It is often said that the issue of costs is of primary
importance in litigation. However, 2012 saw the issue of costs
become one of increasing uncertainty for litigants in New South
Wales (NSW). This is in large part due to differing judicial
opinions on the application of rule 20.26 of the Uniform Civil
Procedure Rules 2005 (NSW). This rule relates to offers of
compromise and provides, in general terms, that such offers must be
"exclusive of costs".
In Old v McInnes and Hodgkinson  NSWCA 410
(Old), the NSW Court of Appeal found that the relevant
offers were not "exclusive of costs" because they
provided that the offeror would also pay the offeree's costs.
In that way, rather than being "exclusive of costs", the
offers included an offer to pay costs. Such a "plus
costs" offer was therefore invalid.
The matter was then revisited in Vieira v O'Shea
(No.2)  NSWCA 121 (Viera), where the (differently
constituted) NSW Court of Appeal again considered the effect of a
"plus costs" offer. This time, the court found that the
mere reference to costs was not sufficient to take the offer
outside the rules unless the reference operated inconsistently with
the rules. Such a "plus costs" offer was therefore
Since that time, numerous judges have aligned themselves with
the views expressed in Old. Numerous others have preferred
the views in Vieira. The only aspect of certainty –
is one of inherent uncertainty. One of the cases that followed
Vieira, a decision of Justice Garling in Rail
Corporation NSW v Vero Insurance  NSWSC 632, is
presently on appeal. The Court of Appeal will therefore have the
opportunity to set things straight.
As the Honourable Justice M J Beazley AO (who is of the view
that Old represents the law as it presently stands in NSW)
"[i]t must be conceded, however, that the proliferation of
inconsistent statements on a matter of practice and procedure, but
which has such a substantial impact on the parties, is
unsatisfactory and should be addressed by the Rules Committee of
We presume that there is almost unanimous agreement that this
uncertainty should be resolved, forthwith. We understand that the
Uniform Rules Committee is reviewing the matter in conjunction with
the NSW Bar Association.
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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