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[2026] NSWSC 386
Supreme Court of NSW
2026-04-17
Hmelnitsky J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Octet Finance Pty Ltd v Macgregor (No 2) [2026] NSWSC 386
Hearing dates: On the papers
Date of orders: 17 April 2026
Decision date: 17 April 2026
Jurisdiction: Equity - Commercial List
Before: Hmelnitsky J
Decision: (1) Vacate order 1 made on 20 February 2026 and, in lieu thereof, enter judgment for the plaintiff against the seventh defendant in the sum of $47,533.44 (consisting of the principal sum of $37,779.46 and pre-judgment interest of $9,753.98), such judgment to take effect from 20 February 2026.
(2) The plaintiff is to pay the out-of-pocket costs actually and reasonably incurred by the third defendant in connection with the proceedings.
(3) The plaintiff is to pay the costs of the fourth to sixth defendants on the ordinary basis.
(4) The plaintiff is to pay the costs of the first and second defendants on the ordinary basis up to and including 26 September 2025 and thereafter on the indemnity basis.
(5) The seventh defendant is to pay 25% of the plaintiff’s costs on the ordinary basis.
Catchwords: COSTS — Party/Party — Orders when proceedings involve multiple parties — Where plaintiff was successful only as against one of seven defendants and only as to a small proportion of its overall claim — Whether costs should be apportioned by issue — Whether plaintiff’s entitlement to costs should be reduced to reflect limited success
COSTS — Party/Party — Exceptions to general rule that costs follow the event — Offers of compromise/Calderbank offers — Where offer by first and second defendants was made on condition that the terms of settlement be recorded in a deed containing standard terms including as to confidentiality and non-disparagement — Whether offer contemplated an outcome which could never have been obtained by first and second defendants from a final judgment — Where offer by fourth to sixth defendants was for an amount that effectively invited capitulation by the plaintiff — Where offer by seventh defendant was to settle all claims made against him — Whether it was unreasonable for plaintiff to reject the offers — Whether costs should be ordered on the indemnity basis
Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, 42.1 and 42.34
Cases Cited: Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29
CJD Equipment v A and C Constructions Pty Ltd [2010] NSWSC 502
Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219
Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407
Hansen t/as Derrawee Pastoral Co v Monterey (Coolah) Pty Ltd [2012] NSWSC 1383
Jireh International Pty Ltd t/as Gloria Jean’s Coffee v Western Export Services Inc (No 2) [2011] NSWCA 294
Lawrence v Nikolaidis (2003) 57 NSWLR 355; [2003] NSWCA 129
Little v Saunders [2004] NSWSC 655
Octet Finance Pty Ltd v Macgregor [2026] NSWSC 103
OXS Pty Ltd v Sydney Harbour Foreshore Authority and Minister for Planning and Environment [2014] NSWSC 1702
Payce Communities Pty Ltd v Canterbury-Bankstown Council (No 5) [2021] NSWSC 710
Preston v Commissioner for Fair Trading (2011) 80 NSWLR 359; [2011] NSWCA 40
Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368
Robb Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170
Sim Development Pty Ltd v Greenvale Property Group Pty Ltd [2018] VSCA 201
The Star Entertainment Sydney Properties Pty Ltd v Buildcorp Group Pty Ltd (No 2) (Costs) [2026] NSWSC 190
Waterwood Hotel Management Pty Ltd v KOP International Pty Ltd [2020] NSWSC 709
Wirepa v Hill (No 2) [2023] NSWSC 1654
Texts Cited: Nil
Category: Costs
Parties: Octet Finance Pty Limited (Plaintiff)
Katrina Jane MacGregor (First Defendant)
Robert James MacGregor (Second Defendant)
Timothy Robert Hantke (Third Defendant)
Nicki Anderson (Fourth Defendant)
Luciano Steven Pangiarella (Fifth Defendant)
Jonathan Richard Moss (Sixth Defendant)
Jason Felton Markwart (Seventh Defendant)
Representation: Counsel:
DL Williams SC / ND Riordan (Plaintiff)
N Kirby / M Fernandes (First and Second Defendants)
TE O’Brien / CJ Murphy (Fourth to Sixth Defendants)
DA Hughes SC (Seventh Defendant)
Solicitors:
Thomson Geer (Plaintiff)
Tudori Hager Grubb Lawyers (First and Second Defendants)
Arnold Bloch Leibler (Fourth to Sixth Defendants)
HWL Ebsworth (Seventh Defendant)
File Number(s): 2023/61698
Publication restriction: Nil
On 20 February 2026, I gave judgment for the plaintiff against the seventh defendant in the sum of $37,779.46: Octet Finance Pty Ltd v Macgregor [2026] NSWSC 103. I dismissed the claims against the first to sixth defendants. I will refer to that judgment as the ‘principal judgment’ or ‘PJ’.
