WAHHAB -v- BMD NOMINEES PTY LTD [2026] WADC 2 (S)

[2026] WADC 2 (S) Page 1 JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA IN CIVIL LOCATION : PERTH CITATION : WAHHAB -v- BMD NOMINEES PTY LTD [2026] WADC 2 (S) CORAM : ASTILL DCJ HEARD : 1 APRIL 2026 DELIVERED : 3 JULY 2026 FILE NO/S : CIV 3391 of 2020 BETWEEN : ELIANA MUNIR WAHHAB First Plaintiff JORDAN RIVER DEVELOPMENT PTY LTD Second Plaintiff AND BMD NOMINEES PTY LTD Defendant Catchwords: Costs - Indemnity costs - Calderbank offer - Whether plaintiffs are entitled to indemnity costs - Whether rejection of Calderbank offer is grounds for ordering indemnity costs - Whether rejection of Calderbank offer was unreasonable - Whether r 42A of District Court Rules 2005 (WA) ought to apply - Whether court should 'otherwise order' -- 1 of 17 -- [2026] WADC 2 (S) Page 2 Legislation: District Court of Western Australia Act 1969 (WA) District Court Rules 2005 (WA) Rules of the Supreme Court 1971 (WA) Result: Costs orders made Representation: Counsel: First Plaintiff : Mr J M Healy Second Plaintiff : Mr J M Healy Defendant : Mr P G Donovan & Ms C D Radenti Solicitors: First Plaintiff : Tang Law Second Plaintiff : Tang Law Defendant : Williams + Hughes Case(s) referred to in decision(s): Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586 Cooper Ellis (by his Next Friend Christopher Graham Ellis) v East Metropolitan Health Service [2018] WADC 36 (S) Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115 Gemini Energy and Minerals Pty Ltd v Luff [2017] WASC 190 (S) Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 Hughes v St Barbara Ltd [2011] WASCA 234 (S) Leichhardt Municipal Council v Green [2004] NSWCA 341 Lo Presti v Ford Motor Company of Australia Ltd [No 2] [2008] WASC 12 (S) Milne v Attorney-General for the State of Tasmania [1956] HCA 48; (1956) 95 CLR 460 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 13) [2007] VSC 516 -- 2 of 17 -- [2026] WADC 2 (S) Page 3 Sino Iron Pty Ltd v Mineralogy Pty Ltd [2014] WASC 406 Wahhab v BMD Nominees Pty Ltd [2026] WADC 2 -- 3 of 17 -- [2026] WADC 2 (S) ASTILL DCJ Page 4 ASTILL DCJ: Introduction 1 On 30 January 2026 I awarded judgment in the amount of $300,000, plus interest, against the defendant (Judgment). The Judgment gave effect to the reasons for decision in Wahhab v BMD Nominees Pty Ltd.1 The question of costs was reserved for later determination. 2 Following programming orders made on 12 March 2026 for the filing of affidavit material and written submissions in support of the plaintiffs' application for costs, the matter returned before me on 1 April 2026 for argument. 3 The plaintiffs submit the history of the matter justifies a departure from the usual costs order and that costs ought to be awarded either on an indemnity basis or, alternatively, as between a law practice and its client pursuant to r 42A(4) of the District Court Rules 2005 (WA) (DCR).2 4 The defendant does not oppose a costs order being made in favour of the plaintiffs on a party and party basis,3 but submits no departure from the usual rule that costs follow the event is warranted. 5 At the conclusion of the hearing, the proceedings were adjourned to enable the parties to file further material in response to an oral submission by the defendant concerning the validity of the plaintiffs' retainer with their solicitors. On 16 April 2026, the plaintiffs filed a further affidavit sworn on 15 April 2026 by their solicitor, Mr Martin Koshy, addressing that issue. Following receipt of that material, the defendant's solicitors advised on 22 April 2026 that the submission would no longer be pressed, and the parties were content for the issue to be determined on the material already before the court. 6 For the reasons that follow, I am not satisfied that an order for indemnity costs should be made. However, I am satisfied that costs should be awarded on a law practice and own client basis from 25 March 2024 onwards. 1 Wahhab v BMD Nominees Pty Ltd [2026] WADC 2 (original decision). 2 Plaintiffs' costs submissions dated 20 March 2026 (Plaintiffs' costs submissions), par 1. 