Tin-Tagel Majikk Pty Limited v Hockey (No 2)

Case •

[2025] NSWSC 1031

•

11 September 2025

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Tin-Tagel Majikk Pty Limited v Hockey (No 2) [2025] NSWSC 1031
Hearing dates: On the papers (written submissions received on 18 July, 6 August and 14 August 2025)
Date of orders: 11 September 2025
Decision date: 11 September 2025
Jurisdiction:Common Law
Before: Walton J
Decision:

The Court orders and directs that the defendant shall file and serve Short Minutes of Order reflecting this judgment within 7 days of publishing this judgment.

Catchwords:

JUDGMENTS AND ORDERS – Interest – Calculation of interest – Where agreement provided for method of calculation – Whether interest accrued ought to have been greater due to failure of party to provide consent to transfer of controlled monies – Where no issue raised in substantive proceedings – Interest calculated in accordance with agreement

COSTS –Offer of compromise – Whether offer of compromise valid – Whether offer was no less favourable than the order or judgment obtained – Whether interest on a judgment debt is to be taken into account – Discretion to award indemnity costs not exercised – Ordinary costs order made

COSTS – Gross sum costs order – Whether gross sum costs order should be made – No basis for gross sum costs order established – Limited evidence as to calculation of actual costs – Discretion to order gross sum costs order not exercised

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Legal Profession Uniform Law 2014 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Beach Petroleum NL & Claremont Petroleum NL v Johnson (No 2) (1995) 57 FCR 119

Calderbank v Calderbank [1975] 3 All ER 333

Chalik v Chalik [2025] NSWCA 136

Channel Seven Sydney Pty Ltd v Mahommed (No 2) (2011) 80 NSWLR 210; [2011] NSWCA 6

Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213

Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391

O’Connor v O’Connor – [Gross Lump Sum Cost Order] [2022] NSWSC 940

Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368

Tin-Tagel Majikk Pty Limited v Hockey [2025] NSWSC 578

Texts Cited:

Nil

Category:Costs
Parties: Tin-Tagel Majikk Pty Limited ACN 130 947 009 (First Plaintiff)
Danc Pty Limited ACN 079 357 869 (Second Plaintiff)
Kenneth Roy Folley (Third Plaintiff)
Kathryn Mary Folley (Fourth Plaintiff)
Majikk Pty Limited ACN 115 170 100 (Fifth Plaintiff)
Wayne Craig Hockey (First Defendant)
Susan Noelene Eastway (Second Defendant)
Ashleigh Jane Eastway (Third Defendant)
David Richard Eastway (Fourth Defendant)
Courtney Louise Eastway (Fifth Defendant)
Representation:

Counsel:
S Philips (First, Third, Fourth and Fifth Plaintiffs)
BF Katekar SC with E Hall (First, Second, Third, Fourth, Fifth Defendants)

Solicitors:
PBL Legal (First, Third, Fourth and Fifth Plaintiffs)
Aubrey Brown Lawyers (First, Second, Third, Fourth, Fifth Defendants)
File Number(s): 2020/159228
Publication restriction: Nil

JUDGMENT

  1. By a Second Further Amended Statement of Claim (“2FASOC”) filed on 18 July 2024, the first to fifth plaintiffs advanced 6 claims against the first to fifth defendants, arising from a dispute in relation to a sale of business transaction.

  2. Pursuant to a Share Sale Agreement (“the Agreement”), Tin-Tagel Majikk Pty Limited ACN 130 947 009 (“Tin-Tagel”) as trustee for the KR & KM Folley Family Trust purchased the shares in Danc Pty Limited ACN 079 357 869 (“Danc”) from the first to fifth defendants (“the Hockey Family” or “the vendors”), which included Mr Wayne Craig Hockey (“Mr Hockey”) and Mrs Susan Noelene Eastway (“Mrs Hockey”) (collectively, “the Hockeys”). Danc operated the real estate business known as Ray White Bateau Bay.

  3. Mr Kenneth Roy Folley (“Mr Folley”) and Kathryn Mary Folley (“Mrs Folley”) (collectively, “the Folleys”) guaranteed the obligations of Tin-Tagel under the Agreement.

  4. The sale of shares in Danc from the Hockey Family to Tin-Tagel as trustee for the KR & KM Folley Family Trust completed on 1 June 2018.

  5. The purchase price under the Agreement was $2.3 million. A deposit of $230,000 was paid on exchange of the Agreement, leaving a balance of $2,070,000 to be paid by the Folleys on completion. The balance was paid on completion as follows:

  1. $690,000 was provided by the Hockeys as vendor finance pursuant to cl 6.6(e) of the Agreement. This amount was payable by the Folleys 2 years after completion, after which interest of 5% per annum was payable on any unpaid amount, accruing from the date of completion.

