Bofinger v Kingsway Group Pty Ltd (No. 2)

In *Bofinger v Kingsway Group Pty Ltd (No. 2)*, the Court of Appeal of New South Wales considered an application for indemnity costs. The dispute concerned an offer made by the fifth to seventh respondents to the guarantors, which the guarantors had not accepted.

The primary legal issue before the Court was whether the guarantors should be ordered to pay the costs of the fifth to seventh respondents on an indemnity basis, following the guarantors' failure to accept a *Calderbank* offer. The Court was required to determine if there were exceptional circumstances justifying an award of indemnity costs, particularly in the absence of any question of principle being involved.

The Court reasoned that the guarantors' conduct in refusing the *Calderbank* offer, which was made in circumstances where the fifth to seventh respondents had acted reasonably and the offer was not unreasonable, warranted an award of indemnity costs. The Court applied the principle that where a party unreasonably rejects a reasonable offer of settlement, and subsequently achieves a worse outcome, an award of indemnity costs may be appropriate. The Court found that the guarantors' refusal of the offer was unreasonable and that no question of principle was raised by the proceedings that would militate against such an award.

The Court ordered that the costs payable by the guarantors to the fifth to seventh respondents be on an indemnity basis from 7 December 2007, and that the guarantors pay the fifth to seventh respondents' costs of the application for indemnity costs.