Alora Davies Developments 104 Pty Ltd (in liq) v Raphael

In the case of Alora Davies Developments 104 Pty Ltd (in liq) v Raphael, the liquidators of Alora Davies Developments 104 Pty Ltd sought indemnity costs against the defendants on the basis of the Calderbank principles. The liquidators had made a Calderbank offer to the defendants prior to an amendment of the plaintiffs’ pleadings. The defendants, Raphael, argued that the liquidators should not be entitled to indemnity costs as it was unreasonable for the liquidators not to accept their offer. The matter was heard in the Supreme Court of New South Wales, where the court was required to determine whether the liquidators were entitled to indemnity costs and whether a gross sum costs order should be made.

The primary legal issue before the court was whether the liquidators were entitled to indemnity costs under the Calderbank principles. The court had to assess whether it was reasonable for the liquidators not to accept the defendants' Calderbank offer. Additionally, the court needed to determine whether a gross sum costs order should be made, considering the differing scope of the cases against the defendants and the uncertainty as to whether only recoverable costs were claimed.

The court held that the liquidators were not entitled to indemnity costs. The court found that it was reasonable for the liquidators not to accept the defendants' Calderbank offer, as the offer was made prior to the amendment of the plaintiffs’ pleadings, which altered the scope of the case against the defendants. The court also held that a gross sum costs order should not be made. The court was not satisfied that the scope of the cases against the defendants was fairly addressed by a gross sum assessment and that only recoverable costs were claimed.

The court made an order that the liquidators were not entitled to indemnity costs and that a gross sum costs order should not be made. The court further ordered that the liquidators pay the defendants’ costs of the proceeding in the amount of $67,500.