MAKEIG v DERWENT

THE COURT: On 9 August 2001 the Court dismissed with costs the claimant’s application for leave to appeal. Counsel for the opponent asked for an order that the claimant should pay the costs on an indemnity basis. The Court reserved its decision on this question and asked for submissions to be put in writing by the parties. This has now been done.

In his written submissions the claimant’s counsel conceded the opponent’s entitlement to indemnity costs for the reasons put forward by the opponent. The claimant submitted however that such an order should be for “all costs except in so far as they are of an unreasonable amount or unreasonably incurred so that, subject to such exception, the opponent will be completely indemnified by the claimant”. The model for these additional words was to be found in the decision of the Full Federal Court in Re Wilcox; ex parte Venture Industries Pty Limited [No 2] (1996) 72 FCR 151. Reference is also made to the decisions of Wilcox J in Coshott v Learoyd [1999] FCA 276 at para 51 and Callinan J in Arundel Chiropractic Centre Pty Limited v Deputy Commissioner of Taxation [2001] HCA 26 at para 40.

The first two cases relate to Federal Court practice where, apparently, an order for indemnity costs is of an open ended nature. In the second of those cases, Wilcox J said that because the underlying concept is one of indemnity, the order allows recovery even of costs that have been unreasonably incurred or incurred in an unreasonable amount. However, Part 52A, rule 37 of the Supreme Court Rules provides that where, in any proceedings, costs are payable to a person by or under the rules or any order of the Court on an indemnity basis, relevantly, “all costs incurred by that person shall be allowed except to the extent that it appears that they are of an unreasonable amount or have been unreasonably incurred.”

This rule obviates the necessity for the additional words suggested by the claimant. In the third decision Callinan J said that an order for an indemnity for costs should be exceedingly rare for reasons that his Honour gave. In the present case, the claimant has conceded the opponent’s entitlement.

Accordingly, the Court adds to the orders made on 9 August 2001 the following order: “The costs of the application for leave to appeal payable by the claimant to the opponent are to be on an indemnity basis.”