Hughes v Sangster (No 2)

In Hughes v Sangster (No 2), the dispute involved the plaintiff, Hughes, and the defendant, Sangster, concerning the rejection of a Calderbank offer. The case was heard in a court in Australia. Hughes had made a Calderbank offer, which is a settlement offer made without admitting liability, to Sangster, who rejected it. Following this, Sangster made several other offers, which Hughes also declined. The court had to determine whether Sangster's rejection of the offers was reasonable and, if not, what consequences should follow. Specifically, the court had to consider the appropriate allocation of costs and whether the proceeds from the sale of a house, to which Sangster was entitled, should be quarantined to ensure the defendant met his costs obligations.

The central legal issue was the reasonableness of Sangster's rejection of the offers made by Hughes. The court examined whether the rejection was a factor that could influence the costs order. If Sangster's rejection was deemed unreasonable, the court needed to decide on the appropriate costs order. Given that the Calderbank offer was rejected, the court also had to consider whether the costs should be awarded on a solicitor and client basis from the date the Calderbank offer was made. Furthermore, the court had to determine if the proceeds from the sale of a house should be quarantined to ensure Sangster met his costs obligations.

The court held that Sangster's rejection of the offers was unreasonable. As a result, Hughes was awarded costs on a solicitor and client basis from the date the Calderbank offer was made. To ensure Sangster met his costs obligations, the court ordered that the proceeds from the sale of the house be quarantined. This meant that until Sangster fulfilled his costs obligations, the proceeds could not be used for any other purpose. The court's decision ensured that Hughes would be compensated for the costs incurred due to Sangster's unreasonable rejection of the settlement offers.