The parties have now filed and served evidence and submissions on the questions of costs and interest. These reasons deal with those matters. I will use the same naming conventions and abbreviations as used in the principal judgment.
Octet was an unsecured creditor of Mrs Mac’s. It was left unpaid when Mrs Mac’s went into liquidation on 9 November 2022. Octet’s essential claim was that it had been misled by the Chief Financial Officer and by the directors of Mrs Mac’s in connection with what was known as Project Gateway. It claimed that it had been misled by those persons into believing that Mrs Mac’s was pursuing a ‘recapitalisation’ which was highly likely to result in the Octet Facility being paid in full whereas, in truth, Mrs Mac’s was also pursuing – and eventually consummated – an asset sale transaction which led to the company’s liquidation. Octet put this claim in various ways, including on the basis that the defendants had engaged in misleading and deceptive conduct by remaining silent as to the true scope of Project Gateway and by failing to correct certain representations about the scope and likely outcome of that project. Octet also alleged that the defendants had engaged in unconscionable conduct by causing Mrs Mac’s to continue to use the Octet Facility even when they knew that a liquidation was likely.
So far as the directors were concerned, Octet’s case depended largely on an allegation that the Chief Financial Officer, Mr Markwart, had been acting as the directors’ agent in connection with their pursuit of a course of action designed to give them the benefit of the ‘safe harbour’ provisions in s 588GA of the Corporations Act 2001 (Cth).
So far as its loss was concerned, Octet alleged that if the defendants had not engaged in the alleged contravening conduct, it would have secured full repayment of the Octet Facility ahead of other unsecured creditors with the assistance of Westpac, who was the senior secured creditor. Octet’s claim, therefore, was for damages equal to the entire balance of the Octet Facility as it stood when Mrs Mac’s went into liquidation on 9 November 2022, namely the sum of $3,999,842.69 plus interest.
These claims enjoyed mixed success.
I found that Mr Markwart did make the first alleged representation concerning Project Gateway and that he therefore did provide positive assurance about the likelihood of Octet being repaid, albeit that this representation was not expressed with quite the level of certainty as was alleged: PJ at [223]-[234]. However, I concluded that that representation was not misleading or deceptive: PJ at [250]. Nevertheless, it was a representation on which Octet relied: PJ at [350].
Although the first representation was not false and was not itself misleading or deceptive, I found that Mr Markwart did engage in misleading and deceptive conduct by remaining silent and failing to correct Octet’s understanding when, on 22 September 2022, he became aware that Project Gateway was instead likely to result in an asset sale to Pie Face and then liquidation, leaving Octet unpaid: PJ at [230] and [281]-[282].
On the other hand, I rejected the claim that the directors had engaged in this conduct, either directly or by being knowingly involved: PJ at [234], [284]-[285] and [299]. They had no direct dealings with Octet and I was not persuaded that they were aware of the specific assurances given by Mr Markwart to Octet about the scope of Project Gateway: PJ at [291]-[299]. I rejected an argument that the directors had propounded a policy of misinformation towards creditors in connection with Project Gateway: PJ at [293]. I also rejected the so-called Markwart Agency, which was the principal means by which Octet sought to sheet liability home to the directors: PJ at [219].
