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Category: Consequential orders

Parties: Celal Tekin (Plaintiff)
Phillip Norman Stratford (First Defendant)
Denis Gordon Low (Second Defendant)
Kelvin Reginald Low (Third Defendant)
Gary Patrick Doherty (Fourth Defendant)
Patrick Anthony Doherty (Fifth Defendant)

Representation: Corporate Legal (Plaintiff)
Gilchrist Connell (Defendants)

File Number(s): 2020/00343395

JUDGMENT

1. On 29 May 2025 I handed down judgment in Tekin v Stratford & Ors [2025] NSWSC 541 (the principal judgment) by which Mr Tekin obtained the following orders against the Firm:

(a) judgment for damages of $300,000; (b) interest in accordance with s 100 of the Civil Procedure Act 2005 on that judgment sum from 17 July 2015; (c) in addition, an order that the Firm pay equitable compensation of $127,398.17; (d) an order that the Firm pay compound interest on the equitable compensation calculated at yearly rests from 17 July 2015 at the rates prescribed for the purposes of the Civil Liability Act 2005; (e) an order that the [Firm] pay [Mr Tekin’s] costs; and (f) either party wishing to seek an alternative or additional order in relation to costs has liberty to apply in the next 14 days.

2. The details of the case are set out in that judgment and are not repeated here.

3. There is no dispute between the parties about the calculation of interest pursuant to Orders (b) and (d). When interest is calculated to the date of the Judgment, the total monetary payment to be made by the Firm to Mr Tekin is $698,641.20. In addition, Mr Tekin is entitled to costs pursuant to Order (e).

4. The Firm has now exercised its liberty to apply in respect of the costs order. In the months leading up to the final hearing on 25 November 2024 the Firm served two formal Offers of Compromise pursuant to the Uniform Civil Procedure Rules 2005 (NSW) r 20.26:

(a) on 13 May 2024 – $900,000 plus costs; and (b) on 19 November 2024 – $700,000 plus costs.

5. The Firm now seeks the following orders in lieu of existing Order (e):

(a) the Defendants pay the Plaintiff’s costs on an ordinary basis up to 13 May 2024, or alternatively 19 November 2024, but thereafter the Plaintiff pay his own costs of the proceedings, and (b) the Plaintiff pay the Defendants’ costs from 14 May 2024, or alternatively 20 November 2024, on an indemnity basis.

6. The orders are sought either pursuant to UCPR 42.15(2)(a) and (b) or in accordance with the principles set out in the decision of Calderbank v Calderbank [1975] 3 All ER 333.

Background

7. The history of the original dealings between Mr Tekin and the Firm are set out in the principal judgment. The history culminated with Mr Tekin’s success in the Upside litigation in the Court of Appeal on 18 December 2017. By that time Balmain NB had caused Mr Tekin’s Land to be sold.

8. On 3 December 2020 Mr Tekin filed the Statement of Claim by which these proceedings were commenced against the Firm. Over the following years Mr Tekin had a number of different legal representatives. His pleading went through a number of amendments, which relevantly included:

(a) an Amended Statement of Claim filed on 25 August 2021; (b) a Further Amended Statement of Claim filed on 10 June 2022; (c) a Second Further Amended Statement of Claim filed on 18 June 2024.

9. At the heart of each pleading was the claim that the Firm’s negligence had caused Mr Tekin loss of the $300,000 deposit from the aborted sale of the Land to Upside. Other loss was also claimed, some of which was claimed consistently (such as loss of the ability to claim the extra deposit of $480,000 and loss from Balmain NB’s forced sale of the Land for less than its 2015 market value) and some of which came and went (such as lost profit from a development of the Land).

