1. The court deprived both parties of costs for failing to comply with the spirit of civil procedure reforms requiring pre-commencement disclosure, mediation, and other cost-saving initiatives. 2. The defendant unreasonably rejected pre-commencement settlement offers from the plaintiffs, while the plaintiffs exaggerated their damages claim and imposed unreasonable conditions on mediation. 3. The court allocated costs against each party for different periods based on their compliance with the civil procedure reforms and reasonableness of their conduct, with the aim of reflecting the spirit of reducing costs.

1. Case note
Cameron Ford*
SPIRIT OF CIVIL PROCEDURE REFORMS BITES
The spirit as well as the letter of Northern Territory Practice Direction 6 (PD6)1
has been given teeth by the first published decision in which it was expressly
applied, Spadaccini v Grice (2012) 32 NTLR 1. Barr J deprived both parties of
costs for their failure to comply with its letter and its spirit. Notably, the spirit of
PD6 was applied to pre-commencement conduct even though it did not apply to
the proceeding until six weeks after it had been commenced, when an order was
made that, having been commenced by Originating Motion, it continue as if
commenced by Writ, thus attracting PD6. The defendant’s unreasonable rejection
of sensible pre-commencement settlement offers operated to reduce her costs
entitlement until the time the plaintiffs’ serious failure to comply with PD6
overwhelmed the effects of the defendant’s failure. Settlement was reached on the
second day of trial for $110,000, with combined costs exceeding $900,000 which
the court was asked to allocate.
BRIEF FACTS
The plaintiffs commenced proceedings after negotiations – including an
in-principle agreement – failed; consent orders were made six weeks later for
damages to be assessed, the defendant paid $52,500 into court and offered
indemnity costs seven months later, and two months later the parties settled after
two days of trial for $110,000, leaving the plaintiffs worse off than had they
accepted the $52,500 and indemnity costs. Under the settlement agreement, costs
were to be determined by the court.
SUMMARY OF MESSAGES FROM THE DECISION
The key messages from the decision of ways to reduce the incurrence of or
liability for costs are dealt with in greater depth at the end of this note. A
summary of the messages is:
1. the spirit of PD6 can be applied to proceedings where its letter does not
apply;
2. use appropriate, non-inflammatory precedents and terms for settlement
agreements;
3. make and accept reasonable and genuine offers of alternative dispute
resolution (ADR) early;
4. do not impose irrelevant conditions on mediation;
*
LLB (Qld), LLM (Melb), GradCertIntArb (NUS), FCIArb, FSIArb; Barrister; Editor, Northern
Territory Law Reports; Executive Editor, Northern Territory Law Journal.
1
PD6 contains civil procedure reforms requiring pre-commencement and pre-trial disclosure,
mediation and other time and cost-saving initiatives. A copy is annexed to the judgment in the
Northern Territory Law Reports.
(2012) 2 NTLJ 277 277

2. 5. explain a change in attitude from earlier refusing, to later agreeing to
mediation;
6. courts should force mediation;
7. make and accept reasonable offers of settlement;
8. respond promptly to offers closer to trial;
9. indemnity costs will not always be awarded where offers are not bettered;
10. avoid grossly exaggerated damages claims;
11. quantify and document damages claims;
12. temper public comments about opponents. Use conciliatory language in court
and in person;
13. do not plead unsustainable or inconsistent defences;
14. plead matters which must be pleaded. Do not ambush;
15. avoid trench warfare in court; and
16. agree costs in a settlement if at all possible.
