Cong Xu v Austino Property Development Pty Ltd (No 2)

The case involved Cong Xu as the plaintiff and Austino Property Development Pty Ltd as the defendant. The dispute centred around a claim for costs on an indemnity basis, following an unsuccessful attempt to settle the matter through a Calderbank offer. The matter was heard in the Supreme Court of New South Wales. The plaintiff sought costs on the basis that the defendant had unreasonably rejected a genuine offer of compromise, as outlined in the Calderbank letter, which required the entry of consent orders in exchange for payment of $10,000.

The court was required to determine whether the offer was genuinely a compromise and whether it was unreasonable for the defendant not to accept it. The primary consideration was whether the offer contained a meaningful element of compromise and whether it was reasonable for the defendant to decline such an offer. The court examined the terms of the offer, its nature, and the context in which it was made. The plaintiff argued that the offer was genuine and contained a significant element of compromise, while the defendant contended that the offer had minimal elements of compromise and was therefore not unreasonable to reject.

The court found that the offer did not contain a substantial element of compromise and therefore was not unreasonable for the defendant to reject. The offer primarily required the entry of consent orders that were similar to the plaintiff's Statement of Claim in exchange for a payment of $10,000, which did not significantly depart from the plaintiff's original claim. The court held that the offer lacked a meaningful compromise and thus it was not unreasonable for the defendant to decline the offer. Consequently, the court dismissed the plaintiff's application for costs on an indemnity basis.

The court's decision effectively clarified the threshold for a genuine Calderbank offer, emphasising that for such an offer to be deemed reasonable, it must contain a substantial element of compromise. The court's ruling underscored the importance of the nature of the offer and its departure from the original claim in determining whether it was unreasonable to reject it.