Carey v Freehills

In the case of Carey v Freehills, the parties were engaged in a dispute that involved a cross-claim filed against Freehills, which was the first cross-respondent in this matter. The nature of the dispute centred around whether indemnity costs should be awarded to Freehills, given that the cross-claimants had rejected two Calderbank offers. The case was heard in the Federal Court of Australia. The legal issues that the court needed to decide involved the circumstances under which indemnity costs could be awarded, particularly in the context of Calderbank offers, and the factors relevant to exercising the court's discretion in such matters.

The court examined the stage of the proceedings, the reasonableness of the cross-claimants' rejection of the Calderbank offers, and other factors pertinent to the exercise of discretion. It was noted that the cross-claimants had rejected the offers based on several grounds, including the early stage of the proceedings and their belief in the reasonable prospects of success of the cross-claim. However, the court found that Freehills had not established that the rejection was unreasonable or imprudent. The court also considered the broader context of the litigation, including the unsuccessful mediation and the procedural steps taken prior to the trial. Ultimately, the court decided that an indemnity costs order was not warranted, given the specific circumstances of the case.

The court's reasoning led to the outcome that Freehills was not entitled to indemnity costs. However, since Freehills had successfully defended the cross-claim, the court ordered that the cross-claimants pay Freehills’ costs of and incidental to the cross-claim on a party and party basis. Additionally, the court dismissed other claims made by the cross-claimants regarding the exclusion of certain costs from the overall costs order and the reimbursement of specific costs related to proposed witnesses.

The final orders made by the court included the directive that the cross-claimants pay the first cross-respondent’s costs of and incidental to the cross-claim on a party and party basis. The entry of these orders was governed by Rule 39.32 of the Federal Court Rules 2011.