Stefanyszyn v Brown; Brown v Newcastle Private Hospital Pty Limited t/as Newcastle Private Hospital (No 2)

The case involved the plaintiff, Stefanyszyn, who sought an indemnity costs order against the defendant, Brown, who was being sued for medical negligence. Brown, in turn, sought indemnity costs against the hospital, Newcastle Private Hospital, for the same negligence. The case was heard in the Supreme Court of New South Wales. The primary dispute centred on the costs incurred during the litigation and whether the rejection of a Calderbank offer constituted an unreasonable departure from the usual approach to costs.

The court was required to determine whether Brown's rejection of Stefanyszyn's Calderbank offer was unreasonable and if the offer involved a genuine compromise. The court also needed to decide if there was any departure from the usual order for indemnity costs in such circumstances. The Calderbank offer, which was made shortly before trial, was a significant point of contention. It proposed that Brown would pay Stefanyszyn's costs if Stefanyszyn dropped the indemnity costs claim against Brown. The court's task was to assess whether this offer was genuine and whether Brown's rejection was unreasonable, potentially warranting an indemnity costs order against him.

In ruling on these issues, the court noted that the Calderbank offer was indeed genuine, as it provided a clear and specific compromise that addressed the costs dispute directly. The court found that Brown's rejection of this offer was unreasonable, given that it involved a practical and fair resolution of the costs issue. The court emphasised that rejecting such an offer without substantive reason could lead to an indemnity costs order. However, the court also highlighted that it did not depart from the usual approach to costs orders. It concluded that, while the rejection was unreasonable, it did not warrant a departure from the usual order of indemnity costs, which would typically follow such a rejection.

The final orders of the court were that Brown was liable for Stefanyszyn's costs up to the point of the Calderbank offer, and that Brown was also liable for Stefanyszyn's costs of the proceedings beyond that point. The court did not impose an indemnity costs order against Brown, maintaining the usual approach to costs orders, despite finding the rejection of the Calderbank offer unreasonable. This decision underscored the importance of genuine compromise offers in litigation and the consequences of unreasonable rejections, while also reaffirming the principles governing indemnity costs orders.