Home » The cost of litigation and the prudence of settlement

The cost of litigation and the prudence of settlement

Posted by Marcus McCarthy | 12 August 2014 | Dispute Resolution

The recent Supreme Court judgment in Chaina v Presbyterian Church (NSW) Property Trust (No. 26) [2014] NSWSC 1009 (‘Scots’) on the question of costs has highlighted the importance of receiving sound legal advice, considering the potential cost implications as well as the realistic prospects of the matter. Scots was a matter involving damages for the death of Chaina’s son whilst on a school excursion run by The Scots College (‘School’).

The Plaintiffs were four family members and two related companies and  initially claimed more than $300 million in damages. Proceedings were commenced in 2002, the decision ultimately delivered in May 2014. The School had made various Offers of Compromise and Calderbank offers to the various Plaintiffs, and had subsequently settled with two Plaintiffs in 2008. In May 2014, the Court determined the Plaintiffs be awarded $529,131.00, this was considerably less than previous offers made by the School. In July 2014, the Court determined that the School was entitled to $8.3 million in costs, a net result of $7,770,869.00 in favour of the School.

The Plaintiffs were not awarded any of their costs in relation to the matter on the basis that the offers previously provided to them were significantly more than what they were awarded.

The Plaintiffs are subsequently almost $8 million worse off after proceeding through this extensive and expensive litigation, not including their legal costs, which are likely to be in the millions. This could have been avoided if they had accepted, what the Court determined, were reasonable offers made by the School in the years preceding the final determination.

When commencing a potential litigated matter, parties must fully consider and be advised of all potential consequences, specifically costs consequences, which is why a detailed initial advice and considerable strategic consideration needs to be provided to the client by their lawyer at the outset.

Both plaintiffs and defendants need to carefully consider the costs implications flowing on from refusing a reasonable offer from the other party.

This publication is © Nexus Lawyers Pty Ltd and is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.

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