Woolworths Ltd v Pallas Newco Pty Ltd

In *Woolworths Ltd v Pallas Newco Pty Ltd*, the Full Federal Court considered an appeal concerning the costs of litigation. The dispute arose from an offer of compromise made by the respondent, Pallas Newco Pty Ltd, to the appellant, Woolworths Ltd. The offer was made pursuant to the *Federal Court Rules* and stipulated that if it was not accepted, the respondent would seek costs on an indemnity basis from the date the offer was made. Woolworths did not accept the offer.

The central legal issue before the Full Federal Court was whether the respondent was entitled to an order for its costs to be assessed on an indemnity basis from 1 July 2002, as stipulated in its offer of compromise. This required the Court to determine the proper application of the rules governing offers of compromise and the circumstances under which a court may depart from the usual order for costs on a party-and-party basis.

The Court reasoned that the offer of compromise was validly made and that the appellant's failure to accept it triggered the condition for indemnity costs. Applying the principles established in cases concerning offers of compromise, the Court held that the respondent had made a reasonable offer that was not accepted by the appellant, and that the appellant's conduct in refusing the offer warranted the imposition of indemnity costs. The Court found no reason to depart from the clear terms of the offer and the rules governing such offers.

Consequently, the Full Federal Court ordered that the appellant pay the respondent's costs, and crucially, that those costs be assessed on an indemnity basis from 1 July 2002.