LHRE GROUP PTY LTD -v- COMPLETE HIRE & SALES PTY LTD [2025] WADC 81 (S)

[2025] WADC 81 (S) [2025] WADC 81 (S) (AC) Page 1 JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA IN CIVIL LOCATION : PERTH CITATION : LHRE GROUP PTY LTD -v- COMPLETE HIRE & SALES PTY LTD [2025] WADC 81 (S) CORAM : WALLACE DCJ HEARD : 5 MAY 2026 WITH SUPPLEMENTARY WRITTEN SUBMISSIONS FILED ON 20, 22 & 26 MAY 2026 DELIVERED : 7 AUGUST 2026 FILE NO/S : CIV 169 of 2024 BETWEEN : LHRE GROUP PTY LTD Plaintiff AND COMPLETE HIRE & SALES PTY LTD Defendant Catchwords: Costs - Whether indemnity costs should be ordered - Whether there is a contractual entitlement to indemnity costs - Calderbank offer - Where the offer constituted a genuine compromise - Whether rejection of the offer was unreasonable in the circumstances - Whether the court has power to discharge or vary an earlier costs order made following an unsuccessful interlocutory application - Turns on own facts -- 1 of 23 -- [2025] WADC 81 (S) [2025] WADC 81 (S) (AC) Page 2 Legislation: Building and Construction Industry (Security of Payment) Act 2021 (WA) Building Services (Complaint Resolution and Administration) Act 2011 (WA) District Court of Western Australia Act 1969 (WA) Result: Defendant to pay the plaintiff's costs on a party/party basis Representation: Counsel: Plaintiff : Mr L N Firios Defendant : Mr M R Collins Solicitors: Plaintiff : Squire Patton Boggs Defendant : Hotchkin Hanly Case(s) referred to in decision(s): Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 Commonwealth of Australia v Albany Port Authority [2006] WASCA 185 Frigger v Lean [2012] WASCA 66 Guillaume v City of Stirling [2020] WADC 41 Hawkesbury City Council v The Civil Experts Pty Ltd t/as TCE Contracting (No 2) [2023] NSWSC 1108 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 Kyabram Property Investments Pty Ltd v Murray; Murray v Kyabram Property Investments Pty Ltd [2005] NSWCA 87 LHRE Group Pty Ltd v Complete Hire & Sales [2024] WADC 61 LHRE Group Pty Ltd v Complete Hire & Sales [2025] WADC 81 Liu v The Age Company Pty Ltd (2016) 92 NSWLR 679 Manton Enterprises Pty Ltd as Trustee for GPK No. 2 Trust v Lt Market St Pty Ltd [2021] WASC 4 (S) Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 Monaco v Arnedo Pty Ltd (1994) 13 WAR 522 -- 2 of 23 -- [2025] WADC 81 (S) [2025] WADC 81 (S) (AC) Page 3 Mullins v Howell (1879) 11 Ch D 763 Murcia & Associates (a firm) v Grey (2001) 25 WAR 209 Nominal Defendant v Manning (2000) 50 NSWLR 139 NSW Rifle Association Inc v The Commonwealth of Australia [No 2] [2012] NSWSC 1098 Oliveri Legal Pty Ltd v Cassegrain Tea Tree Oil Pty Ltd (No 3) [2023] NSWSC 1500 Prestney v Corporation of Colchester (1883) 24 Ch D 376 Ridgepoint Corporation Pty Ltd v McCallum Donovan Sweeney (a firm) [2011] WASC 167 (S) Slater v Ecosol Pty Ltd (No 2) [2024] SASC 29 Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96 Taree Pty Ltd v Bob Jane Corporation Pty Ltd [2008] VSC 228 Varcity Solutions Pty Ltd v Gulliver; Varcity Solutions Pty Ltd v Jagbo Pty Ltd (No 2) [2021] NSWSC 184 Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd (Unreported, WASCA, BC 9201139, 19 June 1992) Wilkshire v Commonwealth of Australia (1976) 9 ALR 325 Woods v Sheriff of Queensland (1895) 6 QLJ 163 -- 3 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 4 WALLACE DCJ: Introduction 1 On 12 November 2025, the court delivered reasons for judgment in these proceedings brought by the plaintiff, LHRE Group Pty Ltd against the defendant, Complete Hire & Sales Pty Ltd.1 2 The parties conferred but were unable to agree on costs, primarily due to a dispute as to whether the plaintiff was entitled to costs on an indemnity basis, and the court made the following orders on 22 December 2025: 1. Judgment be entered for the plaintiff. 2. The defendant pay the plaintiff $81,934.64 plus interest on that sum from 6 November 2023 until judgment at the rate of 6% per annum. 3. The sum of $65,000 paid into Court by way of security for the defendant's costs be paid out of court to the plaintiff. 4. By 4 February 2026, the plaintiff file and serve any application for indemnity costs (Application) together with written submissions in support of the Application. 5. By 18 February 2026, the defendant file and serve any written submissions in response to the plaintiff's Application. 6. The Application be listed for a hearing on a date not before 25 February 2026, for a duration of 1 hour 30 minutes. 3 The plaintiff filed written submissions together with the affidavit of Thomas Charles Prior on 4 February 2026, with supplementary written submissions filed on 20 and 26 May 2026. 4 The defendant filed written submissions together with the affidavit of Ashley David Roberts on 18 February 2026 in opposition to the plaintiff's application, with supplementary written submissions filed on 22 May 2026. 5 The hearing of the plaintiff's application, at which time the parties advanced oral submissions on the question of costs, took place before me on 5 May 2026. 1 LHRE Group Pty Ltd v Complete Hire & Sales [2025] WADC 81. -- 4 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 5 The position of the plaintiff as to costs 6 The plaintiff seeks costs on an indemnity basis, on two grounds: (a) a purported contractual entitlement to indemnity costs it says arises due to the operation of cl 4.14 of the standard terms and conditions which it says formed part of the contract entered into with the defendant;2 and (b) the defendant's unreasonable rejection of the plaintiff's offer of 16 May 2024 to settle the proceedings.3 7 Further, the plaintiff seeks an order vacating an earlier order made by the principal registrar on 1 August 2024 requiring the plaintiff to pay the defendant's costs of its failed summary judgment application. Contractual entitlement 8 The plaintiff submitted that where a contract allows for costs to be paid on an indemnity basis, a court will ordinarily exercise its discretion in a manner consistent with the relevant contractual term bestowing such entitlement. 