3 Defendant's outline of submissions with respect to costs dated 30 March 2026 (Defendant's costs submissions), par 4. -- 4 of 17 -- [2026] WADC 2 (S) ASTILL DCJ Page 5 Materials relied upon 7 In support of their application, the plaintiffs rely on an affidavit sworn by Mr Koshy dated 30 January 2026 (plaintiffs' affidavit) which outlines the history of attempts made to resolve the claim prior to the trial commencing on 29 April 2024. In particular, the plaintiffs rely on three pre-trial offers to compromise: 1. A letter of offer dated 3 December 20214 said to be what is commonly referred to as a 'Calderbank offer', being an offer made pursuant to the principles outlined in Calderbank v Calderbank5 (First Offer). 2. A letter of offer dated 25 March 2024 also purporting to be a Calderbank offer (Second Offer). 3. A notice of offer to compromise also dated 25 March 2024 made pursuant to O 24A of the Rules of the Supreme Court 1971 (WA) (RSC) and r 42A of the DCR (Rule 42A Offer). 8 In response, the defendant has filed an affidavit of Ms Camilla D'Angelo Radenti sworn 13 March 2026 (defendant's affidavit) which it relies upon for the purposes of contextualising the correspondence contained within the plaintiffs' affidavit. General principles 9 The court's discretion regarding costs is unconfined, save that it is one that must be exercised judicially.6 Nevertheless, the 'default position' is that generally a wholly successful party should receive their costs unless good reason is shown to the contrary.7 10 The history and operation of O 24A of the RSC, along with what constitutes a Calderbank offer and how it may be taken into consideration by a court when exercising its costs discretion, was comprehensively outlined in Hughes v St Barbara Ltd.8 11 Ordinarily, where a Calderbank offer has been made, and it would not have been unreasonable for the other party to accept it, then the existence of the Calderbank offer will be a powerful factor in 4 Plaintiffs' affidavit, Attachment MJK-1. 5 Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586. 6 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [22] (Gaudron & Gummow JJ). 7 Milne v Attorney-General for the State of Tasmania [1956] HCA 48; (1956) 95 CLR 460, 477. 8 Hughes v St Barbara Ltd [2011] WASCA 234 (S) [5] - [14] (Hughes). -- 5 of 17 -- [2026] WADC 2 (S) ASTILL DCJ Page 6 the exercise of the court's discretion. If the rejection of the offer is unreasonable then an indemnity costs order may be made against the offeree, but it still remains a matter of discretion.9 12 However, as outlined by Gething DCJ (as his Honour then was) in Cooper Ellis (by his Next Friend Christopher Graham Ellis) v East Metropolitan Health Service,10 r 42A of the DCR alters the default position. 13 That rule provides: 42A. Offers of compromise (1) The RSC Order 24A applies, subject to subrule (2). (2) The RSC Order 24A rule 10(4) and (5A) do not apply to a case. (3) Subrule (4) applies if - (a) an offer is made by a plaintiff; and (b) the offer is not accepted by the defendant; and (c) the plaintiff obtains judgment on the claim to which the offer relates; and (d) the judgment is no less favourable to the plaintiff than the terms of the offer. (4) Unless the Court otherwise orders, the plaintiff is entitled to an order against the defendant for - (a) the plaintiff's costs in respect of the claim from the date on which the offer was made, taxed as between a law practice and its client; and (b) the plaintiff's costs incurred before that date, taxed on a party and party basis. 14 At the time Ellis was determined, his Honour was attempting to reconcile an apparent inconsistency in the interaction between r 42A of the DCR, as it then stood, and O 24A r 10(5A) of the RSC. Order 24A r 10(5A) provides that, where the court is satisfied that a defendant's failure to accept a plaintiff's offer was unreasonable, the plaintiff's costs are to be taxed on an indemnity basis. Following Ellis, r 42A(2) of the 9 Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115 [16] (Ford). 10 Cooper Ellis (by his Next Friend Christopher Graham Ellis) v East Metropolitan Health Service [2018] WADC 36 (S) (Ellis). -- 6 of 17 -- [2026] WADC 2 (S) ASTILL DCJ Page 7 DCR was amended to expressly exclude O 24A r 10(5A) of the RSC, such that his Honour's reasoning concerning that reconciliation need not be considered further. It is, however, noteworthy that the amendment appears to give effect to his Honour's preferred interpretation, which in any event operated to exclude the application of O 24A r 10(5A).11 15 However, his Honour's reasoning regarding the operation of r 42A of the DCR in altering the default position and the factors that may be relevant to why the court might 'otherwise order' appear to be readily applicable. 