In the recent Supreme Court case of Mansi v
O'Connor, Giovanno Mansi risked it all when he rejected
what turned out to be a very generous offer of compensation for
personal injuries he sustained in the accident. He obtained a
judgment amount of $93,757.51. As a result of his rejection of the
offer, Mansi suffered significant adverse cost consequences.
Lyons J held that the driver of the first defendant's
vehicle had been negligent in his driving of a truck insured by QBE
The parties made Mandatory Final Offers (MFOs) pursuant to
section 51C(10) of the Motor Accident Insurance Act 1994
(Qld) at the compulsory conference on 10 December 2010. Mansi's
MFO was $240,000.00 plus costs. All ten defendants submitted MFOs
On 22 May 2012, a week before trial, the defendants offered to
settle Mansi's claim by way of a Calderbank offer for
$400,000.00 plus costs. Mansi rejected the offer, which turned out
to be substantially more than he recovered at trial.
As Mansi could not demonstrate that his rejection of the
Calderbank offer was reasonable or prudent, counsel for
the defendants submitted that Mansi should bear the burden of costs
on an indemnity basis. Lyons J considered that Mansi rejected a
very fair offer. Lyons J determined that the court had the
discretion to consider the MFOs when awarding costs on an indemnity
The Court's decision
As the second defendant lost the trial, it was ordered to pay
Mansi's costs, and the other defendants' costs, on the
standard basis up to the date of the $400,000 offer. However, the
consequence of rejecting the offer was that, even though his claim
was successful, Mansi was ordered to pay all of the defendants'
costs from the date of the $400,000 offer on the indemnity
The court also ordered that the amount Mansi had to pay under
the costs order was to be deducted from the $93,757.51 judgment in
Significance of decision
This case provides a good illustration of the risks associated
with rejecting a genuine and reasonable Calderbank offer.
It also emphasises the importance of taking properly considered
steps at an early stage to protect a defendant's position on
costs before a dispute proceeds to trial.
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Peter Sise explores how your contractual clause for recovery of legal costs might not do what you think it does.
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