SETTLEMENT NO BAR TO COSTS DETERMINATION
Courts will often refuse to determine costs where the parties have settled and it is
difficult to determine success, usually the most significant determinant of costs.2
This approach3
was not mentioned in the decision, with emphasis being placed
instead on the conduct of the parties and on offers made and rejected. Perhaps
one reason for this is that there had been a consent judgment for the plaintiffs and
it only remained for damages to be quantified. There were no academic issues to
try solely to decide costs; the plaintiffs had been successful in one sense and their
prima facie entitlement to costs was affected by conduct, offers and their degree
of success.4
2
For example, Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194;
NT Pubco Pty Ltd v DNPW Pty Ltd [2011] NTSC 51; R v Dunkerton [2011] NTSC 25; Renehan v
Leeuwin Ocean Adventure Foundation Ltd (No 4) (2006) 17 NTLR 124; Parkmore Investments Pty
Ltd v Acer Forester (Darwin) Pty Ltd [2005] NTSC 9; South East Queensland Electricity Board v
Australian Telecommunications Commission (unreported, Fed Ct, Pincus J, No G168 of 1987,
10 February 1989); Parap Hotel Pty Ltd v Northern Territory Planning Authority (1993) 112 FLR
336; JT Stratford & Son Ltd v Lindley (No 2) [1969] 1 WLR 1547; Re Minister for Immigration and
Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; Domino Hire v Pioneer Park [2003] NSWSC
496; Advance Housing Pty Ltd (in liq) v Newcastle Classic Developments Pty Ltd (1994) 14 ACSR
230; Network Exchange Pty Ltd v MIG International Communications Pty Ltd (1994) 13 ACSR 544;
Re St George Builders Hardware Pty Ltd (1995) 18 ACSR 451; United Super Pty Ltd v Randazzo
Investments Pty Ltd [2010] NTSC 31; One.Tel Ltd v Commissioner of Taxation (2000) 101 FCR 548.
3
In Brawley v Marczynski [2002] 4 All ER 1060 at 1065, the Court of Appeal said that there was “no
tradition” of there being no order as to costs merely because a case had been settled except as to costs.
In such a case, the overriding objective was to do justice between the parties without incurring
unnecessary court time and consequently additional cost. At each end of the spectrum there would be
cases where it was obvious which side would have won if the substantive issues had been fought to a
conclusion. In between, the position would, in differing degrees, be less clear. How far the court
would look into previously unresolved substantive issues would depend on the circumstances of the
case, not least the amount of costs at stake and the conduct of the parties. In the absence of a good
reason to make any other order, the fallback was to make no order as to costs.
4
Referable to the amount claimed compared to the amount recovered, and betterment of the
defendant’s offers.
Case note
(2012) 2 NTLJ 277278

3. FIVE PERIODS FOR COSTS
Costs were awarded for five separate periods:
1. from commencement to consent orders – six weeks;
2. from consent orders to the time for acceptance of a payment into court –
seven months;
3. from payment into court to the time for acceptance of a Calderbank offer –
two months;
4. from the time for acceptance to trial – six days;
5. for trial and submissions on costs – two days plus written submissions.
The award for each of those periods and the reasons may be summarised as:
Period Award Reasons
Commencement to
consent orders
(6 weeks).
Defendant pay
plaintiffs’ costs.
Plaintiffs entitled to bring proceedings and
vindicated. Defendant unreasonably rejected
pre-commencement offers (at [51]).
Consent orders to
payment in
(7 months).
Defendant pay 70%
of plaintiffs’ costs.
Plaintiffs seriously defaulted under PD6 but
effects not yet fully felt. Plaintiffs entitled to
bring proceeding. Defendant unreasonably
rejected pre-commencement offers.
Defendant’s unsustainable and inconsistent
defences (at [88], [90], [92]).
Time for acceptance
of payment in to time
for acceptance of
Calderbank offer
(2 months).
Plaintiffs pay 50% of
defendant’s costs.
Plaintiffs better off to accept payment in.
Plaintiffs’ default under PD6 overwhelmed
defendant’s pre-commencement unreason-
ableness (at [83], [88], [94]).
Time for acceptance
of Calderbank offer to
trial (c 6 days).
Plaintiffs pay
defendant’s costs.
Plaintiffs should have accepted one day
after offer made. Settled for same amount
on second day of trial (at [96]-[97]).
Trial and costs
submissions (2 days
plus written
submissions).
Each party bear own
costs.
Trial was trench warfare, partly organised
and disciplined but with confusion,
obfuscation, thick mud and murky fog;
caused partly by defendant’s arguments and
ambush of plaintiffs.
The costs incurred by the parties are analysed using this table and certain
stated assumptions at the end of this note to suggest the parties were not in a
greatly different position under the decision than if they had agreed to bear their
own costs in the settlement.