16 The operation of r 42A is 'to create a tangible inducement for a defendant to settle a case' by avoiding the risk of higher than normal costs should the plaintiff obtain a judgment on no less favourable terms than the plaintiff's offer.12 The way r 42A achieves this is by altering the default position and giving the plaintiff an entitlement to costs, taxed as between a law practice and its client, from the date of the offer unless, the court otherwise orders. 17 Given that r 42A operates to modify the default approach to the exercise of the court's discretion, the appropriate starting point is to determine whether r 42A applies and, if so, whether the defendant has demonstrated why the court should exercise its discretion to 'otherwise order'. Does r 42A of the District Court Rules 2005 (WA) apply? 18 The defendant advances two bases as to why the court ought not to make an order in accordance with the default position established by r 42A:13 (a) the Rule 42A Offer was not a genuine offer and so does not engage the operation of r 42A; and/or (b) the plaintiffs conducted the litigation in a wasteful and unreasonable way. 11 Ellis [21], [39]. 12 Ellis [46]. 13 Defendant's costs submissions, par 24. -- 7 of 17 -- [2026] WADC 2 (S) ASTILL DCJ Page 8 19 The terms of the Rule 42A Offer were as follows: 1. The plaintiffs were to receive $270,000 of the $300,000 deposit that had been paid. 2. The defendant would receive the remaining $30,000. 3. The defendant was to pay the plaintiffs' costs to the date of the offer. 20 The offer remained open for 28 days, thus expiring on 22 April 2024 being the week before the trial commenced. Was it a genuine offer? 21 The defendant submits that the offer represented only a 10% reduction of the plaintiffs' claim and that, once the plaintiffs' costs to that point were taken into account, the $30,000 concession would effectively be absorbed by the costs the defendant would be required to pay. On that basis, the defendant contends the offer did not even amount to a 'walk-away' position, as it would still be liable for the plaintiffs' costs, and was, in substance, not a genuine compromise but a demand for capitulation. 22 At [318] - [337] of my original decision, I identified difficulties in the defendant's case on loss, which was ultimately framed as a loss of a chance to profit. In making its own offers of compromise, the defendant was therefore giving up portions of a profit it had not in fact realised. Ultimately, it would still have received some benefit by way of unrealised profit, albeit less than the entirety of what it claimed it was entitled to recover. 23 By contrast, although the Rule 42A Offer was modest, it involved the relinquishment of money by the plaintiffs that had once been actually theirs and they were now prepared to forgo. Even though, in each case, the parties' offers involved surrendering asserted entitlements, that distinction highlights the practical significance of the plaintiffs' concession notwithstanding its apparent modesty. What the plaintiffs were offering to give up needs to be evaluated in that context. 24 Whether an offer is a genuine compromise or a demand for capitulation depends on the circumstances at the time. There is no rule that an 'optimistic' offer cannot be genuine, and a modest discount from -- 8 of 17 -- [2026] WADC 2 (S) ASTILL DCJ Page 9 full recovery may still constitute a valid compromise.14 Nor is genuineness determined by a purely mathematical comparison.15 Importantly, the question of whether an offer is genuine is distinct from whether it was reasonable to reject it. 25 Here, it is apparent that both parties were conscious of the significant costs of proceeding to trial and regarded those costs as a substantial factor favouring resolution. Whatever the strengths and weaknesses of their respective cases, each party understood that a trial would likely result in commercial detriment that would not be fully recoverable.16 26 Against that background, the plaintiffs' offer, while not reducing liability for costs already incurred, proposed to resolve the proceeding at a stage which would relieve the defendant of the substantial future costs of trial. That relief represented a real commercial benefit to the defendant which was likely to exceed the $30,000 the plaintiffs were offering. 