Tinyow v Lee

The case of *Tinyow v Lee* concerned an application by the appellant for indemnity costs following litigation that had proceeded through arbitration and subsequent appeals. The dispute originated in the District Court, with the appellant initially obtaining an arbitral award in his favour against the respondents. However, the judgment was later overturned on appeal, with costs following the event in favour of the appellant. The central issue arose from a settlement offer made by the appellant via a "Calderbank letter" shortly before a scheduled hearing.

The legal issues before the Court of Appeal were whether the appellant was entitled to indemnity costs based on the Calderbank letter, and consequently, whether the existing costs orders should be varied. The appellant contended that the respondents' failure to accept his settlement offer, made shortly before the hearing and with a very limited response time, warranted an order for indemnity costs from the date of that letter.

The Court of Appeal, comprising Handley JA, Santow JA, and Ipp JA, dismissed the appellant's application for indemnity costs. The reasoning focused on the nature of the settlement offer. The court noted that the offer, described as a Calderbank letter, was made only two days before the hearing and provided just one working day for acceptance. Crucially, the offer included a sum inclusive of costs, which was contrary to the requirements of Uniform Civil Procedure Rules (UCPR) Pt 20 r26 concerning offers of compromise. The court found that it was entirely reasonable for the respondents not to respond to an offer that did not comply with the rules for a formal offer of compromise and was made with such a short timeframe.

Accordingly, the Court of Appeal ordered that the appellant's application for indemnity costs be dismissed, with the appellant to pay the costs of that application. The original costs orders made in the judgment of 13 April 2006 were to stand.