"I was referred to a number of cases in which orders for costs have been made on a solicitor and client or indemnity basis. Those orders have usually been made in circumstances where the conduct of the parties against whom the orders have been made has been deserving of criticism: see, for example, Degman Pty Ltd (in liq) v Wright No 2) (1983) NSWLR 354 (sic); Packer v Meagher (1984) 3 NSWLR 486; and Australian Guarantee Corporation Ltd v De Jager (1984) VR 483. The respondent fought these proceedings fiercely and left no stone unturned in resisting the application. But I do not think the conduct of its case is deserving of criticism of the kind referred to in the authorities relied upon by the applicant. Accordingly, the cases in which orders for costs have been made on a solicitor and client or indemnity basis by reason of the undeserving conduct of a litigant are distinguishable from the present case."
The New South Wales Court of Appeal considered the appropriateness of making an order for the payment of indemnity costs on appeal in Huntsman Chemical Co (Australia) Ltd v International Pools (Australia) Ltd (1995) 36 NSWLR 242. The judgments of Kirby P and Mahoney JA (as they then were) suggest that a cautious approach should be adopted to the awarding of indemnity costs, especially on appeal. This is consistent with the approach taken by Kirby P in Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 (at 32-4).
Despite certain decisions (referred to by Hill J in Boner v Anderson (No. 2) to the effect that there should be an increase tendency towards the awarding of indemnity costs, we consider that there is still in existence and operation a general approach to the effect that costs will be normally awarded on a party-party basis with the indemnity costs to be awarded in the more exceptional case where conduct of a party justifies it. Hill J referred to those matters this way:
". . . . a case in which there are special or unusual features of an unmeritorious or improper nature surrounding the case of one party (usually the loser) which make it unreasonable and unfair that the successful party should be out of pocket as a result of the proceedings."
The view of Morling J in the Tobacco Industry Case , consistently with our thinking, was that fierce opposition to the claim was insufficient to ground indemnity costs; something more is needed.'
6 This is the approach which must guide the exercise of the discretion to award indemnity costs. Here the claim for indemnity costs was advanced on the basis that:
· The applicant prosecuted his case in wilful disregard of the facts known to him.
· In his conduct of the proceedings he opportunistically multiplied allegation upon allegation, all of them ultimately found to be groundless, in a deliberate attempt to deny the agreement that he had made.
· As a result, he grossly prolonged the hearing.
· He made allegations of fraud that were not sustained, and which he must have known to be false. His allegations of serious misconduct against his former legal representatives have the same character.
7 Additionally there was, it was submitted, a strong public interest in litigation being brought to an end. It was submitted that indemnity costs would be properly awarded where litigation was pursued unreasonably in the light of settlement negotiations.
8 This approach was opposed for the applicant because it was submitted that the respondents were not entitled to appropriate and reprobate. The agreement which they had relied upon had included a payment of $20,000 to the applicant in respect of his costs. It followed that it had been agreed that there was to be no other order made as to costs and that the applicant was to be released in relation to the claim he had advanced. The costs order sought, so understood, was contrary to the deed upon which the respondents relied.
9 It was submitted for the respondents that the principle relied on was misstated, that it was the applicant who had denied the agreement and could not later seek to take advantage of one aspect of it, in circumstances which could not possibly have been in the parties' contemplation when the agreement was made.
10 I reject the applicant's arguments as to whether or not a costs order should be made in the proceedings, having in mind the terms of the deed.
11 As the earlier judgment noted, the proceedings before me were concerned with a notice of motion filed by the applicant seeking to proceed to have his application heard. The respondents were brought to the Court to defend that application, which they did by filing their own motion. While it was submitted that the respondents could have accepted the applicant's breach of the agreement and recovered damages, I cannot agree that they are not entitled to a costs order in these circumstances, having been brought to this Court by the applicant who sought to proceed with his claim, despite the agreement reached. While questions of whether litigation has been settled may in the usual case be resolved in a different jurisdiction, it was the applicant's course which brought the parties to this Court, in circumstances where it had to be concluded on the evidence that the litigation had been settled and the proceedings should therefore be stayed. I reject the argument that the motions so brought led to the parties incurring 'costs of and incidental to' the proceedings, as envisaged by the agreement between them. The applicant's course was plainly not contemplated by their agreement.
12 I do not, however, completely reject the submissions advanced by the applicant as to the basis of the order to be made. As I observed in the judgment, the applicant represented himself and as an unrepresented litigant was given various latitude by the Court. Accommodations were also made for him by the respondents. Both matters undoubtedly added to the costs incurred by the successful respondents. I accept entirely the submissions for the applicant that as an unrepresented litigant, he could not be expected to run his case as efficiently as an experienced counsel might have run the matter. Indeed, the respondents also accepted this. Nor do I take the view that the proceedings were simply vexatious.
13 Nevertheless, there were aspects of the applicant's approach which, on any view, were opportunistic, untenable and unnecessarily prolonged the hearing, as the respondents submitted, thereby unfairly adding to the costs then incurred in the proceedings. This was especially so in relation to the allegations advanced in relation to fraud and misrepresentation. They cannot simply be regarded as the applicant pursing the proceedings fiercely. Those circumstances are described in detail in the judgment of 5 July and I do not repeat them. They can be fairly characterised as demonstrating the special or unusual feature of the case, which make it unreasonable and unfair that the successful respondents be out of pocket as to the part at the least of the case. While an indemnity costs order is not designed to punish an unsuccessful litigant and is not to be made lightly, in appropriate circumstances as a matter of justice to the successful party, it must be made. I am satisfied that this is such a case.
14 In that context, I take the view that the proper course is to make an order that costs be borne on a party-party basis, other than the costs of one day of the hearing, which should be borne by the applicant on an indemnity basis. This is perhaps a conservative view as to the unnecessary prolongation of the hearing and the work associated with the difficulties in question, but one I regard as appropriate in all of the circumstances and consistent with the cautious approach which the authorities indicate should be adopted to such cases. In making that order, I do not nominate a particular day, but I should be understood as not intending that those indemnity costs reflect the costs of the last day of the hearing, which concluded prior to the luncheon adjournment.
15 As to the claim for set off, in my view even if it were within power it must be rejected, having in mind the conclusion reached in the judgment of 5 July and the orders there made. Undoubtedly, there will be questions which the parties need to discuss as to how the matters now outstanding between them should be attended to. Set off of the respective amounts which they owe each other, will no doubt be one of them. These proceedings were, however, not concerned with the enforcement of the agreement reached between the parties, but rather with questions of whether an agreement had been reached and if so, whether Dr Payne should be held to it, thereby precluding him from pressing the claim which the agreement had settled. I take the view that in these proceedings questions of set off should not be dealt with by order of the Court.