Lawyers often send settlement offers when dealing with disputes. These are sometimes in the form of “Calderbank” offers, named for the decision of Calderbank v Calderbank [1975] 3 All ER 333. Other times, offers may be made in accordance with the Uniform Civil Procedure Rules 2005 (NSW). The outcome of a “Calderbank” offer versus a “UCPR” offer can be very different.

Recently, in the decision of CEG Direct Securities Pty Ltd v Shining Pty Ltd (No 3) [2020] NSWSC 1562, the Court considered the impact of a UCPR offer made by some defendants to a plaintiff. The Plaintiff was suing for some money, and for possession of some land. He failed in his claim against the Third and Fourth Defendants.

The Court had to consider what costs order was appropriate, particularly whether the Plaintiff should have to pay the Third and Fourth Defendants’ legal costs regularly or on the more generous “indemnity” basis. During the litigation – and before the Plaintiff’s failure – the Third and Fourth Defendants had made a settlement offer, which the Plaintiff did not accept.

The offer was made pursuant to Uniform Civil Procedure Rules 2005 (NSW). The way the relevant rule (r42.15A) operates is that, if an offeror makes an offer that is more favourable to the offeree than the eventual outcome of the litigation, the offeror will have its costs paid on the indemnity basis from the date of the offer unless the Court orders otherwise. In this case, the offer was more favourable than the eventual outcome. This meant the Plaintiff had to argue this was an “exceptional case” to avoid an indemnity costs order.

While this case was exceptional in one sense (the Third and Fourth Defendants were victims of a forgery perpetrated by the Second Defendant!), the Plaintiff failed to move the Court to waver from the usual r42.15A position. The Third and Fourth Defendants received their costs on the indemnity basis from the date of the offer.

Interestingly, if the offer was a Calderbank offer, it is not sure that the outcome would have necessarily been the same. All the more reason to think carefully when making and receiving offers…