10. A significant feature of the amendment on 10 June 2022 was the introduction of a case based on breach of fiduciary duty. From the outset the cause of action was put forward broadly, but it included the specific claim arising from the Firm’s beneficial receipt of monetary payments from the proceeds of the Balmain NB refinance which the Firm arranged for Mr Tekin in 2015. It also included a case based on the Firm acting for Mr Tekin in the Upside litigation when there was a conflict of interest. Another change on 10 June 2022 was the addition of a claim based on the Firm’s advice (or non-advice) about selling the Land from March 2015 onwards. To a substantial extent, the claims upon which Mr Tekin ultimately succeeded at hearing were all included in his pleading by June 2022.

11. Further relevant procedural context is that the proceedings were listed for a status review on 9 February 2024 before Cavanagh J when orders were made listing the proceedings for hearing for five days commencing 3 June 2024. A further status review occurred on 26 April 2024 on which occasion an order was made for the parties to attend a mediation on or before 17 May 2024. On 13 May 2024 the parties went to mediation but the proceedings did not resolve. The Firm served the formal Offer of Compromise of $900,000 plus costs immediately after the mediation. It was served under the cover of a letter which included an alternative Calderbank offer of $961,052.41 inclusive of costs. The evidence does not reveal how that figure was calculated but it may be inferred that $61,052.41 was referrable to a perception of Mr Tekin’s costs up to that date.

12. Mr Tekin did not accept either offer. Shortly afterwards he retained new legal representation with a firm called Corporate Legal. As a result of an application to adjourn by Corporate Legal, the 3 June hearing date was vacated. The proceedings were ultimately relisted for hearing commencing on 25 November 2024.

Principles

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.

14. UCPR 20.26 relevantly provides as follows:

20.26 Making of offer

(1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms.

(2) An offer under this rule—

(a) must identify—

(i) the claim or part of the claim to which it relates, and

(ii) the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, and

(b) if the offer relates only to part of a claim in the proceedings, must include a statement—

(i) in the case of an offer by the plaintiff, as to whether the balance of the proceedings is to be abandoned or pursued, or

(ii) in the case of an offer by a defendant, as to whether the balance of the proceedings will be defended or conceded, and

(c) must not include an amount for costs and must not be expressed to be inclusive of costs, and

(d) must bear a statement to the effect that the offer is made in accordance with these rules, and

(e) if the offeror has made or been ordered to make an interim payment to the offeree, must state whether or not the offer is in addition to that interim payment, and

(f) must specify the period of time within which the offer is open for acceptance.

…

(5) The closing date for acceptance of an offer—

(a) in the case of an offer made two months or more before the date set down for commencement of the trial—is to be no less than 28 days after the date on which the offer is made, and

(b) in any other case—is to be such date as is reasonable in the circumstances.

…

(10) A party may make more than one offer in relation to the same claim.

15. UCPR 20.27 provides for the acceptance of an offer of compromise.

16. Where an offer of compromise is not accepted, there may be costs consequences which are specified in Division 3 of Part 42. In the case of an offer made by a defendant which is not accepted by a plaintiff who ultimately obtains a judgment no more favourable, UCPR 42.15 provides:

42.15 Where offer not accepted and judgment no more favourable to plaintiff

(1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the plaintiff obtains an order or judgment on the claim no more favourable to the plaintiff than the terms of the offer.

(2) Unless the court orders otherwise—

(a) the plaintiff is entitled to an order against the defendant for the plaintiff's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and

(b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, 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.

17. For the purpose of comparing an offer of compromise with the judgment ultimately obtained by a plaintiff, UCPR 42.16 provides:

42.16 Costs with respect to interest

(1) If a plaintiff obtains an order or judgment for the payment of a debt or damages and--

(a) the amount payable under the order or for which judgment is given includes interest or damages in the nature of interest, or

(b) the court, by a separate order, awards the plaintiff interest or damages in the nature of interest in respect of the amount,

then, for the purpose of determining the consequences as to costs referred to in rule 42.14, 42.15 or 42.15A, the court must disregard so much of the interest, or damages in the nature of interest, as relates to the period after the day on which the offer was made.

