Offers of comp - check the date - new rule reinstates previous practice (Australia)


New South Wales (NSW) litigants and their advisers now know where they stand - if you served an offer of comp before 7 June 2013, you better hope you didn't express it to be plus costs because it will not be valid. However, after 7 June 2013, don't worry about it because we're back to the old days with a new rule.
The Court of Appeal has delivered its judgment in Whitney v Dream Developments Pty Limited [2013] NSWCA 188 confirming that Old v McInnes [2011] NSWCA 410 was correctly decided. In other words, offers of compromise which are expressed to be 'plus costs agreed or assessed' are not valid under the (old) rules, and cannot be treated as a Calderbank offer. This ends at least 18 months of uncertainty and conflicting decisions coming from the courts.

The reasoning of the Court of Appeal does have a compelling logic - in the leading judgment, Bathurst CJ says: 'although (the Rules) provide for an order for costs in favour of the plaintiff after the time the offer is accepted, the court has power to make a contrary order. An offer providing for payment of costs removes that residual discretion. It is thus inconsistent with the scheme for the making of offers of compromise laid down by the rules at the relevant time.' The problem is how long it took for this to become law. Before Olds and the cases which led up to that decision, legal practitioners in NSW had long been serving offers of comp on a plus costs basis and getting indemnity costs orders for their clients.

The Chief Justice is there referring to the new rules governing Offers of Compromise which commenced on 7 June 2013 which permits plus costs offers of compromise. For more detail on the amendments see my earlier blog 'Amendments to offers of comp rules - Clarity at last.'

Now all we need is for some unfortunate litigant to sue their equally unfortunate lawyer for serving an invalid offer of comp. If ever there was a time to plead section 5O of the Civil Liability Act, this would be it, but that's some fun to be had on another day.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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