County Securities Pty Ltd v Challenger Group Holdings Pty Ltd (No 2)

County Securities Pty Ltd brought proceedings against Challenger Group Holdings Pty Ltd and Challenger Life Limited (referred to collectively as Challenger). The dispute concerned an offer made by Challenger to County Securities, which was not accepted. The matter came before the Supreme Court of New South Wales, Court of Appeal.

The primary legal issue before the Court of Appeal was whether Challenger should be awarded indemnity costs for the trial, following its failure to accept a *Calderbank* offer made by County Securities. The Court was required to consider the circumstances surrounding the *Calderbank* offer and the conduct of the parties in determining whether to depart from the ordinary rule of awarding costs on a party-party basis.

The Court of Appeal, in a joint judgment, determined that while Challenger had ultimately been successful in the trial, the circumstances did not warrant an award of indemnity costs for the entire period. The Court noted that the *Calderbank* offer was made by County Securities and that Challenger's subsequent conduct, particularly in relation to the terms of settlement and the progression of the litigation, justified a departure from the ordinary costs rule for a portion of the trial. The Court applied the principles governing *Calderbank* offers, which allow for indemnity costs where a party rejects an offer and subsequently obtains a judgment no more favourable than the offer. However, the Court found that the specific facts of this case warranted a partial award of indemnity costs.

Consequently, the Court ordered that Challenger and CHL pay County Securities' costs of the trial before Rolfe DCJ up to and including 8 February 2007 on the ordinary basis, and from 9 February 2007 on the indemnity basis.