WSA Online Limited v Arms (No 2)

WSA Online Limited and its directors, Houghton and Student, were defendants in a proceeding brought by Arms. The dispute centred around the liability of WSA and its directors for damages and costs, and the terms under which these liabilities should be settled. The case was heard by the Federal Court of Australia. The primary issue before the court was whether the appellants should be ordered to pay the costs of the appeal on an indemnity basis or a solicitor/own client basis, given that Arms had made a Calderbank offer to settle the matter. A Calderbank offer is an informal proposal to settle a legal dispute, which, if rejected, can lead to an order for indemnity costs against the rejecting party. The court needed to determine whether the rejection of the offer was unreasonable and whether it should lead to an indemnity costs order.

The court found that the Calderbank offer was not clear and was conditional upon the agreement of all parties, including Houghton and Student. Additionally, the offer did not clearly propose a less favourable outcome for Arms compared to what he had achieved. The court also noted that the offer did not separate the costs of the hearing at first instance from the judgment amount and interest, which influenced their decision. Considering these factors, the court concluded that it was not appropriate to award the costs of the appeal on an indemnity basis or a solicitor/own client basis against WSA. Instead, the court ordered that each party bear their own costs for the appeal.

Further, the court referred the issue of interest on the judgment and the costs of the trial to be determined by the primary judge. Finally, the court granted a costs certificate in respect of the appeal to the respondents, pursuant to section 6 of the Federal Proceedings (Costs) Act 1981 (Cth).