Trajkovski v Commonwealth Insurance Ltd (No. 3)

The plaintiff, Trajkovski, brought an action against the defendant, Commonwealth Insurance Ltd, seeking damages for breach of contract. The Federal Court of Australia was tasked with determining whether the plaintiff's rejection of offers made by the defendant was unreasonable. The defendant had initially applied for a costs order under the Uniform Civil Procedure Rules and, alternatively, under the Calderbank principle, both contingent on the plaintiff's rejection of the offers. The court had to decide if the rejection was unreasonable and, if so, whether the defendant was entitled to the costs order.

The court examined the circumstances surrounding the defendant's offers and whether the plaintiff had acted unreasonably in rejecting them. The primary consideration was the strength of the defendant's position in making the offers, the timing of the offers, and the extent to which the plaintiff's rejection was justified. The court also assessed the merits of the plaintiff's case and whether the rejection was influenced by factors other than the merits, such as the plaintiff's financial situation or the desire to avoid the risks associated with litigation.

In reaching its decision, the court found that the defendant had made a strong offer that was reasonable under the circumstances. The timing of the offer was also considered, as it was made before the plaintiff had incurred significant legal costs. The court concluded that the plaintiff's rejection of the offer was unreasonable, as it did not have a compelling justification. Consequently, the court varied the costs order in favour of the defendant, awarding costs under both the Uniform Civil Procedure Rules and the Calderbank principle.

The final orders included the variation of the costs order to reflect the defendant's successful application, with costs to be paid by the plaintiff in accordance with the court's determination. The court's ruling highlighted the importance of assessing the reasonableness of a plaintiff's rejection of offers made by a defendant, particularly in cases where the defendant's position is strong and the offer is made at an opportune time.