(2) For the purpose only of this rule, the court may be informed of the fact that the offer was made, and of the date on which it was made, but must not be informed of its terms.

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).

Submissions by the Firm

26. In the first instance the Firm relies upon the formal Offer of Compromise which it made on 13 May 2024: $900,000 plus costs. The Firm submits that Mr Tekin has now obtained a judgment no more favourable than the terms of the offer. Pursuant to UCPR 42.15, it is entitled to the costs order it seeks unless the Court orders otherwise. It points out that the offer was made immediately after the conclusion of the mediation on 13 May 2024. The covering letter referred Mr Tekin to the Firm’s “position” as set out in its mediation paper. Minds had been focussed on the day of the mediation, by virtue of which seven days was a reasonable time to allow for acceptance by Mr Tekin given that the trial was listed (at that time) to start on 3 June 2025.

27. The covering letter contained the alternative Calderbank offer which was inclusive of costs.

28. The Firm further submits that the formal Offer of Compromise which was served on 19 November 2024 also attracts the operation of UCPR 42.15. Although for less than the earlier offer, the judgment now obtained by Mr Tekin is no more favourable. It was served on the Tuesday before the commencement of the final hearing on the following Monday. Given the proximity of the hearing and the pre-trial work which was presumably underway by Mr Tekin and his legal representatives (including counsel), three days was a reasonable time to allow for acceptance. The fact that another offer had been made earlier does not invalidate the second offer: UCPR 20.26(10).

29. Again, the covering letter contained the alternative Calderbank offer, this time for $700,000 plus costs.

Submissions by Mr Tekin

30. Mr Tekin submits that existing costs Order (e) complies with UCPR 42.1 which provides that the general rule is that costs follow the event. Mr Tekin succeeded in the litigation so he ought to receive a costs order in his favour.

Offers in May 2024

31. In relation to the Offer of Compromise served on 13 May 2024, Mr Tekin submits that it did not comply with UCPR 20.26. The only reason given is that UCPR 20.26(2)(a)(i) requires that an offer of compromise must identify the claim or part of the claim to which it relates. The Offer of Compromise stated that it was an offer to compromise “the entire claim set out in the Amended Statement of Claim filed 25 August 2021”. As at 13 May 2024 Mr Tekin had filed the Further Amended Statement of Claim dated 10 June 2022 by which additional claims had been added. Therefore, the Offer of Compromise was “unclear on the face” as to which of Mr Tekin’s claims it was intending to compromise.

32. Mr Tekin further submits that:

(a) the sum offered ($900,000) had no apparent relationship with the eight separate claims which Mr Tekin was making at the time and no explanation was given as to how the sum was arrived at; (b) his claims were complicated, involved an insurer and a potential cap under the professional standards regime for which there was little authority; (c) the offer was for significantly less than the total of Mr Tekin’s claims; (d) it is difficult to discern any genuine compromise or attempt by the Firm to resolve the issues in the matter – Mr Tekin relies upon Lorenzato v Burwood Council [2021] NSWSC 266 (Fagan J) for the proposition that the offer of compromise should involve some real element of compromise; (e) the Offer of Compromise appeared to be designed “rather to dissuade [Mr Tekin] from pursuing his claims to hearing and threatening adverse costs orders”; (f) the Offer of Compromise was subject to a condition that Mr Tekin provide a release which was vague, wide, unexplained and “not sought by [the Firm] in the proceedings”, and in any event no draft deed was provided to Mr Tekin during the time for acceptance of the offer; (g) the time for acceptance (7 days) was unreasonable because as at 13 May 2025 the hearing date was “still some 6 weeks away” (this is factually incorrect); and (h) Mr Tekin was not a sophisticated litigant and his claims were numerous and complex.

