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Clear and Careful Clauses Create Clarity for Costs Consequences

In Farmer v Broadspectrum (Australia) Pty Ltd (No.3) [2024] NSWSC 53 the Supreme Court of New South Wales dismissed a motion for indemnity costs.The plaintiff, who was injured in a fall at a Regional Processing Centre in Nauru, had sued two defendants, Broadspectrum and Wilson Security, for damages. He had also made two Offers of Compromise to each defendant, which were not accepted. He sought indemnity costs from the date of each offer, based on r 20.26 of the Uniform Civil Procedure Rules 2005 (UCPR).

The court dismissed the motion and ordered the plaintiff to pay the defendants’ costs of the motion: The court found that neither of the Offers of Compromise complied with UCPR r 20.26, as they did not identify the proposed orders for the disposal of the claim, and they contained vague and imprecise terms regarding the payments made by Fullerton Health and the previous costs orders. The court also rejected the plaintiff’s argument that the offers could take effect as Calderbank offers, as there was nothing to indicate that they were intended to be relied upon irrespective of their effectiveness under UCPR r 20.26.

The court considered the relevant factual background and the evidence on the motion: The court outlined the history of the proceedings, the nature of the plaintiff’s claim, the cross-claim by Broadspectrum against Wilson Security, and the joining of Wilson Security as the second defendant. The court also examined the terms and the timing of the two Offers of Compromise, and the correspondence between the parties and Fullerton Health, which had paid the plaintiff some benefits under certain policies.

The court applied the relevant rule and the case law on Offers of Compromise: The court quoted the provisions of UCPR r 20.26, which set out the requirements for making an offer under that rule, such as identifying the claim or part of the claim, the proposed orders, and the period of time for acceptance. The court also referred to the provisions of r 42.14, which stipulate the costs consequences if an offer under UCPR r 20.26 is not accepted and the plaintiff obtains a judgment no less favourable than the terms of the offer. The court cited the case of Whitney v Dream Developments Pty Ltd, which held that an offer made under UCPR r 20.26 will not take effect as a Calderbank offer unless there is something to indicate that it is proposed to be relied upon on the question of costs, irrespective of its effectiveness under UCPR r 20.26.

The document is a judgment of the Supreme Court of New South Wales on a motion for indemnity costs: The plaintiff, who was injured in a fall at a Regional Processing Centre in Nauru, had sued two defendants, Broadspectrum and Wilson Security, for damages. He had also made two Offers of Compromise to each defendant, which were not accepted. He was awarded a larger sum at trial than the amount of the offers and therefore sought indemnity costs from the date of each offer, based on UCPR r 20.26.

The court dismissed the motion and ordered the plaintiff to pay the defendants’ costs of the motion: The court found that neither of the Offers of Compromise complied with UCPR r 20.26, as they did not identify the proposed orders for the disposal of the claim, and they contained vague and imprecise terms regarding the payments made by Fullerton Health and the previous costs orders. The court also rejected the plaintiff’s argument that the offers could take effect as Calderbank offers, as there was nothing to indicate that they were intended to be relied upon irrespective of their effectiveness under UCPR r 20.26.

The court considered the relevant factual background and the evidence on the motion: The court outlined the history of the proceedings, the nature of the plaintiff’s claim, the cross-claim by Broadspectrum against Wilson Security, and the joining of Wilson Security as the second defendant. The court also examined the terms and the timing of the two Offers of Compromise, and the correspondence between the parties and Fullerton Health, which had paid the plaintiff some benefits under certain policies.

The court applied the relevant rule and the case law on Offers of Compromise: The court quoted the provisions of UCPR r 20.26, which set out the requirements for making an offer under that rule, such as identifying the claim or part of the claim, the proposed orders, and the period of time for acceptance. The court also referred to the provisions of UCPR r 42.14, which stipulate the costs consequences if an offer under UCPR r 20.26 is not accepted and the plaintiff obtains a judgment no less favourable than the terms of the offer. The court cited the case of Whitney v Dream Developments Pty Ltd, which held that an offer made under UCPR r 20.26 will not take effect as a Calderbank offer unless there is something to indicate that it is proposed to be relied upon on the question of costs, irrespective of its effectiveness under UCPR r 20.26.

Takeaway

There are two cautionary lessons from this case:

  1. The first is to ensure that all Offers of Compromise comply with UCPR r 20.26.
  2. The second is that careful consideration should be given as to whether the letter serving an Offer of Compromise should be formulated as a Calderbank offer if the offer is held not to comply with UCPR r 20.26.

For more information about commercial litigation disputes, contact David Collins in the Mullane & Lindsay litigation team.

Supreme Court Judgment – Farmer v Broadspectrum (Australia) Pty Ltd

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