  2. $90,000 was paid to the vendors’ solicitor, which when added to the $230,000 deposit became a $320,000 retention amount. The retention amount was to be held by the vendors’ solicitor, Richardson Legal, to be dealt with in accordance with cl 7.1 of the Agreement.

  3. $13,654.99 was paid to the vendors’ solicitor as payment for their legal fees.

  4. $36,942.78 was paid to Macquarie Leasing as payment for one of Danc’s motor vehicles.

  5. $800,899.78 was paid to Macquarie Bank to pay out a loan that the Hockeys had obtained for Danc from Macquarie Bank.

  6. $438,502.45 was paid directly to the Hockeys.

  1. In April 2019, the Folleys agreed to release $265,084.64 of the retention amount to the Hockeys. The balance of $54,915.36, which remained in dispute, remained in the vendors’ solicitor’s trust account.

  2. The vendor finance was payable by the Folleys on 1 June 2020, being 2 years after completion. On 28 May 2020, the Folleys filed the Statement of Claim in the proceedings and the vendor finance was not paid.

  3. The claims advanced by the plaintiffs in the 2FASOC were, in broad terms, as follows:

  1. That the Hockeys breached the Agreement by virtue of the purchase price not being adjusted on settlement to account for Danc’s: (a) tax liabilities, and (b) employee entitlements. The Folleys sought damages of $164,435.48.

  2. That the Hockeys breached the Agreement by virtue of not paying to the Folleys the value of lost Management Agency Agreements, which they contended amounted to $213,844.86. The Folleys sought damages in that sum.

  3. That Mrs Hockey breached her restraint of trade by being the licensee in charge of Boyle Partners Pty Limited (“Boyle Partners”), who operated Ray White Berkeley Vale. The Folleys sought damages in this respect, however, the amount was not quantified.

  4. That the Hockeys failed to comply with the conditions precedent and warranties under the Agreement, by not disclosing or causing to be discharged, a charge in favour of Macquarie Bank over all of Danc’s assets. The Folleys sought damages and a partial rescission of the Agreement.

  5. The Folleys claimed that the Hockeys made several representations prior to entering into the Agreement which were misleading and deceptive. They sought damages (the amount of which was not quantified) and, in effect, rescission of the Agreement and the security agreements relevant to the vendor finance.

  1. The defendants filed a Cross Claim on 23 October 2020 (“CC”), in which they sought repayment of the vendor finance (less an offset for employee entitlements as required by the Agreement) and release of the balance of the retention amount, plus interest.

  2. The Court delivered judgment with respect to the 2FASOC and the CC on 10 June 2025: Tin-Tagel Majikk Pty Limited v Hockey [2025] NSWSC 578 (“the primary judgment”).

  3. The Court effectively found that the plaintiffs failed to establish each of the claims within the 2FASOC, and in those circumstances, the 2FASOC was dismissed. The CC bought by the defendants was successful, and the Court determined that:

  1. Tin-Tagel was liable to pay the Hockeys the sum of $631,657.29 plus interest at the rate of 5% per annum of that amount, accrued on a daily basis from 1 June 2018 to a date to be determined by the Court after the receipt of further submissions.

  2. The balance of the retention amount was to be paid by the Folleys to the Hockeys in the amount of $54,915.36 plus accrued interest. The monies were to be paid to the Hockeys out of the Hockeys’ solicitors trust account. The Court’s preliminary view was that interest payable should be the “accrued interest” earned by virtue of being held in a controlled monies account with the National Australia Bank (“NAB”), pursuant to cl 7.1(b) of the Agreement. However, the Court made provision for the receipt of further submissions in this respect.

  1. The following orders reflecting the primary judgment were made on 3 July 2025:

  1. The 2FASOC is dismissed.

  2. Judgment in favour of the first and second cross-claimants in the sum of $631,657.29 (“the vendor finance amount”).

  3. The balance of the retention amount held in the trust account of Aubrey Brown Lawyers in the amount of $54,915.36 (“the retention amount”) be released to the first and second cross-claimants.

  1. The question of interest and costs was reserved, and a timetable was set down for the receipt of further submissions from the parties, who were in dispute as to the calculation of both interest and costs.

  2. The parties agreed to deal with the question of interests and costs on the papers, and submissions were received on 18 July 2025, 6 August 2025 and 14 August 2025.

  3. This judgment concerns the Court’s determination of the interest payable arising from the orders with respect to the vendor finance amount and retention amount, as well as the form of costs order to be made in favour of the defendants.

  4. As noted in the primary judgment, Danc was put into receivership by Macquarie Bank Ltd on 2 April 2024 and did not actively participate in the proceedings nor sought any relief. Hence, the submissions received by Mr S Phillips of counsel were only advanced on behalf of the first, third, fourth and fifth plaintiffs.

