//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2003] NSWIRComm 424
procedural. The applicant must pay the third respondent’s costs and the first and second respondents’ party-and-party costs from 4 July 2001; the first and second respondents must pay 80% of the applicant’s...
The court divided costs according to the outcome and the offers made. The applicant had no specific claim against the third respondent, so he had to pay that respondent's costs. The March Calderbank offer could not be assessed fairly because it covered separate proceedings and did not provide for taxed costs already incurred. The July Offer of Compromise was more favourable than the result when compared over the same period, so the applicant had to pay the first and second respondents' costs from the offer date. For earlier costs, the court rejected a mechanical division of the case but reduced the applicant's recovery to 80 per cent because the serious-misconduct issue unnecessarily lengthened the case. The court refused indemnity costs.
AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.
2,416 words · generated 29/09/2026
This is a costs judgment, not the decision of the substantive dispute itself. Walton J, Vice-President, had given judgment in the underlying proceeding on 3 October 2002. The resulting orders, made by consent on 11 November 2002, required Cronulla Sutherland Leagues Club Limited and Cronulla Sutherland District Rugby League Football Club Limited to pay Peter Rochester Gow $105,000, plus $32,593.31 interest. The application against the third respondent, Barry Michael Pierce, was dismissed. Costs had been reserved (para 1).
No linked legislation citations have been extracted yet.
The parties then disputed who should bear the costs. The respondents relied on two offers made before the substantive judgment. The first was a Calderbank offer dated 15 March 2001. It proposed dismissal of proceedings, payment of $200,000 in a combination of cash and release of a costs obligation, co-operation to end separate District Court proceedings, mutual releases, assistance with documents for Licensing Court proceedings, and confidentiality (para 4.2). The second, made on 4 July 2001 under Rule 216 of the Industrial Relations Commission Rules, offered $140,000 inclusive of interest, plus the applicant's costs (para 4.3).
The applicant sought his costs, and alternatively indemnity costs. He argued, among other things, that the offers did not protect him from potential costs in the separate Licensing Court proceedings, and that judgment gave him non-monetary benefits not included in the July offer. The respondents sought their costs, including costs following the July offer, and proposed allocating costs by reference to the parts of the case on which each side had succeeded (paras 4-5).
The court made three distinct costs orders. First, the applicant had to pay the third respondent's costs because no specific claim against that respondent had ever been formulated (para 7). Secondly, the applicant had to pay the first and second respondents' party-and-party costs from 4 July 2001 under Rule 216(6) (paras 13-19). Thirdly, the first and second respondents had to pay 80 per cent of the applicant's party-and-party costs up to and including that date. That reduction reflected the time and expense generated by the applicant's unsuccessful position on serious misconduct (paras 20-24).
The court first considered the claim for indemnity costs. It described indemnity costs as available in unusual cases where needed to meet the requirements of justice, rather than to punish. It noted that such cases often involve unmeritorious or improper conduct, but that is not a necessary feature in every case. What mattered here was that the respondents' strong opposition, including a dispute over key facts, was not enough. The court also relied on the Full Bench's reasoning in Australian Mutual Provident Society v Avis: an adverse finding of unfairness under s 106 did not, without more, justify indemnity costs (para 8). The request was therefore refused.
The March Calderbank offer failed for two practical reasons. It bundled together proceedings in separate courts. The Commission had no evidence about the District Court proceedings' outcome, the costs incurred there, or the amount in dispute. Without those details, it could not compare the total result of the offer with the outcome eventually obtained in the Commission (para 10). The court left open whether an offer spanning unrelated proceedings in different jurisdictions might be inherently ineffective, because the point was not argued with authority and was unnecessary to decide.
The offer also did not allow the applicant to recover his taxed costs to the date of the offer in addition to the proposed settlement. The court applied the principle stated by Goldberg J in Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2): an offeree should be able to compare the offer with the relief sought, and should have the opportunity to obtain taxed costs to date separately from the settlement sum (paras 9, 11). Since both the comparison problem and the costs-to-date problem were present, the Commission did not use the March offer to alter the customary costs outcome. It did not decide whether refusing that offer was unreasonable, because it could not assess the offer's relative value in the first place (para 12).
For the July Offer of Compromise, the court applied Rule 216(6). The rule provided that if an applicant rejected a respondent's offer and then obtained an order no more favourable than the offer, the applicant would ordinarily receive costs to the offer date and the respondent would ordinarily receive costs thereafter, unless the Commission ordered otherwise (para 13). The applicant said that judgment was more favourable in non-monetary terms because it publicly vindicated him and meant the respondents had not had “the last word”. The court rejected that argument. It considered that such a test would undermine the policy of encouraging serious consideration of settlement offers (para 14).
