Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd (No 2)

Edelbrand Pty Ltd (the appellant) and HM Australia Holdings Pty Ltd (the respondent) were parties to proceedings in the Supreme Court of New South Wales. The dispute concerned the costs of the proceedings, specifically whether the costs should be awarded on an ordinary or indemnity basis. The appeal concerned the costs of the trial proceedings and the costs of the appeal itself.

The primary legal issue before the Court was whether the respondent should be ordered to pay the appellant's costs of the trial on an indemnity basis from a certain date, or on the ordinary basis. This question arose in circumstances where the respondent had made a settlement offer that was not accepted by the appellant. The Court also considered the appropriate basis for awarding the costs of the appeal.

The Court applied the general rule that costs follow the event, meaning the unsuccessful party typically pays the successful party's costs. However, the Court also considered the principles governing the award of indemnity costs, which are awarded in circumstances where the unsuccessful party has behaved unreasonably. The Court examined the reasonableness of the appellant's rejection of the respondent's settlement offer, which had been made pursuant to the principles established in *Calderbank v Calderbank*. The Court found that the respondent's conduct in making the offer and the appellant's subsequent conduct warranted a departure from the ordinary basis for costs for a portion of the trial proceedings.

The Court ordered that the respondent pay the appellant's costs of the Court below up to and including 21 March 2011 on the ordinary basis, and thereafter on an indemnity basis. The Court further ordered that the respondent pay the appellant's costs of the appeal on the ordinary basis.