AAMI Limited v Cirevska (No 2)

AAMI Limited, the appellant, sought to recover indemnity costs against its former insured, Sonja Cirevska, who was the respondent in this matter. The dispute arose from a motor vehicle accident in which Cirevska was involved while insured under a policy held by AAMI. The case was before the Supreme Court of Victoria, specifically the Court of Appeal. The primary issue before the court was whether the trial judge was correct in holding that AAMI’s rejection of Cirevska's Calderbank offer was reasonable. This determination was crucial in deciding whether AAMI was entitled to indemnity costs.

The court needed to assess the trial judge's decision regarding the reasonableness of AAMI's rejection of Cirevska's offer. This involved a detailed examination of the circumstances under which the offer was made and the factors considered by AAMI in deciding whether to accept it. The court also had to consider whether the trial judge applied the correct legal principles in making the decision about the reasonableness of the rejection. The key legal principles involved the assessment of the Calderbank offer and the criteria for determining the reasonableness of its rejection, including the strength of the respondent's case and the prospects of success at trial.

The Court of Appeal found that the trial judge had correctly applied the relevant legal principles and had not erred in holding that AAMI's rejection of the Calderbank offer was reasonable. The court considered that the trial judge's assessment of the strength of Cirevska's case and the prospects of success for AAMI were consistent with the evidence and submissions presented. The court further held that the trial judge had appropriately weighed the factors relevant to the reasonableness of the rejection, including the potential for significant indemnity costs if AAMI were to lose at trial. Consequently, the appeal was dismissed, and AAMI was not entitled to indemnity costs against Cirevska.