POSITION OF THE PARTIES

  1. The defendants’ submissions were, in summary, as follows:

  1. Pursuant to cl 6.6(e) of the Agreement, the interest payable on the vendor finance amount is to be calculated at a rate of 5% per annum accrued on a daily basis from 1 June 2018 to the date of judgment, being 10 June 2025. In accordance with this formula, the Hockeys’ solicitor deposed that the total interest payable on the vendor finance amount is $265,914.23.

  2. On completion, the retention amount was paid into a controlled monies account held by Richardson Legal, the Hockeys’ previous solicitors. When Aubrey Brown Lawyers took carriage of the matter in August 2020, the monies were transferred to Aubrey Brown Lawyers’ trust account, which was not an interest-earning account. On 18 November 2020, the Hockeys’ solicitors wrote to the Folleys’ solicitors proposing that the amount of $55,360.17 (being the retention amount plus any interest it had earned while held in Richardson Legal’s controlled monies account) be deposited into a controlled monies account with the NAB and requested the Folleys’ authority to do so. The Folleys’ solicitors did not respond to that communication, and “no consent was ever provided”.

  3. Pursuant to s 139 of the Legal Profession Uniform Law 2014 (NSW), Aubrey Brown Lawyers required a written direction from those on whose behalf the funds were held in order to invest the controlled monies. The Agreement did not empower Aubrey Brown Lawyers to invest the retention amount, as the term “Vendors’ Lawyer” was defined as Richardson Legal and by the time Aubrey Brown Lawyers took carriage of the matter, any authority provided by cl 7.1 of the Agreement had expired.

  4. As a result, the monies were left in Aubrey Brown Lawyers’ trust account and did not earn interest. Based on enquiries made with the NAB, the retention amount would have earned a total interest of $10,105.89 if the Folleys had provided their authority to the retention amount being deposited into a controlled monies account with the NAB. Hence, in the defendants’ submission, the total interest payable on the retention amount is $10,105.89.

  5. That the Hockeys are entitled to their costs on an ordinary basis for the period up to and including 13 March 2024, and an indemnity basis for the period from and including 14 March 2024. The basis for such an order is an offer of compromise from the Hockeys to the Folleys dated 13 March 2024 (“the Offer”), which was not accepted by the Folleys.

  6. That pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) (“CPA”), the Court should make a gross sum costs order instead of costs as assessed. Those costs should be fixed in the sum of $347,410.85, which is calculated on the basis of a 30% discount being applied to the costs incurred prior to 13 March 2024. [1]

    1. The defendants’ submissions mistakenly referred to ‘13 March 2025’.

  1. The plaintiffs’ submissions were, in summary, as follows:

  1. The plaintiffs did “not cavill with the arithmetic of the calculation of Pre-Judgment Interest” as set out by the defendants and, therefore, accepted that total amount of interest (as at the date of judgment) payable by them pursuant to cl 6.6(e)(i) of the Agreement was $265.914.23.

  2. The plaintiffs disputed the calculation of interest on the retention amount as set out by the defendants. The plaintiffs accepted that the total amount of $55,360.17 (being the retention amount plus any interest it had earned while held in Richardson Legal’s controlled monies account) currently held in the Hockeys’ solicitors trust account should be paid to the Hockeys, but strongly disputed the suggestion that any further interest should be calculated by reference to what the retention amount could have earnt by virtue of being deposited into an interest-bearing account.

  3. The plaintiffs agreed with the Court’s preliminary view, that the “accrued interest” referred to in Issue 21 of the Agreed Statement of Issues (“ASOI”) is the actual amount of interest earned on the retention amount by virtue of being held in a controlled monies account with the NAB. The Agreement required the Hockeys’ solicitor to invest the retention amount in a controlled monies account with the NAB, and the fact that they did not comply with this obligation or keep the retention sum in an interest bearing account, with the result that no interest was earned on the retention amount after being transferred to Aubrey Brown Lawyers’ trust account, was not the fault or responsibility of the plaintiffs.

  4. Further, the defendants’ submission that the retention sum could not have been transferred into an interest-bearing account with the NAB without the Folleys’ express consent or authority, is a matter which was not addressed at the substantive hearing, either by pleadings, evidence or submissions. Hence, the defendants cannot seek to open up this issue at this stage of the proceedings.

  5. The appropriate order as to costs is that the plaintiffs should pay the defendants’ costs on an ordinary basis. The Court should not order indemnity costs for the period from and including 14 March 2024, for the following reasons:

  1. The Offer did not comply with a number of requirements in r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) and, therefore, was not a valid offer of compromise to which the presumption in r 42.15A of the UCPR would apply.

  2. While the Offer may still operate as a Calderbank offer, the Court should nonetheless exercise its discretion not to order indemnity costs because the ultimate result achieved by the Hockeys was less favourable than the terms of the Offer and, in any event, it was reasonable for the plaintiffs not to accept the Offer.