Although Octet succeeded in demonstrating that Mr Markwart engaged in misleading or deceptive conduct, it did not succeed in demonstrating that its loss from this conduct was the entire amount of the Octet Facility. That claim rested on a hypothesis that Westpac was so attracted to the prospect of the Pie Face transaction that it would have found a way to fund the full payout of the Octet Facility, even if it had to make the payment on its own account. I rejected that hypothesis: PJ at [366]. I found that if Mr Markwart had told Octet about the real nature of the Pie Face transaction on 22 September 2022, then Octet would have stopped the facility and, in all likelihood, Mrs Mac’s would have gone into external administration at that point, leaving the facility outstanding. I also found that if the parties had secured Westpac’s assistance to pay out Octet, the arrangement would probably have amounted to an unfair preference in any event: PJ at [367]-[379].
On the other hand, I found that the misleading and deceptive conduct did cause some loss. That is because the balance of the Octet Facility on 9 November 2022, when the company finally went into liquidation, was greater than the balance as at 22 September 2022, when (in my view) Mr Markwart should have disabused Octet about the nature of Project Gateway: PJ at [316] and [382]. Had he done so, Octet’s loss would have been limited to the outstanding balance of the facility on that day. The difference between the two amounts was $75,558.92.
That loss was, in turn, reduced pursuant to ss 87CB and 87CD of Schedule 2 of the Competition and Consumer Act 2010 (Cth) – The Australian Consumer Law (ACL). I found that Mr Markwart’s silence was also the company’s silence and that it was ‘just’, within the meaning of those provisions, to limit the loss recoverable from Mr Markwart to 50%: PJ at [407]. The final damages sum was therefore $37,779.46.
In the end, Octet:
succeeded in demonstrating that Mr Markwart engaged in misleading or deceptive conduct;
succeeded in obtaining an award of damages, although its loss was much smaller than claimed; but
failed altogether in its claims against the directors.
“(1) Within 7 days of written acceptance of the Offer, [the first and second defendants] shall pay [the plaintiff] $200,000 (Settlement Sum);
(2) Subject to payment by [the first and second defendants] of the Settlement Sum, [the plaintiff] shall release [the first and second defendants] from any claims arising out of the subject matter of the action.
(3) The terms of settlement be recorded in a Deed of Settlement with standard terms including as to confidentiality and non-disparagement; and
(4) Within 7 days of payment of the Settlement Sum, [the plaintiff and the first and second defendants] shall cause a minute of consent orders to be filed in action in the following terms:
- The action against the first defendant and second defendant be dismissed
- Any unsatisfied costs orders as between the plaintiff, first defendant and second defendant shall be recalled and discharged; and
- There be no order as to costs.”
The offers were open until 10 October 2025. These offers were made following an unsuccessful mediation of the proceedings, which were due to commence on 27 October 2025.
On 10 October, Octet made counter-offers to the Macgregors. These offers were also expressed to be without prejudice save as to costs. The offers made no mention of the Macgregors’ 26 September offers. Each counter-offer set out a series of propositions about Octet’s case which, the author said, the Court would have no difficulty concluding. The proposed terms of settlement as between Octet and the first defendant were as follows:
“2.1 On the terms set out in section 2.2 below, [the plaintiff] makes an offer that the first defendant is to pay the sum of $500,000 to [the plaintiff] in full and final settlement of all claims as between them, the subject of these proceedings (Settlement Sum).
2.2 The respective parties are to enter into a legally binding deed of settlement and release, which includes the following material terms:
(a) the first defendant is to pay the Settlement Sum to the plaintiff within 7 days after the parties’ entry into the deed of settlement and release;
(b) upon payment of the Settlement Sum, the parties are to mutually release each other, and any of the plaintiff’s associated entities or officers, employers, employees, representatives or agents, against all claims which arise, whether directly or indirectly, out of, or are incidental to or are in connection with the circumstances or allegations giving rise to, and matters the subject of these proceedings; and
(c) upon payment of the Settlement Sum, the proceedings are to be discontinued against the first defendant and any costs orders previously made as between the plaintiff and the first defendant are to be vacated and there is to be no other order as to the costs of the proceedings as between the plaintiff and first defendant.
2.3 There will be no binding agreement until the execution of a deed of settlement and release.
2.4 The Offer represents a substantial discount on [the plaintiff’s] claim for damages in the proceedings. Accordingly, the Offer is a genuine commercial compromise and rejection of it would be imprudent.”