33. Mr Tekin observes that after the mediation he retained new solicitors, amended his Statement of Claim, prepared further evidence and successfully applied to have the hearing date postponed to 25 November 2024. He submits that these changes were not known to him as at 13 May 2024. He further submits that the outcome achieved at the hearing was not obvious, and that the Court did not simply reject Mr Tekin’s claims and adopt the Firm’s grounds of defence.

34. Mr Tekin makes no separate submissions about the Calderbank offer made on 13 May 2025 other than to observe that reasonableness is also a consideration for Calderbank offers. The Firm bears the onus of demonstrating that Mr Tekin acted unreasonably not to accept the Calderbank offer and that the test of unreasonableness should not be upheld other than on clear grounds.

Offers in November 2024

35. Mr Tekin apparently accepts that the Offer of Compromise served on 19 November 2024 complied with UCPR 20.26.

36. Mr Tekin nonetheless submits that the Court ought otherwise to order under UCPR 42.15 because:

(a) the sum offered ($700,000) had no apparent relationship with the separate claims which Mr Tekin was now making, including the additional claims added in his further amendment to his Statement of Claim on 18 June 2024; (b) his claims remained complicated; (c) there was no explanation as to how the offer was calculated; (d) the Offer of Compromise was still subject to a condition that Mr Tekin provide a release which was vague, wide and undefined; (e) the offer was significantly less than the previous offer which therefore did not genuinely seek to resolve the litigation but to threaten Mr Tekin with adverse costs orders; and (f) the time for acceptance (3 days) was unreasonable because it provided too little time to seek further details as to the offer.

37. Mr Tekin further points out that the judgment which he obtained was less favourable to him by only $1,358.80. That submission is to be understood as a further reason why the Court ought to exercise its discretion otherwise to order. Given the closeness of his success, Mr Tekin submits that it cannot be the intention of the UCPR to deprive him of his costs and require him to pay the Firm’s cost of the hearing, in each case including the fees of senior counsel for a six day hearing. This is said to be so given the totality of Mr Tekin’s claims and the “range of potential outcomes”.

38. For essentially the same reasons, Mr Tekin submits that he ought not to be deprived of his costs because he did not accept the Calderbank offer made on 19 November 2024.

Decision

Exclusion of interest after the dates of the offers

39. Whilst the issues currently before the Court are not to be decided with hindsight, UCPR 42.15 has at its threshold a comparison between the offer which was not accepted and the judgment ultimately obtained by the plaintiff.

40. In this case Mr Tekin has obtained a judgment by which he has established an entitlement to a monetary payment of $698,641.20 which includes interest up to the date of judgment on 29 May 2025. By virtue of UCPR 42.16 the unaccepted offers are to be compared with a lessor sum which disregards so much of the interest as relates to the period after the day on which each offer was made. The purpose of UCPR 42.16 is important. When considering an offer of compromise, regard must be had not only to the amount offered but also to the time at which the offer was made.

41. The evidence adduced on the costs application includes workings for the interest calculations, from which it appears that the applicable figures are:

(a) for the offers made on 13 May 2024 – $658,709; and (b) for the offers made on 19 November 2024 – $677,348.

42. These figures should be viewed as approximates only, but for current purposes they show that the judgment obtained by Mr Tekin was relatively more unfavourable to him than his submissions assume.

Offers in May 2024

43. The submission that the Firm’s Offer of Compromise served on 13 May 2024 did not comply with UCPR 20.26 cannot be accepted. At its highest, the effect of Mr Tekin’s submission is that the Offer of Compromise was not an offer to compromise the whole of his claim because the reference to the earlier version of the Statement of Claim did not include the two claims added by amendment on 10 June 2022.

44. UCPR 20.26(1) provides that an offer may be made to compromise “the proceedings, either in whole or in part”. If the offer is made to compromise proceedings in part only:

(a) the offer must identify the part of the claim to which the offer relates – UCPR 20.26(2)(a)(i); (b) the offer must identify the proposed orders for disposal of the part of the claim – UCPR 20.26(2)(a)(ii); (c) the offer must include a statement as to whether the balance of the proceedings will be defended or conceded – UCPR 20.26(2)(b)(ii).

