Treloar Constructions Pty Ltd v McMillan (No 2)

In *Treloar Constructions Pty Ltd v McMillan (No 2)*, the New South Wales Court of Appeal considered applications for indemnity costs following an appeal and a prior settlement offer made in the District Court. The dispute concerned the assessment of costs at first instance and on appeal, with the appellant seeking indemnity costs in certain circumstances.

The primary legal issues before the Court of Appeal were whether a settlement offer made prior to the District Court trial constituted a valid "Calderbank offer" sufficient to warrant an order for indemnity costs, and whether an offer of compromise made in accordance with the Uniform Civil Procedure Rules 2005 (NSW) prior to the appeal proceedings should lead to costs being awarded on an indemnity basis. The Court also had to determine the appropriate basis for assessing the costs of the appeal itself.

The Court held that the settlement offer made before the District Court trial was insufficient to justify an order for indemnity costs because it did not clearly indicate that its non-acceptance would be relied upon as a basis for seeking such costs. Regarding the offer of compromise made before the appeal, the Court found no discretionary reason to depart from the usual rule that costs follow the event, meaning the respondent was to pay the appellant's costs of the appeal on the ordinary basis up to a specified date, and thereafter on an indemnity basis.

The Court ordered the release of security for costs paid by the appellant, varied the District Court's costs orders to direct judgment for the plaintiff on an ordinary basis, and ordered the respondent to pay the appellant's costs of the appeal on the ordinary basis up to 18 August 2016 and thereafter on an indemnity basis. The respondent was also ordered to pay the appellant's costs of the motion.