Sahade v Bischoff (No 2)

In Sahade v Bischoff (No 2), the New South Wales Court of Appeal considered an application for costs following an offer of compromise made by the respondents (Bischoffs) to the appellants (Sahades). The dispute concerned the application of Uniform Civil Procedure Rules (UCPR) r 42.15A, which provides for indemnity costs where a defendant's offer of compromise is not accepted and the defendant obtains a judgment no less favourable than the offer.

The primary legal issue before the court was whether the Bischoffs' joint offer of compromise, which encompassed both the appeal and a cross-summons, was capable of being accepted separately by the Sahades in relation to each of those proceedings, and consequently, whether r 42.15A could apply to the costs consequences of the offer. The appellants argued that the offer comprised two distinct parts, neither capable of independent acceptance, and that r 42.15A could not apply to the offer relating to the cross-summons because the Bischoffs were plaintiffs in that context.

The Court of Appeal found that while it was open in principle to treat the offer as having interdependent parts, the application of r 42.15A was complicated by the differing roles of the parties in the appeal and the cross-summons. Specifically, for the appeal, the appellants were plaintiffs and the Bischoffs were defendants, making r 42.15A potentially applicable. However, in relation to the cross-summons, the Bischoffs were plaintiffs and the appellants were defendants, meaning r 42.15A would not apply, and r 42.14 (which deals with unaccepted offers by plaintiffs) would be the relevant provision. The court noted that neither party had addressed the cost consequences under r 42.14 for the offer relating to the cross-summons, and identified a more fundamental problem with the Bischoffs' reliance on either rule.

The court ordered that the appellants pay the respondents' costs of the appeal, and the cross-applicants pay the cross-respondents' costs of the cross-summons. Each party was to bear their own costs of the application for costs.