Constantine v Pates (No 2)

I gave the principal judgment in these proceedings on 19 December 2025: Constantine v Pates [2025] NSWSC 1589 (Principal Judgment). Defined terms in the Principal Judgment are used here. This judgment also presumes familiarity with the Principal Judgment.

The Court ordered that the plaintiff’s Statement of Claim be dismissed. The Court also ordered the plaintiff to pay the defendants’ costs, in accordance with the usual rule that costs follow the event: Uniform Civil Procedure Rules 2005 (NSW) (UCPR).

After I pronounced the orders of the Court as set out at the end of the Principal Judgment, counsel for the defendants immediately rose and said the following (TR 19 December 2025 P1 L26-30):

I responded by saying that I would not deal with the issue there and then but would instead make a series of orders for the parties to put on submissions and any supporting evidence as necessary. Given my judgment was delivered on the last day of term, I considered it would be appropriate to allow the parties some time into the new law term to make their submissions.

Following discussion with counsel for each of the parties who were there to take judgment, I made the following further orders:

In accordance with my orders, the defendants filed written submissions authored by Mr G McGrath of counsel on 30 January 2026 (DWS Costs) and an affidavit of Mr Michael Mandicos, the solicitor for the defendants, sworn 30 January 2026.

No submissions or evidence in reply have been filed by the plaintiff.

On 6 March 2026, my Chambers received an email from Mr Mandicos, on behalf of the defendants. In that email, Mr Mandicos wrote as follows:

On 16 February 2026, a Notice of Ceasing to Act had been filed by the plaintiff’s former solicitor, Mr Lee. The Registry of this Court issued a Notice of Rejection on the same day. The reason for the rejection provided for in the Notice of Rejection was as follows:

The Notice of Ceasing to Act itself says:

There is no Notice of Intention to File Notice of Ceasing to Act on the file. However, in the file which was opened when the plaintiff filed a Notice of Intention to Appeal in relation to the orders I made on 19 December 2025 dismissing her claim, it appears Mr Lee did file the requisite Notice of Intention to File Notice of Ceasing to Act, on 4 February 2026.

Rule 7.29(1) of the UCPR provides that a solicitor who ceases to act for a party in any proceedings may file notice of the change. Subrule (1) is immediately qualified by sub-r (2), which says that except by leave of the court, a solicitor may not file or serve notice of the change (under sub-r (1)) unless the solicitor has filed and served on the client a notice of intention to file and serve the notice of change before specified time periods, depending on the status of the proceedings. Rule 7.30(a) then provides that a change for which notice is required to be given under div 7 of Pt 7 does not take effect as regards the court until the notice is filed. Given that the Notice of Ceasing to Act has not actually formally been filed in these proceedings, in light of its rejection for filing, there might be a question about whether, as far as the Court is concerned, Mr Lee has in fact ceased to act for the plaintiff in these proceedings.

I do not consider it necessary to resolve that question. Whatever the precise status between the plaintiff and her former solicitor may be with respect to each other and with respect to the Court, the fact remains that no submissions have been put on by the plaintiff.

The plaintiff was legally represented at the time judgment was delivered and I pronounced my orders. In fact, she was represented by counsel when judgment was delivered. Counsel for the plaintiffs was also, consequently, present when the timetable for submissions on costs was set. When the defendants’ submissions were filed, the plaintiff appears to still have been legally represented – the Notice of Intention to File Notice of Ceasing to Act was filed (albeit, technically, in the file for a different matter) after the defendants filed their written submissions on costs. The plaintiff could have made submissions on her own behalf as a self-represented litigant once her solicitor ceased to act, but she has made no effort to otherwise contact my Chambers or the Court generally. Taking these factors into account, I consider it appropriate to determine the defendants’ application for a special costs order notwithstanding the plaintiff has not provided any submissions. In my opinion, there is no good reason available not to do so.

The special costs order sought by the defendants is specified at DWS Costs [2]. The order sought is as follows:

The defendants submit that the basis for the special costs order was that the defendants emailed a letter making an offer of settlement to the solicitors for the plaintiff in accordance with the principles of Calderbank v Calderbank (1975) 3 All ER 333 on 28 July 2025 (the Calderbank offer, or the offer), the terms of which are set out below.

