Ozzy States Pty Ltd v Norton Property Group Pty Ltd

Ozzy States Pty Ltd commenced proceedings against Norton Property Group Pty Ltd in the Supreme Court of New South Wales, seeking relief in relation to a contractual dispute. The plaintiffs sought an order for specific performance of a contract, as well as damages for breach of contract. The defendants opposed the application and counterclaimed for relief. The case proceeded to a hearing, at which the plaintiffs made an offer of compromise pursuant to section 55 of the Civil Procedure Act 2005 (NSW). This offer included an undertaking to pay the defendants' costs of the proceeding up to a specified date, on the ordinary basis. The defendants rejected this offer, and the plaintiffs later sought an order for indemnity costs.

The court was required to determine whether the plaintiffs were entitled to an order for indemnity costs, and if not, whether they were entitled to costs on the ordinary basis. The court noted that the general rule in the law of costs is that costs follow the event, meaning that the losing party pays the winning party’s costs. However, there are exceptions to this rule, including where a party makes a Calderbank offer that is rejected by the other party. In such cases, the court may order that the costs of the proceeding follow the event on an indemnity basis. The court also noted that, while the plaintiffs' offer included an undertaking to pay the defendants' costs up to a specified date, it did not articulate with precision all relevant reasons why the offer should be accepted.

The court held that it was not unreasonable for the defendants to reject the plaintiffs' offer, as the offer failed to articulate with precision all relevant reasons why it should be accepted. The court also noted that the offer was made close in time to the commencement of the hearing, and that it was not unreasonable for the defendants to require more information before accepting the offer. Accordingly, the court held that the plaintiffs were not entitled to an order for indemnity costs, but were entitled to costs on the ordinary basis. The court ordered that the defendants pay the plaintiffs’ costs of the proceedings, including the cross claim, other than the plaintiffs’ application for indemnity costs. The court also ordered that the plaintiffs pay the defendants’ costs of the application for indemnity costs.

The court's decision is a reminder that, while Calderbank offers can be a useful tool in the resolution of disputes, they must be made with precision and clarity if they are to be effective. The court's decision also highlights the importance of considering the timing of an offer, and the need for parties to provide all relevant information when making an offer of compromise.