“The fourth to sixth defendants offer, in full and final settlement of all claims made against them in the proceedings, to pay the plaintiff $15,000.”
“Judgment entered for the fourth to sixth defendants, the plaintiff’s claim against the fourth to sixth defendants be dismissed with no order as to costs.”
The letter enclosing the offer also stated that the fourth, fifth and sixth defendants would rely on the offer as a Calderbank offer in the event it was found not to satisfy the requirements of r 20.26 of the UCPR.
The evidence shows that the costs incurred by the fourth, fifth and sixth defendants as at 2 June 2023 were around $58,000, although this was not stated in the offer (or in the accompanying letter), nor is there any evidence that the plaintiff would have been aware of the exact amount of the offerors’ costs as at that point.
Mr Markwart made an offer to settle the proceedings on 20 August 2025. On that day, his solicitors served an Offer of Compromise pursuant to r 20.26 of the UCPR as well as a Calderbank offer.
The offers were as follows:
“Rule 20.26 Offer
- Mr Markwart offers to compromise the whole of Octet’s claim against him by the making of the following orders:
(a) judgment for Mr Markwart; and
(b) Mr Markwart will pay $70,000 towards Octet’s costs.
- The offer in paragraph 32 above is made in accordance with r 20.26 of the UCPR (Rule 20.26 Offer) and is open for 28 days from the date of this letter.
Calderbank Offer
- Alternatively, Mr Markwart makes an offer in accordance with the principles applied in Calderbank v Calderbank [1973] 3 All ER 333 (Calderbank Offer) to resolve the whole of Octet’s claim against him on the following terms, intended to be immediately binding:
(a) Mr Markwart pays Octet the amount of $70,000;
(b) the Proceedings against Mr Markwart are dismissed, with no orders as [to] costs; and
(c) the parties enter into a deed of settlement and release, on the usual terms.”
“36. Both the Rule 20.26 Offer and the Calderbank Offer are open for acceptance until 5:00pm (AWST) on 18 September 2025.
- If the Rule 20.26 Offer is accepted, the Calderbank Offer is automatically withdrawn.
- If neither the Rule 20.26 Offer nor the Calderbank Offer is accepted (or lapse) and Octet does not better the offers at trial, Mr Markwart will seek his costs from Octet from the date of this letter on an indemnity basis and will rely on this letter in support of such an application.”
“The Offer expires today. As you know, our respective clients have been engaged in a without prejudice dialogue concerning the prospective resolution of the proceedings as against your client. We understand that our client has indicated that the terms of the Offer might be acceptable to it, subject to and conditional upon Mr Markwart agreeing to assist our client in the proceedings against the balance of the defendants, including by providing evidence in support of our client’s claims against those defendants.”
The email then spelled out the evidence which, it was hoped, Mr Markwart might be able to give.
Nothing came of this and the offers lapsed. Mr Markwart’s solicitors made clear that Mr Markwart did not consider that he could assist Octet in any way that would aid its claim against the directors, even if he wanted to.
42.1 General rule that costs follow the event
Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.
Speaking generally, and subject to the important proviso to which the rule itself refers, r 42.1 might be expected to produce a result in which (a) Octet is ordered to pay the costs of the successful defendants but (b) Mr Markwart is ordered to pay Octet’s costs of the claim against him, both being costs on the ordinary basis.
So far as the first, second, fourth, fifth and sixth defendants are concerned, they and Octet accept that this is the starting point, subject only to whether Octet’s failure to accept one or other of the settlement offers referred to above warrants the making of an indemnity costs order of some kind. I will deal with each of the offers below.
I did not receive any submissions from the third defendant in relation to costs. He was self-represented at the hearing and is not entitled to a costs order in respect of his own time spent in litigation: Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29 at [1]. Octet submitted that there should therefore be no costs order in relation to the unsuccessful claim against the third defendant.