For the reasons which follow, the Court has determined that it should make a special costs orders in the terms propounded by the defendants.

On Monday, 28 July 2025, Mr Mandicos sent by email to Mr Lee a letter dated the same date, which contained the Calderbank offer giving rise to this application for a special costs order. The letter was also signed off by him.

Whilst it will contribute to the length of the judgment, it is convenient to set out the whole of the letter sent by Mr Mandicos on behalf of the defendants. The letter reads as follows:

In his affidavit, Mr Mandicos says he sent the letter to the plaintiff’s solicitor using the email address from which he had received and to which he had sent correspondence “numerous times previously”.

No response to this offer was received.

As is uncontroversial, s 98(1) of the Civil Procedure Act 2005 (NSW) gives the Court a broad discretion with respect to costs, though that discretion is to be exercised judicially: Netdeen Pty Ltd t/as GJ Gardner Homes v Lindfield NSW Pty Ltd (No 2) [2025] NSWCA 218 (Stern and Ball JJA, Griffiths AJA); Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276 at [136] (McColl JA, Sackville AJA and Adamson J agreeing).

Rule 42.2 of the UCPR provides that unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis. The defendants apply for an “order otherwise” under r 42.2 (DWS Costs [15]).

The relevant principles were conveniently summarised by the Court of Appeal (Kirk, Adamson and Stern JJA) in C&V Engineering Services Pty Ltd v Metropolitan Demolitions Pty Ltd (No 2) [2023] NSWCA 240 (C&V Engineering) at [28]-[32]. For convenience, I will set out those paragraphs of their Honours' judgment below:

The summary of the applicable principles provided by the defendants in their written submissions accord with the above.

The offer involved the defendants effectively capitulating and giving the plaintiff the principal relief she sought in her Statement of Claim, namely a transfer back to her of the first defendant’s share of the property. The final judgment of the Court was that the Statement of Claim against them was dismissed: the defendant was wholly successful. Clearly, the defendants obtained a judgment better than the terms of their offer to settle the proceedings. Furthermore, in circumstances where the defendants effectively offered to capitulate, clearly, I must also accept the defendants’ submission that there was a genuine offer of compromise.

I also accept the defendants’ submissions that it was unreasonable in all of the circumstances, as at the time of the offer, for the plaintiff to reject the defendants’ offer. I will address why I reach that conclusion principally by reference the factors identified by the Court of Appeal in C&V Engineering at [32], albeit not in the order listed by the Court of Appeal. Of course, as the defendants acknowledge at [18] of DWS Costs, the factors the Court can take into account in assessing whether the plaintiff’s non-acceptance of the defendants’ offer was unreasonable are not limited to those factors listed by the Court of Appeal. However, the defendants fashioned their submissions by reference to those factors (albeit sourced from a different judgment) and it is not apparent to me what other factors would be relevant in the circumstances of this particular case.

The extent of the compromise offered, the third factor listed in [32] of C&V Engineering at [32], was significant in this case. I agree with the defendants when they characterise their offer as offering “everything the plaintiff wanted other than costs” (DWS Costs [26] and [28]).

The defendants say they were not able to identify a similar case addressing a situation where a defendant “has capitulated on the substance of the claim rather than incur additional costs of trial, prevailed and sought costs on a Calderbank letter” (DWS Costs [30]). That is unsurprising. It cannot be often that a party rejects an offer as generous as the defendants’ was in this case and incur the additional costs of a final hearing, where the only apparent marginal benefit to doing so would be to also obtain the costs order she sought.

The defendants submitted that this is “the single strongest factor” the court should take into account (DWS Costs [26]). I accept that this factor significantly weighs in favour of a special costs order. Even without taking into account what ultimately happened in these proceedings, if the defendants offer had been accepted, the plaintiff would have got what she wanted, and further costs referable to a trial would be avoided. Instead, further costs were incurred and the plaintiff achieved a much worse result.