The court accepted a comparison that assessed interest over the same period. On that basis, the July offer exceeded the value of the result by $16,000. It also observed that even on the applicant's alternative comparison, the difference was only $2,406.49, which was not enough to justify departing from the rule, referring to prior decisions involving small differences (para 17). The applicant had not shown exceptional circumstances or a reasonable basis sufficient to displace the ordinary operation of Rule 216(6). The separate Licensing Court costs risk did not assist him because neither the offer nor the Commission's judgment could resolve that separate issue (para 18).
Finally, the court considered the costs before 4 July 2001. It accepted that apportionment may be appropriate where a party succeeds only on part of a case, but emphasised that the exercise is discretionary and not a matter of mathematical precision (para 20). It rejected the respondents' proposed approach of dividing the case into three limbs or allocating costs according to when the successful aspect became apparent. Evidence about the meeting and what had been agreed there was complicated but material to the outcome (para 21). The court did, however, identify one issue that had unnecessarily lengthened proceedings and increased costs: the applicant's position that his conduct could not be classified as serious misconduct (para 22). It accordingly awarded him 80 per cent, rather than all, of his pre-offer costs (para 23).
The judgment did not purport to change the law on costs. It applied existing rules and principles to the offers and issues before it. Its account of the legal position draws on the authorities cited in the judgment: Calderbank principles, Rule 216(6), the ordinary approach that costs follow the event, and the court's discretion to apportion costs where there is mixed success.
For Calderbank offers, the judgment applied the approach in Dr Martens: an offer should make a careful comparison possible and should separate the settlement value from costs already incurred. The court also considered McKerlie v State of New South Wales (No 2), where an offer to dismiss proceedings without an order as to costs did not trigger Calderbank consequences. In this case, however, the Commission did not need to decide whether the structure of the March offer itself was legally insufficient in all circumstances. It held that the lack of evidence about the other proceedings and the absence of provision for taxed costs to date made the offer unusable for the comparison required here (paras 9-12).
For formal offers of compromise, the judgment applied Rule 216(6) as written and discussed the principles collected in Morgan v Johnson. Those principles, as recited by the court, include encouraging settlement, requiring serious consideration of an offer, and treating the rule's ordinary costs consequence as the prima facie result, subject to judicial discretion and proper reasons for departing from it (paras 15-16). The judgment's contribution is its application of those ideas to the applicant's asserted non-monetary vindication and to the comparison of the offer and outcome over the same period.
For apportionment, the court reaffirmed that mixed success does not automatically require a fixed percentage based on the number of issues or time spent. The outcome depends on an evaluative exercise. Here the applicant recovered most of his pre-offer costs, but not all, because one aspect of the case was found to have unduly increased the time and expense of the proceedings (paras 20-23).
The judgment therefore records an application of existing principles rather than a “before and after” change in the law. The text does not establish that the rules or doctrines themselves changed because of this decision.
At paragraph 9, the judgment explains that an offer must enable a careful comparison between the settlement and the relief sought. In plain English, an offer that folds legal costs into a single total can make it difficult for the recipient to know how much is being offered for the claim itself. That matters where rejection may later affect costs.
At paragraph 10, the court says there was not enough evidence to decide whether the applicant had done better than the March offer. Put simply, because the offer also dealt with another court case, the Commission could not evaluate it without knowing what happened in that case and what it was worth.
At paragraph 14, the court rejects the argument that public vindication made the result more favourable than the July offer. The court treated the offer rules as serving a public purpose, not only as a calculation of whether a party felt vindicated. In plain English, the question under the rule was not whether judgment felt more satisfying, but whether the order obtained was more favourable than the offer in the relevant sense.
At paragraph 18, the court says the risk of costs in the Licensing Court proceedings was irrelevant to whether Rule 216(6) applied. The Commission's order could not determine that separate issue, and the offer did not remove it. This illustrates the judgment's focus on the claim and order governed by the rule before it.
At paragraph 20, the court says mathematical precision in apportioning costs is illusory. In plain English, a court does not necessarily divide costs according to the number of claims or hours spent on them. It makes an evaluative decision based on the way the issues affected the case.
