SAN REMO MACARONI COMPANY PTY LTD v PASTIFICIO GUIDO FERRARA SPA [2025] SASC 196

Applicant: SAN REMO MACARONI COMPANY PTY LTD Counsel: MR A HARRIS KC - Solicitor: DW FOX TUCKER LAWYERS Respondent: PASTIFICIO GUIDO FERRARA SPA Counsel: MR T BESANKO SC - Solicitor: JOHNSON WINTER SLATTERY Hearing Date/s: 30/09/2025 File No/s: CIV-23-002179 B SUPREME COURT OF SOUTH AUSTRALIA (Civil: Application) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. SAN REMO MACARONI COMPANY PTY LTD v PASTIFICIO GUIDO FERRARA SPA (No 2) [2025] SASC 196 Judgment of the Honourable Justice McDonald 26 November 2025 PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - INTERLOCUTORY PROCEEDINGS PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - INDEMNITY COSTS PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - INTERLOCUTORY PROCEEDINGS - PAYABLE FORTHWITH PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS - INFORMAL OFFERS AND CALDERBANK LETTERS This is an application for costs arising from the interlocutory application that was filed by the respondent. The following orders are sought by the applicant: 1. the applicant’s costs up to and including 14 September 2023 be paid on a party and party basis to be agreed if not taxed and payable forthwith; 2. the applicant’s costs after 14 September 2023 be paid on an indemnity basis and payable forthwith; and 3. an order certifying the proceedings are fit for Senior Counsel. The applicant contends that the respondent’s position on both the interlocutory application and the issue of service was so unreasonable that the Court should deviate from the normal course of party and party costs and make a special costs order for indemnity costs. -- 1 of 19 -- The respondent opposes the orders sought by the applicant. Whilst the respondent accepts than an order will be made requiring that they pay the applicant’s costs on the interlocutory application, they contend that the order should be made on a party and party basis and not an indemnity basis. Held: 1. That the applicant’s costs incurred in association with the argument as to whether there had been effective service of the claim on the respondent and the interlocutory application (FDN 8) up until 5:00 pm on 30 April 2024 be paid on a party and party basis. 2. That the applicant’s costs incurred in association with the argument as to whether there had been effective service of the claim on the respondent and the interlocutory application (FDN 8) after 5:00 pm on 30 April 2024 be paid on an indemnity basis. 3. The costs are to follow the event. 4. The costs of the appeal are to be fit for Senior Counsel. Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters art 6, 10(a); Sale of Goods (Vienna Convention) Act 1986 (SA); Supreme Court Act 1935 (SA) s 40; Uniform Civil Rules 2020 (SA) rr 1.5, 3.1, 194.1, 194.5, 194.6, sch 1 r 4, sch 1 r 12, sch 1 r 13; United Nations Convention on Contracts for the International Sale of Goods, referred to. Bradman v Robinson (No 2) [2009] SASC 180; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397; H Stanke and Sons Pty Ltd v Von Stanke (No 2) [2007] SASC 109; Hamod v New South Wales (2002) 188 ALR 659; Holt v Bunney (No 2) [2020] SASCFC 120; Leichhardt Municipal Council v Green [2004] NSWCA 341; Morad v El-Ashey (No 2) [2017] FCA 1612; Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197; Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491; Stewart v Paladin Aus Pty Ltd [2020] SASC 244; Total & Universal Pty Ltd v Kingsway Property Investments (No 2) Pty Ltd [2007] NSWSC 581, applied. Calderbank v Calderbank [1975] 3 All ER 333; Phantom Precision Engineering Pty Ltd v Luscombe (No 2) [2021] SASC 103, considered. -- 2 of 19 -- SAN REMO MACARONI COMPANY PTY LTD v PASTIFICIO GUIDO FERRARA SPA (No 2) [2025] SASC 196 Civil: Application MCDONALD J. 1 This is an application for costs arising out of an interlocutory application filed by the respondent. The following orders are sought:1 1. The Applicant’s costs up to and including 14 September 2023 be paid on a party and party basis to be agreed if not taxed and payable forthwith; 2. The Applicant’s costs after 14 September 2023 be paid on an indemnity basis and payable forthwith; and 3. an order certifying the proceedings fit for Senior Counsel. 2 The respondent opposes the orders sought by the applicant. Whilst the respondent accepts that an order will be made requiring that they pay the applicant’s costs on the interlocutory application, they contend that the order should be made on a party and party basis and not an indemnity basis. Further, that care should be taken to limit the costs to those incurred as a consequence of the interlocutory application, and not include the costs associated with the bringing of the claim or the argument about whether there had been effective service of the claim on the respondent. Background 3 Before coming to the issues that arise for consideration on the application, it is necessary to set out some of the background to this matter. 4 On 23 February 2023, San Remo Macaroni Company Pty Ltd (‘the applicant’) filed a claim against Pastificio Guido Ferrara S.P.A. (‘the respondent’). The applicant alleges negligence and/or a breach of contract resulting in a claim for $2,726,406.48. There are two claims for breach of contract and one in the tort of negligence. The second claim for breach of contract is advanced pursuant to the United Nations Convention on Contracts for the International Sale of Goods. That convention applies to South Australia by the Sale of Goods (Vienna Convention) Act 1986 (SA). 5 On 26 May 2023, the respondent filed an interlocutory application2 seeking orders to set aside the service of the claim brought by the applicant, pursuant to r 4(2)(a) of sch 1 of the Uniform Civil Rules 2020 (SA) (‘UCR’). In the alternative, the respondent sought an order dismissing the proceedings pursuant to r 4(2)(a) 1 FDN 55 at [2]. 