DECISION IN DETAIL
Defendant’s wall encroaches on plaintiffs’ land
The parties were neighbours on East Point Road, Fannie Bay, overlooking the
ocean, and a wall of the defendant’s encroached onto the plaintiffs’ land. The
plaintiffs wanted to demolish the wall so they could build their dream home, and
after initial reluctance, the defendant orally agreed to the demolition of the wall
Case note
(2012) 2 NTLJ 277 279

4. and for a fence to be erected on the plaintiffs’ side of the boundary at the
plaintiffs’ expense. The defendant insisted on the agreement being formally
documented which Barr J said was unnecessary and, together with the
inappropriate terms of the deed drafted by her solicitors, suggested arrogance and
caused or contributed to the breakdown in relations (at [21]-[25]).
Defendant “kicks gift horse in teeth” with inappropriate,
offensive settlement deed
The draft deed was based on an inappropriate precedent, contained inapplicable
and inflammatory terms such as referring to the defendant as “the Landlord”,
requiring the plaintiffs to submit plans of the new wall to the defendant as
Landlord for approval, to rectify any defect in the new wall of which the
defendant notified the plaintiffs, that the wall be built in a proper and
workmanlike manner by properly qualified and experienced contractors, and that
the plaintiffs achieve completion of the new wall within 60 days from
commencement.
His Honour said that in insisting on the agreement and its insulting terms,
“[n]ot only was the defendant ‘looking the gift horse in the mouth’; she was
reserving the right to kick it in the teeth” (at [23]). He said the precedent used for
the deed was not a conciliatory precedent which parties who have caused a legal
wrong would use in recording their agreement with an injured party who was still
motivated to be reasonable, it would almost inevitably annoy, irritate and even
offend the plaintiffs, it showed a lack of commonsense and was without apparent
appreciation for the need to maintain and not jeopardise the very favourable
outcome for the defendant as a result of the plaintiffs’ willingness to sensibly
compromise (at [21]-[25]).
Suffer costs for rejecting reasonable proposals
pre-commencement
This conduct by the defendant, combined with her later rejections of reasonable
proposals from the plaintiffs before they commenced proceedings, resounded in
costs against her even though PD6 did not apply to the proceedings until they
were ordered to continue as if commenced by Writ six weeks after commence-
ment. His Honour said that “[a] just costs order must reflect the defendant’s
unreasonable refusal to accept the plaintiffs’ pre-commencement settlement
proposals” (at [88]).
It also had the incidental effect of depriving the defendant of indemnity costs
for the period after the plaintiffs should have accepted her Calderbank offer, about
a week before trial. Because the judge did not award indemnity costs against the
defendant for her pre-commencement rejections of reasonable offers, to be
consistent, he did not award indemnity costs against the plaintiffs for their initial
rejection of this offer (at [97]).5
Had there been no unreasonable rejections by the
defendant,6
there would have been no reason to deny her indemnity costs for the
plaintiffs’ rejection of her offer.
5
It could be argued that this is an unequal comparison and that a potential defendant’s rejection of an
informal pre-commencement offer is not in the same class of delinquency as a plaintiff’s rejection of
a Calderbank offer one week from trial, and seven months after rejecting a substantively identical
Case note
(2012) 2 NTLJ 277280

5. Unexplained offer to mediate is costs-neutral
After rejecting a number of further reasonable proposals from the plaintiffs, the
defendant offered to mediate but did not explain how or why she had
reconsidered her position. His Honour said that without more, this bald offer to
mediate and the plaintiffs’ rejection of it had no significant effect on costs
(at [36]).
Plaintiffs justified in commencing proceedings
On that background, his Honour held that the plaintiffs were entitled to bring the
proceedings for declaratory relief and consequential orders. Their purpose was
rapidly achieved, practically, by the making of consent orders on 20 April 2011,
six weeks after commencement, requiring the defendant at her own expense to
remove the wall and footings and that the proceedings continue as if commenced
by Writ. PD6 applied from this point. General damages were reserved for trial.
