Cabport Pty Ltd v Marinchek (No 2)

In *Cabport Pty Ltd v Marinchek (No 2)*, the New South Wales Court of Appeal considered an appeal concerning the award of indemnity costs. The dispute arose from a cross-claim brought by the respondent, Marinchek, against the appellant, Cabport Pty Ltd, in proceedings before the District Court. The core of the appeal related to whether Marinchek's conduct in maintaining its cross-claim and its rejection of an offer of compromise warranted an award of indemnity costs in favour of Cabport.

The Court of Appeal was required to determine whether Marinchek's conduct in prosecuting its cross-claim, particularly in light of its prospects of success and its response to an offer of compromise, was "plainly unreasonable" or involved "delinquency" such as to justify departing from the usual order for costs.

The Court reasoned that indemnity costs are an exceptional form of costs order and are not to be awarded lightly. It found that Marinchek had not maintained proceedings that had no real prospects of success, nor was its rejection of the offer of compromise unreasonable in the circumstances. Consequently, the Court concluded that the threshold for awarding indemnity costs had not been met.

The Court of Appeal made orders regarding the costs of the trial before Hughes DCJ and Olsson DCJ, reflecting the success and failure of various aspects of the respondent's cross-claim. These orders generally provided for the appellant to pay the respondent's costs in relation to the successful parts of the cross-claim for defects, and for the respondent to pay the appellant's costs in relation to the unsuccessful or abandoned parts of the cross-claim.