Edwards v Merlaust Pty Ltd (Costs)

In the case of Edwards v Merlaust Pty Ltd, the dispute arose from a contractual claim related to the sale of a property. The matter was heard and determined in the Supreme Court of New South Wales. The plaintiff sought indemnity costs against the defendant based on a Calderbank offer, which is a formal offer of compromise made under r 46.1 of the Uniform Civil Procedure Rules 2005 (NSW). The defendant had made the offer before the trial, which was only valid for a very limited period. However, the offer was not renewed before the appeal, and it required the parties to enter into a non-disparagement deed. The plaintiff relied solely on this offer to argue for a departure from the usual costs order.

The primary legal issue before the court was whether the Calderbank offer, made under the specified conditions, provided a sufficient basis for the plaintiff to be awarded indemnity costs. The court had to consider the nature and circumstances of the offer, including its limited duration and the requirement for a non-disparagement deed. Additionally, the court examined whether the offer was a genuine attempt to resolve the dispute and whether the defendant's refusal to accept it was unreasonable. The court also needed to determine whether the plaintiff's reliance on this offer alone was adequate to justify a departure from the usual costs order, which generally awards costs in the party's favour.

The court held that the Calderbank offer did not provide a sufficient basis for awarding indemnity costs to the plaintiff. The limited duration of the offer and the requirement for a non-disparagement deed meant that it was not a genuine attempt to resolve the dispute. Furthermore, the court found that the defendant's refusal to accept the offer was not unreasonable, given the short timeframe and the additional requirement. The court emphasised that a party seeking indemnity costs must demonstrate that the offer of compromise was reasonable and made in good faith. In this case, the plaintiff's reliance on the Calderbank offer alone was not enough to justify a departure from the usual costs order. Consequently, the plaintiff was not entitled to indemnity costs.

The court ordered that the defendant was to pay the plaintiff's costs of the appeal on the standard basis. The plaintiff was not awarded indemnity costs, as the court found that the Calderbank offer did not meet the necessary criteria for such an award. This decision highlights the importance of the nature and circumstances of a Calderbank offer in determining whether it can serve as a basis for indemnity costs.