Koprivnjak v Koprivnjak (No 2)

The appeal concerned an application to vary an earlier costs order made by the Court of Appeal of New South Wales. The dispute arose from the interplay between the general rule that costs follow the event and the exceptions to this rule, specifically in relation to offers of compromise or Calderbank offers made during the proceedings. The central question was whether a particular offer complied with the requirements of the *Uniform Civil Procedure Rules 2005* (NSW) and, if so, whether there were grounds to depart from the usual costs consequences.

The Court was required to determine whether the respondent's offer of compromise was valid and compliant with the *Uniform Civil Procedure Rules 2005* (NSW). If the offer was found to be valid, the Court then had to consider whether there was any reason to depart from the ordinary costs consequences that would typically flow from the making of such an offer, particularly in light of the outcome of the appeal.

The Court reasoned that the respondent's offer of compromise was indeed compliant with the relevant rules. Applying the principles governing offers of compromise, the Court concluded that the appellant's failure to accept the offer, when it was more favourable than the ultimate outcome for the respondent, warranted a departure from the ordinary costs rule. The Court found that the offer was sufficiently clear and unambiguous to be considered a valid offer of compromise under the UCPR.

Consequently, the Court ordered that the earlier order be varied. The appellant was ordered to pay the respondent’s costs of the proceedings on the ordinary basis up to and including 21 September 2022. However, from 22 September 2022 onwards, the appellant was ordered to pay the respondent’s costs on an indemnity basis, reflecting the Court's finding that the appellant ought to have accepted the respondent's offer of compromise.