Carmody v Roseville Golf Club Ltd (No 2)

On 10 February 2026, the Court delivered its principal judgment in these proceedings: Carmody v Roseville Golf Club Ltd [2026] NSWSC 45. This judgment should be read, and assumes familiarity, with the principal judgment. Defined terms in the principal judgment have the same meaning in these reasons.

Mr Carmody challenged his expulsion from the Club. He was unsuccessful and the outcome of the principal judgment was that his amended summons was dismissed and he was ordered to pay the Club’s costs of the proceedings.

In accordance with the Court’s directions, the Club has now applied by motion filed on 19 February 2026 for the costs order made at the conclusion of the principal judgment to be varied by reference to two offers of compromise under the Uniform Civil Procedure Rules 2005 (NSW) (Rules) and two corresponding Calderbank offers.

For the reasons which follow, the Court will accede to that application such that Mr Carmody will be ordered to pay the Club’s costs on the indemnity basis on and from 21 September 2024 by reason of an offer of compromise served on 20 September 2024.

The Club’s written submissions in relation to costs were prepared by Mr C O’Neill of Counsel with Mr J Charlton of Counsel.

Mr Carmody prepared his own submissions. However, I record that Mr Carmody properly complied with Practice Note SC Gen 23 by disclosing that he had used generative artificial intelligence for the preparation of his submissions, including for legal research, drafting assistance and identification of citations. Mr Carmody’s submissions were apposite, concise and referred to relevant authority.

After the period for the written submissions had closed, by 10 April 2026 both parties had agreed that the Court should determine the Club’s application on the papers. The Court has done so and these are its reasons.

As I recorded in the principal judgment (at [6]), Mr Carmody’s conduct was the subject of two hearings at the Club. The first was a hearing of a disciplinary committee on 30 January 2024 in which Mr Carmody chose not to participate. He was found guilty of the charge and expelled. The second was a hearing of an appeals committee constituted by three directors of the Club which, after a hearing held on 8 March 2024, determined that Mr Carmody was guilty of the charge of having engaged in conduct which was unbecoming of a member and expelled him from the Club.

Mr Carmody commenced these proceedings by summons filed on 30 April 2024. At the same time, Mr Carmody served his evidence in chief which consisted of one affidavit made by him.

On 9 August 2024, the Club served seven lay affidavits in chief in the proceedings.

On 16 August 2024, the Club served one further lay affidavit in chief in the proceedings.

The eight affidavits referred to in the preceding paragraphs were substantial and were prepared by the Club’s solicitors.

On 20 September 2024, the Club’s solicitors served an offer of compromise under the Rules (first offer):

The first offer was sent with a Calderbank offer (first Calderbank) as set out in a letter of the same date.

The first Calderbank did three things:

As at the date of the first offer and the first Calderbank, the Club had incurred the legal costs of reviewing the summons and accompanying evidence, and preparing the Club’s affidavit evidence in response.

Mr Carmody did not respond to either the first offer or the first Calderbank, both of which lapsed on 18 October 2024.

On 18 October 2024, with the consent of the Club, Mr Carmody filed an amended summons which introduced eight further grounds for the relief sought in the original summons.

On 29 November 2024, Mr Carmody served three lay affidavits as his evidence in reply in proceedings.

On or about 12 December 2024, the proceedings were listed for hearing before me with an estimate of three days commencing on 4 August 2025.

On 28 April 2025, the Club served a second offer of compromise under the Rules (second offer) and a second Calderbank offer (second Calderbank) as set out in a letter of that date.

The second offer was:

The second Calderbank again did three things:

As at the date of the second offer and the second Calderbank, the Club had incurred the legal costs of reviewing the summons and accompanying evidence, preparing the Club’s affidavit evidence in response, reviewing the amended summons and reviewing the plaintiff’s affidavit evidence in reply.

Mr Carmody did not respond to either the second offer or the second Calderbank, both of which lapsed on 26 May 2025.

The proceedings were heard on 4 and 5 August 2025, with the principal judgment delivered on 10 February 2026.

Because of the view to which the Court has come, it is only necessary to deal with the first offer.

The starting point is to understand the nature of the proceedings. Mr Carmody sought declarations and injunctions although, if he was successful in having his expulsion set aside, Mr Carmody did seek consequential damages such as his legal expenses. The proceedings were what might be described as non-monetary, all or nothing (or binary) proceedings: Mr Carmody would either succeed or fail to have his expulsion set aside. The proceedings were not, for example, a claim for a debt, which a defendant could seek to compromise by offering a lesser sum in satisfaction.

On its face, the first offer formally complied with the Rules such that UCPR Pt 42 r 42.15A had been engaged because the Club had achieved a result better than what it had put in the first offer, having obtained dismissal of the proceedings and a costs order in its favour:

In other words, unless the Court ordered otherwise, the Club was “entitled” to orders to the effect of those specified in the rule.

In Bates v Cooke (No 2) [2014] NSWSC 1322, I said (at [4]):

Mr Carmody’s submissions may be summarised as:

For the reasons which follow, the Court accepts the Club’s submission that there is no feature of the proceedings that would warrant the Club being deprived of its conditional entitlement to an indemnity costs order pursuant to r 42.15A.