So far as Mr Markwart is concerned, the position is more complicated. He contends that Octet should pay all of his costs of the proceedings, despite the fact that Octet succeeded in obtaining an award of damages against him. He further contends that Octet should pay those costs on the indemnity basis from the date of his offer. Octet, on the other hand, contends that Mr Markwart should pay 25% of its costs.
The offer made by the Macgregors on 26 September 2025 was subject to a condition that ‘[t]he terms of settlement be recorded in a Deed of Settlement with standard terms including as to confidentiality and non-disparagement’.
Octet submits that acceptance of the offer would therefore not have given rise to a legally binding agreement and that its non-acceptance was, for that reason, not unreasonable: Little v Saunders [2004] NSWSC 655 at [45]-[46]. It submits that the precise scope of the proposed releases was unclear because it was not accompanied by a draft deed. It also submits that in seeking terms as to confidentiality and non-disparagement, the offer contemplated an outcome which could never have been obtained by the first and second defendants from a final judgment, such that Octet’s rejection of the offer was not unreasonable: Payce Communities Pty Ltd v Canterbury-Bankstown Council (No 5) [2021] NSWSC 710 (‘Payce’) at [26]; Wirepa v Hill (No 2) [2023] NSWSC 1654 at [22]-[23].
The fact that an offer to settle proceedings is made on condition that the parties enter into an as-yet-undrafted settlement deed is not always fatal to an argument that its rejection is unreasonable. In Little v Saunders, Campbell J was concerned with the consequences of the failure to accept an offer that merely required the offerees to ‘enter a deed of settlement’. Campbell J said at [46]:
“I regard this offer as one which, if accepted, would result in a contract which was void for uncertainty. There is no knowing what the deed of settlement … would involve, and that is a sufficient reason for reaching that conclusion.”
However, it does not always follow that a reference to a proposed settlement deed will produce this same result. The question of whether the failure to accept an offer is unreasonable depends on a consideration of a whole range of matters and varies from case to case. It will usually include (at least) a consideration of the nature of the claims, the stage of the litigation, the ability of the parties to assess the merits of the proposed settlement and the extent to which the offer represents a real compromise. It will also include a consideration of the precise terms of the offer and may also include a consideration of the history of the parties’ communications about settlement, both before and after the making of the offer.
For example, in Sim Development Pty Ltd v Greenvale Property Group Pty Ltd [2018] VSCA 201 (‘Sim Development’) at [74]-[80], the Victorian Court of Appeal found that there was no error in the trial judge’s conclusion that it was unreasonable of the plaintiff to reject an offer that included the following:
“If the offer is agreed to by your client, it will need to be recorded in terms of settlement drafted by this firm and which are satisfactory to our client, which terms will contain clauses recording the above arrangements, standard mutual releases, mutual non-disparagement clauses and a confidentiality clause.”
“It can be seen that Greenvale was not stipulating terms of settlement with Sim having ‘no way of knowing’ what they would contain. The matters in question were plainly spelt out together with ‘standard’ releases and other clauses commonly found in terms of settlement.”
Nor is it true that it is never unreasonable to reject an otherwise good settlement offer where it would require the offeree to agree to terms regarding confidentiality and non-disparagement. In saying this, I acknowledge that an offer on such terms does often supply a fairly shaky foundation for an application for indemnity costs. The usual difficulty is the one identified by Slattery J in Wirepa v Hill (No 2). In that case, there were two Calderbank offers dated 21 March 2023 and 19 May 2023. His Honour made an indemnity costs order based on the unreasonable failure to accept the first Calderbank offer.
Although it was therefore unnecessary to deal with the consequences of non-acceptance of the second Calderbank offer, his Honour noted that it was on terms that would have required a deed dealing with confidentiality and non-disparagement. His Honour said at [22]-[23]:
“[22] But [the] non-disparagement [and] the confidentiality clauses … are in a different category. It is now not uncommon in commercial negotiations for parties to stipulate for non-disparagement and confidentiality clauses. The circumstances in which parties seek such clauses will vary. In this case there was a bitter dispute between neighbours about an easement. Had Ms Wirepa obtained the relief that she sought on her Summons, or had that relief been dismissed, it was highly unlikely that the Court would in either case have made non-disparagement orders between these parties or made suppression orders imposing a regime of confidentiality on the outcome of the proceedings. The proceedings were conducted in public as an essential part of the good administration of justice. Moreover, final relief of that kind was not sought in the Summons, or in the Cross Summons.