27 The compromise lay in that concession. The plaintiffs were willing to give up $30,000 of their claim to bring the matter to an end. Although modest in proportion, it was nonetheless a real and tangible concession. As noted, a compromise need not be substantial to be genuine. 28 Whether the offer was commercially attractive to the defendant, having regard to its own costs, its view of the case, and its perceived entitlements, is a separate question. That issue goes to the reasonableness of the defendant's refusal, not to whether the offer itself was a genuine compromise. 29 Notwithstanding its modesty, I am satisfied that the Rule 42A Offer constituted a genuine offer of compromise. Once that is accepted, and r 42A of the DCR is engaged, r 42A(4) provides that, unless the court otherwise orders, the plaintiffs are entitled to recover their costs from the date of the offer on a law practice and own client basis. 14 Leichhardt Municipal Council v Green [2004] NSWCA 341 [37] - [40] (Santow JA). 15 Gemini Energy and Minerals Pty Ltd v Luff [2017] WASC 190 (S) [14]. 16 Plaintiffs' affidavit, Attachment MJK-1, page 9, pars 11 and 12; Attachment MJK-5, page 28, par 37; Defendant's affidavit, Annexure CDR-1, page 5, par 13. -- 9 of 17 -- [2026] WADC 2 (S) ASTILL DCJ Page 10 Should the court otherwise order? 30 The principles governing the expression 'unless the court otherwise orders' were comprehensively set out by Gething DCJ in Ellis at [44], and I respectfully adopt them. The matters his Honour set out at [44(a)] - [44(n)] would tend to support making the order contemplated by r 42A(4) of the DCR. While the list is not exhaustive, it does not suggest that a failure to conduct litigation efficiently and reasonably is, of itself, a basis for departing from the usual order. 31 However, as Edelman J observed in Sino Iron Pty Ltd v Mineralogy Pty Ltd,17 the efficient use of court resources, the timely resolution of proceedings, and the avoidance of delay are central objectives of case management more broadly, as embodied in O 1 r 4A and r 4B of the RSC. Encouraging the proper compromise of litigation, which is the purpose of r 42A of the DCR,18 is one way of advancing those objectives. Consistent with that purpose, those considerations will ordinarily favour making the order provided for by r 42A and weigh against ordering otherwise. 32 That said, there may be cases where a party's conduct justifies a departure from the default position. However, such matters are usually addressed through interlocutory case management, including appropriate costs orders made at the time the conduct occurs. 33 In this matter, that is what happened. Due to the plaintiffs' delay in entering the matter for trial, the proceedings were transferred to the Inactive Cases List on 18 July 2022 under r 44E of the DCR, requiring the plaintiffs to apply for its removal. The plaintiffs were ordered to pay the defendant's costs of both their unsuccessful application to extend the entry for trial milestone, which was on foot at the time, and the subsequent application to remove the matter from the Inactive Cases List on 11 October 2022. 34 Further, to the extent the plaintiffs' conduct contributed to delay, that was addressed in my original decision at [303] - [307], causing me to exclude the period from 16 December 2021 to 26 May 2023 from the calculation of interest. 35 In any event, r 42A(4) of the DCR makes clear that, unless the court otherwise orders, costs on the higher basis apply only from the date of the offer, with earlier costs assessed on the usual party and party basis. The plaintiffs do not seek otherwise. 17 Sino Iron Pty Ltd v Mineralogy Pty Ltd [2014] WASC 406 [30] - [32]. 18 Ellis [44(a)]. -- 10 of 17 -- [2026] WADC 2 (S) ASTILL DCJ Page 11 36 The Rule 42A Offer was made on 25 March 2024. There is nothing in the plaintiffs' conduct from that point onwards, or in the way they conducted the trial, that suggests any undue delay. Any earlier delay has already been addressed by other orders. Insofar as any delay by the plaintiffs that might otherwise have justified the court ordering differently, it has already been accounted for. 37 The defendant has not identified any basis to exercise the discretion to order otherwise. Accordingly, the default position applies, and the plaintiffs' costs, including any reserved costs, from 25 March 2024 are to be taxed on a law practice and own client basis. Should indemnity costs be ordered? 