Savills (NSW) Pty Ltd v ATF Cth Pty Ltd (No 2)

The case involved a dispute between Savills (NSW) Pty Ltd and ATF Cth Pty Ltd, with the matter being heard in the Supreme Court of New South Wales. The primary focus of the litigation was the calculation of costs, particularly under the party/party costs regime on an indemnity basis. The defendant, ATF Cth Pty Ltd, had made a Calderbank offer to the plaintiff, Savills (NSW) Pty Ltd, which was subsequently rejected. The legal issues at hand were whether the Calderbank offer was defective and whether the rejection of the offer was unreasonable, thereby affecting the entitlement to costs on an indemnity basis.

The court examined the nature and terms of the Calderbank offer and assessed whether it complied with the requirements set out in relevant case law. It was determined that the offer was not defective as it was clear, unambiguous, and did not impose any condition that would render it unacceptable. The court then turned to the issue of reasonableness in the rejection of the offer. It was found that the rejection was not unreasonable, as the plaintiff had a legitimate basis to reject the offer, considering the potential merits of the case and the strategic importance of proceeding to trial. The court concluded that the plaintiff's decision to reject the offer was reasonable, and the rejection did not bar the plaintiff from seeking costs on an indemnity basis.

In light of the above findings, the court ordered that the defendant pay the plaintiff's costs of the proceeding on an indemnity basis. This decision recognised the plaintiff's entitlement to recover costs, despite the rejection of the Calderbank offer, as the rejection was deemed reasonable under the circumstances. The court's ruling underscores the importance of evaluating the merits of a Calderbank offer and the potential consequences of its rejection in the context of party/party costs agreements.