AAMI Limited v Hain

AAMI Limited appealed a decision of the District Court of New South Wales concerning a claim for damages. The respondent, Mr Hain, had made an offer of compromise which was not accepted by AAMI Limited. The appeal concerned the assessment of costs, specifically whether AAMI Limited should be ordered to pay Mr Hain's costs on an indemnity basis for a period after the offer of compromise was made.

The central legal issue before the Court of Appeal was whether the respondent, Mr Hain, was entitled to an order for indemnity costs of the appeal from the date of his offer of compromise, notwithstanding that the appeal was ongoing and the ultimate outcome of the appeal was not yet determined. The court had to consider the principles governing the award of indemnity costs in circumstances where an offer of compromise has not been accepted.

The Court of Appeal, in determining the issue, applied the principles established in cases concerning offers of compromise and the award of indemnity costs. The court reasoned that while an unaccepted offer of compromise is a significant factor, it is not determinative of an entitlement to indemnity costs. The court considered the overall conduct of the parties and the circumstances surrounding the offer and its rejection. Ultimately, the court ordered that Mr Hain's costs of the appeal up to 7 August 2007 be assessed on an ordinary basis, but thereafter, his costs of the appeal were to be assessed on an indemnity basis.