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[2026] NSWSC 1013
Supreme Court of NSW
2026-09-02
McNaughton 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: Smith v Visy Pulp and Paper Pty Ltd (No 2) [2026] NSWSC 1013
Hearing dates: 18 August 2026
Date of orders: 2 September 2026
Decision date: 02 September 2026
Jurisdiction: Common Law
Before: McNaughton J
Decision: (1) The plaintiff’s application for an order that the first defendant pay his costs of the proceedings on an indemnity basis on and from 7 September 2024 is dismissed.
(2) The first defendant is to pay the plaintiff’s costs of the proceedings on the ordinary basis, as agreed or assessed.
(3) The plaintiff is to pay the first defendant’s costs of and incidental to this application.
Catchwords: COSTS — general discretion as to costs — whether the Court should order otherwise — application of r 42.14 Uniform Civil Procedure Rules 2005 (NSW) — whether offer of compromise/Calderbank offer was capable of acceptance by first defendant alone — whether judgment is no less favourable to plaintiff
Legislation Cited: Workers Compensation Regulation 2016 (NSW) Sch 7
Uniform Civil Procedure Rules 2005 (NSW) rr 20.26, 20.27, 42.14
Cases Cited: Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391
Milich v The Council of the City of Canterbury (No. 3) [2012] NSWSC 1280
Smith v Visy Pulp and Paper Pty Ltd [2026] NSWSC 685
Tekin v Stratford & Ors (No 2) [2025] NSWSC 902
Vieira v O’Shea (No 2) [2012] NSWCA 121
Ziliotto v Hakim [2013] NSWCA 359
Texts Cited: Nil
Category: Costs
Parties: Wayne John Smith (Plaintiff)
Visy Pulp and Paper Pty Ltd (First Defendant)
D.M.E. Engineering Services (Australia) Pty Ltd
(Second Defendant)
Representation: Counsel:
D Hooke SC (Plaintiff)
NJ Polin SC (First Defendant)
Solicitors:
Turner Freeman (Plaintiff)
Wotton Kearney (First Defendant)
Turks Legal (Second Defendant)
File Number(s): 2022/00066558
Publication restriction: Nil
This judgment is about one aspect of costs arising from my earlier judgment in Smith v Visy Pulp and Paper Pty Ltd [2026] NSWSC 685 (the principal judgment) and the orders subsequently entered on 31 July 2026. In summary, in the principal judgment I found for Mr Smith (the plaintiff**)**, equally against Visy Pulp and Paper Pty Ltd and the employer D.M.E. Engineering Services (Australia) Pty Ltd (DME) (less 20% for contributory negligence). The details of the case are not repeated here.
Orders reflecting my findings were made by consent on 31 July 2026 as follows:
“1. Judgment for the plaintiff against [Visy] in the sum of $1,630,468.61 (Visy Judgment).
2. Judgment for the plaintiff against [DME] in the sum of $1,227,614.72 (DME Judgment).
3. The judgments in Orders 1 and 2 are not cumulative, and satisfaction of either judgment operates pro tanto in satisfaction of the other.
4. Judgment for DME on the First Cross Claim in the sum of $613,807.36 with no order as to costs of the First Cross Claim.
5. Judgment for Visy on the Second Cross Claim in the sum of $613,807.36 with no orders as to costs of the Second Cross Claim.
6. DME to pay to the Plaintiff’s costs pursuant to Schedule 7 of the Workers Compensation Regulation 2016.
The Court notes the following:
7. DME agrees that the Plaintiff’s costs in Order 6 includes an amount for the fees of two advocates including Senior Counsel.
8. Pursuant to s 11 of the Law Reform (Miscellaneous Provisions) Act 1965 (NSW), that before the reduction for contributory negligence and the application of s 151Z(2)(c) of the Workers Compensation Act 1987 (NSW), the Plaintiff’s damages are $2,541,653.13 against Visy and $1,534,518.41 against DME.
9. The Plaintiff’s damages are reduced by 20% on account of contributory negligence.
10. Before the application of s 151Z(2)(c) of the Workers Compensation Act 1987 (NSW), the Plaintiff’s damages after reduction for contributory negligence are $2,033,322.50 against Visy and $1,227,614.72 against DME.”