2 FDN 8. -- 3 of 19 -- [2025] SASC 196 McDonald J 2 and/or (b) of sch 1 of the UCR, or in the further alternative, an order permanently staying the proceedings pursuant to r 4(2)(a) and/or (b) of sch 1 of the UCR. 6 At the time of hearing the submissions on the interlocutory application, there was an extant antecedent issue in relation to whether there had been effective service of the proceedings on the respondent. Although the issue was not raised in the interlocutory application, in their written submissions, the respondent asserted that there had not been effective service of the claim. It was submitted that:3 Before the Court comes to consider the Application, the Applicant must satisfy the Court that the Claim has been effectively served under the Rules; questions of setting aside the service of the Claim or the dismissal or stay of the proceeding only fall for consideration if the Claim has in fact been validly served. The Respondent respectfully submits that the Claim has not been effectively served on it under the Rules, having regard to what the Rules require for effective service of an “originating process”. (Footnotes omitted) 7 The respondent then set out a detailed argument in support of their contention that there had not been effective service. The submission concluded:4 If the Court accepts these submissions, it need not proceed to determine the Application. Rather, it should make a declaration that there has not been effective service of the Claim on the Respondent. In the event that the Court does not accept these submissions, the Respondent respectfully submits that it should set aside service of the Claim on it, or dismiss or permanently stay the proceeding. … 8 It followed that, by the time of the hearing, there were four questions that arose for consideration. These were: 1. Had the service of the claim been validly effected on the respondent? 2. Did the applicant require leave to serve the claim outside of Australia? 3. Was the Court “clearly an inappropriate forum” to hear the applicant’s claim? 4. Did the claim have insufficient prospects of success to warrant putting the respondent to the time, expenses and trouble of defending the claim? 9 I answered each of these questions in favour of the applicant. On the issue of whether there had been effective service, by the time of handing down my decision, there was no longer any real contest as it was accepted by the respondent that the Italian Central Authority had confirmed that it had served the claim and associated documents on the respondent, and had issued a certificate of service in accordance with article 6 of the Hague Convention on the Service Abroad of 3 FDN 26, Written Submissions of Respondent at [10]. 4 FDN 26, Written Submissions of Respondent at [25]. -- 4 of 19 -- [2025] SASC 196 McDonald J 3 Judicial and Extrajudicial Documents in Civil or Commercial Matters (“Hague Convention”). 10 It was conceded by the respondent that this amounted to effective service. 11 In my reasons for judgment on the interlocutory application, I noted that in the event that this development had not taken place, and there had not been service in accordance with the Hague Convention, I would have found this to be an appropriate case in which to utilise r 12 of sch 1, div 3, sub-div 1 of the UCR for deemed service, on the basis that it appeared at that time to not be practicable to serve the documents by this means. 12 On the application for a stay of the proceedings, I found that the respondent had not established that this Court was clearly not an appropriate forum in which to bring these proceedings and that it could not be said that the claim had insufficient prospects of success to warrant putting the respondent to the time, expense and trouble of defending the claim.5 Relevant correspondence 13 Prior to the hearing of the interlocutory application, a not insubstantial body of correspondence passed between the parties. Of particular significance on the applicant’s argument is a letter that was sent by the applicant’s solicitor to the respondent’s solicitor on 14 September 2023. In this letter, the applicant set out in some detail the case against the respondent, challenging the various arguments that the respondent was making on the interlocutory application. The letter concluded with the following:6 The offer 7.1 In light of the above, it is evident that the Application is fraught with deficiencies and will not succeed on any order sought. 7.2 Notwithstanding the above, we are instructed to make the following offer on a solely commercial basis: 7.2.1 The Respondent immediately withdraw the Application. 7.2.2 The Respondent accept service of the claim and statement of claim. 7.2.3 The Respondent file and serve a defence by 6 November 2023. 7.2.4 The Respondent pay the Applicant’s costs of the Application to be agreed if not taxed. (Referred to as the Offer) 5 San Remo Macaroni Company Pty Ltd v Pastificio Guido Ferrara SPA [2025] SASC 75 at [78]. 6 FDN 52, Affidavit of Helene Michele Chryssidis made on 18 July 2025 at HMC-004. -- 5 of 19 -- [2025] SASC 196 McDonald J 4 7.3 The above Offer is open for acceptance until 4.00 p.m. on Thursday, 28 September 2023. Next steps 8.1 For the reasons set out in this letter, the Offer is a genuine compromise by the Applicant. The Respondent ought to genuinely consider the Offer in light of the merits of its Application. 8.2 This letter is sent in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333. 8.3 If the Offer is not accepted, and the Respondent achieves an outcome no more favourable than the Offer, then the Applicant will rely upon this letter on any application for indemnity costs. 