Caine v Lumley General Insurance Ltd (No 2)

In *Caine v Lumley General Insurance Ltd (No 2)*, the appellants (Caine) appealed against a decision of the primary judge concerning their entitlement to costs following a dispute with the respondent insurer, Lumley General Insurance Ltd. The core of the dispute involved the interpretation of an insurance policy and the appellants' success in recovering certain costs.

The Court of Appeal was required to determine whether the primary judge erred in refusing to award the appellants their costs on an indemnity basis, particularly in light of offers of compromise made by the respondent. The central legal issue was whether the appellants had established a sufficient reason for rejecting the respondent's offers of compromise, which would justify a departure from the usual order for costs.

The Court found that the primary judge had erred in her assessment of the costs. McColl JA, with whom Mason P and McClellan CJ at CL agreed, reasoned that the appellants had, in fact, achieved a result that was more favourable than the offers of compromise made by the respondent. This success meant that the appellants were entitled to recover their costs on an indemnity basis from the date of the offers, as there was no valid reason for them to have refused those offers. The Court allowed the appeal in part, setting aside the judgment of 5 May 2006 and entering judgment for the appellants for the extra costs of reinstatement and interest. The Court also ordered that the respondent pay the appellants' costs of the appeal and the trial on an indemnity basis from specific dates, reflecting the appellants' success in relation to the offers of compromise.