9 The plaintiff contended that the standard terms and conditions provided by the plaintiff to the defendant formed part of the parties' agreement. Clause 4.14 of the standard terms and conditions provides as follows: Expenses: The Client must pay to LHRE any costs, charges and expenses (including all stamp duty and legal fees on an indemnity basis) incurred by LHRE in connection with the entry into these Terms, the exercise or attempted exercise of any power, right or remedy under these Terms, and the failure of the Client to comply with these Terms. In addition, the Client will be liable for all transactions involving the Client's credit account, including fraudulent use of that account by the Client or its employees. 10 The plaintiff submits that cl 4.14 is a plain and unambiguous provision for the payment of indemnity costs arising due to legal proceedings being initiated by the plaintiff because of the defendant's failure to comply with cl 4.2 of the standard terms and conditions requiring payment of invoices issued to it. 2 Amended Trial Bundle document 15. 3 Affidavit of Thomas Charles Prior sworn 4 February 2026, annexure TCP-1. -- 5 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 6 11 The plaintiff submits that the parties' bargain ought to be respected and guide the court's exercise of its discretion with respect to the granting of costs to be awarded on an indemnity basis. Calderbank offer 12 By letter dated 16 May 2024, the plaintiff made an open offer to the defendant to settle the action.4 The plaintiff's offer comprised of the following: (a) the defendant to pay OSB Group Pty Ltd (OSB) the sum of $81,934.64 (OSB being the entity with whom the defendant contended it had contracted with rather than the plaintiff); (b) the plaintiff and OSB will each release and discharge the defendant and the defendant will release and discharge the plaintiff and OSB from any and all claims which: (i) directly or indirectly relate to or arise from the works carried out at the Spinifex Hotel in or around June 2023; and (ii) arose or were in the reasonable contemplation of the parties at any time on or before the date the offer is accepted in relation to the works at the Spinifex Hotel; (c) the plaintiff, defendant and OSB to enter into a deed of settlement and release reflecting the terms; (d) the plaintiff, defendant and OSB will bear their own costs associated with the preparation of the deed of settlement and release; and (e) upon acceptance of the offer, the plaintiff and defendant will do all things necessary to file consent orders with the court consenting to the proceedings being dismissed on the basis that there be no order as to costs and that any existing costs orders be discharged. 13 The offer was open to acceptance by the defendant until 4.00 pm on 28 May 2024. The letter put the defendant on notice that if it did not accept the offer and the action was ultimately resolved in the plaintiff's favour, the plaintiff intended to rely on the letter in support of an application for costs to be paid on an indemnity basis from 28 May 2024. 4 Affidavit of Thomas Charles Prior sworn 4 February 2026, annexure TCP-1. -- 6 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 7 14 The plaintiff submits that the offer was a genuine compromise in circumstances where: (a) interest was accruing from 6 November 2023 and constituted a material sum relative to the modest quantum of the amount in dispute; (b) the plaintiff's costs of enforcement were likewise relatively material having regard to the amount in dispute in the proceedings; and (c) the nature of enforcement actions under the Building and Construction Industry (Security of Payment) Act 2021 (WA) (SOP Act) are essentially binary, namely a claimant is either entitled to the amount claimed or not and courts are precluded from undertaking a merits review or considering defences. 15 The plaintiff submits that an offer to release interest and costs is a genuine offer of compromise and thus it is not necessary for there to be a reduction of the principal claim. 16 The plaintiff contends further that it was unreasonable for the defendant to have rejected the offer in the circumstances given, inter alia, the following: (a) the offer was made at a relatively early stage, before the hearing of the application for summary judgment; (b) the terms of the offer were clear and foreshadowed the prospect of an application for indemnity costs if the offer were to be rejected; (c) the parties' respective positions and arguments were well known at the time the offer was made; (d) the offer provided the defendant with an avenue to pay the entity it identified as the true counterparty, OSB, shorn of interest and costs; and (e) the cross-examination of Mr Emanuel Dillon (the sole director of the defendant) at trial, afforded to the defendant an opportunity to explain the basis for rejecting the offer which exchange demonstrated the absence of any cogent reason. -- 7 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 8 Costs order made by the principal registrar 17 The plaintiff further seeks that the court vacate an order for costs made by Principal Registrar McGivern on 1 August 2024 in relation to a failed application made by the plaintiff for summary judgment. The plaintiff submitted to the court that the principal registrar ordered the plaintiff to pay the defendant's costs of the application, being an order contrary to the usual order that the costs of an unsuccessful application be in the cause. 18 The plaintiff submitted that if the principal registrar's orders were left undisturbed, the ultimate costs outcome would not be just and fair as between the parties because the affidavits relied upon by the plaintiff in its summary judgment application were repurposed for trial as the evidence-in-chief of the witnesses. As a result, the plaintiff contends that the defendant would enjoy a windfall from the principal registrar's interlocutory costs application, and the plaintiff would be deprived of a portion of its costs notwithstanding its ultimate success in the action. 