45. The Offer of Compromise dated 13 May 2024 stated that the Firm offered to compromise “the entire claim set out in the Amended Statement of Claim filed 25 August 2021 on the following terms”. Those terms included:

(a) consent orders would be filed dismissing the proceedings with no order as to costs; and (b) Mr Tekin will provide a written release “against the pursuit of any future claim”.

46. Reference was made to the wrong version of the Statement of Claim but there can be no doubt from the terms of the offer that it was an offer to compromise the proceedings “in whole”. In this respect, unlike other provisions in UCPR 20.26, UCPR 20.26(2)(a) does not require a “statement” as to the part of the claim to which the offer relates. It requires that the offer must “identify” the part. The whole of the Offer of Compromise must be reviewed to see what is identified. Even if there is no explicit statement, the requirement that the part (or the whole) be identified may be satisfied from the terms of the unambiguously worded orders which the offeror offers.

47. The construction is reinforced when regard is had to the terms of the letter under the cover of which the Offer of Compromise was served on 13 May 2024. An offer of compromise may be construed having regard to the covering letter: Leach v The Nominal Defendant [2014] NSWCA 391 at [34], [38] and [39] (McColl JA with whom Gleeson JA and Sackville AJA agreed). The Firm’s covering letter referred to the mediation and stated:

“The purpose of this letter is to set out the terms on which our clients propose to resolve the proceedings, without admissions of liability, on a full and final basis with a view to avoiding the time, cost and inconvenience of ongoing litigation.”

48. It then went on to state:

“… in the interests of negotiating a final commercial settlement, we enclose by way of service an Offer of Compromise.”

49. The letter made clear that the Firm’s purpose in serving the Offer of Compromise was to resolve the whole of Mr Tekin’s claim so that there would be no need further to conduct the proceedings in any respect.

50. In any event, even if properly construed the Offer of Compromise did not comply with UCPR 20.26(2)(a)(i) because it did not identify the claim or part of the claim to which it related, it was not such a non-compliance so as to invalidate the Offer of Compromise. Having regard to UCPR 20.26 and Division 3 of Part 42, and having regard to s 56 of the Civil Procedure Act 2005, such a non-compliance is clearly not intended to render an offer of compromise invalid: Leach v The Nominal Defendant at [37]–[38]. The Offer of Compromise dated 13 May 2024 attracts the operation of UCPR 42.15 in accordance with its terms.

51. Mr Tekin has now obtained a judgment which, when interest after 13 May 2024 is disregarded, is for $658,709 plus costs. It is no more favourable to him than the Offer of Compromise ($900,000 plus costs). The Firm has a conditional entitlement to the costs order it seeks.

52. In his submissions Mr Tekin accepts that he bears the burden of trying to demonstrate that the Court ought to order otherwise. He has failed to discharge that burden.

53. The complaint that the Offer of Compromise did not explain the relationship between the sum offered and Mr Tekin’s claims does not provide a basis to deprive the Firm of a costs order in accordance with UCPR 42.15. UCPR 20.26 is prescriptive about the form the offer of compromise must take and the information to be provided in it. 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.

54. Even if some explanation of the offer was thought to be appropriate, the sort of explanation now demanded by Mr Tekin was not necessary. In the context of a Calderbank offer, the Court of Appeal has said that the general question is whether the offer is made in terms which enabled the offeree to give proper consideration to the offer: Health Care Corporation Pty Ltd t/as Wollongong Private Hospital v Cleary (No. 2) [2024] NSWCA 94 at [12]. UCPR 20.26 does not require more. Comprehensibility needs to have regard not just to the terms of the offer but also to the circumstances in which the offer was made. The submission that Mr Tekin was an unsophisticated litigant can go only so far in the face of my findings in the principal judgment at [11], [12] and [17]. He had legal representation when the Offer of Compromise was served. He had just spent the day at the mediation. There is no evidence about what was said at the mediation, but it may be assumed that Mr Tekin mediated in good faith and obtained all the information and advice he considered necessary to consider any offer which was made that day. In the context in which the Offer of Compromise was served, there is no reason why it was necessary for the Firm to explain how the figure was calculated.