I respectfully adopt and apply what was said by Ward P (Kirk JA and Basten AJA agreeing) in Langdon v Carnival PLC (2024) 115 NSWLR 78; [2024] NSWCA 168:

Mr Carmody referred the Court to [28] to [31] of the decision of the Court of Appeal in Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368, to which citation I would respectfully add one additional paragraph:

It is also instructive to recall what was said by the Court of Appeal (Santow JA; Bryson and Stein JJA agreeing) in the passage referred to in Regency from Leichhardt Municipal Council v Green [2004] NSWCA 341:

The effect of the authorities to which I have referred is to explicate the meaning of “an offer… to compromise” in r 20.26(1). To be an offer of the relevant kind, it must involve a genuine element of compromise, that is to say that the offeror is giving away something of substance. As a matter of principle, giving away a prospective entitlement to costs can be a concession of substance. Whether it is sufficiently substantial will involve an assessment of its quantum, not necessarily always in an absolute sense, but in all the circumstances of the particular case. Those circumstances may include the strength of the offeror’s case and, conversely, the reasonableness of the offeree’s decision to reject any offer. Such considerations may be particularly important in the case of a “walk away” offer in proceedings where the outcome is binary.

It is true that in the present case the Court does not know the actual quantum of the costs that had been incurred by the Club at the time it made the first offer. However, what the Court does find from the number and detail of the affidavits that had been served by the Club and the detailed consideration of Mr Carmody’s case as reflected in the letter enclosing the first offer, is that an obviously more than trivial legal effort had been expended in considering Mr Carmody’s claim and his affidavit, determining what evidence was required to meet his case, preparing that evidence and considering the legal merits of Mr Carmody’s claim. The Court is entitled to, and does, take notice of the fact based on its own experience that the undertaking of that work would have generated legal fees in the thousands of dollars.

How many thousands of dollars is not to the point (although in some cases it may be). What is to the point is that the Court can conclude that an offer to forgo that amount (even on a party party basis) would be sufficiently of substance (in the sense that I have used [37] above) to represent a genuine element of compromise. That it is “genuine” is demonstrated not only by the likely quantum being forgone (which may in some cases may be sufficient of itself to demonstrate that it is “genuine”) but that it was accompanied by a thorough legal analysis to the effect that the Club’s defence was a very strong one which, as it happened, was ultimately vindicated by the Court. To adopt the language of the Court of Appeal in Leichhardt, in this case the Court is unable to characterise the first offer as “merely a tactical step designed to secure the benefits which flow from whatever incentives there are”.

For these reasons, the Court is satisfied that the first offer was “an offer to … compromise” the proceedings within the meaning of r 20.26. Therefore, the Club has demonstrated that it has an entitlement to indemnity costs subject only to the Court’s discretion to order otherwise.

The public policy to encourage settlement which underlies the rules governing offers of compromise means that such an entitlement, once established, is not to be lightly displaced. That conclusion is compelled, in part, by the Court’s obligation to exercise its discretion under the Rules to order otherwise so as to give effect to the overriding purpose, being the just, cheap and quick resolution of the real issues in dispute (Civil Procedure Act 2005 (NSW), s 56).

To be entitled to something bespeaks a right to it. As the authorities to which I have referred make clear, while “exceptional circumstances” are not necessary to exercise the discretion to order otherwise, in general the discretion should only be exercised in an exceptional case, that is a case which presents a feature which warrants an exception being made.

None of the four reasons advanced by Mr Carmody meets that description, whether considered individually or together. That is because each of those reasons invokes an unremarkable or usual feature that applies to many cases that are properly brought (in the sense of not being hopeless from the outset) but are ultimately unsuccessful. It would undermine the operation of offers of compromise as a means to encourage settlement if any such matters were sufficient for the Court to order otherwise.

It may be accepted that Mr Carmody’s claim was not frivolous, vexatious or hopeless. However, many claims which answer that description ultimately fail.

Mr Carmody’s submission that his case had reasonable prospects of success at the time of the first offer was based on the fact that he had the benefit of legal advice from experienced solicitors and counsel who had accepted the brief and were preparing the case for trial. This characterisation also is unremarkable, applying to many cases, if not most, that fail at trial.

The same observation may be made of Mr Carmody’s submission that there had been no “relevant delinquency” in his conduct of the litigation. Timely compliance with Court directions and engaging appropriately with the Court process are what is required by the Rules and, fortunately, have not become unusual or exceptional in most cases before the Court.

Mr Carmody’s final ground is that his case was binary. Again, that is to describe many cases which fail at hearing. It would be to undermine the utility of the rule to find that just because a case had a binary outcome would render it sufficient for an exception to be made to displace a successful offeror’s conditional entitlement to indemnity costs even where that offer was to “walk away”.

For completeness, I record that for substantially the same reasons I would have reached the same conclusion based upon the second offer. Similarly, applying the relevant principles to either the first Calderbank or the second Calderbank, I would have exercised the Court’s discretion to bring about the same result.

The Court’s order is: