Allianz Australia Insurance Ltd v Rawson Homes Pty Ltd (No 2)

Allianz Australia Insurance Ltd (the appellant) and Rawson Homes Pty Ltd (the respondent) were parties to proceedings in the Court of Appeal of New South Wales. The dispute concerned the appropriate orders for costs following an appeal where the appellant was successful. The court was asked to determine whether the costs of the appeal should be awarded on an indemnity basis and how the costs of the proceedings below should be apportioned, given the respondent's substantial success on factual issues at first instance despite the appellant's success on appeal.

The primary legal issues before the court were: (1) whether the appellant was entitled to an order for its costs of the appeal on an indemnity basis, and (2) how the costs of the proceedings below should be ordered, considering the general rule that costs follow the event and the specific circumstances of the case, including the respondent's significant success on factual matters at trial. A further issue arose regarding the costs of submissions made concerning the appropriate cost orders.

The court refused the appellant's application for indemnity costs of the appeal. It reasoned that while the appellant had succeeded on appeal, the offer of compromise made by the respondent was served late on the Friday before the hearing and was only open for acceptance until an hour before the commencement of the hearing, which was considered an unreasonable time frame. Regarding the costs of the proceedings below, the court applied the general rule that costs follow the event but exercised its discretion to depart from it. The court found that the issue on appeal was separable and dominant, but the respondent had been substantially successful on the factual issues at first instance, and the costs of those issues vastly exceeded the costs of the issues on which it failed. Consequently, the court ordered that the appellant pay 85% of the respondent's costs of the proceedings below.

The court made several orders: it refused the appellant's application for indemnity costs of the appeal; it ordered that the appellant pay 85% of the respondent's costs of the proceedings below; it varied a previous order to exclude certain submissions from the respondent's recoverable costs of the appeal; and it ordered that the appellant pay the respondent's costs of the application for indemnity costs and the submissions relating to the costs of the proceedings below.