19 The plaintiff contends that an order superseding, recalling or varying the prior order of the principal registrar may be made pursuant to the court's incidental powers necessary for the exercise of its conferred jurisdiction by analogy to the power of the Supreme Court to discharge or vary orders previously made. Defendant's position on the application Contractual entitlement 20 The defendant refutes any contractual entitlement of the plaintiff to be awarded costs on an indemnity basis for the following reasons: 1. The plaintiff did not commence action seeking recovery of amounts owing under a contract but rather commenced action to recover a statutory debt under the SOP Act. As such it did not plead a case for breach of contract or plead its case relying on cl 4.14 of the purported standard terms and conditions. As such the court made no findings in relation to cl 4.14 or its scope of operation (if any) and is now functus officio in relation to that question. 2. The plaintiff is not entitled to rely on cl 4.14 in its application seeking indemnity costs where it failed to plead such a position. The plaintiff ought to be held to its pleaded claim consistent with procedural fairness and the 'no surprise' rule. -- 8 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 9 3. In any event cl 4.14 is not plain and unambiguous and is open to more than one interpretation. For example, one possible interpretation is that the clause focuses on the costs associated with entry into the contract and any costs associated with a legal dispute about that matter. Calderbank offer 21 The defendant submits that it was not unreasonable for it to reject the plaintiff's offer because it did not involve a real compromise of its claim for the following reasons: (a) an offer requiring capitulation in return for the offeror agreeing to bear its own costs is not ordinarily regarded as a genuine compromise. In addition, the defendant was not informed of the quantum of costs that the plaintiff was proposing to forego and thus was not able to assess the extent of the compromise; (b) interest on the payment claim as of 16 May 2024 was a little over $2,000 and giving up that sum involved no real compromise on the part of the plaintiff; (c) in all or nothing cases, as is the case in this proceeding, the plaintiff's offer of the full amount of the payment claim was not a real compromise; (d) the plaintiff's offer required the defendant to give up certain of its legal rights. The relief sought by the plaintiff concerned an interim payment under the SOP Act, which was subject to adjustments after a final determination of the parties' rights under the contract. Section 55 of the SOP Act expressly preserved the defendant's right to recover any amounts that would have been paid to OSB. Given that the offer was one that was intended to fully and finally resolve all claims related to the Spinifex Hotel, part of the plaintiff's offer was that the defendant would forego the rights preserved by s 55 of the SOP Act; (e) the plaintiff's success at trial largely turned on the court's findings about the reliability of witnesses with particular emphasis on oral conversations occurring on 12 May and 26 July 2023 and the plaintiff did not file evidence about those conversations until May 2025, nearly 12 months after the plaintiff's offer had lapsed; -- 9 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 10 (f) the rejection of the offer was reasonable, the basis for which is set out in the defendant's letter dated 27 May 2024, which included the defendant's concern regarding its statutory and contractual right of set-off;5 and (g) the offer presumed that OSB was entitled to the full amount of the payment claim, which was disputed by the defendant as some of the works were defective. Costs order made by the principal registrar 22 The defendant refutes the plaintiff's claim that the court has power to discharge, vary or vacate the costs order made by the principal registrar in relation to the plaintiff's unsuccessful summary judgment application. In relation to this matter, the defendant raises the following: (a) the plaintiff, if dissatisfied with the decision, could have sought to appeal the decision to a judge of the District Court within 10 days and did not do so. It cannot seek to appeal the decision some 18 months out of time without seeking leave to do so; (b) putting aside the question as to whether the court has jurisdiction to recall or vary its orders in the same way as the Supreme Court, in any event, such powers can only be exercised where the interests of justice demands it. This tends to occur when there has been a material change of circumstances or the discovery of fresh evidence, none of which circumstances exist in the present case; (c) in any event, the principal registrar's decision was consistent with O 66 r 1(1) of the Rules of the Supreme Court 1971 (WA) (RSC) that normally the successful party is entitled to recover its costs; (d) it is not in the interests of justice to deprive the defendant of its costs of the plaintiff's unsuccessful summary judgment application on the sole basis that the plaintiff succeeded at trial. The plaintiff was not obliged to but elected to apply for summary judgment. The decision to apply for interlocutory orders carries with it the attendant risk of paying the other side's costs if the application is unsuccessful; and 5 Affidavit of Ashley David Roberts sworn 18 February 2026, annexure ADR-18. -- 10 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 11 (e) the plaintiff was heard at the time that the costs order was made and accepted before the principal registrar that the defendant ought to be awarded its costs of the summary judgment application and did not seek an order for costs to