CBRE (v) Pty Ltd v City Pacific Ltd (in liq) (No 2)

The Court of Appeal of New South Wales, comprising Bell CJ, Leeming and Brereton JJA, considered an appeal concerning the appropriate costs orders following a dispute between CBRE (v) Pty Ltd and City Pacific Ltd (in liq). The core of the dispute revolved around whether a prior offer to compromise, made by the defendant, City Pacific Ltd, was more favourable than the judgment ultimately obtained by the plaintiff, CBRE (v) Pty Ltd, and whether this warranted a departure from the usual costs orders.

The primary legal issue before the Court was whether the defendant's offer to compromise, which was not accepted by the plaintiff, constituted a "Calderbank offer" and, if so, whether the plaintiff's failure to accept this offer justified ordering the plaintiff to pay the defendant's costs on an indemnity basis from the date the offer was made. The court had to determine if the circumstances warranted displacing the default rule that costs follow the event.

The Court reasoned that the offer made by City Pacific Ltd was indeed a valid Calderbank offer, as it was made in writing, clearly stated its terms, and indicated that the defendant would seek an order for indemnity costs if the offer was not accepted and the subsequent judgment was less favourable. The court found that the judgment obtained by CBRE (v) Pty Ltd was less favourable than the terms offered by City Pacific Ltd. Consequently, the court concluded that it was appropriate to depart from the ordinary rules as to costs.

The Court of Appeal varied the previous orders. It set aside the judgment and earlier costs orders, and in their place, ordered that the proceedings be dismissed. Crucially, the plaintiffs were ordered to pay the defendants' costs on the ordinary basis up to 3 September 2018 and on an indemnity basis thereafter, reflecting the unaccepted Calderbank offer. There were no orders as to the costs of a specific motion filed on 26 April 2022, meaning the parties were to bear their own costs for that motion.