Prior v Brown (No 2)

In *Prior v Brown (No 2)*, the appellant sought to appeal a decision of the primary court. The dispute concerned the appropriate basis for assessing the respondent's costs of the appeal. The Court of Appeal of New South Wales was required to determine whether the respondent was entitled to indemnity costs for a portion of the appeal proceedings.

The central legal issue before the Court of Appeal was whether an offer of compromise made by the respondent had been rejected by the appellant, and if so, whether this rejection warranted an order for indemnity costs from the date of the offer. The Court had to consider the terms of the offer and the subsequent conduct of the parties in light of the relevant rules governing offers of compromise and costs.

The Court reasoned that the appellant's conduct in relation to the offer of compromise justified an award of indemnity costs. By failing to accept the offer, which was ultimately more favourable to the respondent than the final outcome, the appellant had unnecessarily prolonged the litigation. The Court applied the principle that where a party rejects a reasonable offer of compromise and subsequently achieves a less favourable result, the other party may be awarded indemnity costs from the date of the offer.

Consequently, the Court ordered that the appellant pay the respondent's costs of the appeal. These costs were to be assessed on the ordinary basis up to and including 14 March 2012, and on the indemnity basis from 15 March 2012 onwards, reflecting the Court's determination regarding the offer of compromise.