Jireh International Pty Ltd t/as Gloria Jean's Coffee v Western Export Services Inc (No 2)

In *Jireh International Pty Ltd t/as Gloria Jean's Coffee v Western Export Services Inc (No 2)*, the New South Wales Court of Appeal considered appeals and cross-appeals concerning costs orders made at first instance and on appeal. The primary dispute involved a contractual arrangement between Jireh International Pty Ltd (Jireh) and Western Export Services Inc (WES), with the proceedings at first instance resulting in a judgment in favour of WES. Jireh appealed this judgment, seeking a reduction, while WES cross-appealed on certain aspects.

The Court was required to determine several key issues relating to costs. Firstly, it had to consider whether the successful party at first instance, WES, should have its entitlement to costs reduced, given that it recovered only a small proportion of its claim. Secondly, the Court had to assess the costs of the appeal, where Jireh had obtained a substantial reduction in the judgment but had been unsuccessful on many of the issues argued. Thirdly, the Court examined WES's contention that it was entitled to indemnity costs based on a *Calderbank* offer made by Jireh, arguing that WES had unreasonably rejected an offer that would have substantially varied their contractual arrangement. Finally, the Court considered whether evidence of an offer of compromise made outside a court-ordered mediation session, but on the day and at the venue of the mediation, was inadmissible as evidence of a conversation occurring "in a mediation session" or "within a mediation" under section 30 of the *Civil Procedure Act 2005*.

The Court reasoned that while Jireh had achieved a significant reduction in the judgment on appeal, it had also pursued numerous unsuccessful arguments. This led the Court to order that WES pay 25 per cent of Jireh's costs of the appeal, reflecting the mixed success. Regarding the costs at first instance, the Court determined that Jireh should pay 65 per cent of WES's costs, again acknowledging the partial success of Jireh's appeal in reducing the overall judgment. The Court also noted that costs orders made in Jireh's favour concerning interlocutory matters would remain unaffected. The Court declined to grant indemnity costs to WES, finding no basis for such an order in relation to the *Calderbank* offer. The Court also addressed the admissibility of the settlement offer, ultimately allowing it to be considered.

The Court made orders for the parties to agree on the amount of interest to be included in the judgment within 14 days, with liberty to apply for relisting if agreement could not be reached. Jireh was ordered to pay 65 per cent of WES's costs of the proceedings at first instance, excluding costs related to interlocutory matters already ordered in Jireh's favour. WES was ordered to pay 25 per cent of Jireh's costs of the appeal. Certificates under the *Suitors' Fund Act 1951* were to be granted to the respondents if qualified.