[23] Had non-disparagement [and] confidentiality clauses been stipulated for in a Calderbank letter which was otherwise operative, the defendants would have been stipulating for an outcome which they could never have achieved in this litigation. That would probably have made the Calderbank letter ineffective, as rejection of the offer would have been reasonable.”
A similar conclusion was reached by Stevenson J in Payce at [24]-[27].
However, as Slattery J recognised, it is not uncommon for parties to commercial litigation to stipulate for confidentiality and non-disparagement clauses in settlement deeds and the circumstances in which they do so vary. In Sim Development, the Court took into account the fact that the offeree had responded to such a proposal with a counter-offer in which it indicated that it, too, would be prepared to settle on the basis of a deed that included terms dealing with those matters. The Court said at [79]-[80]:
“[79] In the circumstances, there was every reason to think, as the judge found, that if the substantive terms of Greenvale’s offer had been acceptable to Sim, the parties would have negotiated terms of settlement dealing with the matters yet to be specifically spelt out. Those matters were of a kind typically contained in terms of settlement and both parties indicated their preparedness to discuss such matters once the commercial dispute was resolved.
[80] In the circumstances, the fact that these matters were not the subject of express stipulation in the offer did not deprive the offer of clarity or make it reasonable for Sim not to accept it.”
“There will be no binding agreement until the execution of a deed of settlement and release.”
The offer made by the fourth to sixth defendants was to settle all claims made against them for $15,000. The offer did not represent any kind of compromise at all. As the plaintiff submits, it was made at a very early stage in the proceedings (just three months after they were commenced) and it was for an amount that effectively invited capitulation. The offer contemplated judgment in favour of the fourth to sixth defendants, but not for any order for the payment of the $15,000 to Octet.
Where the element of compromise in an offer is so slight that it in substance amounts to an invitation to surrender, the claim would have to approach something of the character of frivolous or vexatious for the offer to constitute a genuine compromise: Robb Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170 at [20]; Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [31]-[32]. Even though Octet was ultimately unsuccessful in its claims against the fourth to sixth defendants, those claims cannot be characterised as frivolous and vexatious, especially at a stage in proceedings where no evidence had yet been served. I find that it was not unreasonable for Octet to reject the offer.
It follows that the fourth to sixth defendants are not entitled to indemnity costs from the date of the offer. I will therefore order Octet to pay the fourth to sixth defendants’ costs on the ordinary basis.
Mr Hantke was not represented in the proceedings and, as Octet submitted, is not entitled to recover costs in relation to his own time spent in litigation.
It does not however follow that there should be no order in relation to costs. That is because even unrepresented parties usually incur costs in connection with litigation, such as filing fees, witness expenses and other outgoings. It has been held that a self-represented litigant who is not a solicitor may be entitled to recover such out-of-pocket costs as are actually and reasonably incurred in connection with the proceedings, including filing fees and other expenses which would have been recoverable as disbursements had the party been legally represented: Preston v Commissioner for Fair Trading (2011) 80 NSWLR 359; [2011] NSWCA 40 at [183] (Campbell JA, Tobias and Young JJA agreeing); see also Lawrence v Nikolaidis (2003) 57 NSWLR 355; [2003] NSWCA 129 at [37] (Hodgson JA, Beazley JA agreeing). I do not know whether and to what extent Mr Hantke incurred such costs in the course of this litigation, but that is a matter that can be dealt with by a costs assessor if it cannot otherwise be agreed. I will therefore order Octet to pay Mr Hantke’s costs.
Mr Markwart submits that it would not be appropriate to order him to pay any of Octet’s costs of the claim against him. Rather, he submits that Octet should pay his costs of the entire proceedings. He submits that Octet succeeded only on one aspect of its liability case (being the case based on misleading and deceptive conduct constituted by the failure to correct) and that it almost entirely failed on its damages case. He points out that Octet’s thesis as to how it could have secured payment of the outstanding balance on the Octet Facility with the assistance of Westpac was rejected and that the sum ultimately awarded represents only a tiny percentage of what Octet was claiming.
