Elkin and Wearne

In the matter of Elkin and Wearne, the court was asked to determine the appropriate basis for awarding costs. The specific dispute concerned whether the wife should be ordered to pay the husband's costs on an indemnity basis or the usual party and party basis.

The central legal issue before the court was the application of the principles governing the award of indemnity costs, as distinct from the standard party and party costs. This required the court to consider the circumstances under which it is appropriate to depart from the ordinary rule of awarding costs on a party and party basis.

Judge Neville, in his reasoning, referred extensively to the principles outlined by Sheppard J in *Colgate-Palmolive Co v Cussons Pty Ltd*. These principles establish that the ordinary rule is for costs to be awarded on a party and party basis, which often falls short of a complete indemnity. Departure from this rule requires special or unusual features in the case that warrant such a departure. While the categories for exercising discretion are not closed, examples of conduct that might justify indemnity costs include making allegations of fraud known to be false, commencing proceedings for an ulterior motive, or wilful disregard of known facts or established law. Ultimately, the decision rests on whether the particular facts and circumstances of the case warrant an order for costs other than on a party and party basis, and the exercise of this discretion will not be found to have miscarried unless it involves a manifest error or injustice.

The court ordered that the Wife pay the Husband’s costs fixed in the sum of $12,000.00.