being what the defendants described as “the short-term cracking issue”. The defendants submit that this was the subject of very limited evidence in the proceedings and indeed the evidence did not emerge until the oral examination of the experts.

58. The defendants say that, on this basis, the second plaintiff should only recover a proportion of its costs and also be ordered to pay a significant proportion of the defendants’ costs. The defendants undertook an extensive analysis of the pre-hearing evidence and the evidence which emerged at hearing to support their submission.

59. The second plaintiff’s response is to maintain:

60. It was not unreasonable to pursue to two limbs of its liability case, being the vibration issue and the cracking issue;

61. There is no justification for somehow splitting the cracking issue case into two different parts, being the extended and short-term periods;

62. It was not unreasonable for the second plaintiff to rely on the opinion of Mr Moffatt, its principal expert. Parts of his opinion were accepted, albeit his ultimate opinion was not;

63. Much of the evidence adduced by the second plaintiff was necessary because of the issues raised by the defendants prior to the completion of the hearing. By way of example, the second plaintiff points to a number of matters which were in issue and necessary for the second plaintiff to adduce evidence of which were ultimately not in in issue, such as:

(a) Whether the second plaintiff carried on business for reward; (b) The terms of the contract and which of the defendants was a party to the contract with the second plaintiff; (c) The loss and damage claimed by the second plaintiff in addition to the loss of the helicopter; (d) A limitation defence under s 14 of the Limitation Act 1969 (NSW); and (e) The service provided by the defendants engaged the operation of the statutory guarantee in the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, s 60.

60. The second plaintiff opposes any variation in the costs order but, in the alternative, maintains that, if there is a variation, it should not be of the type proposed by the defendants but rather the appropriate order would only be that the costs recoverable by the second plaintiff be discounted (by some minor percentage).

Determination

61. The essential point raised by the defendants is that I did not accept much of the second plaintiff’s case or much of its evidence and that the second plaintiff succeeded only on one point. Having regard to the costs and complexity of the matter, there should be an apportionment of costs in this regard.

62. In general terms, costs follow the event (UCPR r 42.1). The “event” refers to the result of the case in a practical sense (see Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] (Ward, Emmett and Gleeson JJA) (“Doppstadt”)). The result of this case, in a real and practical way, is that the second plaintiff won. It obtained a judgment in its favour for a substantial sum. Ordinarily, costs would follow that event.

63. However, that is not always the position. As set out in s 98 of the Civil Procedure Act 2005 (NSW), costs are at the discretion of the Court and the Court has full power to determine by whom, to whom and to what extent costs are to be paid.

64. Further, costs may be awarded on an ordinary basis or on an indemnity basis. The defendants do not rely on any offer made to the second plaintiff, but rather, say that this is a case in which the matters upon which the second plaintiff did not succeed took up a significant part of the trial.

65. In those circumstances, the defendants submit that the Court should exercise its discretion to vary the usual order. As the defendants submit, costs may be apportioned between different issues in the proceedings in certain circumstances, albeit that is often done as a matter of impression and evaluation (see James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [36]; Doppstadt at [19]).

66. In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38], the Court of Appeal set out the principles which apply to the making of an order for costs so as to reflect the time taken in dealing with particular issues in which a successful party in the proceedings did not succeed (as originally referred to in Elite Protective Personnel Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373) as follows:

“• Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported).

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

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

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

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

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

67. In Waterman v Gerling (Costs) [2005] NSWSC 1111 at [10], Brereton J observed:

“The starting point is that the plaintiff, having been successful, is entitled to his costs. It is for the defendants to establish a basis for departing from that rule. A successful plaintiff who has failed on certain issues may be deprived of costs on those issues, or even ordered to pay the defendant’s costs of them [Hughes v Western Australia Cricket Association Inc (1986) ATPR ¶40-748, 48, 136]. But this course, while open, is one on which the court embarks with hesitancy [Mobile Innovations Limited v Vodafone Pacific Limited [2003] NSWSC 423, [4]; Cretazzo v Lombardi (1975) 13 SASR 4, 16; Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261; Trade Practices Commission v Nicholas Enterprises Pty Ltd (No. 3) (1979) 28 ALR 201; Waters v P C Henderson (Aust) Pty Ltd (NSWCA, 6 July 1994, unreported); NRMA Limited v Morgan (No. 3) [1999] NSWSC 768]. From these cases emerge consistent themes that:-

• Justice may not be served if parties are dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case; but

• It may be appropriate to award costs of a separate issue where a clearly definable and severable issue, on which the otherwise successful party failed, has occupied a significant part of the trial.”

68. In this case, there not being a mixed outcome, the second plaintiff has succeeded. The fact that it recovered less damages than it sought is not a basis for apportionment of costs, particularly in circumstances in which the amount recoverable by the second plaintiff was a matter of competing valuation evidence of an unsatisfactory nature. The defendants put in issue the valuation obtained by the second plaintiff. The valuer was successfully cross-examined. However, the same must be said for the defendants’ valuation evidence. A reduction in the amount recovered by the second plaintiff is not a basis for apportioning costs in the circumstances of this case.

69. The real complaint made by the defendants is that a substantial amount of preparation and of the hearing time was spent responding to matters raised by the second plaintiff on which the second plaintiff did not succeed.