He submits that although the starting point is that costs should ordinarily follow the event, the ‘event’ is the ‘practical outcome of the proceedings’: Hansen t/as Derrawee Pastoral Co v Monterey (Coolah) Pty Ltd [2012] NSWSC 1383 at [29] (Schmidt J); Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] (Ward, Emmett and Gleeson JJA). By this measure, Mr Markwart submits that he has been successful and that the award of damages against him may be likened to an award of nominal damages. He refers to a number of cases in which plaintiffs have been ordered to pay the costs of defendants against whom they have secured only piddling amounts of damages: OXS Pty Ltd v Sydney Harbour Foreshore Authority and Minister for Planning and Environment [2014] NSWSC 1702 at [6]-[9] (Black J); Waterwood Hotel Management Pty Ltd v KOP International Pty Ltd [2020] NSWSC 709 at [274] and [277] (Ward CJ in Eq); Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 at [685] (Campbell JA, Allsop P and Giles JA agreeing).
Mr Markwart sought leave to make further brief submissions relying on The Star Entertainment Sydney Properties Pty Ltd v Buildcorp Group Pty Ltd (No 2) (Costs) [2026] NSWSC 190 (‘Star’), a case which was published after the parties’ final submissions on the question of costs were due. I granted leave and allowed Octet the opportunity to file brief submissions in reply.
In Star, Rees J ordered the plaintiff to pay the defendant’s costs where the plaintiff had limited success in the principal proceedings and obtained a judgment for only $285,662 despite making a claim for $4 million: at [48]. Her Honour found that the plaintiff would not have commenced the proceedings in respect of only the limited claim that it succeeded on. Mr Markwart sought to analogise Octet’s situation to that of the plaintiff in Star, submitting that Octet would not have commenced proceedings against Mr Markwart only to recover damages of $37,779.46.
Mr Markwart also relies on r 42.34 of the UCPR. That rule provides as follows:
42.34 Costs order not to be made in proceedings in Supreme Court unless Court satisfied proceedings in appropriate court
(1) This rule applies if—
(a) in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and
(b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants.
(2) If the proceedings could have been commenced in the District Court, an order for costs must not be made unless the Supreme Court is satisfied that the commencement and continuation of the proceedings in the Supreme Court was warranted.
Mr Markwart submits that if I am minded to apportion costs by issue, then I should have regard to the policy and principles underlying r 42.34. In other words, if I consider it appropriate to make specific costs orders in relation to each of the individual issues that were litigated, then I should find that the issue on which Octet succeeded is one which, if it was to be brought at all, should have been brought in the District Court. Thus, he submits that the starting point in determining the question of costs in relation to the one issue on which Octet was successful is that Octet should not receive any costs order in its favour.
Mr Markwart submits that Octet should pay his costs incurred prior to 21 August 2025 on the ordinary basis, and thereafter on the indemnity basis.
Octet submits that it has succeeded against Mr Markwart and that it is entitled to an award of costs in its favour. It successfully demonstrated that he engaged in misleading or deceptive conduct in relation to Project Gateway. This was Octet’s primary claim in the litigation so far as the question of liability was concerned. Octet also succeeded in showing that it suffered loss and damage as a result of Mr Markwart’s conduct, albeit in an amount that is far less than what it was claiming. Be that as it may, Octet submits that the damages are neither trivial nor derisory.
As to the outcome in Star, Octet sought to distinguish the current circumstances. Star involved multiple claims being brought against the defendant, and the damages only resulted from one of the claims, which was not contested by the defendant at trial: at [27] and [47]. Octet said that its claim in misleading or deceptive conduct, by contrast, did not involve multiple discrete aspects, and all of the issues on which Octet was successful were contested by Mr Markwart. Therefore it would be inappropriate to conclude that Mr Markwart was effectively the true victor in these proceedings.
