Yisheng Construction Pty Ltd v City Garden Australia Pty Ltd (No 2)

The case between Yisheng Construction Pty Ltd and City Garden Australia Pty Ltd involved a dispute over costs incurred during litigation. The matter was heard in the Supreme Court of New South Wales. The primary issue was whether an offer of compromise made by Yisheng Construction was genuine and whether City Garden was entitled to indemnity costs under UCPR r 42.15A. The court had to determine if the offer of compromise was made in accordance with the relevant rules and whether it was genuine. This involved examining the terms of the offer, the context in which it was made, and the parties' conduct before and after the offer.

The court found that the offer of compromise was not genuine as it was a "walk away" offer made at a time when Yisheng Construction was aware of City Garden's inability to meet the offer. The court emphasised the importance of the offer being made in good faith and not as a tactic to avoid liability. The court also considered the conduct of both parties and the circumstances surrounding the offer. Based on these factors, the court concluded that the offer was not genuine and City Garden was not entitled to indemnity costs.

The court's reasoning focused on the procedural fairness and the need for offers of compromise to be made in good faith. The court highlighted that offers of compromise should be made with a genuine intention to resolve the dispute and not as a means to gain an advantage in litigation. The court emphasised that the offer of compromise must be assessed in the context of the overall litigation and the parties' conduct. The court found that the offer did not meet the criteria for a genuine offer of compromise, and therefore, City Garden was not entitled to indemnity costs.

The final orders of the court included a declaration that the offer of compromise was not genuine and that City Garden was not entitled to indemnity costs under UCPR r 42.15A. The court also ordered that each party bear their own costs of the proceeding in relation to the costs application.