38 The plaintiffs submit that, despite the availability of an order under r 42A of the DCR, the court should instead exercise its discretion under s 64 of the District Court of Western Australia Act 1969 (WA) (DCA) to award indemnity costs from either 17 December 2021 or 22 April 2024, being the expiry dates of the First Offer and Second Offer respectively.19 39 Any apparent tension between r 42A of the DCR and the discretion under s 64 of the DCA can be resolved on the basis that, if the plaintiffs establish an entitlement to indemnity costs, that would necessarily justify departing from the default position under r 42A, causing the court to 'otherwise order'. Were the offers genuine offers? 40 Apart from the question of whether the offers were genuine offers, and a complaint about lack of clarity in one of the terms of the First Offer, it does not appear to be in dispute that both the First Offer and Second Offer were expressed in terms capable of constituting Calderbank offers. 41 The terms of the Second Offer were materially the same as the Rule 42A Offer outlined at [19] - [20] above, and for the same reasons, I am satisfied that it was also capable of constituting a genuine offer of compromise. 19 Plaintiffs' costs submissions, par 16, notwithstanding what is set out at par 1. -- 11 of 17 -- [2026] WADC 2 (S) ASTILL DCJ Page 12 42 The terms of the First Offer were materially as follows: (a) the defendant releases the entirety of the $300,000 deposit to the plaintiffs; and (b) the defendant pays a sum of $50,000 reflecting 'accrued interest and a reasonable contribution'20 towards the plaintiffs' legal costs. 43 The defendant submits that the requirement to pay a lump sum of $50,000 lacked clarity because it did not distinguish between amounts for interest and costs, making it difficult to assess the reasonableness of the offer. This submission has some force given that any award of interest is discretionary, both as to whether it is awarded and, if so, for what period. 44 The plaintiffs' submission that the amount could be calculated simply by applying a 6% rate over a defined period, with the balance treated as costs, understates the complexity of the position. This is illustrated by the fact that the plaintiffs themselves initially identified 10 June 2019 as the commencement date for interest, whereas for the reasons set out at [287] - [297] of my original decision, I found the appropriate date was in fact 17 June 2019. 45 That submission also overlooks that, from the defendant's perspective, there were arguable reasons why interest, if awarded, might not apply for the entire period, having regard to the plaintiffs' delay in the proceedings. As it transpired, I accepted that submission and excluded a period from the calculation of interest commencing on 16 December 2021. The First Offer expired on 17 December 2021. 46 But even if the plaintiffs' submission is accepted, that would amount to a figure of $44,383.56 allowing a notional costs contribution of $5,616.44. Given the proceedings had been on foot for some time when the offer was made, that allowance appears unduly modest and could give rise to justifiable uncertainty by the defendant as to the extent of what proportion of the $50,000 was genuinely attributable to interest as opposed to costs. 47 In those circumstances, given the absence of clarity in its terms it is understandable why the defendant would be cautious about adopting its own interpretation of what the offer may have meant and to what extent it amounted to a true compromise by the plaintiffs. 20 Plaintiffs' affidavit, Attachment MJK-1, page 9, par 13(a). -- 12 of 17 -- [2026] WADC 2 (S) ASTILL DCJ Page 13 48 That lack of clarity, however, does not deprive the First Offer of its character as a genuine offer to compromise. Rather, the ambiguity identified by the defendant is more appropriately directed to the question of whether it was reasonable for the defendant to reject the First Offer, rather than to the anterior question of its genuineness. Was the defendant's conduct unreasonable? 