  1. In this respect, the plaintiffs submitted that, in monetary terms, the judgment in favour of the Hockeys is less than the Offer (if interest is not included). They also submitted that the Offer included a condition that if the settlement amount was not paid in full in accordance with the Offer, then the Hockeys would be entitled, inter alia, to appoint a receiver to take possession of and sell the assets of the first and second plaintiffs and the residential property of the fifth plaintiff. As such, the Offer was in fact a more favourable outcome for the Hockeys.

  2. Lastly, the plaintiffs submitted that a gross sum costs order is not appropriate as the Hockeys have not discharged the onus of demonstrating that a gross sum costs order would not place the plaintiffs in a worse position than having the costs assessed. However, in the event the Court were minded to entertain a gross sum costs order, then a discount of (at least) 40% should be applied and, given the plaintiffs have lodged a notice of intention to appeal the primary judgment, an order should be made which stays the enforcement of any gross sum costs order, pending determination of the appeal or further order of the Court.

INTEREST

Interest payable on the vendor finance amount

  1. The primary judgment made the following finding (at [698]):

“[698] In the result, I find that that pursuant to cl 6.6(e) of the Agreement, Tin-Tagel is liable to pay the Hockeys the total sum of $631,657.29 plus interest, at a rate of 5% per annum on that amount, accrued on a daily basis from 1 June 2018. Clause 6.6(e)(i) of the Agreement provides that the interest will continue to accrue up to but excluding the date of payment. The CC seeks a relief that the interest would be payable in the amount of $73,808.72 as at 1 October 2020. No party made any submissions about the end date for the calculation of interest. The directions the Court shall make in this matter shall provide for the resolution of that issue.” (emphasis added)

  1. As such, I accept that interest is payable on the vendor finance amount at a rate of 5% per annum, accrued on a daily basis from 1 June 2018.

  2. The submissions of the parties, at least implicitly, accept that the end date for the calculation of interest on the vendor finance amount should be 10 June 2025, being the date of the primary judgment.

  3. The parties agreed that the interest payable in accordance with this formula (5% per annum, accrued on a daily basis from 1 June 2018 to 10 June 2025) is $265,914.23. As such, the directions that the Court will make will provide that Short Minutes of Order be provided to reflect that calculation.

Interest payable on the retention amount

  1. The primary judgment set out the following preliminary view in relation to the payment of interest on the retention amount (at [708]):

“[708] In the absence of submissions from the plaintiffs, I propose to express a preliminary view in relation to this issue but will make provision for supplementary submissions in the orders and directions below. In my view, the “accrued interest” referred to in Issue 9 and Issue 21 refers to the interest being earned on the retention amount by virtue of being held in a controlled monies account with the National Australia Bank. In this regard, I refer to cl 7.1(b) of the Agreement:

“The retention amount shall be invested by the Vendors' Solicitor in a controlled monies account with the National Australia Bank and all interest earned on such investment shall be paid to the Vendors.”

  1. The obligation in cl 7.1 of the Agreement was for the “Vendors’ Solicitor” to invest the retention amount in a controlled monies account with the NAB. I agree with the submission of the plaintiffs, that the fact the retention amount was deposited into a non-interest-bearing account rather than an interest-bearing account was not the fault or responsibility of the plaintiffs.

  2. There is nothing on the face of cl 7.1 which required the controlled monies account with the NAB to be an “interest-bearing” account. While the defendants’ submissions infer that the controlled monies account was, in fact, required to be an interest-bearing account, this matter of construction was not addressed by the Hockeys, and no submissions or other evidence was sought to be adduced in this respect during the trial or in submissions as to costs.

  3. Further, I also agree with the plaintiffs’ submission that, in submitting that the retention amount could not have been transferred to an interest-bearing account without the express consent or authority of the plaintiffs, the defendants are seeking to re-open an issue which ought to have been dealt with at the substantive hearing.

  1. The case before the Court at the substantive hearing proceeded on the basis of the ASOI. Issue 21 in the ASIO, being the second of two issues relevant to the determination of the CC, was expressed as follows:

“Are the Hockeys or the Folleys entitled to the balance of the Retention Amount of $54,915.36 plus accrued interest, and if not, how should this balance be distributed?” (emphasis added)

  1. Hence, despite the fact that the issue for determination (as drafted by the parties themselves) was whether the Folleys or the Hockeys were entitled to the retention amount “plus accrued interest”, no issue was raised by the Hockeys as to the retention amount not having been held in an interest-bearing account since August 2020, and no relief was claimed by the Hockeys with respect to the Folleys not providing their consent to transfer the funds to an interest-bearing account.

  2. As such, the Hockeys cannot now claim that “accrued interest” ought to mean the interest that the retention amount could have accrued had it been transferred to an interest-bearing account.