His Honour said that on general principles the defendant should pay the
plaintiffs’ costs incurred to that point because the plaintiffs had succeeded in
obtaining the relief to which they were entitled, PD6 did not apply and, in any
case, there was no aspect of the plaintiffs’ pre-commencement dealings with the
defendant which disentitled them to costs. Further, the defendant unreasonably
rejected sensible offers from the plaintiffs (at [51]).
Plaintiffs grossly exaggerate damages
After consent orders were made, the plaintiffs variously claimed that their
damages were between $1 million and $1.6 million. His Honour reasoned that
their true entitlement at that time was around $100,000 because of the settlement
sum of $110,000, which included interest (at [53]). The plaintiffs did not explain
the exaggerated quantifications.
This unexplained, gross overestimation of damages, combined with a failure
to provide concise details of their claim and copies of the documents essential to
enable the defendant to understand and investigate it, and a failure to follow a
reasonable procedure to avoid litigation, was a failure to comply with the spirit of
PD6 (at [56]).
Inappropriate condition on mediation
Mediation was then suggested by the defendant but, after initially agreeing, the
plaintiffs said they would not mediate before the costs of a summons were dealt
with. Barr J said that the imposition of that condition on their preparedness to
mediate should be seen as a failure by the plaintiffs to comply with the spirit of
PD6. Those costs were irrelevant to the utility or futility of mediation. If they
were relevant, they should have been included in the issues for mediation
(at [57]).
formal offer. But considerations of costs involve an imprecise synthesis of inherently unequal factors,
with the court’s sense of fairness in all the circumstances taken together, and it is difficult to accurately
describe how the various factors work to produce the result. It is unfair to the court and misleading to
the practitioner to criticise the treatment of one factor in isolation. See, for example, comments of
Kaye J (McGarvie J agreeing) on the appeal from Beach J’s ruling for costs in Verna Trading Pty Ltd
v New India Assurance Co Ltd [1991] 1 VR 129 at 155.
6
Naturally the proceeding would not have commenced, but this proposition assumes no reasonable
offers rejected by the defendant for the sake of illustration.
Case note
(2012) 2 NTLJ 277 281

6. Unreasonable refusal to mediate until damages quantified
The plaintiffs then refused to mediate for two other reasons. First, Mrs Spaddaccini
said she was approached by counsel for the defendant in an aggressive manner
after an interlocutory hearing and thereafter she did not want to participate in
anything he suggested. She said that, after extending his hand to greet her, which
she refused, counsel said to her:
This is crazy, you are going to be neighbours. We should sit down and settle this
matter as the lawyers are the only persons making money out of this case.
His Honour said that while the contact and words may have been
intemperate, they were correct and the plaintiffs’ lawyers would or should have
been giving the same advice (at [64]). Since the concern was not mentioned by
Mr Spaddaccini or their lawyers, his Honour did not accept that this caused the
alleged reluctance to mediate. It would seem from his Honour’s treatment of this
allegation that he might have accepted it as a legitimate reason not to mediate if
he had believed the concern was genuinely held and (perhaps) shared by both
plaintiffs.
Secondly, the plaintiffs insisted they could not mediate until they had
definitive evidence of the quantum of their damages (at [65]). His Honour said
this insistence was unmeritorious, was a cavalier approach to compliance with an
order for mediation, and showed either no awareness of PD6 or an obstructive
approach to compliance. Mediation could have proceeded without definitive
evidence of quantum (at [60], [88]). He said the probable effect of the plaintiffs’
failure to provide a timely quantification and breakdown of their damages claim,
and the consequent postponement of the mediation, was that the parties continued
to incur the substantial costs of the ongoing litigation (at [69]).
Counsel’s court comments create concern
In an interlocutory hearing, counsel for the defendant said:
Your Honour, there is only one reason why these proceedings are continuing and that
is because of a (inaudible) exaggerated claim for damages which is completely, on
any examination of facts, unsustainable. It has been run for one reason only and that
is out of spite by the plaintiffs to harass this old widow. That is what we will be
saying at trial.
This is a classic case where mediation should be undertaken. Not just because of the
nature of this exaggerated claim, but also because of the fact these people are
neighbours. They are living beside each other. It is just ridiculous that this litigation is
continuing. We offer now – we have offered for months to mediate, unconditionally,
this dispute.
