Sabah Yazgi v Permanent Custodians Limited (No 2)

In *Sabah Yazgi v Permanent Custodians Limited (No 2)*, the Court of Appeal of New South Wales considered an application for costs following a trial where the applicant, Permanent Custodians, had made an offer of compromise under the *Uniform Civil Procedure Rules 2005* (NSW) and alternatively, a *Calderbank* offer. The respondent, Sabah Yazgi, had rejected these offers.

The central legal issue before the Court of Appeal was whether Permanent Custodians, as the unsuccessful party at trial, should be awarded its costs of the trial, or whether Sabah Yazgi, as the successful party, should recover its costs. This question turned on the application of rule 20.26 of the *Uniform Civil Procedure Rules 2005* (NSW) and the principles governing *Calderbank* offers, particularly in light of the trial outcome.

The Court of Appeal reasoned that the offer of compromise made by Permanent Custodians required an order for possession and judgment for a specified sum. However, the trial court had rejected Permanent Custodians' claim for both possession and the judgment sum, finding in favour of Sabah Yazgi. As the judgment obtained by Sabah Yazgi was no less favourable than the offer of compromise made by Permanent Custodians, the general rule that costs follow the event applied. The Court found no evidence that Sabah Yazgi had brought inappropriate claims or unnecessarily protracted the trial, which might have warranted a departure from this rule.

Consequently, the Court of Appeal ordered that Permanent Custodians pay Sabah Yazgi's costs of the trial, including the costs of the cross-claim, and also pay the costs of the application for costs of the trial.