Citation: White v Kohacek (No. 2) [2025] NSWSC 1118
Court: Supreme Court of New South Wales
Date: 25 September 2025
Judge(s): Williams J
Background
This decision deals solely with costs following the principal judgment in White v Kohacek [2025] NSWSC 1042, delivered on 12 September 2025. The plaintiffs had pursued claims against the defendant relating to a property, including claims for declaratory relief, specific performance, and a constructive trust over a two-thirds interest in the property, all founded on a document described as a Heads of Agreement.
The plaintiffs failed on all of their primary property-related claims. They succeeded only on an alternative claim for moneys had and received, being reimbursement of payments made after September 2019, though that claim was reduced slightly to exclude expenditure on a ride-on mower. The defendant succeeded on the central question that the Heads of Agreement did not create legally binding relations, and also succeeded on the cross-claim to the extent it sought dismissal of the statement of claim.
The parties then contested the appropriate costs orders, with each side advancing competing arguments about who should pay, in what proportion, and from what date.
Legal Issues
- Whether the defendant's offer of compromise, served on 17 July 2023, attracted the indemnity costs regime under r 42.15 of the Uniform Civil Procedure Rules 2005 (NSW)
- How costs should be apportioned across a mixed outcome where the plaintiffs failed on their primary claims but succeeded on an alternative monetary claim
- Whether the defendant's litigation conduct, particularly maintaining a $1,000,000 damages cross-claim until the first day of hearing, should affect the costs discretion
Decision
Issue 1: The offer of compromise and indemnity costs
The defendant argued that the plaintiffs' failure to accept his July 2023 offer of compromise entitled him to indemnity costs from the date of that offer under r 42.15. The court rejected that argument on two independent grounds. First, the judgment ultimately obtained by the plaintiffs was more favourable to them than the terms of the offer. Second, and separately, the offer lacked the requisite element of compromise: it was merely an offer to consider part of the plaintiffs' claim, subject to further disputation about quantum, on condition that all other claims would be dismissed (at [14]).
Issue 2: Apportionment of costs across the mixed outcome
The court identified two distinct events for the purposes of r 42.1: the plaintiffs' success on the money claim, and the defendant's success in defeating the primary claims. The court found the costs of these two sets of claims were separable. The evidence and submissions directed to the claims on which the plaintiffs failed occupied at least 80% of the trial time and a comparable share of pre-trial preparation, whereas the payments evidence, though voluminous, was not legally complex (at [18]-[19]).
Issue 3: Litigation conduct
The defendant had served multiple rounds of affidavits and maintained his $1,000,000 damages cross-claim until the first day of hearing, conduct the court accepted was unreasonable. However, the plaintiffs had engaged in the same unreasonable conduct with respect to affidavits, and the abandoned damages cross-claim did not generate costs beyond those already incurred by both parties in maintaining their respective positions (at [20]). The court declined to treat the defendant's conduct as a relevant factor in exercising the costs discretion.
Orders Made
- The plaintiffs are to pay 80% of the defendant's costs of the proceedings on the ordinary basis, as agreed or assessed.
- The defendant is to pay 20% of the plaintiffs' costs of the proceedings on the ordinary basis, as agreed or assessed.
- The net effect will result in a payment by one party to the other depending on the quantum of each party's costs.
Key Takeaways
- An offer of compromise that merely invites further disputation about quantum, rather than offering genuine finality, lacks the requisite element of compromise and will not trigger the indemnity costs regime under r 42.15 of the Uniform Civil Procedure Rules 2005 (NSW) (at [14]).
- Where a plaintiff succeeds on an alternative claim but fails on primary claims that dominated the trial, the court may treat those as two separate events under r 42.1 and apportion costs according to the relative weight each set of issues occupied at trial (at [19]).
- Percentage-based cost apportionment is available where the court is satisfied that the costs of distinct claims are separable and that a reasonable estimate of proportionality can be drawn from trial time and preparation effort (at [17]-[19]).
- Unreasonable litigation conduct, such as maintaining a large abandoned damages claim, will not automatically affect the costs discretion where both parties engaged in similar conduct and the impugned behaviour did not cause additional costs beyond what would otherwise have been incurred (at [20]).
- A costs order requiring the losing party on the primary claims to pay two-thirds of the other side's costs, while denying the substantially successful party any costs recovery, was rejected as unjust to the party who achieved the greater overall success in the proceedings (at [21]-[22]).
Legislation and Cases Referenced
Legislation
- Civil Procedure Act 2005 (NSW), s 98
- Uniform Civil Procedure Rules 2005 (NSW), r 20.26, r 42.1, r 42.15
Cases
- Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391
- Zurich Australian Insurance Limited v CIMIC Group Limited & Ors (No 2) [2024] NSWCA 276