United Petroleum Pty Ltd v Skorpos (No 2)

In the case of United Petroleum Pty Ltd v Skorpos (No 2), both parties applied for an order for costs of the action, with the plaintiff seeking an order that the defendants pay the whole of the plaintiff's costs on a solicitor/client basis. This was based on an offer filed pursuant to the Supreme Court Rules 1932, rule 6SCR 188. The offer related to both principal relief and costs and indicated that it was to be accepted in its entirety. The plaintiff's submission was based on the operation of 6SCR 188(6)(b)(ii). Alternatively, the plaintiff submitted that it was entitled to costs on a solicitor/client basis based on various Calderbank offers.

The court was required to decide the issues arising in relation to the offer filed under 6SCR 188 and whether it was adequate. The court concluded that it was unnecessary to consider the issues arising in relation to the Calderbank offers, as it had come to a judgment based on the 6SCR 188 offer. The court held that the plaintiff was entitled to costs to be paid by the defendants on a solicitor/client basis, except with respect to the costs of the injunction proceedings before Anderson J on 13 and 15 January 2010, which were to be paid on a party/party basis.

The court held that the intention of 6SCR 188 was penal and to encourage settlement of litigation. The court held that it exercised its discretion upon its assessment of the adequacy of the offer and not on whether the judgment equals or exceeds the amount of the offer. The express terms of 6SCR 188(6) required the court to apply the rule as to filed offers solely by reference to the adequacy of the offer as to principal relief rather than the adequacy of the offer as to principal relief and costs considered together. The court held that there was no hiatus in the rule and that the rules had been framed in this way to avoid complicating the assessment the court was required to undertake.

The final orders were that the plaintiff was entitled to costs to be paid by the defendants on the following bases: (1) the whole of the plaintiff’s costs of action, except with respect to the costs of the injunction proceedings before Anderson J on 13 and 15 January 2010, on a solicitor/client basis; and (2) the costs of the injunction proceedings before Anderson J on 13 and 15 January 2010 on a party/party basis.