Firstmac Limited v Zip Co Limited (No 2)

Firstmac Limited sought to recover indemnity costs from Zip Co Limited after the proceedings were dismissed. The dispute centred on whether the Zip Companies were entitled to indemnity costs due to Firstmac's rejection of two offers to settle under the Calderbank principle. The case was heard in the Federal Court of Australia. The central legal issues were whether Firstmac's rejections of the offers to settle were unreasonable, and if so, whether the Zip Companies were entitled to indemnity costs as a result. The court had to consider the nature and timing of the offers, Firstmac's prospects of success, and the reasonableness of the offers in light of the evidence available at the time.

The court held that Firstmac's rejections of the offers to settle were not unreasonable. The First Calderbank Offer was made too early in the proceedings, before sufficient evidence was available for Firstmac to assess its chances of success. The Second Calderbank Offer was also made at a time when Firstmac had not had the opportunity to challenge the particulars in the Zip Companies' defence, and given the admissions made by the Zip Companies, it was reasonable for Firstmac to reject the offer. Consequently, the court found that the Zip Companies had not established that it was unreasonable for Firstmac to reject the offers, and therefore, the Zip Companies were not entitled to indemnity costs.

In conclusion, the court dismissed the Zip Companies' application for indemnity costs, ordered that the Zip Companies pay Firstmac's costs of the application, and directed that the Zip Companies' costs of the proceeding be assessed as a lump sum. The court also provided a timeline for the filing of costs summaries and any responses, and outlined the procedure for determining an appropriate lump sum figure if the parties could not agree. The orders reflect the court's determination that the Zip Companies had not demonstrated an entitlement to indemnity costs.