Cahill v Kenna (No 2)

The case of Cahill v Kenna (No 2) involved a dispute between the Cahills and the Kennas. The Cahills sought indemnity costs from the Kennas following a failed attempt to settle the matter. The dispute came before the court on the question of whether the Kennas' offer to walk away from the litigation constituted a genuine offer to compromise for the purposes of an indemnity costs order. The court had to determine whether the Cahills' refusal to accept the offer was unreasonable and whether the timing of the offer, in relation to the service of evidence, was relevant. Additionally, the court considered whether it should draw inferences about the Cahills' reasons for changing their minds after initially indicating a willingness to agree to the offer. The weakness of the Cahills' case, even without hindsight, also factored into the court's reasoning.

The court examined the nature and timing of the Kennas' offer to walk away from the litigation and its implications for indemnity costs. It was established that the Kennas had made a genuine offer to compromise by proposing to abandon their litigation. The court had to decide whether this constituted a genuine offer for the purposes of an indemnity costs order. The court found that the Cahills' refusal to accept the offer was unreasonable, particularly given the weak state of their case. The court also held that the timing of the offer, in relation to the service of evidence, was not a material factor. Furthermore, the court concluded that it was not appropriate to draw inferences about the Cahills' reasons for changing their minds after initially agreeing to the offer. Finally, the court determined that indemnity costs should run from the date of the offer, not the date of its expiry.

In light of the above findings, the court ordered the Cahills to pay the Kennas' costs on an indemnity basis, running from the date of the Kennas' offer. The court held that the Cahills' refusal to accept the offer was unreasonable, given the weak state of their case, and that the Kennas had made a genuine offer to compromise. The court also found that it was not appropriate to draw inferences about the Cahills' reasons for changing their minds after initially agreeing to the offer. The outcome of the case highlights the importance of considering the genuineness of an offer to compromise and the reasonableness of a party's refusal to accept such an offer when determining indemnity costs.