Indemnity cost orders: why the time period for a "reasonable" offer might be shorter than you think

Imagine you’re a General Counsel, deep in the weeds of an urgent, expedited appeal. You've just received an offer of compromise. It’s tight and only open for four days. Your first instinct might be to dismiss it as unreasonable and purely tactical. Surely, the law requires more time for proper consideration, right?

Not so fast. The recent decision of the New South Wales Court of Appeal in Yowie Group Ltd and Bolton v Keybridge Capital Ltd (No 4) [2025] NSWCA 184 shows that the definition of a “reasonable” time for an offer of compromise under r 20.26(5) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) is far more fluid and context-dependent than many in-house legal teams might assume. This is a critical lesson for anyone managing litigation strategy, particularly in a high-stakes, fast-moving commercial dispute.

The case centred on an offer made by Keybridge Capital Ltd to the appellant, Mr Bolton, in an expedited appeal. The offer was simple: drop the appeal, and we’ll walk away with no order as to costs. The catch? The offer was only open for four days – just before Keybridge had to file its final submissions. When Mr Bolton ignored the offer, as well as comments by Justice Leeming at an earlier injunction application that the prospects of success on appeal were "weak at best" and then subsequently lost the appeal, the Court ordered Mr Bolton to pay Keybridge's costs on an indemnity basis from the day after the offer was made.

The Court's reasoning hinged on the interpretation of "reasonable" under subparagraph (b) of r 20.26 of UCPR with respect to the closing date for acceptance of an offer. The court determined that the four-day period was reasonable in the circumstances for the following reasons:

• in the context of the timing of the appeal which was expedited and set down for hearing only seven days later;

• the offer was made promptly after Mr Bolton served his amended notice of appeal and submissions;

• Keybridge was required to file its submissions within two business days and over a weekend;

• The compressed timetable meant that the parties were accruing significant costs on a daily basis;

• Mr Bolton was aware that Justice Leeming had described the principal grounds of appeal as weak and Mr Bolton and his legal advisers were in a position to properly assess and make a reasoned judgment about the offer.

Notably, Mr Bolton also did not take up the opportunity afforded to him to provide the Court with written submissions opposing any costs orders. The Court said that because Mr Bolton did not provide any submissions opposing the making of the indemnity costs order and he held the onus of persuading the Court that it was not appropriate, there was no reason for the Court to order otherwise.

This judgment is an important reminder that an offer of compromise isn't just a settlement tool, it's a high-stakes tactical weapon. Get it right, and you can secure a favourable costs order. Get it wrong, and you might leave money on the table.