Zhang v Harmstorf (No 2)

The case of Zhang v Harmstorf (No 2) involved the plaintiff, Mr Zhang, and the defendant, Mr Harmstorf. The dispute centered around a Calderbank offer made by the plaintiff in a litigation context, with the plaintiff subsequently obtaining a judgment greater than the amount proposed in the offer. The central issue was whether the defendant's refusal to accept the Calderbank offer was unreasonable and whether, considering all circumstances, an indemnity costs order should be made against the defendant. The case was heard in the Supreme Court of Victoria.

The legal issues that the court had to address included the interpretation and application of the principles surrounding Calderbank offers in the context of costs orders in litigation. Specifically, the court needed to determine whether the defendant's refusal to accept the plaintiff's Calderbank offer was unreasonable and whether, under the circumstances, the defendant should be liable for indemnity costs. This required a detailed analysis of the terms of the offer, the subsequent judgment, and the defendant's conduct leading up to and during the litigation.

The court found that the defendant's refusal to accept the Calderbank offer was indeed unreasonable. It was noted that the terms of the offer were clear, and the subsequent judgment in favour of the plaintiff exceeded the amount proposed in the offer. The court also considered the conduct of the parties leading up to the litigation, finding that the defendant's actions were not justified. Based on these findings, the court concluded that an indemnity costs order should be made against the defendant. The court vacated the previous order and ordered the defendant to pay the plaintiff's costs on the ordinary basis up to a certain date and on an indemnity basis thereafter.