At paragraph 22, the court identifies the serious-misconduct issue as the part that unduly lengthened the case. This is the factual reason given for reducing the applicant's pre-offer costs recovery to 80 per cent, rather than making a general penalty for losing some issues.
The costs reasoning is most directly relevant where a respondent has made a formal offer of compromise under the applicable procedural rule, the applicant has rejected it, and the final order is alleged to be no more favourable than the offer. The judgment shows the importance of comparing like with like, including the relevant period for interest, and of identifying whether the applicant has established circumstances warranting departure from the rule's ordinary costs consequence (paras 13-19).
The Calderbank discussion is relevant where an offer combines settlement of a claim with costs, or attempts to settle connected or unrelated proceedings in more than one court. It highlights two practical features of the offer before the Commission: the court could not evaluate the separate proceeding, and the offer did not preserve an opportunity to obtain taxed costs to date in addition to the settlement sum (paras 9-12). The judgment does not decide that every multi-proceeding offer is ineffective. It leaves that broader question open.
The apportionment reasoning is relevant to cases where a party succeeds on some matters but fails on others. The court considered whether the unsuccessful issues were necessary to establish the factual background, whether a proposed division by “limbs” or time spent was justified, and whether a particular issue had materially lengthened the proceedings or increased costs (paras 20-23). It does not prescribe 80 per cent as a standard rate. That figure was tied to the court's assessment of this case.
The third respondent costs order is relevant to a situation where a party is joined but no specific claim is actually formulated against that party. The judgment treats that omission as serious, while leaving the allocation of costs referable to the third respondent to the costs assessor (para 7).
The supplied judgment identifies authorities that it considered or cited, but it does not describe any later judicial treatment of Gow (No 2). It therefore provides no source-grounded basis for saying whether later courts have followed, distinguished, limited, or reconsidered this decision.
The judgment itself refers to prior authorities, including Dr Martens, McKerlie, Morgan v Johnson, Connor v Hatgis, Van Huisstede, and Australian Mutual Provident Society v Avis. Those references show the authorities used by Walton J in reaching the costs decision. They do not establish how courts treated Gow (No 2) after 2003. A later-treatment analysis would require later judgments or other legal sources, which are not included in the supplied material.
The judgment expressly leaves open whether a Calderbank offer that straddles unrelated proceedings in different jurisdictions is, as a matter of principle, ineffective. Walton J said it “may be” so, but the issue had not been supported by authority and did not need determination on the evidence available (para 10).
It also leaves open whether an independent agreement to pay money, to be noted by the court but not made into court orders, could distinguish the March offer from the offer in McKerlie. The court said it tended to think not, but expressly found it unnecessary to decide the question (para 11).
The judgment does not set out a general formula for determining when a rejected offer is “more favourable” in every case involving non-monetary outcomes. It rejects the specific arguments based on public vindication and the respondents not having the last word, and it conducts a monetary comparison with interest measured over the same period (paras 14, 17). The boundaries of the comparison in other fact patterns are not resolved by this decision.
Finally, the supplied text does not explain the substantive findings in detail, including the full factual basis for the serious-misconduct issue or all the terms of the underlying judgment. The costs reasons explain how that issue affected the apportionment, but further conclusions about the merits or later legal treatment cannot be drawn from this costs judgment alone.
This is general legal information, not legal advice. Zoe can make mistakes. Before you act on this, rely on it, or use any draft, get a qualified Australian lawyer to check it.
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.