be in the cause. It is difficult for it to now contend in the circumstances that the principal registrar erred and/or that there would be a miscarriage of justice or some inherent unfairness to the plaintiff due to the order being made by the principal registrar, having heard from the plaintiff, which was entirely consistent with the plaintiff's own position. Relevant principles General principles 23 The well-established principles applicable to the award of costs of an action were well canvassed in Strzelecki Holdings Pty Ltd v Jorgensen.6 They can be summarised as follows: (a) the court has a wide discretion to award costs to be paid or apportioned between the parties pursuant to s 64(1) of the District Court of Western Australia Act 1969 (WA); (b) subject to the District Court of Western Australia Act, a District Court judge has the same power in relation to costs as a judge of the Supreme Court;7 (c) this includes the power to order costs to be paid on an indemnity basis, including where there has been a Calderbank offer;8 (d) unless there is inconsistency between the District Court Rules 2005 (WA) and the RSC, the RSC apply to and in respect of any case in the District Court;9 (e) despite its wide breadth, the discretion to award costs must be exercised judicially, not arbitrarily or capriciously, or on grounds unconnected with the litigation;10 and 6 Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96 [48], [52]. 7 District Court of Western Australia Act, s 64(3). 8 Manton Enterprises Pty Ltd as Trustee for GPK No. 2 Trust v Lt Market St Pty Ltd [2021] WASC 4 (S) [7] - [16]. 9 District Court Rules, pt 1 r 6. 10 Frigger v Lean [2012] WASCA 66 [53]. -- 11 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 12 (f) without limiting the general discretion conferred on the court as to costs, the starting point in relation to the award of costs under the RSC is that the court will generally order that the successful party to the action or matter recover their costs.11 Principles relating to contractual entitlement to indemnity costs 24 If parties to a contractual dispute have agreed, as part of their bargain, that upon resolution of that dispute, the successful party is entitled to legal costs on an indemnity basis, such term being plainly and unambiguously expressed, such circumstance may carry significant weight in the court's exercise of discretion.12 25 However, even where such a contractual term for payment of indemnity costs is expressed in plain and unambiguous language, the court nevertheless maintains a discretion in relation to whether it makes orders for payment of costs on that basis.13 A factor which may sway the court not to exercise its discretion in accordance with such a contractual term is the failure of the party seeking a costs order on that basis to specify the contractual claim in their pleadings.14 26 If the meaning of the contractual provision being relied upon is not plain and unambiguous, it cannot provide the basis for determining how the statutory discretion is to be exercised by the court unless the meaning of the particular contractual provision and/or its validity has been litigated and determined as part of the primary hearing.15 Where two constructions of the contractual provision are open, a construction that avoids capricious, unreasonable, inconvenient or unjust results is to be preferred.16 Principles relating to Calderbank offers 27 It is well established under the principles stated in Calderbank v Calderbank, that the court may make an order for indemnity costs in favour of a party who fairs better after trial than it would have done if its offer of compromise had been accepted, if the court is satisfied that: 1. the offer was a genuine offer of compromise; and 11 RSC O 66 r 1(1). 12 Kyabram Property Investments Pty Ltd v Murray; Murray v Kyabram Property Investments Pty Ltd [2005] NSWCA 87 (Kyabram) [12] - [13]. 13 Taree Pty Ltd v Bob Jane Corporation Pty Ltd [2008] VSC 228 [40]. 14 Kyabram [15] - [17]. 15 NSW Rifle Association Inc v The Commonwealth of Australia [No 2] [2012] NSWSC 1098 [20]. 16 NSW Rifle Association Inc v The Commonwealth of Australia [No 2] [21]. -- 12 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 13 2. it was unreasonable for the other party not to accept the offer in all the circumstances.17 28 The party who makes a Calderbank offer that is rejected bears the onus of satisfying the court that it should make an award of indemnity costs in their favour.18 29 Whether an offer was rejected unreasonably involves matters of judgment and impression and is assessed on an objective basis.19 The mere fact that the recipient of a Calderbank offer is ultimately worse off than they would have been had they accepted the offer does not in and of itself mean that the rejection of the offer was thus unreasonable.20 Rather, in determining whether an offer was unreasonable, it must be considered in its proper context taking into account all relevant facts and circumstances.21 30 In considering whether the rejection of the Calderbank offer was unreasonable, the court should ordinarily have regard to, at least, the following relevant matters:22 (a) the stage of the proceeding at which the offer was received; (b) the time afforded to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; and (f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it. 31 The extent and genuineness of the compromise offered is a relevant factor in determining the reasonableness of the offeree's rejection.23 It must involve a real and genuine element of compromise.24 17 Hawkesbury City Council v The Civil Experts Pty Ltd t/as TCE Contracting (No 2) [2023] NSWSC 1108 [9]. 18 Strzelecki Holdings Pty Ltd v Jorgensen [82]. 19 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 [23] - [24]. 20 Strzelecki Holdings Pty Ltd v Jorgensen [83]. 21 Strzelecki Holdings Pty Ltd v Jorgensen [83]. 22 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [25], [89]. 