As can be seen, both Visy and DME brought successful cross-claims against each other for contribution. Visy’s cross-claim also included a claim for contractual indemnity which failed. Additionally, Visy’s cross-claim included, at one point, a claim relating to DME’s requirement to effect insurance naming Visy as an additional insured on its public liability insurance policy. This insurance issue was resolved on 15 May 2025, prior to the hearing of the matter being concluded.
The plaintiff now claims that indemnity costs should be ordered against Visy from 7 September 2024 consequent upon an offer of compromise dated and served on 6 September 2024 (the Offer) and a Calderbank offer conveyed concurrently under cover of the same letter (the Letter).
This application does not concern DME because its liability for the plaintiff’s costs is regulated by sch 7 of the Workers Compensation Regulation 2016 (NSW), (see [2], Order 6).
The application is made principally under r 42.14 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) consequent upon the Offer which Visy did not accept and which, it is claimed, the plaintiff has bettered. In the alternative, the plaintiff relies on the Calderbank offer.
The plaintiff relies upon the affidavit of Richard Dababneh sworn 5 August 2026 and the annexures to it.
Visy relies upon the affidavit of Claire Tingey sworn 13 August 2026 and the annexures to it.
The plaintiff seeks the following orders:
(a) [Visy] pay the plaintiff’s costs of the proceedings:
(i) On the ordinary basis up to and including 6 September 2024; and (ii) On the indemnity basis on and from 7 September 2024, in each case as agreed or assessed.
The Offer was made to the defendants by the plaintiff’s solicitor emailing the respective solicitors on the record for Visy and DME, in a joint email. It can be noted that DME and DME’s workers compensation insurer, Employers Mutual Limited (EML), utilised the same solicitors.
The covering letter was dated 6 September 2024 and included the following:
“Dear Practitioners
Wayne John Smith v Visy Pulp & Paper Pty Ltd & Anor
…
We refer to the above matter.
We enclose herewith and by way of service, Offer of Compromise in the sum of $1,450,000.
We note the workers compensation insurer’s claimed recovery pursuant [to] Section 151Z of the Workers Compensation Act as at the date of the recent mediation was $665,488.29 plus interest and costs. It would be higher today.
We note the offer of compromise is conveyed on the basis that the workers compensation insurer has agreed to reduce the workers compensation recovery to $250,000[.]
In the event the Offer of Compromise is found to be invalid for whatever reason, our client conveys the same offer pursuant to the principles in Calderbank and Calderbank [1975] 3 ALL ER 333. The plaintiff offers to settle the claims against both defendants for $1,450,000 inclusive of WC recovery plus costs. The plaintiff’s costs to date exceed but say for the purposes of your client’s consideration of the above offer, would be assessed at $250,000 and so the offer is $1,700,000 incl costs incl workers compensation recovery.
Given the significant costs likely to now be incurred with the conclaves currently being arranged, we would appreciate your client’s timely response to the offer which we note is open to be accepted until close of business 4 October 2024.
…
Yours faithfully”
“The Plaintiff offers to compromise in the following manner:
1 Judgment for the plaintiff against the first and second defendants in the sum of $1,450,000.
2 This offer is made without prejudice except as to costs and remains open for twenty-eight (28) days from the date hereof.
This offer is made in accordance with Rule 20.26 of the Uniform Civil Procedure Rules 2005.”
Visy did not respond to the Offer, nor to the covering letter. Consequently, Visy can be taken to have refused the Offer.
I note that unsuccessful mediations took place on 7 August 2024 and 3 February 2025.
In his affidavit at [9], Mr Dababneh purports to state the effect of the Offer as follows:
“The plaintiff’s Offer of Compromise was in the sum of $1,450,000. The first defendant was advised that the offer was conveyed on the basis that the second defendant had agreed to reduce its entitlement to recovery of workers compensation benefits to $250,000.”
“The Offer was conveyed on a basis communicated to Visy: the plaintiff had obtained the agreement of the workers compensation insurer, EML, to reduce its s 151Z recovery – then standing at $665,488.29 – to $250,000 for the purpose of the Offer.”
20.26 Making of offer
…
(4) If the offeror makes an offer before the offeree has been given such particulars of the offeror’s claim, and copies or originals of such documents available to the offeror, as are necessary to enable the offeree to fully consider the offer, the offeree may, within 14 days of receiving the offer, give notice to the offeror that—
(a) the offeree is unable to assess the reasonableness of the offer because of the lack of particulars or documents, and
(b) in the event that rule 42.14 applies to the proceedings, the offeree will seek an order of the court under rule 42.14(2).