Peter Rochester Gow
Cronulla Sutherland Leagues Club Limited
PARTIES : RESPONDENTS: Cronulla Sutherland Leagues Club Limited Cronulla Sutherland District Rugby League Football Club Limited Barry Michael Pierce FILE NUMBER: IRC 4711 of 1999 CORAM: Walton J Vice-President CATCHWORDS : Costs - Indemnity costs - Calderbank offer by respondent - Offer to settle two distinct proceedings in separate courts - Offer did not include applicant's costs to date - Offer of compromise - Apportionment. Australian Mutual Provident Society v Avis (unreported, Matter Nos IRC96/5473 and IRC96/5941, 18 December 1997) Connor v Hatgis (No 2) (CA(NSW) Kirby P, Priestley and Powell JJA, 7 December 1995, unreported, BC9501810) Calderbank v Calderbank [1976] Fam 93 Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 CASES CITED : McKerlie v State of New South Wales (No 2) [2000] NSWSC 1159 Maurice Michael O'Sullivan v The Crown in the Right of the State of New South Wales (Department of Education and Training) [2003] NSWIRComm 303 Morgan v Johnson (1998) 44 NSWLR 578 Peter Rochester Gow v Cronulla sutherland Leagues Club Ltd [2002] NSWIRComm 247 Van Huisstede v The Commissioner of Police (No 2) (2001) 106 IR 56 HEARING DATES: 09/04/2003 DATE OF JUDGMENT: 12/05/2003
24 If the purpose of a Calderbank letter is to offer to bring litigation to an end it should be couched in such terms as enable the offeree to make a carefully considered comparison between the offer made and the ultimate relief it is seeking in all its aspects. An offer inclusive of costs confuses this issue as it puts the offeree in a position of not being able to determine the appropriate amount to attribute to the money sum it is seeking. Although an estimate can be made of what the offeree's taxed party and party costs might be at the time of the offer, the offeree is not being offered the opportunity to have those costs assessed by taxation in default of agreement, in addition to being made an offer to settle its claim. As a matter of principle, if a party is to be put at risk of losing its costs, even if ultimately successful, by not accepting an offer made to settle or compromise the proceeding at a point of time prior to trial, that risk should only be imposed if the party is given the opportunity, at the time of the offer, to obtain its taxed costs to date in addition to the offer made, knowing that it has been able to make a careful comparative assessment of the value of the offer as against the ultimate relief sought to be obtained. 10 There are two problems with the respondents' offer by letter dated 15 March 2001 which preclude me from relying upon it to displace a customary costs order in accordance with the Calderbank principles. First, this Court is not in a position to determine whether or not the offer has been bettered: it is effectively an offer to settle two sets of proceedings, and there is no evidence before this Court as to the outcome of the District Court proceedings; the costs incurred; or even the amount in dispute. It may be that an offer straddling unrelated proceedings in two jurisdictions is ipso facto ineffective as a Calderbank letter; neither party referred the court to any authority on this subject. In any event, the absence of evidence makes it impossible to assess whether or not the applicant has achieved a more or less favourable result than that contained in the offer. 11 Secondly, contrary to the principles enunciated by Goldberg J, the offer did not give the applicant the opportunity to obtain his taxed costs to date (in either proceedings) in addition to the amount being offered. In McKerlie v State of New South Wales (No2) [2000] NSWSC 1159 the Supreme Court of New South Wales held expressly that an offer to settle a case by dismissing it with no order as to costs did not enliven the consequences of a Calderbank letter. Whether an independent agreement to pay money (in the form of a proportion of the claim plus costs), to be noted by the Court but not to take the form of Court orders, is sufficient to distinguish the present offer from that considered by the Supreme Court in McKerlie v State of New South Wales (No2) need not be determined. I tend to the view that it would not. 12 For these reasons it is unnecessary for me to consider whether or not the applicant's failure to accept the offer was so unreasonable that the respondents should be entitled to their costs from the date of the offer. Indeed the lack of evidence which precludes an assessment of whether or not the applicant achieved a result more favourable than the offer also precludes an assessment of whether or not he acted reasonably in failing to accept it. The Offer of Compromise 13 Rule 216(6) of the Industrial Relations Commission Rules 1996 provides: (6) Where an offer is made by a respondent and not accepted by the applicant, and the applicant obtains an order on the claim to which the offer relates not more favourable than the terms of the offer, then, unless the Commission otherwise orders, the applicant shall be entitled to an order against the respondent for costs in respect of the claim up to and including the day the offer was made, assessed on a party and party basis, and the respondent shall be entitled to an order against the applicant for costs in respect of the claim thereafter, assessed on a party and party basis. 14 I do not accept the applicant's submissions that the judgment handed down was more favourable to him than the offer of compromise because, in essence, he considers that he has now been publicly vindicated and the respondents have not "had the last word". Acceptance of this argument would clearly undermine the public policy behind offers of compromise to encourage parties to give serious consideration to reasonable offers of settlement. 