In this Insight, Rose Legal Paralegal Ana Guerron explores the recent New South Wales District Court decision in Willis v Orange City Council (No 2) [2025] NSWDC 242, and the important costs consequences of rejecting reasonable offers of compromise. This case highlights the practical significance of Calderbank offers and provides valuable lessons for legal practitioners on strategic litigation and costs recovery.
Background
The plaintiff made two Offers of Compromise:
- A judgment for the plaintiff with damages to be assessed, subject to a 20% reduction.
- A judgment in favour of the plaintiff in the fixed sum of $100,001.
Both offers were rejected by the defendant. After damages were awarded to the plaintiff, he applied to vary the costs order under Rule 42.14 of the Uniform Civil Procedure Rules 2005 (NSW), which governs the costs consequences of rejected offers.
Court’s Ruling
The court held that the plaintiff was entitled to costs on the ordinary basis up to and including 21 October 2024, and on the indemnity basis thereafter. This outcome reflected the well-established principle that a party who unreasonably rejects a reasonable offer of compromise may bear adverse costs consequences if the final judgment is no less favourable than the offer. The court found the defendant’s rejection of the plaintiff’s offers to be unreasonable in light of the circumstances and the information available at the time.
Understanding Calderbank Offers
Rule 42.14 of the Uniform Civil Procedure Rules 2005 (NSW) sets out when a party may be entitled to indemnity costs following the rejection of an offer. Where a plaintiff makes an offer that is not accepted and later obtains a judgment no less favourable than the offer, they are entitled to costs on the ordinary basis up to the date of the offer and on the indemnity basis thereafter—unless the court orders otherwise.
Key Learnings
- Strategic Use of Offers: Parties should give careful consideration to making Offers of Compromise or Calderbank offers, as these can substantially enhance a client’s prospects of recovering legal costs.
- Reasonableness of Rejection: Whether a rejected offer was reasonably refused is central. An unreasonable rejection may expose a party to adverse costs consequences.
- Documentation and Timing: Offers should be clear, properly documented, and made at strategically appropriate stages of litigation to maximise their potential impact on costs outcomes.
About Ana Guerron, Paralegal
Ana Guerron is a Paralegal at Rose Legal, supporting our team of Legal Costs Consultants in New South Wales. She brings over nine years of international legal experience across labour, corporate, family, and intellectual property law. Admitted to practise in Ecuador, Ana previously worked at one of the country’s leading law firms, where she provided strategic legal advice and representation in both administrative and judicial matters.
At Rose Legal, Ana assists with legal costs assessments, court documentation, and client coordination. She is known for her meticulous approach, strong communication skills, and commitment to delivering high-quality outcomes. Fluent in both Spanish and English, Ana brings a bilingual perspective to her work and is dedicated to building her legal career in the NSW legal system.
