BHCP Pty Ltd (ATF BHCP Trust) v Reliable Constructions (Australia) Pty Limited ACN 137 300 219 and Ors (2)

In the matter of BHCP Pty Ltd (ATF BHCP Trust) v Reliable Constructions (Australia) Pty Limited ACN 137 300 219 and others, the Federal Court of Australia was tasked with determining whether it was reasonable for the cross-claimants to reject Calderbank offers made by the cross-defendants and whether awarding a lump sum assessment of costs was appropriate. The dispute arose from a complex contractual relationship involving several entities, where the cross-claimants sought damages for alleged breaches of contract and misrepresentations. The cross-defendants, in turn, made offers under Calderbank that the cross-claimants declined, leading to a contentious battle over costs.

The court was required to decide whether the cross-claimants' rejection of the Calderbank offers was unreasonable, and if so, whether it warranted an indemnity costs order. The primary focus was on the assessment of the reasonableness of the rejection of these offers, given the specific circumstances and the relative strengths of each party's position. Additionally, the court needed to determine the appropriateness of a lump sum assessment of costs, considering the extensive litigation and the number of parties involved.

In its reasoning, the court found that the cross-claimants' rejection of the Calderbank offers was unreasonable, taking into account the offers' merits and the context of the litigation. The court concluded that the cross-claimants' decision to reject the offers was not justified by the circumstances, leading to the imposition of indemnity costs on them. The court also found it appropriate to award a lump sum assessment of costs, reflecting the extensive nature of the litigation and the involvement of multiple parties. The court's decision was grounded in the principle that parties should not unreasonably reject offers that could resolve disputes and save costs.

The orders made by the court were that the cross-claimants pay the costs of the third to sixth cross-defendants, except in relation to the applications concerning costs. Conversely, the third to sixth cross-defendants were ordered to pay the cross-claimants’ costs related to their applications concerning costs. This decision underscored the importance of considering Calderbank offers and the potential consequences of unreasonable rejections in litigation.