23 Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 [14]. 24 Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [9]. -- 13 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 14 32 Often a Calderbank offer that requires complete capitulation by the other party in return for the offeror only agreeing to bear its own costs, will not be regarded as a genuine compromise. What is genuine, however, will always be dependent on the particular facts and circumstances. Commonly the stage in the proceedings at which the offer is made will be a significant consideration.25 33 In determining whether the rejection of the offer was unreasonable, it is open to the court to consider whether the terms of the offer are materially different to an offer which is, in effect, an offer to consent to judgment.26 34 The inclusion of terms in an offer which are potentially indeterminate and which could not be achieved in the proceeding itself, may impact the ability of the offeree to assess the benefits or disadvantages which may flow from accepting the offer and may well be relevant to the reasonableness or otherwise of rejecting it. In particular, an offer which includes terms of mutual releases that extend to any possible future claims may render the rejection of such an offer not unreasonable.27 35 Thus, where a Calderbank offer includes additional or extraneous aspects beyond the boundaries of the relief sought and beyond the issues raised in the proceedings, it is necessary that the court, in undertaking the exercise of its discretion, give careful consideration to: (a) the clarity of the offer and whether the offeree was able to understand the full scope and implications of the extraneous aspects; and (b) whether the inclusion of extraneous matters is relevant to a consideration of the reasonableness or otherwise of the rejection of the offer. Of course, mutual releases are often commonplace in compromises of litigation and beneficial to both parties, but such a position is not necessarily always the case. 25 Varcity Solutions Pty Ltd v Gulliver; Varcity Solutions Pty Ltd v Jagbo Pty Ltd (No 2) [2021] NSWSC 184 [44]. 26 Slater v Ecosol Pty Ltd (No 2) [2024] SASC 29 [128] - [135]. 27 Oliveri Legal Pty Ltd v Cassegrain Tea Tree Oil Pty Ltd (No 3) [2023] NSWSC 1500 [30]. -- 14 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 15 Incidental powers of the District Court to vary prior interlocutory orders 36 There is some limited authority for the position that, whilst the District Court does not share the inherent supervisory or disciplinary jurisdiction of the Supreme Court, it nevertheless has incidental powers necessary for the exercise of its conferred jurisdiction, including the ability to prevent abuses of process.28 In addition, it is uncontroversial that at times a further interlocutory application of the same nature can be made, particularly when there is a change of circumstances or evidence later sought to be relied upon which could not have reasonably been obtained earlier. Ultimately, when such applications arise it will be a question as to what the interests of justice require.29 37 As to the circumstances in which a court is empowered to discharge or vary orders made on a prior interlocutory application, the following have been found to have justified intervention: (a) if a party to a consent order was acting under a mistaken belief, it may be necessary for the order to be discharged;30 (b) where an order is made ex parte, the court or judge making it may, upon application of any person prejudicially affected by it, review and if necessary, discharge it;31 (c) in order to rectify situations of injustice where an order was made erroneously as a result of inadvertence of counsel or a mistake being made by the judge which was not corrected by counsel;32 (d) a superior court has power to review or recall an interlocutory order, by reason of its inherent jurisdiction to regulate or control its own practices and procedures, provided in so doing the court does not interfere with substantive as opposed to procedural rights already conferred upon a party;33 and 28 Guillaume v City of Stirling [2020] WADC 41 [80] (Levy DCJ) citing Murcia & Associates (a firm) v Grey (2001) 25 WAR 209 [16] (Steytler J). 29 Guillaume v City of Stirling [81] - [82] citing Liu v The Age Company Pty Ltd (2016) 92 NSWLR 679 [199] (McColl JA). 30 Commonwealth of Australia v Albany Port Authority [2006] WASCA 185 [23] referring to Mullins v Howell (1879) 11 Ch D 763, 766 (Jessel MR). 31 Commonwealth of Australia v Albany Port Authority [23] citing Woods v Sheriff of Queensland (1895) 6 QLJ 163, 164 (Griffith CJ). 32 Commonwealth of Australia v Albany Port Authority [23] citing Monaco v Arnedo Pty Ltd (1994) 13 WAR 522, 524 (Malcolm CJ). 33 Commonwealth of Australia v Albany Port Authority [25] citing Wilkshire v Commonwealth of Australia (1976) 9 ALR 325, 332 (Muirhead J). -- 15 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 16 (e) even orders of a substantive nature which had been made after a contested interlocutory hearing can be set aside, varied or discharged where the interests of justice require but ordinarily in cases of a material change of circumstances or the discovery of fresh evidence.34 38 In the ordinary course of proceedings, courts will not lightly vary or set aside orders previously made, at least in the absence of exceptional circumstances such as a clear error coming to light, fraud or fresh evidence.35 39 When the order under consideration has been made by another judicial officer with like jurisdiction, the judge considering whether to vary or discharge it must exercise particular caution not to take on an appellate jurisdiction in circumstances where none exists. This is particularly where the decision is objected to on the ground that it was made erroneously in circumstances where the objection clearly should be made by way of exercising an appeal right.36 Disposition Disposition on contractual entitlement 40 I am not persuaded that the plaintiff is entitled to claim a contractual entitlement to costs on an indemnity basis due to the operation of cl 4.14 of the purported standard terms and conditions. There are a number of reasons why this matter is not a factor which is either determinative or indeed persuasive in the exercise of the court's discretion as to whether indemnity costs ought to be awarded in the plaintiff's favour. Those reasons are set out below. 