55. So too, the submission that seven days was not a reasonable time to give Mr Tekin to accept the Offer of Compromise ought to be rejected. Again, having just mediated in good faith it may be inferred that Mr Tekin had all the information and advice he needed. There is no suggestion, let alone evidence, that he required further time or that he communicated that requirement to the Firm. As at 13 May 2024 the final hearing was listed to commence on 3 June 2024 which was only three weeks hence. Work would be ramping up as the hearing date approached and costs would be incurred. The reasonableness of the time allowed for acceptance must take into account of not just the position of the offeree but also the costs to be avoided by resolving the dispute. It was not unreasonable for the Firm to require the offer to be accepted (or to lapse) before too much more pre-trial work was undertaken.

56. The submission that Mr Tekin’s claims were complicated and “involved an insurer” and a potential professional standards cap does not support his argument that it was not unreasonable for him not to accept the offer. Both matters exposed Mr Tekin to increased risk in the litigation. If anything, they were reasons why he ought to have accepted the offers rather than continue to run the risks.

57. The submission that the amount offered was significantly less than the amount claimed is not developed beyond mere assertion. It may be accepted that the sums claimed by Mr Tekin exceeded $900,000 but no attempt has been made to demonstrate particular prospects for any particular claim so as to make it reasonable for Mr Tekin not to accept $900,000.

58. In this respect, the fundamental problem which Mr Tekin confronted at trial was that the documents and other objective facts strongly favoured the finding that, for reasons unrelated to the dispute which the Firm’s negligence had provoked with Upside, Mr Tekin would never have sold the Land prior to the conclusion of the Upside litigation: Tekin v Stratford [2025] NSWSC 541 at [226]–[235]. The evidence on this critical issue of causation was no better known to the Firm than to Mr Tekin himself. Yet Mr Tekin maintained large claims which were dependent upon him proving that, despite the objective facts, he would have sold in 2015. The fact that he was maintaining such claims does not demonstrate that the offer of $900,000 was not a reasonable offer. Nor does it demonstrate that the offer was not a genuine compromise.

59. The submission that the Offer of Compromise was designed to dissuade Mr Tekin from pursuing his claims to hearing and threatening adverse costs order may be accepted but not the pejorative terms which it is expressed. In addition to the passages set out above, the covering letter stated:

“Our clients are conscious of the time and costs involved in ongoing litigation, especially when having regard to the legal costs already expended in relation to the proceedings and the significant costs which will be incurred if this matter proceeds to trial. We consider these offers to be fair and reasonable considering the deficiencies in your client’s claim and the strength of our clients’ defence.”

60. It is true that the covering letter also referred to the Calderbank case and expressly reserved a right to rely upon the letter in any application for costs, including an application for indemnity costs. It did so in unobjectionable terms. Had it not done so the Firm may have been open to criticism in another context: Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311 at 324; [2013] NSWCA 188 at [59]–[60] (Barrett JA with whom Beazley P and McColl JA agreed).

61. In making his submission about the Firm’s Offer of Compromise Mr Tekin is not paying sufficient regard to s 56 of the Civil Procedure Act 2005 and Part 20 of UCPR. The procedure of making formal offers in order to resolve proceedings by an agreed compromise is an important part of litigation process.

