Clifffall Pty Ltd v Wollongong City Council (No 2)

1. [1]

   I gave judgment in these proceedings on 18 February 2026 – see Clifffall Pty Ltd v Wollongong City Council [2026] NSWSC 84 (PJ or Primary Judgment).

2. [2]

   These reasons assume familiarity with and maintain the same definitions and abbreviations as in the Primary Judgment.

3. [3]

   I made the following orders in the Primary Judgment:

   1. (1)

      Amended statement of claim dismissed.

   2. (2)

      Plaintiff pay the defendants’ costs of the proceedings.

   3. (3)

      Any party seeking a different costs order to order 2 above should notify my Associate within seven (7) days whereupon I will, to the extent necessary, vacate or vary order 2 above and make directions for the determination of any special costs orders on the papers.

4. [4]

   Both defendants took up the opportunity in order 3 and sought orders for indemnity costs. As a result, I set a timetable for the provision of material on the indemnity costs applications. I have received that material including submissions.

5. [5]

   The Council sought:

6. [6]

   Reliance in this regard was placed on the non-acceptance of three Calderbank letters.

7. [7]

   TfNSW sought an order that its costs for the entirety of the proceedings be paid on an indemnity basis, together with interest on those costs. TfNSW contended that the claim against it was hopeless and there was no reasonable basis for a number of the allegations underpinning the claims advanced against it.

8. [8]

   The plaintiff opposed each of the applications.

9. [9]

   I deal with each of the applications below. For the reasons set out below:

The Council’s application for indemnity costs

1. [10]

   The Council relevantly made three offers and contended that the plaintiff unreasonably failed to accept any of them.

2. [11]

   The principles in this regard are well understood and need not be repeated: see for example Joudo v Joudo (No 2) [2024] NSWSC 469 at [12]-[15].

3. [12]

   It is convenient to address each offer in turn.

4. [13]

   The first offer, dated 12 August 2024, contained two alternate offers which the plaintiff was at liberty to accept:

5. [14]

   The Council contended that the following matters were relevant to the exercise of discretion whether to award indemnity costs on account of this offer:

6. [15]

   The plaintiff made a number of submissions in response, including:

7. [16]

   Council did not accept these matters and contended that the plaintiff was always going to be required to obtain the necessary consents to construct a driveway. It was ultimately contended that, having regard to the outcome of these proceedings, the plaintiff is no better position than it would have been, had it accepted the offer put on 12 August 2024.

8. [17]

   I am not satisfied that rejection of that offer warrants an order for indemnity costs. It is far from clear that the plaintiff is worse off for having declined either of the offers.

9. [18]

   The first offer, which involves the purchase of the plaintiff’s land, can be put to one side in circumstances where it was far from clear that the price offered represented market value.

10. [19]

    The second offer made in the 12 August 2024 letter, even if accepted, would not have advanced things too far. The plaintiff would still have been required to obtain all necessary consents for the construction of a driveway. It is also unclear whether Council would have permitted a driveway in the absence of a dwelling.

11. [20]

    The second offer dated 1 May 2025, was in substance a “walk away” offer, namely that the proceedings be dismissed with no order as to costs.

12. [21]

    In support of its claim for indemnity costs based on the second offer, the Council relied on the following matters:

13. [22]

    In response, the plaintiff relied on the fact that the offer was made in the context of what was said to be its then intention to lodge a development application and to seek a transfer the proceedings to the Land and Environmental Court. It was also submitted that the timing of the offer was unfair because it effectively required a response before the plaintiff could obtain town planning advice. Orders were made on 2 May 2025 adjourning the proceedings to 20 June 2025 to enable such advice to be obtained.

14. [23]

    In reply, the Council contended that the introductory aspect of the letter – the potential transfer to the Land and Environment Court – should not be conflated with the substance of the offer.

15. [24]

    I am satisfied that it was unreasonable for the plaintiff not to have accepted the offer. The essence of the offer was simple and unambiguous: it was a walk away offer. This was made at a time when considerable costs have been incurred by both sides – evidence in chief was on – those costs were being compromised.

