East West Airlines Ltd v Turner (No 2)

The appeal concerned an application by the respondent, Turner, for indemnity costs against the appellant, East West Airlines Ltd, following the dismissal of East West Airlines' appeal. The dispute arose from the rejection of a *Calderbank* offer made by Turner to compromise the appeal.

The central legal issues before the Full Federal Court were whether Turner's rejection of the *Calderbank* offer was unreasonable, and consequently, whether East West Airlines was entitled to an award of costs on an indemnity basis. This entitlement was argued to arise from the assertion that certain grounds of appeal pursued by East West Airlines had no reasonable prospects of success, thereby justifying the exercise of the court's discretion to award indemnity costs.

The Court considered the principles governing the award of indemnity costs, particularly in circumstances where a *Calderbank* offer has been made and rejected. It was held that the discretion to award indemnity costs is a significant one and requires careful consideration of all relevant factors. The Court found that the rejection of the *Calderbank* offer was not unreasonable in the circumstances, and that the grounds of appeal, while ultimately unsuccessful, were not so devoid of merit as to warrant the imposition of indemnity costs.

Accordingly, the respondent's application for indemnity costs was refused. The Court ordered that the respondent, Turner, was to pay the appellant's costs of the costs application.