Alison Jane Whittle and ROZILIE Patricia Munday v Filaria Pty Limited ACN 056 933 843 and Independent Group Pty Limited ACN 008 659 792 and DAVID SHEARER and Millie Phillips; Henry Posch v Filaria Pty Limited Acn

This matter concerned an appeal to the Court of Appeal of the Australian Capital Territory from a judgment of a single judge of the Supreme Court of the Australian Capital Territory. The appellants, Alison Jane Whittle, Rozilie Patricia Munday, and Ian Donaldson Johnston, were plaintiffs in separate actions concerning their purchase of units in the Canberra International Hotel. They claimed to have suffered loss and damage due to false and misleading representations made by the respondents, Filaria Pty Limited (the seller), Independent Group Pty Limited (the selling agent), and David Shearer (an employee of the selling agent). The appeal specifically concerned an order for indemnity costs made by the trial judge in favour of the defendants from 5 May 2003.

The central legal issue before the Court of Appeal was whether the trial judge had erred in exercising his discretion to award indemnity costs against the plaintiffs. The trial judge had based this decision on his view that the plaintiffs had unreasonably declined to negotiate a settlement and that their claims were tenuous. The Court of Appeal was required to determine if the evidence supported these findings and, if not, whether the discretion to award indemnity costs had miscarried.

The Court of Appeal disagreed with the trial judge’s conclusions on both grounds. Upon reviewing the extensive correspondence between the parties regarding settlement negotiations, the Court found the position to be confused and vacillating, rather than indicative of an obstinate refusal to negotiate by the plaintiffs. While acknowledging that some requests made by the plaintiffs might have been unreasonable in isolation, the Court found that the overall conduct did not preclude further negotiation. The Court also noted that the assessment of the claims as "tenuous" was made with hindsight and would not have been an obvious conclusion prior to the findings of fact. Consequently, the Court concluded that the trial judge's discretion had miscarried.

The appeal was allowed with costs.