(Emphasis added.)
“Costs are in the discretion of the Court which has full power to determine by whom, to whom and to what extent costs are to be paid (whether on the ordinary basis or on an indemnity basis), subject to, inter alia, rules of court: s 98(1), Civil Procedure Act 2005 (NSW).”
“[13] UCPR 20.26 makes provision for formal offers of compromise to be made in any proceedings. Although the provision usually arises for consideration as part of an argument about costs after judgment has been given, the provision is not located in Part 42 of the UCPR which deals with costs. It is located in Part 20 which provides for the resolution of proceedings without a hearing. Part 20 addresses mediation, arbitration, references out, acknowledgments of liquidated claim and, in Division 4, offers of compromise. Each procedure contemplates a final resolution of the parties’ substantive dispute with less involvement by the Court than would otherwise be required. This underscores that the primary purpose of offers of compromise is to facilitate a final resolution of the real issues in proceedings by an agreement between the parties.
…
[18] UCPR 42.15(2) uses the language of entitlement, but the opening words ‘unless the court orders otherwise’ mean that the entitlement is conditional. In a related context, in Langdon v Carnival PLC [2024] NSWCA 168 at [187]–[188], Ward P said:
‘187 At the outset, it should be noted that a rule such as r 42.15A has been treated as conferring a conditional entitlement to indemnity costs subject to the discretion to order otherwise (see Hillier v Sheather (1995) 36 NSWLR 414). Exercise of the discretion to order otherwise does not necessarily require that there be “exceptional circumstances” (see Barakat v Bazdarova (No 2) [2012] NSWCA 140 at [42]-[49] per Tobias AJA, Bathurst CJ and Whealy J agreeing). More recently, it has been said that “the prima facie position should only be departed from for proper reasons which, in general, only arise in an exceptional case”, rather than the Court’s discretion being impermissibly fettered by a requirement of exceptional circumstances (see Perisher Blue Pty Ltd v Nair-Smith (No 2) [2015] NSWCA 268 (Perisher Blue) at [36]-[37] per Gleeson JA and Tobias AJA, citing Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437; 212 ALR 281 at [17] per Hely J).
188 What is required is that the Court be satisfied that in the particular circumstances of the case a departure from the rule is justified. Courts have declined to define exhaustively the factors that may justify displacing this entitlement (see New South Wales Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100, at 102 per Gleeson CJ). However, what has been accepted is that the reasonableness of the rejection or non-acceptance of the offer is a relevant (though not determinative) consideration (see The Uniting Church in Australia Property Trust (NSW) t/as Northaven Retirement Village v Takacs (No 2) [2008] NSWCA 172 at [15] per Hodgson JA, McColl JA agreeing). When considering the reasonableness or otherwise of a party’s rejection of the offer, there are again a number of factors that may be taken into account (see Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 at [25] per Warren CJ, Maxwell P and Harper AJA (approved by Basten JA in Miwa Pty Ltd v Siantian Properties Pte Ltd (No 2) [2011] NSWCA 344 at [12])). Those may include the offeree’s prospects of success assessed at the date of the offer (which in turn may depend on the state of awareness by the offeree of adverse material evidence).’
[19] The approach to the Court’s residual discretion is not to be approached in a rigid or mechanical way: Hillier v Sheather (1995) NSWLR 414 at 423 (Kirby P). The discretion is to be exercised judicially: Oshlack v Richmond River Council (1998) 193 CLR 72 at 96; [1998] HCA 11 at [65] (McHugh J). Regard must be had to the purpose for which costs orders are made. McHugh J said in OShalck at 97; [67]:
‘Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party.’
[20] In Chalik v Chalik [2025] NSWCA 136 the Court said at [135]:
‘The costs consequences for rejection of offers of compromise and Calderbank letters are well-established. The purpose for the rules concerning offers of compromise and Calderbank letters include (Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724):
“1. To encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants which amount to a realistic assessment of the plaintiff's real claim which can be placed before its opponent without risk that its “bottom line” will be revealed to the court; 2. To save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary, having regard to an earlier (and, as found, reasonable) offer of compromise made by a plaintiff to a defendant; and 3. To indemnify the plaintiff who has made the offer of compromise, later found to have been reasonable, against the costs thereafter incurred. This is deemed appropriate because, from the time of the rejection or deemed rejection of the compromise offer, notionally the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise. In such circumstances, that party should ordinarily bear the costs of litigation.”’
