The Court held that offers of compromise that do not involve a real and genuine element of compromise — such as offers that are trivial relative to the amount in dispute or that merely seek to induce abandonment of a claim — will not support an award of indemnity costs based on non-acceptance. However, indemnity costs were awarded from the date of a detailed letter identifying the hopelessness of the claims, on the basis that two of the plaintiff's three claims (unconscionable conduct under s 51AA of the Trade Practices Act) were so lacking in merit that they had no real prospects of success and should have been recognised as hopeless. The third claim (inducing breach of contract against a solicitor) was characterised as tenuous but not hopeless, and indemnity costs were refused in respect of it. Interest on costs was ordered under s 101(4) of the Civil Procedure Act 2005 from the dates costs were actually paid.
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