The court may have regard to a Calderbank letter when deciding questions of costs but 'In the end the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure' - SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37], Jones v Bradley (No 2) [2003] NSWCA 258. Relevant factors are whether the rejection of the compromise offer was reasonable in the circumstances and the timeframe in which the offeree had to consider the offer - Crump v Equine Nutrition Systems Pty Limited (No 2) [2007] NSWSC 25 at [40]. It is for the defendant to persuade the court that the plaintiff acted unreasonably in rejecting the Calderbank offer - Gretton at [16]. Circumstances to be considered in determining whether the failure to accept the offer was unreasonable or not include the making of an assessment of the strengths and weaknesses of the plaintiff's case looking at the claim prospectively at the time the offer was made. This task is not to be determined with the benefit of hindsight - Gretton at [24]."
5 The contention of Westbury is that the letter I have quoted conveyed an offer - or invitation - which was, at the time, of such a nature that it was unreasonable for the Miltonbrook parties to persist with their application rather than withdrawing it. Five reasons why the application was doomed to fail were advanced in the letter:
1. The application had no merit.
2. The Miltonbrook parties had no standing to bring the application because the order for reinstatement had been made.
3. The proper course was for the applicants to appeal to the Court of Appeal.
4. The matters sought to be raised should rather be argued in the separate proceedings in which the reinstated company became engaged.
5. Westbury had grounds as a person aggrieved.
6 The first of these contentions was ultimately not made out - at least if "no merit" was intended to indicate entire absence of merit. At least one matter was decided favourably to the Miltonbrook parties - namely, that Westbury had placed before the court an incomplete description of relevant matters (see paragraph [16] of the judgment of 11 May 2007). I do not accept that the case of the Miltonbrook parties was devoid of all merit.
7 As to the second matter, the Miltonbrook parties were not found to have lacked standing, although it is true that the circumstance that the reinstatement order had been acted upon by ASIC was ultimately the decisive consideration against the grant of the relief they sought. On the question of standing, there was a finding that the Miltonbrook parties were entitled to be heard.
8 The third and fourth points raised in the solicitors' letter are misconceived and were, in any event, not raised when the interlocutory process was heard.
9 As to the fifth matter, the court found it unnecessary to consider the point which accordingly played no part in the outcome: see paragraph [12] of the judgment.
10 I am of the opinion that, while the proposal conveyed by Westbury's solicitor was in essence an invitation to capitulate, rejection of that proposal is, for the purposes of the present application, relevant to an assessment of the reasonableness of the behaviour of the Miltonbrook parties. But I am also of the opinion that, viewed in the context prevailing at the time the letter was received, it was not unreasonable for the Miltonbrook parties to reject the invitation to capitulate and to persist in their attempts to have the orders of 5 March 2007 set aside. I say this, first, because there was merit in their contention that Westbury had caused the court to act on the basis of incomplete information and, second, because the substantial reason for Miltonbrook's failure (the finding that the reinstatement order was, in effect, beyond recall) was not something that Westbury relied upon in maintaining that the Miltonbrook parties should retire from the field.
11 There will be no order that the costs awarded against the Miltonbrook parties be assessed on the indemnity basis. Miltonbrook does not seek to resist an order that it pay costs on the party/party basis, so the appropriate outcome is a costs order in the terms indicated when judgment was delivered on 11 May 2007.
12 The Miltonbrook parties contend that the application by Westbury for an indemnity costs order is a discrete matter which produced a separate and new "event" for the purposes of the rule that costs should follow the event, with the result that they should have the costs of that application.
13 For reasons I sought to explain in Singh v Singh (No 3) [2004] NSWSC 866 (including a theoretically infinite multiplicity of costs applications), I do not consider that to be an appropriate approach in matters of this kind - except, perhaps, in special cases. In the present case, the argument on costs should be seen as part of the overall "event" and the court should simply confirm the order that the applicants under the interlocutory process filed on 14 March 2007 pay the costs of the respondents thereto, so that the whole of the costs assessed on the party/party basis are covered.
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