Drake v PKF (Gold Coast) Pty Ltd (No 2)

In Drake v PKF (Gold Coast) Pty Ltd (No 2), the plaintiff brought proceedings against the first and second defendants for alleged negligence occurring in 2013. The tenth amended statement of claim concerning causation and loss was struck out without leave to replead, and the proceeding was dismissed for want of prosecution. The plaintiff appealed against the dismissal, and the Court of Appeal set aside the orders made by Dalton J, including the order for the plaintiff to pay the defendants’ costs on the standard basis. The plaintiff argued that indemnity costs should not be awarded, and the defendants contended that there were grounds for indemnity costs based on an imprudent refusal of an offer to compromise and wilful disregard of known facts or clearly established law.

The court considered the defendants' reliance on an offer to compromise made on 11 July 2022, which the plaintiff refused. The offer proposed that the plaintiff discontinue his claim and pay 60% of the defendants' costs or a fixed sum of $65,000. The court found the offer to be a genuine compromise but concluded that the plaintiff's refusal was not imprudent. The court also noted that the plaintiff's proceeding had negligible prospects of success, as evidenced by the previous dismissal order. The court ultimately determined that the plaintiff should pay the defendants' costs incurred before the determination of the appeal on the standard basis, but the costs of the application filed on 27 February 2023 should be assessed on the indemnity basis.

The court ordered that the plaintiff pay the defendants' costs of the application filed on 27 February 2023 assessed on the indemnity basis if not agreed. Additionally, the plaintiff was ordered to pay the defendants' costs of the proceeding, including reserved costs, assessed on the standard basis if not agreed, to the extent that costs had not been awarded by existing orders. This decision reflected the court's view that while the plaintiff's refusal of the offer to compromise was not imprudent, other factors warranted the imposition of indemnity costs for the application.