Cutler v Derwent Howard Media Pty Ltd, in the matter of Derwent Howard Media Pty Ltd (Subject to Deed of Company Arrangement) (No 3)

Cutler (the plaintiff) brought an action against Derwent Howard Media Pty Ltd (the first defendant), as well as two other defendants, seeking to set aside a Deed of Company Arrangement (DOCA) on the basis of alleged uncommercial transactions. The plaintiff subsequently made a Calderbank offer, which was accepted by two of the defendants, but the acceptance was conditional on a capped figure for costs. The primary issue for the court was to determine the appropriate order for costs given the conditional acceptance of the Calderbank offer.

The court considered the principles governing costs in such circumstances, including the nature of the Calderbank offer and the conditions attached to the acceptance. It noted that the offer was open for a very limited time and was conditional on a capped figure for costs. The court held that the appropriate order was for each party to bear its own costs, reflecting the fact that the Calderbank offer was not accepted in its entirety and the conditions attached to the acceptance. The court found that an indemnity costs order was not appropriate given the conditional acceptance of the offer.

The court ordered that the second and third defendants admit the plaintiff to proof in respect of the DOCA of the first defendant in the sum of $22,691.98, and that each party bear its own costs of and in connection with the proceeding, subject to any previous costs orders. This decision underscores the importance of the terms of any settlement offer and the consequences of conditional acceptances in determining the appropriate costs order.