Barr J said that those words were not likely to encourage the plaintiffs to
engage in mediation, were not words calculated to create or induce a spirit of
reconciliation, and would normally be expected to create or aggravate hostility
(at [73]). Since the plaintiffs did not complain of any adverse reaction to the
comments, his Honour did not expressly take them into account on costs, but it
seems he would have done had there been such evidence of a reaction.
Case note
(2012) 2 NTLJ 277282

7. Court does not force mediation
At that hearing and at the urging of both parties (contrary to the words quoted
above), the court did not force them to mediate (at [77]). Of course, at that time
the court did not know the history of offers, agreement, rejections and mediation
proposals, but if it had it might have ordered mediation over objection. With
knowledge of this history at the conclusion of the proceeding, Barr J said that
neither of the parties was so unreasonable that an experienced mediator could not
have brought them to a satisfactory agreement much earlier (at [86]). His Honour
had difficulty in assessing the impact this had on costs, since the parties
consented to the mediation not being held (at [87]).
In hindsight, knowing both the history of the dispute and its ultimate
settlement, a mediation ordered at or around that time may have resulted in
settlement or laid the foundation for a settlement earlier than occurred. At that
stage of proceedings there can only be one of two positions – either there will or
will not have been settlement offers. If offers have been made, even a forced
mediation may well rejuvenate stagnant discussions. If offers have not been made
by then, a forced mediation might start the settlement ball rolling. Mediation is
not considered a failure merely because it does not produce agreement on the day.
It might just be the first but essential step in breaking down barriers between the
parties and their advisers. The Hon JJ Spigelman AC QC, when Chief Justice of
New South Wales, said extrajudicially:7
At first there was some scepticism as to whether or not forcing someone to negotiate
a settlement by court order would work. However, it has proven very effective. A
formal court order has frequently overcome the negotiating posture of a party who
pretends, and may believe, that his or her case cannot fail. The experience of the
courts is that reluctant starters have often become active participants in negotiations,
leading to significant success rates for mediation in civil disputes.
Reading the excerpts of transcript in this case, “reluctant starters” seems an
appropriate description of the parties at the time rather than, say, “vehement
opposers” of mediation.
Payment into court is significant costs factor
Seven months after the consent orders were made for removal of the wall
(April 2011), the defendant paid $52,500 into court combined with a Calderbank
offer to pay indemnity costs. To this point, his Honour awarded the plaintiffs 70%
of their costs on the standard basis. This was because the plaintiffs committed
serious defaults under PD6 after the payment in, but the effects were not manifest
for some time. A deduction of 30% was made to reflect some effect of their
non-compliance which led to costs being incurred unnecessarily (at [90]).
7
Spigelman JJ, “Judicial Mediation in Australia” (Speech delivered at the National Judicial College,
Beijing, 25-28 April 2011) pp 13-14, http://www.lawlink.nsw.gov.au/lawlink/Supreme_Court/ll_
sc.nsf/vwFiles/spigelman280411.pdf/$file/spigelman280411.pdf viewed 27 June 2012.
Case note
(2012) 2 NTLJ 277 283

8. Unsustainable defences add to litigation and adversarial
nature
Barr J said he considered denying the plaintiffs all of their costs in the period
between consent orders and when they should have accepted the payment into
court, but did not because (1) the plaintiffs were entitled to $100,000 throughout,
(2) proceedings would not have been necessary had the defendant accepted the
plaintiffs’ reasonable pre-commencement offers, and (3) the defendant contrib-
uted to the ongoing litigation and its adversarial nature by maintaining various
defences, one in particular which was inconsistent with reliable and objective
documentary evidence and with an admission by the defendant (at [88], [92]).
“Giving effect to PD6” by depriving plaintiffs of costs
After the time for acceptance of the payment into court (24 November 2011), his
Honour gave effect to PD6 by depriving the plaintiffs of all their costs to trial and
awarded the defendant 50% of her costs. He said the plaintiffs would have been
better off had they accepted this offer than the eventual settlement of $110,000
two months later (at [83], [94]).