15 Authorities pertaining to offers of compromise in other jurisdictions were considered by the New South Wales Court of Appeal in Morgan v Johnson (1998) 44 NSWLR 578. Mason P extracted the following principles from the relevant case law at 581: The leading cases on the Supreme Court rule are Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 and New South Wales Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100 (" Reeve "). The leading cases on the corresponding provision in the District Court rules are Hillier v Sheather (1995) 36 NSWLR 414, Quach v Mustafa (Court of Appeal, unreported, 15 June 1995) and Houatchanthara v Bednarczyk (Court of Appeal, unreported, 14 October 1996). The following principles can be extracted: (1) The purpose of the rule is to encourage the proper compromise of litigation, in the private interests of individual litigants and the public interest of the prompt and economical disposal of litigation: Maitland Hospital at 725-6; Hillier at 421, 431. (2) The aim is to oblige the offeree to give serious thought to the risk involved in non-acceptance: Maitland Hospital at 724. (3) The prima facie consequence of non-acceptance will be that the rule will be enforced against the non-accepting party: Reeve at 102; Hillier at 422. This is because, from the time of non-acceptance "notionally the real cause and occasion of the litigation is the attitude adopted by [the party] which has rejected the compromise" : Maitland Hospital at 724; see also Hillier at 420. (4) Lying behind the rule is the common knowledge that "litigation is inescapably chancy" : Maitland Hospital at 725. For this reason, the ordinary provision is expected to apply in the ordinary case: ibid ; Reeve at 102-3. The mere fact that it was reasonable for the litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule: Reeve at 102. As Clarke JA expressed it in Houatchanthara at p4: "The rule lays down the general principle that should be applied, and the order provided for in that rule should only be departed from for proper reasons which, in general, only arise in an exceptional case. It is clear that if the rule operates, the plaintiff will be significantly disadvantaged, but that disadvantage flows naturally from the risks of litigation. The idea behind the rule is to encourage settlement or compromise of proceedings, and more specifically, to encourage litigants to give serious consideration to the settlement of proceedings. Where an offer is made by a defendant to a plaintiff, the latter is put on notice that unless he or she accepts that offer, there is a significant risk that the order provided for by the rule may follow. In declining to accept the offer, the plaintiff undertakes the risk and the consequences that flow naturally from that risk." (5) The discretion to displace the rule is a judicial one, requiring the private and public purposes of the rule to be borne in mind: Maitland Hospital at 725-6. Reasons must be given for "otherwise ordering": Hillier at 419; Quach . 16 Mason P further held in Morgan v Johnson that, generally, exceptional circumstances would be required to justify a departure from the rule. 17 A number of decisions have held that such a departure will not be justified on the basis that the judgment amount only marginally exceeds the amount of the offer: in Connor v Hatgis (No 2) (CA(NSW), Kirby P, Priestley and Powell JJA, 7 December 1995, unreported, BC9501810) the difference was $4000 and in Houatchanthara v Bednarczyk the difference was only $750. Accordingly, even if I accepted the applicant's submission that the offer should be measured against the judgment figure, incorporating as it does interest over an additional fifteen months, the fact that the offer was only $2,406.49 more than the judgment sum is insufficient to justify a departure from the rule. In fact, I accept the respondents' submission that interest should be calculated over the same period to yield a valid comparison, making the relevant difference $16,000. 18 The applicant has not persuaded me that his failure to accept the Offer of Compromise was reasonable, let alone persuaded me of any exceptional circumstances to justify a departure from the rule. The fact that the offer did not give him any security in relation to costs of proceedings in the Licensing Court is irrelevant: nor did the judgment handed down in this matter, nor could it have. It is difficult to see the relevance (far less the probative value) of the applicant's submission that the normal operation of Rule 216(6) should be displaced because the respondents consistently denied that an agreement had been reached at the Meeting. 19 Accordingly, I accept the respondents' submission that the applicant should pay the first and second respondents' party/party costs from 4 July 2001. Apportionment 20 It remains to consider liability for costs incurred before 4 July 2001. The Court recently considered the principles governing apportionment of costs in Maurice Michael O'Sullivan v The Crown in the Right of the State of New South Wales (Department of Education and Training) [2003] NSWIRComm 303 at [198]: However, costs may be apportioned in certain circumstances. The relevant general principles in that regard are contained in the judgment of Toohey J in Kimberley John Hughes v Western Australian Cricket Association (Inc) and Ors (1986) ATPR 48, subject to the qualifications in Cretazzo v Lombardi (1975) 13 SASR 4, namely: (a) Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order; (b) Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which it has failed; (c) A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law; and (d) Notwithstanding the above, the interests of 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.
(1998) 44 NSWLR 578
(2001) 106 IR 56
(1992) 27 NSWLR 721
(1993) 42 NSWLR 100
(1995) 36 NSWLR 414
(1975) 13 SASR 4
(1993) 26 IPR 261
The applicant must pay the third respondent’s costs and the first and second respondents’ party-and-party costs from 4 July 2001; the first and second respondents must pay 80% of the applicant’s party-and-party costs up to and including 4 July 2001, as agreed or assessed.