The fact the defendants offered to capitulate on everything bar costs could arguably justify the defendants’ special costs order all on its own. However, considering the other factors relevant to assessing the unreasonableness of the plaintiff’s non-acceptance of the defendants’ offer makes it even clearer that non-acceptance was unreasonable.

Addressing the second, fifth and sixth factors listed in [32] of C&V Engineering at [32]:

As to the first factor listed in [32] of C&V Engineering at [32], the defendants say that the offer was submitted at a time when the pleadings were closed, the primary affidavits were served and an outline of the competing cases as to the construction of the deed were clear (DWS Costs [23]). Thus, they submit that the plaintiff had the information she needed to assess the strength of the competing arguments (DWS Costs [23]).

The Statement of Claim was filed in May 2023. The Defence had been filed in July 2023, about two years before the offer. The Registrar in Equity made the order listing the matter for hearing on 16 July 2025, 12 days before the offer. In light of the usual practice of this Court, I infer that on 16 July 2025, the matter was ready for hearing, as far as the evidence was concerned. In any event, save for one affidavit made on 23 September 2025, the last of the affidavits which were in the Court Book were made in July 2024, about a year before the offer was made. This would suggest that the defendants are accurate in submitting that the “primary” affidavits had been served by the time the offer was made.

Given what was set out in the previous paragraph, I accept the defendants’ characterisation as to the stage of the proceedings at the time of the offer.

The proceedings were at an advanced stage at the time the offer was made. I consider that they were at a stage such that the plaintiff could meaningfully assess her prospects of success. Additionally, in any event, the case was principally one about the construction of a legal document. While some factual matters no doubt could play a part in a Court’s construction task, as at the time of the offer, it cannot be said that the plaintiff’s case depended on the assessment of factual matters, witness credibility and like matters such that she would have trouble assessing her prospects of success at that time. Accordingly, I accept the defendants’ submissions that the timing of when the offer weighs in favour of a special costs order.

Finally, as to the fourth factor listed in [32] of C&V Engineering: the defendants submitted, at [33] of DWS Costs, that:

I accept that submission. As I said above, the plaintiff’s case was principally one about the construction of particular clauses in a contract. Reading the Deed, the plaintiff’s construction of the clause which was the centrepiece of the dispute, cl 6(a), is not the only available way of reading it. As at the time of the offer, the defendants’ construction of cl 6(a) could have been considered reasonably open to a court coming to construe the clause. I do not think that, reasonably assessed, the plaintiff’s prospects of success were so high that she might be described as certain to succeed.

The precise “level” of the plaintiff’s prospects of success is unnecessary to consider in the circumstances of this case. Even if I assume in the plaintiff’s favour that her prospects of success assessed as at the time of the offer could be characterised as “high”, I do not think the plaintiff’s prospects of success should meaningfully tend against a special costs order. This is because, as the defendants emphasised, the defendants’ offer involved almost complete capitulation, except on costs. As at the date of the offer, it could not be said the plaintiff would be so certain to win such that she would be justified in proceeding to trial to also get her costs back (on top of the relief she ultimately sought, being the transfer back to her of the first defendant’s interest in the Kingsgrove Property). Given that reality, I accept that once the extent of the compromise offered is considered, as well as the other relevant contextual factors as to the timing and form of the offer, an assessment of the reasonableness of the plaintiff’s non-acceptance could not be meaningfully altered by a conclusion as to the plaintiff’s prospects of success.

Even having what might be characterised as having a strong case surely cannot make it reasonable to put an opposing party to the expense of a trial when that other party is willing to give you the substance of what you want.

The defendants offered to virtually capitulate and avoid the expense of a trial by so doing. Almost all of the other factors usually considered on an application of this kind in assessing the reasonableness or not of the plaintiff’s non-acceptance of the offer point in favour of a special costs order.

Acknowledging the plaintiff has not made any submissions, there is nothing I can identify in the circumstances of this case which would permit the Court to even countenance the conclusion that the plaintiff’s non-acceptance of the defendants’ Calderbank offer was not unreasonable.

The defendants should have their special costs order.

For the reasons set out above, I make the following orders: