Perpetual Trustee Company v Papantoniou [2014] NSWSC 885

The primary case was decided in favour of two brothers as against a solicitor who bought out their sister’s interest with loan secured over the property and by the brothers’ guarantees. The solicitor sought to be discharged from the loan and the brothers successfully claimed that their agreement with the solicitor was unjust and were ultimately reimbursed for their costs over and above the re-acquired share.

During the course of the proceedings the brothers had made a Calderbank offer for $15,000 plus costs of $90,000 – an offer which was not as good for them as the ultimate outcome. They argued that the rejection of the offer was unreasonable and they should be paid their costs on an indemnity basis.

The court found that it was not unreasonable for the solicitor to reject the offer because it was not a genuine attempt to compromise, rather it called for capitulation or unconditional surrender. The court said:

There appears to be an increasing tendency for defendants who have made Calderbank offers and achieved a better outcome to seek indemnity costs from the date of the Calderbank offer, relying on the outcome to show that rejection of the offer was unreasonable. That is hindsight analysis. Whilst every application must be considered and dealt with on its particular facts, I do not think that it follows necessarily from the adverse outcome that rejection of the offer was relevantly unreasonable.

The court refused indemnity costs.

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