70. As indicated in my Principal Judgment, the second plaintiff did not succeed on the vibration issue. Further, by the end of the hearing, the second plaintiff was limiting its claim on the cracking issue to a short period before the helicopter crash. It had pleaded a much broader case which required the defendants to adduce evidence in response.

71. As it turned out, I did not accept the ultimate opinion of a number of the experts. I will not repeat what I said in the Principal Judgment, but it was not only the evidence of Mr Moffatt (the expert retained by the second plaintiff) which was not accepted, at least in its entirety. Some of the defendants’ expert evidence was similarly not accepted.

72. Having said that, I plainly did not accept the original opinion of Mr Moffatt, which was presumably relied upon to support the pleaded case, being that the cracking was likely to have been visible in the months before the crash.

73. The second plaintiff did not, in the end, pursue that proposition, rather, limiting its case to the cracking being present only days before the crash. That is the basis on which it succeeded. Further, it succeeded because I preferred the evidence of Dr Farzaneh as to the physical appearance of the cracking after the crash (as demonstrating that it was likely to have been there before the crash). In support of its contention, the defendants also highlight (they say) the suggestion that the basis upon which I ultimately found for the second plaintiff was not referred to in the evidence until the oral evidence of Dr Farzaneh. There is some merit in that submission, albeit there was some reference in Dr Farzaneh’s earlier report to the significance of corrosion on the cracking.

74. There is also some merit in the defendants’ submission that success on the vibration issue was always going to be difficult for the second plaintiff because of the ambiguous or uncertain evidence about causation. That is, the second plaintiff bore the onus on causation and there was some doubt as to what a vibration test would have shown if it had been undertaken.

75. I am mindful that it is generally not appropriate to apportion costs on an issue-by-issue basis (unless the costs are entirely severable). They are not in this case.

76. I reject the defendants’ contention that because the second plaintiff did not win on some issues, even though it ultimately succeeded and recovered a substantial sum, the second plaintiff should pay 80 per cent of the defendants’ costs. That rather ignores the fact that even though the ultimate opinion of the second plaintiff’s expert was not accepted, much of the background in his report was accepted and, further, that as often happens when experts give evidence jointly, the issues were narrowed, leading to a more limited dispute between the experts. Further, there was considerable overlap in the expert evidence.

77. In my view, the Court should be particularly cautious in apportioning costs on an issue-by-issue basis when the outcome of an issue is very much dependent upon expert opinion which changed somewhat during the course of the trial. Successful parties should not be punished for pursuing cases on alternative, reasonably arguable bases, particularly when there is considerable overlap in the evidence and incurring of costs.

78. Further, this is not a case in which the second plaintiff failed on one severable cause of action and succeeded on the other. Although the second plaintiff pursued claims in contract and tort and under the Australian Consumer Law, they were all based on a failure to take care. As the matter progressed, there was little distinguishing the causes of action. The second plaintiff succeeded in establishing a failure to take care. It is just that it succeeded on only one of the pleaded bases and not the other.

79. For the same reason, I do not accept the characterisation of the defendants between the extended period and the short-term cracking issues. They were all the one issue. It is just that as the evidence emerged, it became less likely that the cracking had been present for an extended period and on my findings, more likely that it had been present only for a short period prior to the crash. I reject the defendants’ attempt to characterise them as severable issues.

80. Yet, on a fair review of the transcript and oral and written submissions of the parties, as well as all the expert and lay evidence, it is plain that the time taken and the costs which must have been incurred in pursuing issues on which it did not succeed was not small, de minimus or marginal. Considerable time and money was expended on pursuing the vibration issue and until the latter part of the trial, continuing to pursue the proposition that the cracking had been present for a long period prior to the crash.

81. All of this means that, in my view:

82. The original costs order should be varied, but not in the way suggested by the defendants;

83. Having substantially succeeded, the second plaintiff should not be ordered to pay any proportion of the defendants’ costs. To do so would be to fail to recognise the connection or relationship between the issues and the overlap in the expert reports and lay evidence. To do so would be to fail to recognise the most important point, being that the second plaintiff recovered a substantial sum from the defendants;

84. In the particular circumstances of this case there should be a variation of the order for costs in favour of the second plaintiff, but only by way of a percentage reduction in the amount recoverable;

85. In my view, the second plaintiff is entitled to recover 80 per cent of its costs.

86. Therefore, I make the following orders:

87. Set aside the orders made in the judgment dated 17 December 2025. In lieu thereof, make the following orders:

88. In the proceedings 2021/103314:

(a) Judgment for the plaintiff against the first defendant in the sum of $55,250. (b) The proceedings against the second defendant are dismissed. (c) Order the first defendant pay the plaintiff’s costs as agreed or assessed up to and including 18 August 2022 on an ordinary basis. (d) Order the plaintiff to pay the defendants’ costs on an indemnity basis from 19 August 2022, including the costs of the motion dated 23 December 2025.

3. In the proceedings 2021/106215:

(a) Judgment for the plaintiff against Encore Aviation Pty Ltd in the sum of $627,732.41. (b) The proceedings against the first defendant are dismissed. (c) Encore Aviation Pty Ltd to pay the plaintiff’s costs as agreed or assessed but limited to 80 per cent of those costs (including costs of the motion dated 23 December 2025).

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