49 The plaintiffs contend that indemnity costs should be awarded on the basis that the First Offer and Second Offer were Calderbank offers and amounted to reasonable offers. They submit that they should receive the 'full protection' of those offers by way of an 'entitlement to indemnity costs'.21 50 The basis for that asserted entitlement is not clearly articulated, but appears to rest on the policy of encouraging the efficient and cost‑effective resolution of disputes.22 If so, then that policy objective must be properly understood in the context of Gething DCJ's analysis in Ellis.23 51 As that analysis makes clear, r 42A of the DCR promotes resolution by creating a tangible incentive to compromise through its default costs consequences. By contrast, an award of indemnity costs does not operate as an incentive, but rather as a mechanism by which the court expresses its disapproval of conduct that is properly characterised as unreasonable or improper. 52 Although both mechanisms support the same policy objective, they do so in fundamentally different ways. Unlike r 42A of the DCR, which rewards the making of a reasonable offer, an award of indemnity costs does not follow simply because a reasonable offer has been made. The focus instead is on the conduct of the offeree and whether its refusal of the offer was unreasonable in the circumstances. 53 Accordingly, the plaintiffs' submission that the making of 'reasonable offers' entitles them to the 'full protection' of those offers by way of indemnity costs overstates the position. 54 The authorities make clear that even where a reasonable offer is made on terms more favourable than the result ultimately achieved, that fact alone does not create an entitlement for an award of indemnity 21 Plaintiffs' costs submissions, par 16. 22 Plaintiffs' costs submissions, par 8. 23 Ellis [45] - [46]. -- 13 of 17 -- [2026] WADC 2 (S) ASTILL DCJ Page 14 costs.24 Nor does that fact render the rejection of such an offer unreasonable.25 The critical question is not whether the offer was reasonable, but whether the rejection was unreasonable.26 55 Whether a rejection was reasonable is ultimately a matter of judgment, informed by the non‑exhaustive factors identified in Hazeldene and endorsed in Ford27 which I adopt without repeating. 56 Often the decision to accept or reject an offer is made based on a party's assessment of its prospects and the likely outcome at the time. By the time costs are considered, that assessment may have proved wrong,28 but that hindsight cannot be used to judge whether the rejection was unreasonable.29 57 In substance, the plaintiffs' argument is that their offers were reasonable and should have been accepted, and that the defendant's failure to do so therefore makes its rejection unreasonable.30 Put even plainer, the plaintiffs' position as stated is:31 'Well, was it reasonable for the defendant to not accept the offer?' We say, 'Well, they took their legal advice. The legal advice was found to not be correct' … 'and they wore the risk of it, and because of that, we should get our indemnity costs from that period, all the way through.' 58 When reduced to that bare form, the plaintiffs' submission amounts to little more than a criticism that the defendant made an 'erroneous or even imprudent' prediction of the kind referred by Byrne J in Premier Building, or a prediction shown to be wrong only with the benefit of hindsight, as cautioned against by Beech J in Lo Presti. 59 At the time of each offer, the plaintiffs asserted that the finance application failed because they could not service the loan due to insufficient income.32 A central aspect of the defendant's case, 24 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 [23] (Hazeldene) cited with approval in Ford [16] (Buss JA). 25 Ford [31] (Buss JA). 26 Ford [23] (Buss JA). 27 Ford [19] (Buss JA). 28 Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 13) [2007] VSC 516 (Premier Building). 29 Lo Presti v Ford Motor Company of Australia Ltd [No 2] [2008] WASC 12 (S) [20] (Beech J) (Lo Presti). 30 ts 988. 31 ts 999. 32 Plaintiffs' affidavit, Attachment MJK-1, page 8, par 3; Attachment MJK-2, page 16, par 14. -- 14 of 17 -- [2026] WADC 2 (S) ASTILL DCJ Page 15 however, was that the plaintiffs had not accurately disclosed their financial position and that this affected both the lender's decision and their compliance with the obligation to use best endeavours. 