  3. The interest payable on the retention amount will be $444.81, being the interest that has accrued on the retention amount since completion by virtue of being held in a controlled monies account with the NAB. That amount should be released from the trust account of Aubrey Brown Lawyers to the first and second cross-claimants.

COSTS

  1. In light of the submissions received from the parties, the issues between the parties as to costs can be distilled to the following:

  1. Whether the Offer complied with the requirements under r 20.26 of the UCPR.

  2. Whether interest awarded on a judgment debt is to be considered in determining whether the Offer is no less favourable than the order or judgment obtained.

  3. Whether, in the Court’s discretion, indemnity costs should be awarded from and including 14 March 2024.

  4. Whether a gross sum costs order should be made.

Issue 1: Whether the offer was a valid offer of compromise under the UCPR

  1. An offer of compromise must comply with r 20.26 of the UCPR in order to attract the operation of the rules contained in Div 3 of Pt 42 of the UCPR.

  2. Rule 42.15A of the UCPR, which appears in Div 3 of Pt 42, provides as follows:

(1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of the offer.

(2) Unless the court orders otherwise--

(a) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and

(b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis--

(i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and

(ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.

  1. Hence, if a valid offer of compromise was made by the Hockeys and not accepted by the Folleys, and the order or judgment obtained by the Hockeys is no less favourable to the Hockeys than the terms of the Offer, then, unless the Court orders otherwise, the Hockeys are entitled to costs on an ordinary basis up to and including the date of the offer, and costs on an indemnity basis thereafter. I note in this respect that there is no dispute that the Court should make an order for costs on an ordinary basis in favour of the Hockeys.

  2. The Offer, which was made by the Hockeys on the 13 March 2024, contained the following terms:

“1. The plaintiffs authorise the first and second defendants' solicitor to release to the first and second defendants, the amount being held in the trust account of Aubrey Brown Lawyers ($55,360.17), being the disputed amount of the Retention under clause 7 of the Share Sale Agreement.

The plaintiffs are to pay the first and second defendants $700,000.00 within 21 days of the date of this offer being accepted (the Settlement Amount).

2. The plaintiffs consent to orders being made by the Supreme Court that:

a. The plaintiffs are liable to pay the Settlement Amount to the first and second defendants; and

b. The proceedings against the first to fifth defendants and the first and second defendants' cross-claim are otherwise dismissed, with no order as to costs.

3. The plaintiffs' solicitors agree to sign consent orders giving effect to term 3 of this offer, which the first and second defendants' solicitors will file in court, for those orders to be made by consent.

4. If the Settlement Amount is not paid in full in accordance with term 2 of this offer, time being of the essence, then each of the plaintiffs, individually and collectively agree and acknowledge that the first and second defendants will be entitled to each of the following things:

a. The first and second defendants will be entitled to appoint a receiver to, and enter into possession of, the first plaintiff's assets under clauses 14(a) and 16 of the General Security Agreement between the first plaintiff and the first and second defendants, and the receiver will be entitled to sell those assets and apply the net proceeds towards the satisfaction of the Settlement Amount, subject to the rights of any prior-ranking security-holders.

b. The first and second defendants will be entitled to appoint a receiver to, and enter into possession of, the second plaintiff's assets under clauses 14(a) and 16 of the General Security Agreement between the second plaintiff and the first and second defendants, and the receiver will be entitled to sell those assets and apply the net proceeds towards the satisfaction of the Settlement Amount, subject to the rights of any prior-ranking security-holders.

c. Appoint a receiver to enter into and take possession of the property at 75 Bobbin Head Road, Turramurra (being lot 2 in DP 183217) (the Property) under clauses 6(a) and (f) of Mortgage Memorandum AJ843928, pursuant to the mortgage of the Property by the fifth plaintiff to the first and second defendants registered number AN394625. The receiver will be entitled to sell the Property and apply the net proceeds towards satisfaction of the Settlement Amount, subject to the rights of any prior-ranking security-holders.

Notes:

5. This offer of compromise will close immediately following the expiration of 28 days after its receipt by the offerees or their legal representatives.

6. This offer of compromise is made in accordance with rule 20.26 of the Uniform Civil Procedure Rules 2005 (NSW).

6. Should this offer fail to meet the requirements of the Uniform Civil Procedure Rules 2005 (NSW), the offer is, in any event, made in accordance with the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333.”

  1. I do not agree with the plaintiffs’ submission that the Offer did not comply with r 20.26 of the UCPR, for the following reasons:

  1. The terms of the Offer were set out on “UCPR Form 1” and detailed (under the heading “Issuing Details”) that the Offer was “issued in relation to” the plaintiffs’ claim and the Hockeys CC. Further, the terms of the Offer, including the fact that both claims were to be dismissed, leaves no doubt that the Offer could only have related to the whole of those claims.

