Bonanno v Finamore (No 2)

The New South Wales Court of Appeal, comprising Ward P, Macfarlan JA, and Basten AJA, considered an application to vary a costs order made on 20 December 2022. The underlying dispute concerned an appeal where the appellant, Bonanno, was ultimately successful in having the appeal dismissed with costs. The application to vary the costs order related to the assessment of those costs, specifically whether they should be awarded on an ordinary or indemnity basis from a certain date.

The primary legal issue before the Court of Appeal was whether to vary the existing costs order to reflect an indemnity basis for costs incurred after 23 August 2022. This question arose in circumstances where an offer of compromise had been made by the respondent, Finamore, which was not accepted by Bonanno. Bonanno was successful on appeal, meaning Finamore, as the offeror, had not achieved a better outcome than their offer. The Court was required to determine if the circumstances warranted an order for indemnity costs from the date of the unaccepted offer.

The Court reasoned that the purpose of an offer of compromise is to encourage settlement and that a party who rejects an offer and subsequently fails to achieve a better outcome on appeal may be penalised in costs. In this instance, the Court found that the offer of compromise made by Finamore was not accepted, and Bonanno was ultimately unsuccessful in their appeal. Consequently, the Court varied its previous order to reflect that costs should be assessed on an ordinary basis up to and including 23 August 2022, and thereafter on an indemnity basis, reflecting the unaccepted offer of compromise. The appeal was dismissed with costs, with the costs of the motion to vary the order also to be assessed on the same basis.