The Court declined to award indemnity costs despite the appellant having obtained a result more favourable than its offer of compromise and Calderbank letter, because the proceedings were fundamentally transformed after the offers lapsed when the Commissioner was granted leave to rely on further grounds. The Court held that where a respondent substantially expands the scope of proceedings after an offer lapses, and the offeror makes no further offer addressing the new grounds, the original offers lose their costs significance. The Court also accepted that the Commissioner's pursuit of the further grounds, while ultimately unsuccessful, raised important questions of principle for future administration of the Land Tax Act 2005 and was not hopeless, which weighed against indemnity costs.
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