Capital Aircraft Services Pty Ltd v Nicholas Carl Brolin

Capital Aircraft Services Pty Ltd (the appellant) appealed a decision of the Federal Court of Australia. The dispute concerned the costs of a dismissed appeal, specifically whether those costs should be awarded on a party/party or indemnity basis. The appeal was heard by Higgins CJ, Crispin P, and Madgwick J.

The primary legal issue before the Full Federal Court was whether the appellant's refusal of a settlement offer made by the respondent, in the form of a *Calderbank* letter, was unreasonable. This unreasonableness, if established, would justify an award of indemnity costs against the appellant for the appeal proceedings, notwithstanding the general rule that costs follow the event. The court also considered the nature of the appellant as a substantial corporate entity in its assessment of the reasonableness of the offer.

The court reasoned that the *Calderbank* offer was a reasonable one, and the appellant's refusal to accept it was unreasonable. The offer was made in good faith and was a genuine attempt to resolve the dispute. The appellant, as a substantial corporate entity, was expected to act reasonably in considering such offers. The court applied the principles governing *Calderbank* offers, which allow for indemnity costs where a party unreasonably rejects a reasonable offer to settle. The retirement of the appeal judge was noted but did not impact the determination of the costs.

The Full Federal Court ordered that the appellant pay the respondent's costs of and incidental to the appeal.