  2. The Offer clearly set out the proposed orders for disposal of the claims, including the monetary amount that was proposed. I do not agree with the plaintiffs’ submission that it was unclear whether the proposed settlement amount of $700,000 included, or was in addition to, the amount of $55,360.17. These were clearly separate obligations. They were dealt with separately as two limbs of paragraph 1 and were also to be paid by different mechanisms – the first, by way of payment from the plaintiffs, and the second, by way of release of the retention amount from Aubrey Brown Lawyers’ trust account.

  3. The Offer did not include an amount for costs and was not expressed to be inclusive of costs. Rather, the Offer explicitly stated (at paragraph 2(b)) that there was to be “no order as to costs”.

  4. The Offer included a statement (at paragraph 6) that “the offer is made in accordance with rule 20.26 of the [UCPR]”.

  5. The Offer specified (at paragraph 5) that the offer would close immediately following the expiration of 28 days after its receipt by the offerees or their legal representatives and therefore specified the period of time with which the offer was open for acceptance.

  1. Hence, the Offer complied with each of the requirements for a valid offer of compromise, which are exhaustively set out at r 20.26(2) of the UCPR.

  2. A number of other matters were addressed by the Folleys concerning the validity of the Offer. However, in my view, none of those considerations properly address the question of the validity of the Offer per se, and in the result, I do not propose to pass upon them except to say that they do not constitute any proper basis to determine that the Offer was invalid. For example, the Folleys submitted that the Offer did not include any order as to the time for payment of the “Settlement Amount”. This submission cannot be sustained in the face of paragraph 1 of the Offer, which clearly states that the “Settlement Amount” must be paid within 21 days, and in any event, stipulating a time for payment is not one of the requirements for a valid offer of compromise under r 20.26 of the UCPR.

  3. The Folleys also conceded that the Offer would nonetheless operate as a Calderbank offer. In my view, that concession was properly made having regard to the terms in paragraph 6 of the Offer.

  4. I also note that in order for an offer of compromise to attract an indemnity costs order by the operation of the UCPR, the offer “must involve a ‘genuine offer of compromise’ and not merely be made so as to trigger the costs consequences under the rules”: Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 (“Leach”) at [41] (per McColl JA, with whom Gleeson JA and Sackville AJA agreed), citing Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [16] (per Spigelman CJ, Beazley and McColl JJA). Whether an offer is a genuine offer of compromise is to be determined objectively according to the circumstances of the particular case at the time the offer was made: Leach at [42].

  5. The question as to whether the Offer was a “genuine offer of compromise” was not raised as an issue in these proceedings. In the absence of submissions from the parties in this respect, and there being no obvious matter raising the question of genuineness in the evidence in the proceedings, I do not propose to pass upon this question.

Issue 2: Whether interest is to be considered in determining whether an offer is no less favourable than the order or judgment obtained

  1. In determining whether a judgment or order is “no less favourable” for the purpose of r 42.15A of the UCPR, only the amount of interest as relates to the period before the offer of compromise was made is taken into account: r 42.16 UCPR.

  2. In Channel Seven Sydney Pty Ltd v Mahommed (No 2) (2011) 80 NSWLR 210; [2011] NSWCA 6 at [55] (per McColl JA, with whom Spigelman CJ, Beazley JA, McClellan CJ at CL and Bergin CJ in Eq agreed), the Court of Appeal confirmed, albeit in relation to an application for indemnity costs in relation to the costs of an appeal, that having regard to r 42.16 of the UCPR, the correct approach in determining whether a judgment is no less favourable than the terms of an offer, is to calculate the interest accruing up to the date on which the offer of compromise is made. The interest, when added to the judgment sum, may be taken into account to determine whether a party has obtained a judgment or order that is no less favourable than the terms of the offer of compromise.

  3. Hence, the defendants were correct to submit that in considering how the Offer compares to the outcome ultimately obtained by the Hockeys, regard should be had to the interest payable on the vendor finance amount up to 13 March 2025.

  4. The defendants submitted that the interest payable on the vendor finance amount as at the date of the Offer was $211,889.13. When added to the vendor finance amount, this equals $843,546.42, being an amount which is greater than the “Settlement Amount” in the Offer.

  5. The Folleys did not make any submission as to whether they agreed or disputed the Hockeys’ calculation of interest as at the date of the Offer. However, in my view, it is at least implicit from the Folleys’ submissions, that the Folleys must accept that a different conclusion must be reached (as to whether or not the judgment was no less favourable than the Offer) if interest is taken into account.

  6. In this regard I note that [22(a)] of the Folleys’ submissions was as follows:

“[22] … This outcome is less favourable to the Hockeys than the terms of the [Offer] because: (a) in monetary terms, it is in total less than the Settlement Amount of $700,000 proposed in the [Offer] (if interest is not included, which it is not in the [Offer]) …” (emphasis added)

  1. I accept the Hockeys’ submission that properly construed, there is no confusion as to whether interest was or was not included in the Offer. The amounts required to be paid, as identified in paragraph 1 of the Offer, were exhaustive. If any additional amount was to be paid in the form of interest, this would have needed to be expressly stated in the Offer.