8.4 Please confirm in writing within the timeframe set out above whether the Offer is accepted. 14 Although the letter self identifies as a ‘Calderbank’ letter, it is the subject of contention as to whether that was, in fact, the case. I will return to this topic when I come to deal with the issue of whether costs should be awarded on an indemnity basis. Legal principles - costs The unfettered discretion of the Court to award costs 15 Section 40(1) of the Supreme Court Act 1935 (SA) provides that costs are in the discretion of the Court: 40—Power of Court with regard to costs (1) Subject to the express provisions of this Act, and to the rules of court, and to the express provisions of any other Act whenever passed, the costs of and incidental to all proceedings in the court, including the administration of estates and trusts, shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and to what extent such costs are to be paid. 16 The Court may order costs at any stage in the proceedings7 on a standard costs basis, on a solicitor/client basis, indemnity basis or another basis specified by the Court. 17 Subject to the presumption of costs rules and the Court’s overriding discretion, costs follow the event.8 Ordinarily, the Court exercises its discretion as to costs at the hearing of an application on its merits to the successful party. 18 That discretion must of course be “exercised judicially by not relying on irrelevant considerations and by having regard to all relevant considerations, 7 Uniform Civil Rules 2020 (SA), r 194.1. 8 Uniform Civil Rules 2020 (SA), r 194.5(2). -- 6 of 19 -- [2025] SASC 196 McDonald J 5 including those discretionary considerations identified in subrule 194.6(2)”.9 These are: (a) any misconduct or unreasonable conduct of a party in connection with a proceeding; (b) any breach by a party of overarching obligations, these Rules or an order of the Court; (c) any breach by a party of the pre-action obligations imposed by Chapter 7 Part 1; (d) the making or not making of an offer by a party to resolve the proceeding; (e) the non-acceptance by a party of an offer made by another party to resolve the proceeding; (f) the value and importance of the relief sought or any relief obtained; (g) any public interest in the subject matter of the proceeding or public benefit from the prosecution or defence of the proceeding; or (h) whether costs awarded are to be met by a person or out of a fund. Indemnity costs 19 In general, the Court awards costs on a party/party basis. Whilst the Court has a discretion to award indemnity costs,10 there must be some unusual feature about the case that would warrant the exercise of the discretion.11 20 Whilst the categories in which indemnity costs may be awarded are not closed, the Court may only make an award of indemnity costs where the justice of the case warrants such an order.12 21 Indemnity costs are not punitive, rather they serve the purpose of compensating a party when the Court believes it is unreasonable for the party (against whom the order was made) to have subjected the innocent party to costs.13 22 In Morad v El-Ashey (No 2),14 Kenny J summarised the principles as follows: [8] In the ordinary course costs will follow the event and, if a party to an application succeeds, then the Court will order the respondent to pay the costs of that application, assessed on a party and party basis, unless there are special circumstances justifying some other order: Ruddock v Vadarlis (No 2) at [11]-[16] (Black CJ and French J). … 9 Holt v Bunney (No 2) [2020] SASCFC 120 at [9] (footnotes omitted). 10 Uniform Civil Rules 2020 (SA), r 194.3(1)(a). 11 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd Ltd (1988) 81 ALR 397 at 400–1. 12 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 232. 13 Hamod v New South Wales (2002) 188 ALR 659 at [20] (Gray J, Carr J agreeing at [26], Goldberg J agreeing at [27]). 14 [2017] FCA 1612. -- 7 of 19 -- [2025] SASC 196 McDonald J 6 [9] The principles relevant to an award of indemnity costs are well-established. In broad terms costs will be payable on a party and party basis, unless the circumstances of the case justify a departure from the normal course: see Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 (Colgate-Palmolive) at 233 (Sheppard J). The question is always whether the facts and circumstances of a particular case justify the making of an order for the payment of costs other than on a party and party basis. [10] Plainly enough, the categories in which indemnity costs may be ordered are not closed. Reference to some of the circumstances in which costs on an indemnity basis have been ordered is illustrative, however, of the occasions that have been thought capable of attracting such an award of costs. It has been held, for example, that indemnity costs may be awarded where “the applicant, properly advised, should have known that he had no chance of success” (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 (Fountain Selected Meats) at 401; where an application is wholly untenable and misconceived (Henke v Carter [2002] FCA 492 at [22] (Goldberg J)); and where there is “evidence of particular misconduct on the part of a party that causes loss of time to the Court and to other parties” (Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 225 at [22] (French J)). 23 The circumstances in which indemnity costs will be awarded are varied, and invariably depend on the particular circumstances of each case. 24 In Colgate-Palmolive Co v Cussons Pty Ltd,15 Sheppard J undertook a detailed analysis of the leading authorities that gave consideration to the question of the circumstances in which indemnity costs should be awarded. From those authorities, his Honour distilled a number of principles and guidelines. These included the following:16 4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes said the Court had a general and discretionary power to award costs as between solicitor and client “as and when the justice of the case might so require”. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston; namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said in Tetijo, “The categories in which the discretion may be exercised are not closed”. Davies J expressed similar views in Ragata. 5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant 15 (1993) 46 FCR 225 at [23]. 16 (1993) 46 FCR 225 at 233. -- 8 of 19 -- [2025] SASC 196 McDonald J 7 allegations of fraud …; evidence of particular misconduct that causes loss of time to the Court and to other parties …; the fact that the proceedings were commenced or continued for some ulterior motive …or in wilful disregard of known facts or clearly established law …; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions …; an imprudent refusal of an offer to compromise … and an award of costs on an indemnity basis against a contemnor …. Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis. 6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice. (Footnotes omitted) Issues to be determined 25 Although a number of matters have been raised and arguments ventilated on this application for costs, it would seem that the issues can be distilled into four questions. These are: 1. Should costs be limited to the interlocutory application (FDN 8), that is, to not include costs associated with the argument around the question of service and the costs associated with the bringing of the claim? 2. Should costs be awarded on an indemnity basis? 3. If so, from what point in time should indemnified costs be awarded?; and 3. Should there be an order that the payment be made forthwith? Should costs be limited to the interlocutory application (FDN 8)? 26 The effect of the orders sought by the applicant is that all of their costs be paid, with the costs incurred prior to 14 September 2023 being paid on a party and party basis, and after that date, on an indemnity basis. The first issue to be determined relates to the breadth of the order sought. 27 The respondent contends that the applicant has overreached in claiming for costs for the entirety of the proceedings to date. Contentiously, that includes costs incurred in the filing of the claim and the commencement of the action prior to the filing of the interlocutory application, as well as costs incurred as a result of the issues surrounding the service of the proceedings. -- 9 of 19 -- [2025] SASC 196 McDonald J 8 28 The former, the issue of the costs incurred prior to the filing of the interlocutory application, can quickly be disposed of. No argument has been advanced before me as to why, at this stage in the proceedings, an order should be made in relation to those costs. 29 The second issue is more nuanced. 30 As I have said, one of the two broad issues that was the subject of submissions and argument, in the lead up to and at the hearing on 1 May 2024, was whether the respondent had been effectively served. There were a number of limbs to this argument, including whether service had been effected through the Italian Central Authority pursuant to the Hague Service Convention, whether the applicant had effected service by international post pursuant to Article 10(a) of the Hague Service Convention, and whether in the circumstances, it was an appropriate case for deemed or substituted service.17 31 By the time of delivering judgment, service had been effected through the Italian Central Authority. In my judgment, I indicated that had that not occurred, I would have made an order for deemed service, particularly given the efforts that the applicant had made to utilise the appropriate mechanism under the Hague Service Convention. In those circumstances, I determined that it was unnecessary for me to determine whether it was open for the applicant to effect service by registered post. 32 For that reason, the respondent submits that, given the manner in which this issue evolved, the question of whether there had been effective service fell away and the Court only had to determine the second broad issue before it at the hearing, namely, the interlocutory application. It was submitted that “[i]t is well- established that where a court has not determined a claim on its merits orders for costs should be made only in very exceptional circumstances”.18 33 Whilst the respondent accepted that there was a determination on the issue of deemed service in favour of the applicant, it was contended that the possibility of deemed service was only raised by the applicant in their written submissions filed on 7 December 2023. Further, that this aspect of the argument only consumed a limited amount of the Court’s time. 34 There is a degree of artificiality in the approach advocated for by the respondent. The interlocutory application was predicated on there having been effective service of the claim documents. The respondent challenged that there had been service of the claim documents. The determination of that issue was necessarily anterior to the determination of the interlocutory application; if there had not been effective service of the claim documents, the Court’s jurisdiction was 17 Uniform Civil Rules 2020 (SA) rr 12 and 13 and of sch 1, div 3, sub-div 1. 18 FDN 56, Written Submissions of Respondent at [4]. -- 10 of 19 -- [2025] SASC 196 McDonald J 9 not invoked and there was no occasion for the determination of the interlocutory application. 