60 As set out at [183] - [201], [220] - [223] and [242] - [252] of my original decision, a substantial aspect of the reasoning turned on how delay, that obligation, and the refusal of finance interacted. That issue remained uncertain because, despite the plaintiffs' assertions, no evidence was led as to why the application was refused or how the plaintiffs' conduct may have affected it. 61 In those circumstances, and without speculating as to how the matter might have resolved had such evidence been available, it is understandable why the defendant would treat the plaintiffs' assertions as unproven and regard these issues as exposing material uncertainties in the plaintiffs' case. Viewed in that light, the defendant's decision not to accept the offers cannot be characterised as commercially irrational. 62 In considering the genuineness of the plaintiffs' Rule 42A Offer, I noted at [23] above that part of its significance to the plaintiffs lay in their willingness to give up money that they still considered to be theirs. That observation should not be seen to undermine the legitimacy of the defendant's expectation. 63 The defendant maintained a claim for loss of chance which, if established, would have produced a substantial financial benefit. Although that entitlement had not crystallised, acceptance of the offers would still have been seen by the defendant as giving up money it believed it was entitled to recover. In the absence of a compelling reason to do so, it was not unreasonable for the defendant to decline to accept less than what it perceived it was entitled to. 64 The First Offer, in effect, required the defendant to abandon its claim entirely while making a payment to the plaintiffs of $50,000, a proportion of which included an unspecified contribution towards their costs in the way I have discussed. This was at a time when the defendant had already incurred its own costs, no doubt inflated by the plaintiffs' delay in entering the matter for trial. The offer was supported only by the plaintiffs' submission as to the strength of their case and the weaknesses of the defendant's. No independent or objective justification was advanced for why the defendant should accept their assessment. Further, the terms of the offer made no meaningful allowance for the possibility that the defendant's case might succeed. -- 15 of 17 -- [2026] WADC 2 (S) ASTILL DCJ Page 16 65 The Second Offer, although superficially more favourable, did not materially change that position. It required the defendant to pay the plaintiffs' costs at a time close to trial, where that cost liability would likely have exceeded the $30,000 the plaintiffs were proposing to forego. The only real commercial benefit to the defendant was limited to avoiding trial costs and the risk of an adverse costs order. Those risks were ones that depended on the plaintiffs succeeding. Nothing further had been provided that would suggest the defendant's assessment of its own prospects had become untenable or were unreasonable. 66 The defendant's case rested on arguable constructions of the contract and evaluative findings of fact, the outcome of which could not be predicted with precision. Its arguments, while ultimately unsuccessful, were not without merit. Nor was the plaintiffs' case so strong, or the offers so favourable, that continued opposition was plainly unreasonable. 67 In that context, the defendant's decision to proceed on its legal advice and accept the risks of litigation was commercially rational. The fact that those risks later materialised unfavourably does not make the decision unreasonable. 68 Accordingly, I am satisfied that the defendant's refusal of both offers represented a rational and defensible forensic judgment made in circumstances of genuine uncertainty and arguable merit. It cannot be characterised as unreasonable. What costs orders are the plaintiffs entitled to? 69 For the reasons I have set out above, the plaintiffs are entitled to costs orders in the following terms: 1. The defendant pay the plaintiffs' costs of the action, including reserved costs: (a) up to 24 March 2024 on a party and party basis, to be taxed if not agreed; and (b) from 25 March 2024 as between a law practice and its client, to be taxed if not agreed. -- 16 of 17 -- [2026] WADC 2 (S) ASTILL DCJ Page 17 I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia. EO Associate to Judge Astill 2 JULY 2026 -- 17 of 17 --