Salmon v Osmond (No 2)

The case of *Salmon v Osmond (No 2)* concerned an application to vary orders made by the Court of Appeal of New South Wales regarding costs. The dispute arose from earlier proceedings where an offer of compromise had been made. The appellants sought to vary the original costs orders to reflect the effect of this offer.

The primary legal issue before the Court of Appeal was whether the "slip rule" under rules 36.16 and 36.17 of the *Uniform Civil Procedure Rules 2005* (NSW) could be invoked to alter an order as to costs made prior to an offer of compromise being considered. Specifically, the court had to determine if it had the power to amend its previous costs order to reflect the consequences of the offer of compromise, which had not been taken into account in the initial judgment.

The Court of Appeal reasoned that the slip rule was intended to correct errors arising from oversight or misapprehension, and that the failure to consider the offer of compromise at the time of the original costs order constituted such an error. The court applied the principle that where an offer of compromise has been made and not accepted, and the judgment obtained is less favourable than the offer, the party making the offer is generally entitled to costs on an indemnity basis from the date of the offer. The court found that the original order had inadvertently failed to give effect to this principle.

Consequently, the Court of Appeal varied the original costs order. It ordered that the second respondent pay the appellants' costs of the proceedings below on the ordinary basis up to 8 January 2013 and on an indemnity basis thereafter. Further, it specified how these costs were to be determined and credited against distributions from the estate. The first and second respondents were also ordered to pay the costs of the appellants' notice of motion.