[21] In exercising the discretion under UCPR 42.15 the Court must also seek to give effect to the overriding purpose of the UCPR, namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 56 of the Civil Procedure Act 2005 (NSW). In that respect, and as noted above, it is apparent from UCPR 20.26 that the primary purpose of an offer of compromise is to encourage settlement of the real issues in the proceedings without a hearing.
[22] When considering the reasonableness of the party’s rejection of the offer of compromise, reasonableness is to be considered objectively and not by reference to the motivations or understanding of the particular party: Uniting Church in Australia Property Trust (NSW) v Takacs (No 2) [2008] NSWCA 172 at [13] (Hodgson JA, with whom McColl JA agreed). It is to be considered as at the date the offer is made and not with the benefit of hindsight: Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [33] (Spigelman CJ, Beazley and McColl JJA).
[23] Where UCPR 42.15 applies, the onus is on the plaintiff to persuade the Court why costs orders ought not be made in accordance with UCPR 42.15(2): Leach v The Nominal Defendant [2014] NSWCA 391 at [29] (McColl JA, with whom Gleeson JA and Sackville AJA agreed).
[24] It is different for Calderbank offers. In Chalik the Court said at [137]:
‘In contrast, where a plaintiff rejects a Calderbank letter, and the defendant obtains judgment which is no less favourable than the terms of the offer – the offeror is not presumptively entitled to indemnity costs: Valmont Interiors Pty Ltd v Giorgio Armani Australia Pty Ltd (No 3) [2021] NSWCA 160 at [23]-[24]. Rather, as the Court held in Stewart v Atco Controls Pty Ltd (in liq*) (No 2)* (2014) 252 CLR 331; [2014] HCA 31 at [4]:
“This Court has a general discretion as to costs. The non-acceptance of a Calderbank offer is a factor, in some cases a strong factor, to be taken into account on an application for indemnity costs.”’
[25] The reasonableness of rejecting a Calderbank offer is centrally important the exercise of the costs discretion in the assessment of which regard must be had to all the circumstances: Daynes v I-MED Central Queensland Pty Ltd [2025] NSWCA 150 at [190]–[191] (Bell CJ, with whom Leeming & Free JJA agreed).”
I note that in this case, should the Offer be found valid, the onus would be on Visy (given UCPR r 42.14 is the relevant provision in this matter) to persuade the Court why costs orders ought not be made in accordance with r 42.14(2).
Rule 42.14 reads:
42.14 Where offer not accepted and judgment no less favourable to plaintiff
(1) This rule applies if the offer is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer.
(2) Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff’s costs in respect of the claim—
(a) assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and
(b) assessed on an indemnity basis—
(i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and
(ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.
(Emphasis added.)
“There is no requirement that the offer of compromise explain the relationship between the amount offered and the claims made by the offeree. On the contrary, UCPR 20.26 contemplates that an offer will be made and the offeree will be left to assess the reasonableness of the offer in accordance with its own interests. That is why UCPR 20.26(5) ensures that the offeree is given reasonable time to assess the offer and UCPR 20.26(4) displaces the adverse costs consequences if the offeree is ‘unable to assess the reasonableness of the offer’ for the reasons stated in the provision.”
“The rules concerning offers of compromise were designed to make more certain the consequences as to costs which followed from refusal of an offer which the offeree failed to better at trial.”
Before me, Visy did not contest that the Offer complied with the formal requirements of UCPR r 20.26(2) (“as a matter of drafting”), but contended, as its primary position, that formal compliance did not answer the question of substance which was whether, in terms, “Judgment for the plaintiff against the first and second defendants in the sum of $1,450,000” was an offer “capable of acceptance” by Visy alone such as to engage the costs consequences in r 42.14, citing Vieira v O’Shea (No 2) [2012] NSWCA 121 in support.
The plaintiff contends that Vieira has no application in this case.