62. The fact that the Firm required Mr Tekin to give a deed of release does not take Mr Tekin’s argument much further. By virtue of the principal judgment of the Court on 29 May 2025, there has been a final determination of all issues in the proceedings. There is finality. The Firm has no further liability in respect of the litigated claims. In addition, in the ordinary course Mr Tekin will now be precluded from bringing any future claims which could have been but were not brought in these proceedings: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. A deed of release would have done no more than achieve the finality both parties presumably intended from the proceedings. There is no suggestion that there is some other claim which Mr Tekin would have had to give up had he given a release but which he is now free to pursue.

63. Having regard to all these considerations, Mr Tekin has not demonstrated that the discretion otherwise to order ought to be exercised in his favour. The Firm is entitled to the costs orders specified in UCPR 42.15. The pertinent date is 13 May 2024.

64. In view of that conclusion it is not necessary to consider the Ca**lderbank offer which was made on 13 May 2024. The Calderbank offer was made inclusive of costs. Whilst it may be inferred that the Calderbank offer included an allowance of $61,052.43 for costs, there is no evidence about the amount of Mr Tekin’s costs as at 13 May 2024, either on a solicitor and own client basis or on an estimated party-party basis. In the face of that unknown, it is not possible to say with certainty whether the judgment achieved by Mr Tekin is better or worse than the offer. In those circumstances, the Calderbank offer does not add anything to the Firm’s reliance on its formal Offer of Compromise.

Offers in November 2024

65. In view of the finding about the Offer of Compromise served on 13 May 2024 there is no utility in determining the competing submissions about the offers made on 19 November 2024. Had it been necessary, I would have found that from 19 November 2024 the Firm is alternatively entitled to the costs orders it seeks under UCPR 41.15 and that the same result would have followed from the principles in the Calderbank case.

66. As compared to the Offer of Compromise which was served on 13 May 2024, there are three differences to the considerations which arise in relation to the Offer of Compromise which was served on 19 November 2024. First, it was a reduction on the previous offer. The mere fact that there had been an earlier offer for a higher amount did not make it reasonable for Mr Tekin not to accept the offer on 19 November 2024. The reduction was significant, but he was still being offered a substantial sum. He was also being offered his (by then increased) costs, plus no order that he pay the Firm’s (by then also increased) costs.

67. Secondly, Mr Tekin was allowed only three days to accept the offer in November 2024. The offer was open until 5pm on the Friday before the Monday commencement of the hearing. Preparation would have been on foot in Mr Tekin’s camp and it would have been expected to increase over the ensuing days. Minds were again focussed. In the circumstances, three days was a reasonable time.

68. Finally, Mr Tekin points out that the judgment he obtained was only $1,358.80 lower than the amount offered. It was in fact approximately $22,652 lower when post offer interest is disregarded as required by UCPR 42.16. It is still a modest difference but it does not provide a reason why the Court should otherwise order. Even where the judgment obtained is only slightly lower than the offer which was not accepted, it is still the case that it is no more favourable: Health Care Corporation Pty Ltd t/as Wollongong Private Hospital v Cleary (No 2) at [15]–[16]. In this respect, UCPR 42.15(1) is precise. Even if the judgment obtained by the Plaintiff is exactly the same as the offer previously made by the Defendant, the otherwise overly cumbersome words (“no more favourable”) say that the Defendant has a conditional entitlement to the specified costs orders unless the Court orders otherwise.

69. The correct view of the offer of $700,000 plus costs is that the Firm offered to pay Mr Tekin’s claim in full. It was a reasonable approach for the Firm to take. By accepting the offer, Mr Tekin accepted the risk that he would not do as well at trial in the hope that he would do better. He also accepted the risks as to costs.

Orders

70. The Orders of the Court are:

(a) Order (e) made on 29 May 2025 be vacated. (b) The Defendants pay the Plaintiff’s costs on an ordinary basis up to 13 May 2024 and the Plaintiff bear his own costs thereafter. (c) The Plaintiff pay the Defendants’ costs on an indemnity basis from 14 May 2024.

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Amendments

14 August 2025

Correction to case citation on cover sheet.