  2. In the result, taking into account the interest which accrued on the vendor finance amount up until the date of the Offer, I accept that the Offer made by the Hockeys was no less favourable than the outcome which they ultimately obtained, and the entitlement to an order for indemnity costs pursuant to r 42.15A of the UCPR is therefore enlivened.

Issue 3: Whether, in the Court’s discretion, indemnity costs should be awarded from and including 14 March 2024

  1. As a result of the words “[u]nless the court orders otherwise” in r 42.15A of the UCPR, the court maintains its discretion in relation to costs that is provided for in s 98 of the CPA.

  2. Consequently, even where an offer of compromise complies with the rules and Div 3 of Pt 42 of the UCPR is engaged, the court may nonetheless exercise its discretion to “order otherwise” than in accordance with r 42.15A(b) of the UCPR.

  3. However, the Court of Appeal in Chalik v Chalik [2025] NSWCA 136 at [136] (per Bell CJ, Payne and Free JJA) recently set out the following principles in respect of r 42.15A of the UCPR:

“[136] UCPR r 42.15A provides that, where a defendant’s formal offer of compromise is unreasonably rejected by the plaintiff, and the defendant obtains judgment which is no less favourable than the terms of the offer, then, “unless the court orders otherwise”, the defendant is entitled to: (i) costs on the ordinary basis up to the time that the offer was made; and (ii) costs on an indemnity basis thereafter. Satisfaction of the elements in UCPR r 42.15A therefore creates a “prima facie entitlement to indemnity costs” from the date of the offer: Leach v Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [40] (Leach); Houghton v Potts (No 3) [2023] NSWSC 69 at [16]. The unsuccessful party bears the onus of persuading the Court that indemnity costs should not be ordered: Leach at [29]; Snowy Mountains Grammar School Ltd v Adventurer AWD Pty Ltd [2022] NSWSC 53 at [4].”

  1. As such, the Folleys bear the onus of persuading the Court that it should “order otherwise” than in accordance with the entitlement to indemnity costs in r 42.15A of the UCPR.

  2. There is one aspect of the plaintiffs’ submissions which has considerable force in justifying a departure from the general rule in r 42.15A of the UCPR. The plaintiffs submitted that the Offer sought entitlements in favour of the defendants (being the enforcement conditions at paragraph 4 of the Offer) which were not otherwise sought in the CC, and which if accepted, would have given the defendants “benefits” which were not otherwise obtained by them under the Court’s orders. In other words, the Offer included terms which went beyond the relief that was sought or which, thereby, the Court could grant.

  3. As such, the plaintiffs ultimately submitted that the Court should exercise its discretion not to award indemnity costs in favour of the defendants, because it was reasonable for the plaintiffs not to accept the Offer.

  4. The defendants justified paragraph 4 of the Offer on the basis that the terms were designed to provide the Hockeys with security in the event that payment of the “Settlement Amount” was not made. However that may be, it does not make paragraph 4 of the Offer inconsequential for the plaintiffs. This component of the Offer had elements which, by their nature, must have been directly relevant to the plaintiffs’ consideration of the making of a compromise.

  5. Paragraph 4 of the Offer contained significant enforcement rights in favour of the Hockeys, including rights to appoint a receiver to take possession of and sell any of Tin-Tagel or Danc’s assets as well as the Folleys’ residential property. The rights of receivership which the Hockeys sought to impose under paragraph 4 of the Offer, extended the rights available under the General Security Agreements subsisting between Danc and the Hockeys, and Tin-Tagel and the Hockeys, respectively (“the security agreements”).

  6. On the face of the security agreements, the failure to satisfy a settlement amount (as opposed to a judgment sum) would not be an “event of default” triggering the powers under those agreements. The defendants did not make any submission to the contrary but accepted, as I have mentioned, that “the Offer contained terms designed to provide the Hockeys with security in the event that payment of the Settlement Amount was not made”. This submission must represent an acceptance by the defendants that the security agreements were not sufficient, in and of themselves, to secure the obligation by the plaintiffs to pay the settlement amount under the Offer.

  7. In my view, the enforcement rights at paragraph 4 of the Offer were not merely ancillary to the monetary settlement amount but were likely to have materially impacted the Folleys’ decision as to whether or not to accept the Offer.

  8. Hence, I accept that in light of the terms sought at paragraph 4 of the Offer, it was reasonable for the plaintiffs not to accept the Offer, which did, in my view, sought to afford the Hockeys rights in excess of those which could have been obtained in consequence of the 2FASOC and CC.

  9. In the result, I exercise my discretion to order otherwise than in accordance with r 42.15A(b) of the UCPR. However, the plaintiffs will be liable for the defendants’ costs on an ordinary basis. As mentioned, orders of that kind were not opposed by the plaintiffs, and in any event, should be properly made as a consequence of costs following the event.