41 First, the defendant was entitled to be put on notice of the full claim being made against it. If any claim for costs, on a contractual basis, was being sought on an indemnity basis, then clearly that position ought to have been pleaded. No such claim was in fact pleaded, despite the plaintiff being granted leave to amend its statement of claim on the first day of trial. 34 Commonwealth of Australia v Albany Port Authority [25] citing Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44, 46 (McLelland J) and Nominal Defendant v Manning (2000) 50 NSWLR 139. 35 Commonwealth of Australia v Albany Port Authority [25]. 36 Commonwealth of Australia v Albany Port Authority [27]. -- 16 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 17 42 Given that the plaintiff's claim was a statutory one pursuant to s 27(2)(a) of the SOP Act, it is perhaps unsurprising that the pleadings did not provide for any purported contractual claims. Indeed, even par 4 of the Amended Statement of Claim dated 26 June 2025, when identifying the relevant terms of the construction contract, did not specifically refer to cl 4.14 as being one of the pertinent provisions. 43 In the circumstances, the claim clearly took the defendant by surprise and given the proceedings involved a relatively modest claim, it is a significant omission not to give proper notice through the pleadings that a claim for indemnity costs would be sought. In my view, that omission in and of itself ought to preclude the plaintiff from seeking to rely upon the relevant contractual provision.37 44 Secondly, given that the plaintiff's claim was not one based in contract, the court was not required to make a ruling in relation to either the meaning, scope or application of cl 4.14 or whether the standard terms and conditions formed part of the contractual bargain agreed by the parties. Thus, there was no factual finding made by the court, or indeed necessary to be made by the court, as to whether cl 4.14 bound the parties. 45 Thirdly, in my view, cl 4.14 is not plain and unambiguous in its terms.38 Clause 4.14 refers to 'costs, charges and expenses' incurred in relation to, inter alia, the failure of the 'client' to comply with the terms. Expenses are clarified using parenthesis as including stamp duty and legal costs on an indemnity basis. There is nothing to indicate in the plain and natural meaning of the language used, that the clause was intended to encompass what may be quite substantial costs in litigious court proceedings as opposed to a relatively straightforward claim for debt recovery. Indeed, the clause does not refer to court proceedings or litigation and its title of 'Expenses', and the reference to stamp duty, certainly leaves open an interpretation that the intention was not to encompass the cost of legal proceedings. 46 Fourthly, even if the plaintiff was correct and cl 4.14 bound the parties and on its plain and unambiguous application bestowed on the plaintiff a contractual entitlement to indemnity costs in court proceedings, there remains a further materially significant impediment to the plaintiff's contention. That is because the purpose of the proceeding was not to remedy the defendant's failure to comply with 37 Taree Pty Ltd v Bob Jane Corporation Pty Ltd [56]; Kyabram [15] - [17]. 38 NSW Rifle Association Inc v The Commonwealth of Australia [No 2] [20]. -- 17 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 18 the standard terms and conditions. That is certainly starkly clear when one considers the pleadings. The crucial issue to be determined in the proceedings was not whether a contractual term had been breached by the defendant, but rather, was whether the defendant had contracted with the plaintiff or OSB. That is, the question for determination by the court was who the contracting parties to the bargain were, not whether the contractual term obligating payment for services rendered was breached. Therefore, even adopting the interpretation of cl 4.14 contended for by the plaintiff, that clause clearly does not purport to have application to the type of dispute which was before the court. 47 Therefore, in my view, the plaintiff has no contractual entitlement to an award of costs on an indemnity basis. Disposition on the Calderbank offer 48 The plaintiff bears the onus to satisfy the court that it should make an award of indemnity costs in their favour on the basis that its Calderbank offer was rejected unreasonably by the defendant. The plaintiff also needs to persuade the court that the offer made by it was a genuine offer of compromise. 49 Ultimately, I am not satisfied that the offer made by the plaintiff by letter dated 16 May 2024 was a genuine offer of compromise. I have reached this view for the following reasons. 50 First, the Calderbank offer appears to require capitulation by the defendant in return for the plaintiff effectively agreeing only to bear its own costs incurred as at the time of the making of the offer which usually is not regarded by the courts as a genuine compromise.39 The offer made by the plaintiff was for full payment of the quantum the subject of the proceedings with each party bearing its own costs. Whilst the plaintiff also forewent interest on its claim, I accept the submission made by the defendant that as of 16 May 2024 the interest on the payment claim was a little over $2,000 and thus reflected no real compromise. Whether an offer of compromise is a genuine one when it involves a party giving up a claim for interest depends on the particular facts. When the offer involves foregoing a relatively significant claim for interest, the offer of compromise is more likely to be found to be a genuine one.40 This is clearly not the case here. 39 Varcity Solutions Pty Ltd v Gulliver; Varcity Solutions Pty Ltd v Jagbo Pty Ltd [No 2] [44]. 