Ferella v Stomo (No 2)

The case before the court involved a dispute between Ferella and Stomo, with the primary issue being the appropriateness of the costs order made in the proceedings. Ferella, the successful party, had served an offer of compromise and a Calderbank offer, along with repeated 'without prejudice' offers of settlement. Despite these efforts, the court made an order for indemnity costs against Ferella, a decision which is now under review. The court was required to decide whether the gross sum costs order made by the lower court was appropriate, especially in light of the successful party's settlement offers.

The court examined the principles guiding indemnity costs orders and the specific context of the case, including the settlement offers made by Ferella. The court noted that indemnity costs are typically awarded when a party has acted unreasonably or in bad faith, or when there is a significant difference between the damages claimed and those awarded. The court also considered the nature of the 'without prejudice' offers and whether they should influence the costs decision. The court held that despite Ferella's settlement efforts, the defendant's conduct warranted an indemnity costs order due to the unreasonable refusal to settle.

In its reasoning, the court found that the lower court's decision to award indemnity costs and the specific gross sum of $17,000 was appropriate. The court noted that the defendant's refusal to consider Ferella's settlement offers, despite the potential for a more favourable outcome for Ferella, demonstrated unreasonable conduct. The court also upheld the lower court's decision to award gross sum costs, noting that such orders are permissible in costs appeals where the quantum of costs is reasonably within the range of what the parties might have agreed upon. The court made an order that Ferella was to pay Stomo's costs on an indemnity basis, amounting to a gross sum of $17,000, along with an additional $1,000 for the defendant's counsel's costs of the application.