Issue 4: Whether a gross sum costs order should be made

  1. In O’Connor v O’Connor – [Gross Lump Sum Cost Order] [2022] NSWSC 940 (“O’Connor”) at [9] – [10], Hammerschlag CJ in Eq observed that:

“[9] A gross sum costs order is a form of special order as to costs, which can be made when the circumstances warrant departure from the usual position that the beneficiary of a costs order needs to have them assessed, and that such an assessment is subject to review. A gross sum costs order is not warranted simply because a party has a costs order and it will convenience that party not to have their costs subject to the formal process of assessment with the time and expense involved in that process. There must be some good reason to make such an order.

[10] Relevant factors may be the likely length and complexity of the assessment process, the possibility that additional costs of formal assessment would disadvantage the winner, that a party has unnecessarily contributed to the costs of the proceedings, especially where the costs are disproportionate to the result, and an expectation, based on prior experience, that further costs assessment is likely to be unduly protracted and unnecessarily add to the costs of the proceedings. The categories of relevant factors are not closed, and each case will turn on its own circumstances.”

  1. The defendants submitted that a gross sum costs order was appropriate having regard to the quantum involved and the Court’s overriding purpose in s 56(1) of the CPA, and that in the absence of a gross sum costs order, the total costs of the proceeding would become even more disproportionate by virtue of the costs assessment process.

  2. While I note that the principles referred to by Hammerschlag CJ in Eq in O’Connor at [10] are not exhaustive, in my view, the defendants have not adequately identified “some good reason” why there should be a departure from the usual position that a party with the benefit of a costs order needs to have them assessed. If the criteria relied on by the defendants alone were a sufficient basis for the award of a gross sum costs order, then there would be no effective threshold to be crossed in order to obtain an award of that kind.

  3. Further, I am not satisfied that the defendants have provided sufficient evidence to enable the Court to be confident that a gross sum costs order may be properly assessed. In my view, the evidence currently before the Court is insufficient to demonstrate the basis of the defendants’ actual costs incurred, even on a broad-brush basis.

  4. The Court should only exercise its discretion to award a gross sum costs order where “the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available”: Harrison v Schipp  (2002) 54 NSWLR 738 at 743; [2002] NSWCA 213 at [22] (per Giles JA). The approach taken to estimate costs must also be logical, fair and reasonable: Beach Petroleum NL & Claremont Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 123 (per Von Doussa J).

  5. In this case, the only evidence of the costs incurred by the defendants is an affidavit sworn by the defendants’ solicitor, Ms Sharnie Leith. Ms Leith annexed to her affidavit a spreadsheet detailing the total sum of costs incurred by the Hockeys pursuant to invoices from Aubrey Brown Lawyers, counsel and other third parties. The actual invoices are not in evidence.

  6. The spreadsheet only details the sum of each monthly invoice and does not contain adequate details of the actual work done, the hourly rate charged, and, so far as the third-party invoices are concerned, the connection between those invoices and the course of the proceedings. There also appears to be a number of invoices from counsel who, as far as this Court is concerned, did not appear in the proceedings. No explanation was provided in this regard, and as such, it is unclear what involvement those counsel had in the proceedings. I also note that the spreadsheet was generated by Claudia Veitch, a paralegal at Aubrey Brown Lawyers’. However, no evidence was sworn by Ms Veitch in this respect.

  7. For those reasons, I cannot have confidence in the appropriate gross sum costs order on the materials currently available. In my view, it would be better that the parties reach agreement as to the appropriate costs order (an alternative that does not appear to have been exhausted), or alternatively, that costs be assessed in the usual manner.

CONCLUSION

  1. For the above reasons, the Court has concluded that:

  1. The interest payable on the vendor finance amount is 5% per annum, accrued on a daily basis from 1 June 2018 to 10 June 2025, which, as agreed by the parties is $265,914.23.

  2. The interest payable on the retention amount is $444.81, being the interest that has accrued on the retention amount since completion by virtue of being held in a controlled monies account with the NAB. That amount should be released from the trust account of Aubrey Brown Lawyers to the first and second cross-claimants.

  3. The plaintiffs shall pay the defendants costs on an ordinary basis for the whole of the proceedings, as agreed or assessed.

ORDERS

  1. The Court orders and directs that:

  1. The defendant shall file and serve Short Minutes of Order reflecting this judgment within 7 days of publishing this judgment.

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Endnote

Decision last updated: 11 September 2025

Cases Citing This Decision

0

Cases Cited

11

Statutory Material Cited

3

Hadid v Lenfest Communications Inc [2000] FCA 628
Hadid v Lenfest Communications Inc [2000] FCA 628
Chalik v Chalik [2025] NSWCA 136