Estate of Virgona v De Lautour (No 2)

In the matter of *Estate of Virgona v De Lautour (No 2)*, the appellant sought an order for costs against the respondent. The dispute concerned the basis upon which the respondent should pay the appellant's costs, specifically whether the costs should be awarded on an ordinary or indemnity basis. The appellant relied on an offer of compromise made pursuant to Part 42 rule 42.15A of the *Uniform Civil Procedure Rules 2005* (NSW) to support its claim for indemnity costs from a certain date. The case was heard by Hodgson JA, Ipp JA, and Young CJ in Eq.

The primary legal issue before the court was whether the appellant was entitled to an order that the respondent pay its costs on an indemnity basis from 4 October 2005 onwards, as sought by the appellant based on an earlier offer of compromise. This required the court to consider the circumstances under which an offer of compromise, made prior to trial, could justify an order for indemnity costs for the appeal, particularly when the respondent was successful at trial and a significant period had elapsed.

The court reasoned that while an offer of compromise can be a basis for an indemnity costs order, the circumstances surrounding the offer and the subsequent proceedings are critical. The court noted that the length of time since the initial offer was made, the fact that the respondent ultimately succeeded at trial, and the considerable time that passed between the trial and the appeal were significant factors. These factors, taken together, led the court to conclude that the appellant should have renewed its offer of compromise after the trial if it wished to rely on it to claim the costs of the appeal on an indemnity basis.

Consequently, the court ordered that the respondent pay the appellant's costs of the District Court proceedings on an ordinary basis until 4 October 2005 and on an indemnity basis thereafter. However, the respondent was ordered to pay the appellant's costs of the appeal on the ordinary basis only.