40 Hawkesbury City Council v The Civil Experts Pty Ltd t/as TCE Contracting [No 2] [13]. -- 18 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 19 51 Secondly, the Calderbank offer did not identify the quantum of the costs incurred by the plaintiff as at the date of the offer. It was therefore difficult, if not impossible, for the defendant to properly assess whether the offer was a beneficial one. It is similarly difficult for the court to make that assessment given the absence of that information. However, I note that as at 16 May 2024 the parties had had no court appearances and, other than the filing of the writ, no other steps in the proceeding had at that stage been undertaken. Presumably, therefore, the costs incurred would have been relatively modest. 52 Thirdly, the Calderbank offer contemplated the parties, including OSB, entering into a deed of settlement which would provide for mutual releases arising in relation to the works undertaken at the Spinifex Hotel. Whilst mutual releases are commonly a standard provision in settlement deeds, they are clearly not something which can be achieved by a party through the litigation process itself. When such extraneous matters are included in a Calderbank offer, they need careful consideration, both when the court considers whether the offer is a genuine one, and also subsequently when considering whether the rejection of the offer was unreasonable. This assessment will always be dictated by the particular facts and circumstances of the case. 53 In my view, in the circumstances of this case, mutual releases and discharges in relation to the works undertaken by the plaintiff for the defendant further undermined the genuineness of the compromise. This is because the proceedings involved a claim made by the plaintiff under the SOP Act which provided for relief in relation to interim payments which are still subject to adjustments after a final determination of the parties' rights under the contract. Section 55 of the SOP Act preserved the defendant's right to recover amounts paid, if the defendant ultimately wished to enforce its own rights under the construction contract or wished to pursue other civil action. A mutual release would deprive the defendant of the benefit of s 55 of the SOP Act. Mutual releases would also result in the defendant being deprived of other rights in relation to the works undertaken by the plaintiff, including, for example, claims of work not being carried out in a proper or proficient manner or being faulty or unsatisfactory pursuant to the Building Services (Complaint Resolution and Administration) Act 2011 (WA). It is difficult to identify what foreseeable rights the plaintiff would forego by entering into a settlement deed containing mutual releases of the nature sought by it in its Calderbank offer. -- 19 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 20 54 For the above reasons, in my view, the Calderbank offer made by the plaintiff was not a genuine compromise. 55 In the circumstances, it follows that the defendant's rejection of the offer was not unreasonable. In particular, I note that in its rejection of the offer by way of letter dated 27 May 2024, the defendant identified as one of the concerns, its ability to make future claims in relation to the works undertaken by the plaintiff. There is clear case authority to the effect that rejection of offers is not unreasonable when the offer contains mutual releases which extend to possible future claims.41 56 Lastly, whilst the plaintiff submitted that the court ought to place weight on the inability of Mr Dillon to demonstrate any cogent reason for refusing the Calderbank offer, in my view, Mr Dillon's cross-examination at trial did not appear directed to whether or not he held the views set out in the rejection letter dated 27 May 2024.42 57 Further, in my view, a party is entitled to receive legal advice as to whether an offer ought to be accepted and to ultimately act on that advice which appears to be the case here. Disposition as to the incidental powers of the District Court 58 The plaintiff brought an application for summary judgment before Principal Registrar McGivern which was unsuccessful.43 The decision of the learned principal registrar was handed down on 1 August 2024. The transcript of the appearance makes it clear that the parties were provided a preview of the draft reasons for decision and afforded the opportunity to confer in relation to the appropriate consequential orders to be made. 59 Counsel appearing on behalf of the plaintiff submitted to the court that the plaintiff did not seek an order that costs be in the cause.44 Despite making that submission at the time that the principal registrar made the relevant costs order, the plaintiff now submits to the court that the order made was contrary to the usual order that the costs of an unsuccessful application for summary judgment be in the cause.45 41 Oliveri Legal Pty Ltd v Cassegrain Tea Tree Oil Pty Ltd (No 3) [30]. 42 ts 345 - ts 348 (27 June 2025). 43 LHRE Group Pty Ltd v Complete Hire & Sales [2024] WADC 61. 44 ts 55 - ts 56 (1 August 2024). 45 Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd (Unreported, WASCA, BC 9201139, 19 June 1992); Ridgepoint Corporation Pty Ltd v McCallum Donovan Sweeney (a firm) [2011] WASC 167 (S) [7]. -- 20 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 21 Interestingly, the primary case relied upon by the plaintiff for that position is the authority which was brought to Principal Registrar McGivern's attention in the context of the plaintiff conceding that the appropriate order was for costs to be made in favour of the defendant. 