35 It was through no effort on the part of the respondent that the Court was not required to determine one of the limbs of the argument made about the service of the claim. The arguments over this issue took up a considerable amount of the Court’s time. It was a matter of happenstance that service was eventually effected by the Italian Central Authority in the window between the hearing and the delivery of judgment. The issues relating to service had been vigorously agitated by the respondent to a level that, for reasons I will come to, became unreasonable. 36 In my view, the arguments about the service of the claim became inextricably interconnected with the interlocutory application, such that it would now be unreasonable to attempt to disentangle the two arguments for the purpose of costs. That is particularly so when those findings that were made about service were made in favour of the applicant. 37 It follows that the respondent should pay the applicant’s costs for both the interlocutory application and the arguments on the issue of service of the claim. Should costs be awarded on an indemnity basis? 38 The applicant contends that the respondent’s position on both the interlocutory application and the issue of service was so unreasonable that the Court should deviate from the normal course of party and party costs and make a special costs order for indemnity costs. 39 The applicant relies on the combined effect of two aspects of the respondent’s conduct in support of this application, namely, written correspondence putting the respondent on notice of the lack of merit in the arguments that they were advancing; and the obstructive approach adopted by the respondent. Written correspondence putting the respondent on notice of the lack of merit in the arguments that they were advancing 40 Between 22 May and 12 September 2023, the applicant wrote to the respondent and provided reasons why the interlocutory application was doomed to fail,19 would be unsuccessful,20 was fraught with deficiencies,21 and/or that they would not succeed on any order sought.22 41 In particular, on 14 September 2023, the applicant wrote to the respondent addressing the key issues between the parties in considerable detail. In that correspondence, the applicant set out the background of the matter and then specifically addressed the issue of the service of proceedings, the application for a stay, the validity of service without leave of the Court, the validity of service under 19 FDN 52, Affidavit of Helene Michele Chryssidis made on 18 July 2025 at HMC-002. 20 FDN 52, Affidavit of Helene Michele Chryssidis made on 18 July 2025 at HMC-003. 21 FDN 52, Affidavit of Helene Michele Chryssidis made on 18 July 2025 at HMC-004. 22 FDN 52, Affidavit of Helene Michele Chryssidis made on 18 July 2025 at HMC-004. -- 11 of 19 -- [2025] SASC 196 McDonald J 10 the Hague Service Convention and the lack of merit in the “inappropriate forum” argument. The applicant invited the respondent to withdraw the interlocutory application, to accept service of the claim and statement of claim, to file and serve a defence by 6 November 2023, and to pay the applicant’s costs. 42 The respondent did not reply to the letter. 43 It was the applicant’s submission that from this point in time, the respondent was on notice that the arguments that they relied upon were foredoomed to fail and that, properly advised, they should have known that they had no chance of success.23 The obstructive approach adopted 44 The object of the UCR is “to facilitate the just, efficient, timely, cost-effective and proportionate resolution or determination of the issues in proceedings governed by [the] Rules”.24 The overarching obligations of parties and lawyers include: 3.1—Overarching obligations (1) A party or a person appearing or required to appear before the Court must in relation to a proceeding or an appellate proceeding— … (e) not take a step unless they reasonably believe that it is necessary to facilitate the resolution or determination of the proceeding; (f) cooperate with the other parties and with the Court in relation to the conduct of the proceeding; (g) use reasonable endeavours to resolve, or alternatively narrow the scope of, a dispute in or the subject of the proceeding by agreement; (h) use reasonable endeavours to ensure that the time and costs incurred are reasonable and proportionate to— (i) the importance and value of the subject matter of the proceeding or step in the proceeding; and (ii) the complexity of the issues in the proceeding or step in the proceeding; … 45 The applicant submitted that despite the correspondence, and in particular the letter of 14 September 2023, the respondent maintained a position that was both unreasonable and untenable, and the applicant would not have incurred costs in 23 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397. 24 Uniform Civil Rules 2020 (SA) r 1.5. -- 12 of 19 -- [2025] SASC 196 McDonald J 11 connection with the interlocutory application but for the respondent’s obstinance.25 It was said that the respondent’s submissions were “pedantic and overly technical” with “[e]very conceivable hurdle to these proceedings”26 being proffered. Further, that whilst a litigant cannot be criticised for requiring their opponent to “jump through the necessary legal hoops to make good its claim … there comes a point in litigation where resistance becomes obduracy”.27 46 In their written submissions filed on 7 December 2023, the applicant set out the various routes to a finding that there had been effective service. This included the efforts that had been made to serve the claim via the Italian Central Authority, service by international post in accordance with Article 10(a) of the Hague Service Convention and the options of orders for substituted service,28 or deemed service.29 This was in the context of the respondent being well aware that the claim had been brought, and there was no element of surprise. 