Admiral International Pty Ltd v Insurance Australia Ltd (No 2)

In *Admiral International Pty Ltd v Insurance Australia Ltd (No 2)*, the dispute concerned an insurance claim brought by Admiral International Pty Ltd (the appellant) against Insurance Australia Ltd (the respondent). The primary dispute revolved around the respondent's defence that the claim arose out of the appellant's fraudulent or dishonest acts. The matter was heard in the Court of Appeal of New South Wales, with Bell CJ, Ward P, and Macfarlan JA presiding.

The court was required to determine whether the respondent, despite failing in its defence of fraud or dishonesty, should be awarded costs on an issue basis for proving certain disputed facts relevant to that defence. Additionally, the court considered whether the appellant's failure to recover a significant portion of its claim should disentitle it to an award of costs.

The Court of Appeal held that the respondent was not entitled to an issue-based costs order. The court reasoned that the respondent's primary defence of fraud or dishonesty had failed entirely, and the disputed facts, while relevant, did not constitute a distinct success on a separate issue that warranted a departure from the general rule that the unsuccessful party pays the costs of the successful party. The court affirmed the principle that an issue-based costs order is an exception to the general rule and requires a clear demonstration of success on a discrete issue.

The court ordered that the respondent pay the appellant's costs of the appeal and the proceedings at first instance. Further orders were made regarding the payment of monies paid into court as security for costs, which were to be paid out to the appellant. In relation to a cross-claim, the court ordered that the first respondent indemnify the appellant for certain judgments, costs, and interest awarded to a second respondent, and that the first respondent pay the appellant's costs of the appeal and the cross-claim.