Alternatively, Visy submitted, if it were to be concluded that the Offer engaged r 42.14, (or alternatively the Calderbank offer operated), as against Visy, this was a case in which the Court should exercise its discretion to “order otherwise” under r 42.14(2) (or a like discretion vis-à-vis the Calderbank offer). Visy submitted that the ultimate net judgment sum entered against Visy meant that Visy ended up in a substantially better position by not accepting the offer and the plaintiff ended up in a substantially worse position as a result of the offer not being accepted.
I interpolate here to observe that the legislation is not drafted quite in the terms Visy has articulated. Rather, r 42.14 provides that the plaintiff’s entitlement is based on whether the plaintiff “obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer” (emphasis added). That is, relevantly, the test is only viewed through the lens of the plaintiff not that of Visy.
The plaintiff contended there is no basis to “order otherwise”. The plaintiff submitted that the reasonableness of Visy’s response to the offer is assessed as at the time the offer was made, when the workers compensation recovery of $250,000 stood available to be secured on acceptance. Further, the plaintiff submitted that the subsequent reversion of the recovery to its full amount, brought about by Visy’s own rejection, does not render that rejection reasonable, as is evidenced by the increased liability Visy has incurred as a result.
Even if the second defendant’s solicitor was acting for both the second defendant and their insurer, the question is whether the Offer, even when read with the Letter, was clear enough for Visy to assume without more that the second defendant had given its imprimatur to Visy to compromise the plaintiff’s claim on behalf of both of them because the insurer had agreed to reduce the workers compensation recovery to $250,000.
In Vieira, the plaintiff sued seven defendants arising out of the purchase of a racehorse. After about a year after the initiation of the proceedings, the plaintiff served an offer (treated as a Calderbank offer as it failed to comply with the requirement that a formal offer of compromise be exclusive of costs) on the basis that the defendants would “together” pay a single specified sum. The interests of the first defendant (who ultimately succeeded on appeal) and the remaining defendants were opposed. The remaining defendants had only been joined in consequence of a cross-claim brought by the first defendant. The Court of Appeal held that the offer was “not capable of acceptance” by the first defendant, whether on his own account or on behalf of the other defendants “in the absence of authority to do so” and that it was not unreasonable for him not to have accepted it.
In this case, Visy submitted that the terms of the Offer involved a single undifferentiated sum, described as a judgment against both defendants together, rather than a several sum offered against Visy individually. The Offer did not say that the plaintiff would accept $1,450,000 in satisfaction of the claim against Visy alone, with judgment to be entered accordingly, and the proceedings against DME to continue unaffected. Nor did it provide any mechanism by which Visy alone could procure the very judgment described – one entered against both defendants – without DME’s concurrence.
The plaintiff contended that Vieira can be distinguished on the basis that in this case the plaintiff’s claim was against concurrent tortfeasors and is a single claim for a single loss, capable of satisfaction only once. The plaintiff claims that Visy did not require DME’s concurrence to extinguish its own exposure, and, further, Visy “knew of DME’s concurrence in the offer in any event”.
The plaintiff pointed to r 20.27 which deals with how an offer may be accepted. The plaintiff submitted that acceptance of an offer of compromise is a unilateral act, requiring neither the concurrence of a co-offeree nor any authority to bind one. The plaintiff pointed to r 20.27(3) in particular as providing the solution – any question as to the form in which the judgment was to be entered was a matter to be resolved upon that application and was not a reason for declining to accept the Offer.
I reject the plaintiff’s argument. In my view, the evidence falls well short of permitting the inference ultimately contended for by the plaintiff that Visy was bound to assume that the second defendant approved, and authorised the acceptance of, the Offer.
As indicated above, as at the date of the service of the Offer, Visy had filed a cross-claim against DME. Their interests were not aligned.
Further r 20.27(3) does not provide a mechanism to solve the problem caused by an offer of compromise in the factual situation here. That provision would appear, rather, to be directed at straightforward matters involving offer and acceptance, and an application for judgment to be entered consequent upon such acceptance.
I agree with Visy’s submission that it could not have, by unilateral acceptance, have brought about a final compromise and that it necessarily required DME’s own concurrence or authorisation. The offer did not provide that Visy’s unilateral payment would operate to satisfy or extinguish the plaintiff’s claim against DME, or that the plaintiff would continue against DME upon Visy’s acceptance, or that Visy’s acceptance would be treated as several rather than joint.