47 It was the applicant’s submission that despite this, and the inevitability that one way or another, service would be effected, the respondent adopted an obstructive approach to service by refusing to confirm that its solicitors in Italy had instructions to accept service, or concede that the claim documents had been appropriately served by International Post Express in April 2023. 48 In relation to the respondent’s interlocutory application to permanently stay or dismiss the proceedings on the basis of forum non conveniens or insufficient prospects of success, it was the applicant’s submission that there was no persuasive, or genuinely arguable reason for the orders sought. 49 It was the respondent’s submission that, in all of the circumstances, their conduct in pursuing the various arguments was not unreasonable, and that whilst they have been unsuccessful, that of itself does not necessarily mean that they were obstructive, nor should it result in an order for indemnity costs. 50 On the issue of whether service had been effected, the respondent took issue with the suggestion that they had taken an overly technical or pedantic approach. Central to that argument was the importance of effective service. It was submitted that:30 Effective service of proceedings is a critical step in the Court’s process. That is particularly the case where, as here, the Applicant was purporting to serve proceedings overseas pursuant to an international convention to which Australia is a party, on a foreign corporation with no presence in Australia. The Court’s jurisdiction is not properly invoked until the requirements of the Rules for effective service have been satisfied. 25 FDN 55, Written Submissions of the Applicant at [34]. 26 FDN 29, Written Submissions of the Applicant at [4]. 27 T9. 28 Uniform Civil Rules 2020 (SA) r 13 of sch 1, div 3, sub-div 1. 29 Uniform Civil Rules 2020 (SA) r 12 of sch 1, div 3, sub-div 1. 30 FDN 56, Written Submissions of Respondent at [9]. -- 13 of 19 -- [2025] SASC 196 McDonald J 12 (Footnote omitted) 51 It was the respondent’s submission that the UCRs require service to occur in particular ways, therefore “[i]t can hardly have been a breach of the Rules (or otherwise unreasonable or untenable) for the Respondent to maintain that service should occur in accordance with the Rules…”.31 Further, that it was at least arguable that there had not been effective service until such time that the Italian Central Authority served the claim documents on the respondent in accordance with the Hague Service Convention and, at the very least, it cannot be said that the respondent’s position on service was so unreasonable as to justify an indemnity costs order. 52 In relation to the interlocutory application for a stay or dismissal of the claim, the respondent submitted that the Court has not made any findings that would support the requisite degree of unreasonableness or a finding of a breach of the UCRs, to justify an indemnity costs order. In addition, it was contended that the applicant has not identified precisely what conduct has taken place in relation to the interlocutory application that is said to have been so unreasonable as to justify such an order. 53 In summary, it was the respondent’s submission that the applicant relies on no more than the success of their arguments on both the issue of service and the interlocutory application as the basis for seeking indemnity costs. 54 In my view, the conduct of the respondent in maintaining their position on the issue of service was unreasonable and subjected the applicant to unnecessary expenditure. I accept the submission made by Mr Harris KC that it ought to have been obvious from the history of events that every attempt had been made that could sensibly have been expected to cause the Italian Central Authority to effect service under the Hague Service Convention. As Mr Harris put to the Court:32 … it was entirely unreasonable for the defendant, for the respondent to insist that service had to be effected by the Hague Convention when it ought to have been apparent, after that much time, that it was not practicable and that the other avenue of service, by deemed service, ought to have been something that ought to have been agreed to. 55 Similarly, given the nature and onus in the test for the forum non conveniens argument, the respondent, properly advised, should have known that they had no chance of success. The power to stay proceedings on the basis of forum non conveniens is discretionary, however, the bar is set high. The power should only be exercised in a clear case, in circumstances in which the respondent satisfies the Court that the forum, in which the proceedings have been instituted, is so inappropriate that it would be vexatious or oppressive to continue.33 As Stanley J 31 FDN 56, Written Submissions of Respondent at [25]. 32 T8. 33 Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 247. -- 14 of 19 -- [2025] SASC 196 McDonald J 13 observed in Stewart v Paladin Aus Pty Ltd,34 citing Regie Nationale des Usines Renault SA v Zhang:35 … the respondents must satisfy the Court that a trial in this State would be productive of injustice, because it would be oppressive in the sense of seriously and unfairly burdensome, prejudicial or damaging, or vexatious, i.e. productive of serious and unjustified trouble and harassment. 56 The respondent fell a long way short from satisfying this test. As I said in my judgment on the interlocutory application, not only did the respondent fail to establish that this Court is clearly an inappropriate forum in which to hear the proceedings, but rather it was apparent that there are strong reasons why it is appropriate for proceedings to be brought in this jurisdiction. 57 In my view, the respondent should pay at least part of the applicant’s costs on an indemnity basis. From what point in time should indemnity costs be awarded? 