Plaintiffs’ PD6 default overwhelms defendant’s
unreasonableness
His Honour said at this point – the rejection of the payment into court – the
plaintiffs’ default under PD6 and its effects overwhelmed the effect of any
pre-commencement unreasonableness by the defendant (at [88]). There was no
appropriate settlement-motivated response from the plaintiffs for several months,
which was a significant factor in the consideration of costs (at [83]).
Trial preparation, mediation final offer
A mediation was held two months later and eight days before trial. The defendant
made a Calderbank offer of $110,000 a few days after the mediation which was
open until 10 am on the day of trial, due to commence in five days (at [85]). The
plaintiffs initially rejected the offer but then agreed to that sum on the second day
of trial. His Honour said the plaintiffs should have been in a position to deal
promptly with the offer and should have accepted it the day after it was made.
Costs were awarded against the plaintiffs from that day on the standard basis, to
be consistent with not awarding indemnity costs against the defendant for her
pre-commencement unreasonableness (at [96]-[97]).
Costs of trench warfare trial born equally
His Honour ordered each party to bear its own costs of the two days of trial and
of written submissions on costs, principally because the defendant’s raising of a
matter not pleaded as required by r 13.07(1) of the Supreme Court Rules (NT)
had “all the hallmarks of an ambush” (at [98]), but also because:
what happened could be compared with some aspects of trench warfare: organised
and disciplined to a degree, but with considerable confusion and obfuscation: the
parties trudging and stumbling through thick mud, enveloped by murky fog – much
of it created by the defendant’s pleadings and legal arguments. (at [100])
Case note
(2012) 2 NTLJ 277284

9. MESSAGES FROM THE DECISION
1. The spirit of PD6 can be applied to proceedings where its letter does not
apply. The defendant was denied costs and was criticised for pre-
commencement conduct contrary to the spirit of PD6 even though it did not
apply to the proceeding until six weeks after commencement. The
defendant’s rejection of informal pre-commencement offers was treated
similarly for costs purposes to the plaintiffs’ rejection of the defendant’s
formal Calderbank offer. This application of the spirit of PD6 to proceedings
to which its letter does not apply can be supported as the application of a
new approach of the court as expressed in PD6, encouraging settlement and
reducing costs, in the spirit of the High Court’s decision in Aon Risk Services
Australia Ltd v Australian National University (2009) 239 CLR 175.
2. Use appropriate, non-inflammatory precedents for settlement agree-
ments. The defendant was deprived of part of her costs because of her
unreasonable pre-commencement conduct, which included and arguably
stemmed from the inappropriate and offensive draft settlement deed her
lawyers submitted (at [21]-[25], [88]). It is conceivable that lawyers drafting
settlement agreements before proceedings have commenced could be
personally liable for costs if their drafting causes or contributes to a
breakdown in the agreement and to litigation. Rule 63.21(1) is broad enough
to encompass pre-commencement actions by lawyers since it applies
“[w]here a solicitor for a party, whether personally or through a servant or
agent, has caused costs to be incurred improperly or without reasonable
cause or to be wasted by undue delay or negligence or by other misconduct
or default”.
3. Make and accept reasonable and genuine offers of ADR early. The
plaintiffs were denied costs because of their unreasonable refusal of offers of
mediation (at [57], [60], [88]).
4. Do not impose irrelevant conditions on mediation. The plaintiffs lost some
of their costs because they refused to mediate until a separate costs issue was
resolved and until they had definitive evidence of quantum (at [57], [60],
[88]).
5. Explain a change in attitude to mediation. The defendant’s pre-
commencement offer of mediation, rejected by the plaintiffs, had no effect on
costs because she did not explain her change in attitude from rejecting
previous reasonable offers (at [36]).
6. Courts should force mediation. Whether there have or have not been
settlement discussions, even where parties are reluctant starters and need to
be ordered, most proceedings will benefit from a mediation, if only to start
negotiations and to bring cost consequences home to the parties.
7. Make and accept reasonable offers of settlement early. Both parties were
denied costs because they rejected reasonable settlement offers (at [88],
[94]), with a formal offer being significant in consideration of costs (at [84]).
