Fairall v Hobbs (No 2)

In *Fairall v Hobbs (No 2)*, the New South Wales Court of Appeal considered an application to vary costs orders made following a successful appeal. The dispute concerned the appropriate basis for awarding costs, specifically in light of offers of compromise made prior to the initial proceedings.

The primary legal issue before the Court of Appeal was whether the costs orders made on 18 April 2017 should be varied to reflect the fact that offers of compromise had been made before the first instance proceedings. The court was required to determine the impact of these pre-litigation offers on the apportionment of costs, particularly in relation to the period after a specific date.

The Court of Appeal reasoned that the original costs order had not adequately accounted for the offers of compromise made by the appellants before the trial commenced. The court applied the principle that where a party makes a reasonable offer of compromise which is not accepted, and the offering party ultimately obtains a more favourable outcome, the court may order that the unsuccessful party pay the costs of the successful party on an indemnity basis from the date the offer was made or from a later date that is just. In this instance, the court found it just to vary the order to reflect the costs on an indemnity basis from 18 March 2016, the date after which the appellants' success at trial was demonstrably better than their earlier offer.

Consequently, the Court of Appeal ordered that Order 2(b) made on 18 April 2017 be varied. The respondent was ordered to pay the appellants’ costs of the trial as agreed or assessed on an ordinary basis up until 18 March 2016, and on an indemnity basis thereafter.