Galea v Farrugia (No 2)

In *Galea v Farrugia (No 2)*, the Court of Appeal of New South Wales considered an application by the successful respondents for indemnity costs. The respondents sought these costs on the basis of an offer of compromise made pursuant to rule 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) and a *Calderbank* offer, both of which proposed settling the appeal on a "walk away basis".

The central legal issue before the Court was whether the respondents were entitled to indemnity costs given their offers to settle. This required the Court to determine if the offers constituted a genuine compromise and whether the circumstances warranted departing from the usual order for costs.

The Court reasoned that the respondents' offers, made at a stage where it could be inferred they had undertaken little work on the appeal, did not represent a genuine attempt at compromise. The "walk away basis" was interpreted as an indication that the respondents were not seeking to resolve the substantive dispute but rather to avoid further engagement. Consequently, the Court concluded that the offers did not meet the threshold for awarding indemnity costs.

Accordingly, the respondents' Notice of Motion seeking indemnity costs was dismissed, with the respondents ordered to pay the costs of the application.