Barr J said “PD6 encourages an enhanced role for offers made ‘without
prejudice save as to costs’” (at [40], [96]).
8. Respond promptly to offers closer to trial. The plaintiffs had costs awarded
against them from one day after an offer was made a week before trial, even
though the offer was open until trial (at [96]).
Case note
(2012) 2 NTLJ 277 285

10. 9. Indemnity costs not always awarded where offers not bettered. The
defendant received only standard costs for the period after the plaintiff
should have accepted her offer, despite PD6 saying indemnity costs would be
awarded in the ordinary case. The case was not ordinary, and the defendant
was denied indemnity costs to be consistent with the plaintiffs’ not being
awarded indemnity costs for the defendant’s failure to accept their
reasonable pre-commencement offers (at [97]).8
10. Avoid grossly exaggerated damages claims. The plaintiffs were deprived
some of their costs because they persisted in an unjustified damages claim
10 to 16 times greater than their true entitlement, which they never explained
and which contributed to the continuing costs of the litigation (at [56], [69],
[88]).
11. Quantify and document damages claims. The plaintiffs’ failure to provide
a timely quantification and breakdown of their damages claim partly caused
the incurrence of the substantial costs of the ongoing litigation, was a failure
to comply with PD6 and was a factor in awarding costs against them (at [56],
[69], [88]).
12. Temper public comments about opponents. While neither party directly
suffered in costs as a result, counsel’s non-conciliatory and potentially
inflammatory comments in and (allegedly) out of court about and to the
plaintiffs were noted and might have resounded in costs had they caused the
incurrence of costs or a genuine reluctance to mediate (at [64], [73]).
13. Do not plead unsustainable or inconsistent defences. The defendant was
penalised in costs for pleading defences which were unsustainable or were
inconsistent with other defences or with objective documents (at [92]).
14. Plead matters which must be pleaded. Do not ambush. A factor in
depriving the defendant of some costs was her failure to plead a matter in
compliance with r 13.07(1), which “had all the hallmarks of an ambush”
(at [98]).
15. Avoid trench warfare in court. The parties had to pay their own costs of
two days in court partly because it was like trench warfare (at [98]).
16. Agree costs in a settlement. An overriding message is to agree costs in a
settlement if at all possible. Neither party emerges from this decision
particularly victorious or laudable. They would probably have been as well
off had they agreed to bear their own costs in the settlement as explained
below.
WERE THE PARTIES BETTER OFF WITH A RULING?
Would the parties have been just as well off to agree to bear their own costs under
the settlement? This may be explored with some assumptions which, even if not
precise, can give an indicative answer. Assumptions for the sake of argument are:
• solicitor-client costs for each side were around $500,000 (Barr J noted total
costs exceeded $900,000, and for ease let it be assumed costs were equal);
• costs were incurred by each side at roughly the same rate and stage; and
8
See n 6.
Case note
(2012) 2 NTLJ 277286

11. • party-party costs were 70% of solicitor-client costs.
Period Award
Solicitor-client
costs (for each
party) ($)
Plaintiffs’
recovered costs
($)
Defendant’s
recovered costs
($)
Commencement
to consent
orders
(6 weeks).
Defendant pay
plaintiffs’ costs.
100,000 70,000*
Nil
Consent orders
to payment in
(7 months).
Defendant pay
70% of
plaintiffs’ costs.
150,000 73,500†
Nil
Payment in to
time for
acceptance of
later offer
(2 months).
Plaintiffs pay
50% of
defendant’s
costs.
100,000 Nil 35,000^
Time for
acceptance to
trial (c 6 days).
Plaintiffs pay
defendant’s
costs.
100,000 Nil 70,000*
Trial and costs
submissions
(2 days plus
written subs).
Each party bear
own costs.
50,000 Nil Nil
Total 500,000 143,500 105,000
Notes:
*
Full party-party costs at 70%.
†
70% of 70%.
^
50% of 70%.
