Gray v Wagga Wagga City Council (No 2)

The matter before the Court was a dispute between the plaintiff, Mr Gray, and the defendant, Wagga Wagga City Council, concerning damages for personal injuries sustained by the plaintiff. The proceedings were heard in the Federal Circuit Court of Australia. The plaintiff had originally brought the action in the Supreme Court of New South Wales, but it was transferred to the Federal Circuit Court. The defendant had made two offers of compromise, one on 19 March 2018 and another on 23 September 2020. The plaintiff rejected both offers and subsequently the defendant applied for costs on an indemnity basis.

The primary legal issue before the Court was whether the defendant's second offer of compromise constituted an exceptional circumstance under section 56(2) of the Federal Circuit and Family Court of Australia Consequential Amendments Act 1996. The plaintiff argued that the defendant's failure to provide certain documents was a significant factor that negated the exceptional circumstance. The Court was required to consider the factors relevant to determining whether the defendant's second offer constituted an exceptional circumstance and whether the plaintiff's delay in providing documents was a significant factor in the outcome of the case.

The Court found that the defendant's second offer of compromise did constitute an exceptional circumstance. While the plaintiff had delayed in providing documents, this was not deemed an exceptional circumstance in itself. The Court considered the overall circumstances of the case, including the content of the offer and the nature of the dispute. The Court held that the plaintiff's delay in providing documents did not negate the exceptional circumstance, and therefore, the defendant was entitled to indemnity costs from the date of the second offer. The Court emphasised that the deterrent effect of making offers of compromise was an important consideration, and the plaintiff's rejection of the second offer without good reason warranted indemnity costs.

The Court ordered that the plaintiff was to pay the defendant's costs of the proceedings on an ordinary basis up to and including 11 February 2021, and on an indemnity basis thereafter. The Court's decision underscores the importance of considering the timing and content of offers of compromise in determining costs orders.