Ausipile Pty Ltd v Bothar Boring and Tunnelling (Australia) Pty Ltd

In the matter of Ausipile Pty Ltd v Bothar Boring and Tunnelling (Australia) Pty Ltd, the Queensland District Court was required to determine the apportionment of costs following a dispute under the Building Industry Fairness (Security of Payment) Act 2017 (Qld). The respondent, Bothar Boring and Tunnelling (Australia) Pty Ltd, had successfully opposed an application for judgment by the applicant, Ausipile Pty Ltd, on one of three alternative defences. The court had to decide how the costs should be apportioned, particularly given that considerable time and resources were expended arguing about the two unsuccessful grounds of defence. Additionally, the court needed to consider the effect of the applicant's unreasonable refusal of a Calderbank offer made by the respondent.

The court considered the principles of costs in civil proceedings, particularly the general rule that costs follow the event, and the need for special or exceptional circumstances to depart from this rule. It noted that the respondent's offer to settle the proceeding was reasonable and open for acceptance until 10:00am on 19 October 2020. The applicant had rejected this offer two days before it expired, without providing any reason for the rejection. The court found that the applicant had ample opportunity to consider the offer and that its refusal was unreasonable. The court concluded that the applicant's unreasonable refusal of the offer warranted an indemnity costs order from the date of the offer. As a result, the applicant was ordered to pay 70% of the respondent's costs on the standard basis until 9.15am on 12 October 2020, and thereafter on an indemnity basis.

The court's reasoning was grounded in the need to deter unreasonable refusals of offers to settle and to ensure that the costs regime serves its purpose of indemnifying the successful party. The court emphasised that costs are not awarded to punish an unsuccessful party but to indemnify the successful party for the expense incurred in the litigation. The orders reflect the court's determination that the applicant's unreasonable refusal of the Calderbank offer warranted a significant costs penalty.