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Parties should try and settle disputes. Part of the avenues available offers are “without prejudice” offers including offers of compromise. Courts encourage the settlement of disputes in particular, at an early stage when the parties are aware of the issues and the nature of the disputes. The Supreme Court in the case of Clarkes Pty Ltd  NSWSC 1693 (29 November 2019) before Slattery J, provides insight into some of the issues that can arise between the parties who attempted to settle the matter which was considered by the Court.
One way in which parties involved in a Court case is by an Offer of Compromise pursuant to the Rules of the Court relating to offers of settlement which are objectively reasonable, in circumstances where one party makes an offer and the other side does not accept the offer and the offering party then proceeds to a hearing, and obtains a “better result” from the Court. In those circumstances, a higher proportion of costs usually would be ordered than would otherwise be the case.
Those rules also have provisions dealing with costs that follow from acceptance of an offer of compromise made in accordance with those Rules for example, where thereafter is silent as to costs.
Uniform Civil Procedures r. 42.13A, provides as follows:
“Where offer accepted and no provision for costs”
In a decision of Justice Slattery in the Supreme Court of New South Wales, in the matter of Clarkes Pty Ltd  NSWSC 1693 (29 November 2019), the background facts were:
Settlement negotiations then took place as follows:
What was the consequential Costs Order?
The Plaintiff moved the Court by Motion for entry of a Judgment for $10 which the Court then entered. The Plaintiff also in his Motion sought an order that the Defendant pay the Plaintiff’s costs in respect of the claim up until the day before acceptance of the offer.
The First Defendant opposed the Order for Costs and relied on an argument that Rule 42.34 also applied which relevantly provided that in a case of the type brought, where the Judgment obtained is less than $500,000 and the Plaintiff would be entitled ordinarily to an Order for Costs, such an Order for Costs:
“may be made, but will not ordinarily be made, unless, the Supreme Court is satisfied that….For proceedings that could have been commenced in the District Court, the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted….”
The Court proceeded to determine the matter as follows:
Although the basis for the Court’s conclusion at  (differentiating between District Court and Supreme Court costs) is not immediately apparent, the decision nonetheless serves as a salient reminder to properly appreciate the rules relating to offers of compromise and consequential orders for costs.
Watson & Watson Lawyers know that Offers of Compromise and Calderbank offers are important tools in either settling cases or obtaining better results for clients who are unable to settle them. Please contact Richard Watson or his Personal Assistant Shereen Da Gloria if you wish to discuss your matter and if you wish to obtain advice how they could be deployed or responded to in a given matter.
This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.
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