Goulding v Simonds Homes Victoria Pty Ltd (No 3)

In *Goulding v Simonds Homes Victoria Pty Ltd (No 3)*, heard by McNab J, the dispute concerned an application for costs following the rejection of settlement offers made by the respondent. The applicant sought to argue against the respondent's entitlement to costs, or alternatively, to limit the basis and quantum of any costs awarded.

The primary legal issue before the court was whether the respondent was entitled to an order for costs, and if so, on what basis (party-party, solicitor-client, or indemnity) and how those costs should be assessed, particularly in light of the applicant's failure to accept the respondent's settlement offers. The applicant also raised a specific objection to the assessment of indemnity costs, arguing that the respondent's evidence of incurred costs was insufficiently detailed due to redactions.

McNab J considered the principles governing *Calderbank* offers, noting that the court's discretion to award costs is exercised having regard to various factors including the stage of proceedings, time for consideration, extent of compromise, prospects of success, clarity of the offer, and whether indemnity costs were foreshadowed. The court found that despite the short timeframe for acceptance and the circumstances of their making, the applicant's failure to accept the respondent's settlement offers, particularly the First Offer, was unreasonable. The court reasoned that compensating the successful party is the purpose of costs orders, not penalising the losing party, and that upholding the cost consequences of rejecting reasonable settlement offers encourages parties to resolve litigation.

Consequently, McNab J ordered that the respondent was entitled to costs. The court rejected the applicant's argument that the respondent's evidence of costs was insufficient, finding that the respondent had acted reasonably in making clear and genuine offers of compromise. The court indicated that failing to give effect to the cost consequences of rejecting such offers would disincentivise future reasonable settlement attempts.