16. [25]

    The fact that at the time the offer was made the plaintiff was contemplating seeking development consent and commencing proceedings in the Land and Environment Court does not assist the plaintiff on costs. In my view, that consideration was not relevant to the reasonableness or otherwise of the rejection of the offer.

17. [26]

    I am therefore satisfied that indemnity costs should be paid on and from 2 May 2025.

18. [27]

    For completeness I also consider the third offer, made 28 October 2025. This offer was made on an open basis. I referred to it and extracted part of its terms at PJ [43]. The letter was addressed to the solicitors for the plaintiff and TfNSW.

19. [28]

    In addition to paragraphs [20]-[25] extracted at PJ [43], the letter also provided at [26]-[31]:

20. [29]

    The plaintiff’s principal response to whether the rejection of the offer warrants an indemnity costs order is that it was not capable of acceptance unless TfNSW also accepted it – see [27] of the letter. TfNSW did not accept the offer. Furthermore, the undertakings proposed in the letter also suffered from the same difficulty identified in the first offer – namely the need for concurrence from TfNSW.

21. [30]

    The Council did not, in terms, respond to these contentions in their reply submissions.

22. [31]

    I am not satisfied that the rejection of this third offer warrants an order for indemnity costs. In the absence of acceptance by TfNSW the offer was not capable of resulting in an agreement to resolve the proceedings.

TfNSW’s application for indemnity costs

1. [32]

   TfNSW contends that the plaintiff’s claim against it was hopeless and was persisted with, despite the plaintiff’s knowledge of the relevant facts and law.

2. [33]

   Reliance in this regard was placed on the well known authorities of Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233-234; [1993] FCA 801 per Sheppard J and Fountain Selected Meats (Sales) Pty Limited v International Produce Merchants Pty Limited (1988) 81 ALR 397 at 401 per Woodward J.

3. [34]

   Allied to this, it was also contended that there was no reasonable basis for various of the allegations founding claims advanced against TfNSW.

4. [35]

   I have dealt with the case against TfNSW and its shortcomings at PJ [82]-[88]. This included the acceptance by Mr Rayment KC that the central factual allegation against TfNSW could not be maintained on the evidence.

5. [36]

   In its responsive submissions, the plaintiff does not address the lack of a factual basis for the allegations made against TfNSW. Instead, it raised a number of matters concerning the proper construction of s 6 of the Roads Act 1993 (NSW) and its novelty. The plaintiff’s submissions in this regard openly accept that a number of these matters were not even put to me at the hearing.

6. [37]

   I am satisfied that this is an appropriate case to order indemnity costs against the plaintiff in favour of TfNSW. This is principally because the central allegation that TfNSW carried out the “construction works” was not sustainable. Nothing has been said by the plaintiff that it was ever sustainable. Absent a proper basis for that allegation, the claim was hopeless. There were also other problems with the claim advanced, including the construction of s 6 and more importantly, the relief claimed.

7. [38]

   TfNSW also seeks an order for interest on costs pursuant to s 101(4) and (5) of the Civil Procedure Act 2005 (NSW).

8. [39]

   Reliance is placed on what was said by the Court of Appeal in South West Helicopters Pty Ltd v Stephenson (No 2) (2018) 98 NSWLR 96; [2018] NSWCA 99 at [33]:

9. [40]

   Nothing was said by the plaintiff in response to the claim for interest on costs.

10. [41]

    In circumstances where the proceedings have continued for close to two years and costs have been periodically incurred, it is appropriate for interest on costs to be payable from the date of payment of those costs so as to reflect the economic burden.

Conclusion and orders

1. [42]

   The Court orders that:

   1. (1)

      Order 2 made 18 February 2026 be vacated.

   2. (2)

      The plaintiff pay the first defendant’s costs of the proceedings up to and including 1 May 2025 on the ordinary basis and thereafter on the indemnity basis.

   3. (3)

      The plaintiff pay the second defendant’s costs of the proceedings on the indemnity basis and pay interest on those costs from the date on which those costs were paid by the second defendant.