58 The question that then arises is from what point in time should the award of indemnity costs commence. The applicant’s primary position was that 14 September 2023 was the date at which the line in the sand should be drawn, as this was the date upon which the letter was sent to the respondent that set out in some detail the problems with the arguments that were being advanced. It was the applicant’s submission that the significance of this letter was twofold. 59 The first is that it amounted to a Calderbank letter in that it “made an offer” on a solely commercial basis in accordance with the principles enunciated in Calderbank v Calderbank.36 60 In order to amount to a Calderbank offer for the purpose of informing the discretion on the question of costs, the offer must embody a genuine compromise. An offer that lacks any real element of compromise and that is merely designed to trigger a costs sanctions will not be treated as a genuine compromise.37 61 The letter sent by the applicant contained a heading of “The offer”. The offer was expressed in the terms set out at [13]. 62 It was the applicant’s submission that as the letter was sent before the parties had commenced preparation for argument on the interlocutory application, “[a]ccepting the Calderbank Offer would have saved the parties time and costs and ensured that the proceedings continued in a timely and cost efficient manner”.38 34 [2020] SASC 244 at [67]. 35 (2002) 210 CLR 491 at [78]. 36 [1975] 3 All ER 333. 37 Leichhardt Municipal Council v Green [2004] NSWCA 341 at [23]. 38 FDN 55, Written Submissions of the Applicant at [38]. -- 15 of 19 -- [2025] SASC 196 McDonald J 14 63 It was the respondent’s submission that the Calderbank offer was an offer in name only; it was in substance nothing more than a formally stated demand that the respondent abandon the interlocutory application, accept service of the claim documents, file its defence and pay the applicant’s costs. There was no compromise; the applicant offered to give nothing away. 64 There is force in the respondent’s submission about the purported Calderbank offer. It imparted no sense of compromise; demanding that the respondent abandon its claim and pay the other party’s costs is no compromise at all. The letter was more akin to an invitation to surrender in the face of the strength of the applicant’s case. 65 In Total & Universal Pty Ltd v Kingsway Property Investments (No 2) Pty Ltd,39 Campbell JA discussed the difference between a genuine Calderbank offer and an invitation to surrender, by reference to the Calderbank letter in issue in that case:40 Such a letter is not a Calderbank letter: it is an invitation for the recipient of the letter to surrender. An invitation to surrender cast in the form of an offer of compromise under the rules of court does not trigger an entitlement to indemnity costs, even if the party issuing the invitation to surrender is totally successful in the litigation: … The rationale for that view is that before an offer of compromise can trigger any consequences so far as the costs payable are concerned, it is necessary for it to be a genuine compromise, not merely a token one. That same policy applies to Calderbank offers: … (Citations omitted) 66 It cannot be that by self-describing itself as a Calderbank offer, the letter takes on that status. 67 I also do not accept the submission made by the applicant, that such was the strength of their position on the various arguments, there was nothing to offer by way of compromise. The obvious concession for the applicant to have made was in relation to their costs on the interlocutory application. They failed to suggest such a concession. 68 The letter of 14 September 2023 did not contain a genuine Calderbank offer, and therefore, that is not a basis upon which to order that indemnity costs be awarded from this date. 69 It was the applicant’s alternative contention that if not a Calderbank offer, the letter was a genuine attempt to avoid the substantial costs of preparation and presentation of the arguments, by setting out in no uncertain terms, the weaknesses in the respondent’s arguments. It was submitted that the applicant was vindicated 39 [2007] NSWSC 581. 40 Total & Universal Pty Ltd v Kingsway Property Investments (No 2) Pty Ltd [2007] NSWSC 581 at [22]. -- 16 of 19 -- [2025] SASC 196 McDonald J 15 in this approach in that the orders and findings that were ultimately made, reflected the contents of the letter. 70 It was suggested that if that submission is accepted, then indemnity costs should be awarded from the date of the letter, as from that date forwards, the respondent was forewarned of the unlikely prospect that they would be successful in their arguments. 71 Whilst there is some merit to that submission, there is also force to the submission made by the respondent that the possibility of deemed service or substituted service were not raised in this letter. That topic was first raised when the applicant filed their written submissions on 7 December 2023. 72 By the time of the hearing on 1 May 2024, the respondent was well and truly on notice of the various hurdles they were facing, including the options of deemed or substituted service, however, ploughed on ahead regardless. For that reason, I propose to order that the respondent pay the applicant’s costs on an indemnity basis from 1 May 2024, that is, from the commencement of submissions heard in this Court. Should there be an order that the payment be made forthwith? 73 The applicant seeks an order that the costs that I have awarded be paid forthwith. To make such an order is a departure from the ordinary practice of costs following the event. 