It is of interest to note that in correspondence not available to Visy at the time of the Offer, but now before the Court, sent from the plaintiff to Dominic Maait of Turks Legal (the solicitor for both the second defendant and the workers compensation insurer) on 13 August 2024 included the following:
“We refer to the above matter and the failed mediation held on 7 August.
… It is our view that the plaintiff’s contributory negligence would be modest however the employer’s liability in this case may in fact be significant.
It is trite to say that any plaintiff or employer negligence will reduce your client’s recovery in the matter.
We therefore now write to you seeking your client’s commitment to a reduction in its s151Z recovery.
…
We would appreciate if you would take instructions from your client to commit to a reduction in the recovery to $200,00**0.
If so, it is the plaintiff’s intention to convey an Offer of Compromise to the first defendant in the sum of $1,450,000 incl workers compensation (noting the recovery reduced to $200,000 [which was the offer sought]) plus costs.
We do not expect the first defendant would accept that position, but given the costs that are likely to now be expended in preparation for conclaves, we believe it to be a sensible position to take to protect our client’s costs going forward.” (Emphasis added.)
It is notable that the correspondence referred to the “employer” as distinct from “your client”. This would indicate that this piece of correspondence was directed to Dominic Maait in his capacity as the solicitor for the insurer.
In any event, I am not of the view that this preliminary correspondence, not known to Visy at the time of the Offer, makes any practical difference to the decision I must make, but it indicates that at least at one stage, in my view, the correct approach to an offer of compromise was being contemplated by the plaintiff.
In the oral hearing before me, the plaintiff also submitted that because the onus was on Visy to persuade the Court to “order otherwise” (Leach at [45]), and Visy had filed no evidence supporting the contention that the offer was incapable of acceptance because of lack of clarity, this argument should fail. However, if the Offer, on its face, despite superficial compliance with the terms of r 20.26(2) was in fact incapable of acceptance by any one party, no further evidence was required.
I am of the view that the plaintiff’s claim under r 42.14 must fail, because the Offer was not capable of acceptance by Visy on behalf of DME in the absence of authority to do so, especially when, at least in part, their interests were not aligned. It was not unreasonable for Visy not to accept the Offer. In my view, the Calderbank offer suffers, relevantly, from the same problem as the Offer.
Further, I am also not persuaded that the plaintiff obtained an order or judgment on the claim “no less favourable to the plaintiff than the terms of the offer” (r 42.14(1)). It can be observed that making this assessment involved an exercise complicated by the lack of clarity of the Offer.
However, the following position appears to be correct:
The net position of the plaintiff contemplated by the Offer was that the plaintiff would receive $1,200,000 (after payback of workers compensation payments in the amount of $250,000).
The net position of the plaintiff following judgment was that the plaintiff would receive $894**,**937.35 (after payback of workers compensation payments in the amount of $735,531.26).
Whilst it is not clear whether r 42.14 is aimed at the net effect of an order or judgment (that is, after deducting payback of workers compensation payments) or rather, is focussed on the terms of the orders on their face, Davies J determined that the net approach was the correct one in Milich v The Council of the City of Canterbury (No. 3) [2012] NSWSC 1280 at [9]-[15]. In my view, this approach appears to be appropriate. However, even if I am to assume that r 42.14 is focussed on the orders on their face, given the net effect of the orders is such the plaintiff obtained a less favourable outcome, there is a proper basis for me to exercise my discretion and “order otherwise” and not award the indemnity costs sought.
In summary, on any view, it is appropriate to find against the plaintiff on this application.
Accordingly, I make the following orders:
The plaintiff’s application for an order that the first defendant pay his costs of the proceedings on an indemnity basis on and from 7 September 2024 is dismissed.
The first defendant is to pay the plaintiff’s costs of the proceedings on the ordinary basis, as agreed or assessed.
The plaintiff is to pay the first defendant’s costs of and incidental to this application.
**********
Smith
Visy Pulp and Paper Pty Ltd (No 2)
[2026] NSWSC 685
[1998] HCA 11
(1995) 36 NSWLR 414
(1993) 42 NSWLR 100
(2005) 13 VR 435
(1998) 193 CLR 72
(1992) 27 NSWLR 721
(2014) 252 CLR 331