Following a successful commercial application for the return of a deposit, the applicant sought costs on a substantial indemnity basis relying on a pre‑litigation letter requesting the return of the deposit.
The respondents opposed costs, arguing the case was uncertain, settlement options had been offered, and the application procedure was unusual.
The court held that the applicant was entirely successful and that the June 30, 2014 letter constituted a valid offer to settle within the meaning of Rule 49 of the Rules of Civil Procedure.
Because the judgment obtained was more favourable than the offer, the cost consequences of Rule 49.10 applied.
Substantial indemnity costs were awarded but reduced from the amount claimed to reflect that Rule 49 provides substantial indemnity, not full recovery.
