State of NSW v Tyszyk (No. 2)

The appeal and cross-appeal concerned the appropriate orders for costs in the Court of Appeal and the court below. The appellant had made an offer of compromise under the Uniform Civil Procedure Rules (UCPR) and a Calderbank offer to the respondent. The appellant argued that it had achieved a result no less favourable than its offer of compromise, and that indemnity costs should be awarded. The respondent cross-appealed, disputing the basis for costs.

The central legal issues before the Court of Appeal were whether rule 42.14 of the UCPR applied to proceedings in the Court of Appeal, and whether the appellant was entitled to indemnity costs. The court also considered the costs of the proceedings in the court below, in light of a Calderbank offer made by the appellant shortly before trial and an offer of compromise served before the second tranche of the hearing. The court was required to determine the appropriate basis for awarding costs, considering the offers made and the outcome of the appeal, which involved the appellant succeeding on a basis different from that run at trial or extensively on appeal.

The Court of Appeal reasoned that the appellant was entitled to costs on the indemnity basis from a certain date, as it had obtained a result no less favourable than its offer of compromise. The court applied the principles governing offers of compromise and Calderbank offers, considering the timing and nature of the offers made by the appellant in relation to the proceedings in both the Court of Appeal and the court below. The court found that the appellant ought to have succeeded in the court below on a different basis, which supported the award of indemnity costs from specific dates.

The court ordered that the respondent pay the costs of the appellant of the appeal and the cross-appeal on the ordinary basis up to and including 27 June 2007, and on the indemnity basis thereafter. The respondent was also ordered to pay the appellant's costs in the court below on the ordinary basis up to and including 21 September 2006, and on the indemnity basis from 22 September 2006.