On those figures and assumptions, the parties are only some $40,000 apart as
a result of the decision on costs out of total costs each of around $500,000. It
would take very little tweaking of the figures to make them equal, such as
assuming more costs were incurred in the second half of the proceeding when the
defendant received costs awards. Of course, it may be that the plaintiffs incurred
more costs than the defendant in having to prove their claim and that the
pendulum would swing towards them, but there might be an argument on taxation
as to whether the costs were reasonable for a “true entitlement” of only $100,000
as opposed to the $1.6 million the plaintiffs were pursuing.
DID PD6 MAKE A DIFFERENCE?
The final question is whether PD6 made a difference to this proceeding, either to
the incurrence of costs or their apportionment between the parties. As to the
incurrence of costs and the behaviour of the parties, it is difficult to see how PD6
made a difference since the parties – particularly the plaintiffs – appear to have
ignored it considerably. Perhaps the defendant was encouraged to make the offers
in the spirit of PD6 but it would seem likely those offers would have been made
in any case.
Case note
(2012) 2 NTLJ 277 287

12. As to whether PD6 made a difference to the apportionment of costs, all of the
factors taken into account in making the order could have been considered in
practically the same manner under the pre-PD6 approach. In short, any “relevant
delinquency” of a party could be considered9
without PD6: the conduct of the
parties10
– including pre-commencement conduct;11
compliance with court rules
and orders; pleading unsustainable or excessive claims and defences;12
and offers
were highly relevant and often determinative.13
The same orders might well have been made in the absence of PD6, although
under the former practice, greater delinquency may have been required to
displace the usual costs orders. PD6 might embolden parties to rely in court on
conduct that formerly was merely complained about in private, and courts may
feel at greater liberty to sanction that conduct with costs orders if it amounts to
non-compliance with the letter or spirit of PD6. Of course, the hope is that PD6
will ultimately result not in more costs arguments and orders but in less, shorter
and cheaper litigation and better pre-commencement and post-commencement
conduct.
9
Oshlack v Richmond River Council (1998) 193 CLR 72 at [44] (Gaudron and Gummow JJ).
10
MS Stock Contracting v AUX Venture (No 2) [2011] NTSC 76 at [13] (Barr J); Keddie v Foxall
[1955] VLR 320; Lollis v Loulatzis (No 2) [2008] VSC 35; Forbes v Samuel [1913] 3 KB 706;
Parkinson v College of Ambulance Ltd [1925] 2 KB 1; Gold v Patman & Fotheringham Ltd [1958] 2
All ER 497; Capolingua v Phylum Pty Ltd (1991) 5 WAR 137; Verna Trading Pty Ltd v New India
Assurance Co Ltd [1991] 1 VR 129; Fountain Selected Meats (Sales) Pty Ltd v International Produce
Merchants Pty Ltd (1988) 81 ALR 397; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.
11
MS Stock Contracting v AUX Venture (No 2) [2011] NTSC 76 at [13] (Barr J); Bostok v Ramsey
Urban District Council [1900] 2 QB 616; Parkinson v College of Ambulance Ltd [1925] 2 KB 1;
Donald Campbell & Co Ltd v Pollak [1927] AC 732; Re Lucas (1895) 1 ALR 61; Moore v Gannon
(1915) 32 WN (NSW) 60; Belcher v Belcher (1884) 10 VLR (IP & M) 52; Re Spinks (1884) 6 ALT
36; Sutcliffe v Smith (1886) 2 TLR 881; Davey v Bullock (1891) 17 VLR 3; Merrett v Schuster [1920]
2 Ch 240; Scottish Gympie Gold Mines Ltd v Carroll [1902] St R Qd 311; Cromer v Harry Rickards’
Tivoli Theatres Ltd [1921] SASR 325; Bryant Bros v Thiele [1923] SASR 393.
12
Re Elgindata Ltd (No 2) [1993] 1 All ER 232; Huxley v West London Extension Railway Co (1889)
14 App Cas 26; Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129; Fountain
Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397;
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.
13
Cutts v Head [1984] Ch 290; AMEV Finance Ltd v Artes Studios Thoroughbreds Pty Ltd (1988) 13
NSWLR 486; Johns Perry Industries Pty Ltd v International Rigging (Aust) Pty Ltd [1988] 2 Qd R
556; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.
Case note
(2012) 2 NTLJ 277288