Egan v Mangarelli & Ors (No 2)

Egan v Mangarelli & Ors (No 2) involved the respondents making an offer of compromise to the applicant under r 20.26 of the Uniform Civil Procedure Rules 1999 (NSW). The offer included a specified amount payable "plus costs as agreed or assessed". The applicant brought an application to determine the nature of the offer and its compliance with the rules. The primary legal issue was whether the offer complied with r 20.26, given the conflicting decisions from the Court of Appeal. Another issue was whether the offer was a Calderbank offer, and if so, what the effect of r 42.15 of the UCPR was on such offers. The court needed to determine the meaning of "unless the Court orders otherwise" in r 42.15 and whether "exceptional circumstances" were required for such an order. The court also had to consider what constituted "exceptional circumstances" in the context of this case.

The court found that the offer was not compliant with r 20.26 as it did not specify a definite amount of money payable. However, the offer could be considered a Calderbank offer, and the court could order that costs be paid on a basis different to that specified in the offer if there were exceptional circumstances. The court held that the term "unless the Court orders otherwise" in r 42.15 UCPR did not require exceptional circumstances for an order to be made. In this case, the unusual circumstances, including the offer's non-compliance with r 20.26, constituted exceptional circumstances warranting a costs order different from that specified in the offer.

The court ordered that the applicant's costs be paid on an indemnity basis, as opposed to the costs as agreed or assessed basis specified in the offer. This decision was based on the exceptional circumstances present in the case, including the non-compliance with r 20.26 and the need to ensure just outcomes in the proceedings. The court emphasised the importance of the proper use of the offer of compromise mechanism and the need for clarity in such offers to avoid potential disputes over costs.