Octet submits that Mr Markwart should be ordered to pay 25% of its costs of the proceedings on the ordinary basis. It recognises that Mr Markwart was one of seven defendants and that it is appropriate to reduce the overall award to ensure that Mr Markwart is not visited with the costs incurred by Octet in its unsuccessful pursuit of the other defendants. It also recognises that it is appropriate to reduce the total award of damages to reflect the fact that there would be something of a disproportionate outcome if no discount were applied: see, for example, Jireh International Pty Ltd t/as Gloria Jean’s Coffee v Western Export Services Inc (No 2) [2011] NSWCA 294 at [11]-[15]; CJD Equipment v A and C Constructions Pty Ltd [2010] NSWSC 502 at [11].
In my view, Mr Markwart should be ordered to pay 25% of Octet’s costs. My reasons for reaching this conclusion are as follows.
First, I do not consider it appropriate to determine costs on an issue-by-issue basis. Although it was necessary to determine various issues in coming to the conclusion that there should be judgment against Mr Markwart, these were all part of a single, overall claim for loss arising from conduct engaged in over a relatively short period of time in 2022. The evidence was almost entirely concerned with that conduct and it did so in a global way. That is, different aspects of the claim were not the subject of separate and distinct evidence. There was also no evidence dealing separately with the question of loss.
Even if I had found it appropriate to deal with costs on an issue-by-issue basis, I do not consider that it would have been appropriate to do so by reference to the policy of r 42.34 of the UCPR. These proceedings were appropriately brought in this Court. The claim was for an amount that far exceeded the jurisdictional limit of the lower courts. The fact that the plaintiff did not, in the end, make out its whole claim is not a reason to conclude that it should not have been brought in this Court.
Secondly, I do not consider that the judgment is nominal or derisory. Far from it. I found that Octet should be fully compensated for all loss suffered by reason of the misleading or deceptive conduct. It is true that the loss was small, but that does not make damages either nominal or derisory.
Thirdly, Octet succeeded as against Mr Markwart in relation to its central complaint, namely that he misled Octet in connection with Project Gateway. It also succeeded in showing that it had suffered loss by reason of that conduct. It is again true that the loss was small, but even that small loss was never conceded. Although this is an area where minds might differ, I consider the relevant ‘event’ to be the judgment which Octet secured against Mr Markwart, albeit for an amount that was far less than it contended for. In this respect, I accept, as Octet submits, that the reasoning in Star is not directly applicable to this case.
Fourthly, the main issue on which Octet failed so far as the claim against Mr Markwart was concerned was in relation to its Westpac hypothesis. This was calamitous for Octet’s entitlement to damages, but it was a topic that occupied very little time in the course of the trial. This, in fact, was a large part of my difficulty with it; it was not the subject of any useful evidence.
Finally, I do not consider that Octet’s rejection of Mr Markwart’s 20 August 2025 offer is a reason to award indemnity costs to him.
In relation to the offer under r 20.26 of the UCPR, Mr Markwart was proposing that there be judgment for him. Octet did better than that. It secured judgment against Mr Markwart for $37,779.46 plus interest. Mr Markwart’s Calderbank offer was not much better. It was for Mr Markwart to pay sum the sum of $70,000 to Octet and for the proceedings to be dismissed with no order as to costs.
I will therefore order Mr Markwart to pay 25% of Octet’s costs.
The orders of the Court will therefore be as follows:
Vacate order 1 made on 20 February 2026 and, in lieu thereof, enter judgment for the plaintiff against the seventh defendant in the sum of $47,533.44 (consisting of the principal sum of $37,779.46 and pre-judgment interest of $9,753.98), such judgment to take effect from 20 February 2026.
The plaintiff is to pay the out-of-pocket costs actually and reasonably incurred by the third defendant in connection with the proceedings.
The plaintiff is to pay the costs of the fourth to sixth defendants on the ordinary basis.
The plaintiff is to pay the costs of the first and second defendants on the ordinary basis up to and including 26 September 2025 and thereafter on the indemnity basis.
The seventh defendant is to pay 25% of the plaintiff’s costs on the ordinary basis.
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Octet Finance Pty Ltd
Macgregor
(2019) 269 CLR 333
(2009) 76 NSWLR 603
(2003) 57 NSWLR 355
(2011) 80 NSWLR 359