Whitney v Dream Developments Pty Ltd

The appeal concerned the interpretation of an offer of compromise made by the respondent, Dream Developments Pty Ltd, to the appellant, Whitney, under Rule 20.26 of the Uniform Civil Procedure Rules 2005 (NSW). The primary dispute revolved around whether the offer, which included the phrase "costs as agreed or assessed," constituted an offer exclusive of costs, thereby potentially entitling the respondent to indemnity costs if the appellant did not achieve a more favourable outcome at trial. The matter was heard in the Court of Appeal of New South Wales.

The central legal issues before the Court of Appeal were twofold. Firstly, the court was required to determine whether an offer of compromise that stipulated "costs as agreed or assessed" was compliant with Rule 20.26, specifically whether it was an offer exclusive of costs as contemplated by the rule. Secondly, the court had to consider whether a non-compliant offer of compromise could nonetheless be given effect as a *Calderbank* offer, thereby potentially attracting indemnity costs.

The Court of Appeal reasoned that an offer of compromise under Rule 20.26 must be exclusive of costs to attract the cost consequences stipulated in the rule. The phrase "costs as agreed or assessed" was found not to be an offer exclusive of costs, as it did not clearly indicate that the offer was made without regard to the costs of the proceedings. Consequently, the offer did not comply with the requirements of Rule 20.26. The court further held that while a non-compliant offer might be considered as a *Calderbank* offer, the specific offer in this case did not meet the criteria for a *Calderbank* offer to warrant indemnity costs.

The appeal was allowed, and the orders made by Adams J on 23 February 2012 and 31 May 2012 were set aside. In their place, the Court of Appeal ordered that the respondent's summons for leave to appeal from the Local Court of NSW be dismissed, and that the respondent pay the appellant's costs of the proceedings and the application for leave to appeal and the appeal.