60 I am not persuaded that a judge of the District Court has inherent power by analogy to the power of the Supreme Court to discharge or vary orders made in relation to costs by another judicial officer pursuant to s 64 of the District Court of Western Australia Act, whether it be the principal registrar or otherwise. The plaintiff was not able to direct the court's attention to any precedent which identifies that the court has such incidental powers nor any precedent in which such powers have been exercised in the manner contended for by the plaintiff. 61 Whilst the plaintiff relied upon the decision of Guillaume v City of Stirling, I am not persuaded that it supports the plaintiff's contention in this regard. That was not a case where his Honour Judge Levy was considering varying or discharging a prior order made by a registrar pursuant to an inherent or incidental power to do so. Indeed, his Honour was sitting in the appeal jurisdiction of the court determining an appeal from a registrar's decision. Further, his Honour appropriately acknowledged that the District Court, as a creature of statute, does not share the inherent supervisory or disciplinary jurisdiction of the Supreme Court.46 Nevertheless, his Honour noted that the District Court does have incidental powers necessary for the exercise of its conferred jurisdiction, including the ability to prevent abuses of process.47 It is certainly not being contended by the plaintiff that the costs order made by Principal Registrar McGivern constitutes an abuse of process nor could such a submission properly be made. 62 I am reluctant to make a final determination in relation to the inherent or ancillary powers of the District Court in the context of the application before me as I do not believe that this is the appropriate vehicle in which to undertake such a significant analysis, which would clearly have very broad implication. It is unnecessary to do so in order to determine this part of the plaintiff's application, because even if I had the power the plaintiff contends that I have, in my view, there is no proper basis on which such a power should be exercised in the circumstances. I say this for a number of reasons. 46 Guillaume v City of Stirling [80]. 47 Guillaume v City of Stirling [80]. -- 21 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 22 63 First, the circumstances in which such a power is ordinarily exercised in the jurisdiction of the Supreme Court are absent here. For example, the interlocutory costs order was not made under a mistake by one or both parties; there is no material change to circumstances making it just and proper to discharge the order (repurposing of affidavits is not, in my view, a material change in circumstances); the order was not made as a result of inadvertence of counsel, or mistake being made by the learned principal registrar which was not corrected by counsel, thus raising a need to discharge the order to avoid an injustice; discharge of the order is not being sought due to the discovery of fresh evidence or due to an alleged fraud and nor was the order made without the power or jurisdiction to do so.48 64 Secondly, the costs order made by the learned principal registrar was made in circumstances in which the plaintiff was provided with an advanced copy of the draft reasons for decision, had legal representation, was afforded the opportunity to confer on the form of orders to be made, and was afforded the fairness and opportunity to be heard before the order in respect of costs was made. 65 As I mentioned earlier, the order made by the principal registrar was in full accordance with the submissions made by the plaintiff's counsel after adjourning briefly to consider the authority raised before her Honour by the plaintiff. That is, the decision that the plaintiff now seems to contend is attenuated with doubt and which is fundamentally flawed, was the very decision it sought be made. 66 Thirdly, it is particularly important that when a court is being asked to consider discharging an order made by another judicial officer, that they exercise special caution not to take on an appellate jurisdiction where none exists.49 In my view, this is exactly what the plaintiff is seeking to do, that is, to place the court in its appellate jurisdiction without having sought to appeal the principal registrar's decision as it was entitled to do. If the plaintiff formed the view that the principal registrar had erred, then it ought to have exercised its appeal rights. 67 As submitted by the defendant, the plaintiff was not compelled to bring an application for summary judgment. It chose to do so and was ultimately unsuccessful. It was able to reduce the costs of preparation 48 Commonwealth of Australia v Albany Port Authority [23] - [26]. 49 Commonwealth of Australia v Albany Port Authority [27] (Steytler P), citing Prestney v Corporation of Colchester (1883) 24 Ch D 376, 384. -- 22 of 23 -- [2025] WADC 81 (S) WALLACE DCJ [2025] WADC 81 (S) (AC) Page 23 for the trial by repurposing the affidavits relied upon for its summary judgment application. No doubt this provided a cost saving to the plaintiff. Whilst it will not be able to claim the entirety of the costs it incurred in preparing those affidavits, in my view, there appears to be no impediment to the plaintiff claiming a portion of those costs given that the affidavits were also relied upon in the trial itself and the costs of the trial will be awarded in favour of the plaintiff. Conclusion 68 For the foregoing reasons, I consider the discretion of the court should be exercised to refuse the application for indemnity costs in favour of the plaintiff. The costs order will be confined to party and party costs. 69 Therefore, I order that the defendant pay the plaintiff's costs of the proceeding to be taxed if not agreed. I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia. LE Associate to Judge Wallace 7 AUGUST 2026 -- 23 of 23 --