74 The general rule is that an order for the payment of costs forthwith should not be made on interlocutory applications. In Bradman v Robinson (No 2),41 Kourakis CJ discussed the policy considerations underpinning the general rule:42 … The rule is calculated to discourage interlocutory applications. It also recognises that over the course of proceedings, set offs against a costs order on one application may arise in the light of subsequent applications and orders and, ultimately, the disposition of the entire proceedings. 75 Nevertheless, the Court has a broad discretion to order that a party’s costs incurred as a consequence of an interlocutory application be made payable forthwith. That discretion should be exercised in accordance with the interests of justice based on the circumstances presenting in a particular case. The discretion to order immediate taxation and payment of costs is unfettered by anything contained in the UCRs. 76 In H Stanke and Sons Pty Ltd v Von Stanke (No 2),43 White J summarised the principles and policy considerations relevant to a consideration of whether an order should be made for costs to be paid forthwith. In doing so, his Honour identified 41 [2009] SASC 180. 42 Bradman v Robinson (No 2) [2009] SASC 180 at [21]. 43 [2007] SASC 109. -- 17 of 19 -- [2025] SASC 196 McDonald J 16 four considerations that will ordinarily be relevant to such an assessment. These were:44 … first, the avoidance of multiple taxations in the one action. In general, it is desirable that there should be only one taxation in an action. That avoids possible oppression and a dissipation of the Court’s resources. Secondly, it is usually inappropriate to require the party who is unsuccessful on an interlocutory application to pay costs immediately when that party may be successful ultimately and may be a beneficiary of costs orders. In that event, it is to be expected that there would be some set-off of the respective costs liabilities. Thirdly, the process of enforcing costs can itself be expensive and, what is more, distracting of the parties’ energies in the underlying litigation. Fourthly, and this arises out of the third, because of the prospect of expense of taxations courts seek to avoid the prospect of litigants incurring costs in relation to individual taxations. 77 It was the applicant’s submission that the circumstances of this case are such that it warrants an order for costs to be paid forthwith. Each of the four questions to be determined on the interlocutory application were determined in the applicant’s favour and in future proceedings the issues will not be revisited. 78 The applicant also relies upon the likely delay before the finalisation of proceedings and the substantial costs incurred, including Senior Counsel fees. Finally, the applicant points to the absence of any evidence to suggest that a costs order payable forthwith will financially constrain or otherwise prejudice the respondent. 79 In opposing the order, the respondent made a similar observation about the applicant, that is, that there is no evidence to suggest that the applicant will suffer any particular hardship in awaiting the outcome of the trial for the determination of costs. It was the respondent’s contention that a separate taxation of costs at this juncture would be “unnecessarily expensive and distracting from the prosecution of the substantive proceedings”,45 and there are likely to be further interlocutory applications that result in cost orders that may be set off against the order that I have made. 80 There are compelling arguments both for and against an order that the costs be paid forthwith. Whilst I accept that the proceedings that have resulted in the cost order are relatively self-contained and detached from the proceedings yet to be heard, I have come to the view that the other considerations tip the scales in favour of declining to make the order sought. Those considerations include that the litigation is at an embryonic stage. No doubt there will be other interlocutory applications in the future and, in the event that the applicant is unsuccessful on those applications, or in the litigation more generally, this order may set off against 44 H Stanke and Sons Pty Ltd v Von Stanke (No 2) [2007] SASC 109 at [6]-[9]. 45 Bradman v Robinson (No 2) [2009] SASC 180 at [23]. -- 18 of 19 -- [2025] SASC 196 McDonald J 17 other cost orders made against the applicant. In such circumstances, and when the applicant has suggested no particular financial detriment in the payment being delayed, this avoids unnecessary cost and use of the Court’s resources. Fit for Senior Counsel 81 The applicant seeks an order that the costs awarded should be certified fit for Senior Counsel. On this issue, the relevant enquiry is whether, as at the delivery of the brief, the retainment of Senior Counsel was reasonably necessary or prudent for a reasonable litigant’s case to be adequately presented.46 No argument was advanced against the making of this order. In my view, the complexity of the issues that arose on the interlocutory application and the nature of the future litigation warrants the retainment of Senior Counsel. 82 I make the following orders: 1. That the applicant’s costs incurred in association with the argument as to whether there had been effective service of the claim on the respondent and the interlocutory application (FDN 8) up until 5.00 pm on 30 April 2024 be paid on a party and party basis. 2. That the applicant’s costs incurred in association with the argument as to whether there had been effective service of the claim on the respondent and the interlocutory application (FDN 8) after 5.00 pm on 30 April 2024 be paid on an indemnity basis. 3. The costs are to follow the event. 4. That costs of the appeal are to be fit for Senior Counsel. 46 Phantom Precision Engineering Pty Ltd v Luscombe (No 2) [2021] SASC 103 at [18]. -- 19 of 19 --