Hanave Pty Ltd v Nomad Sydney Pty Ltd (No 2)

In the Federal Court of Australia, Hanave Pty Ltd initiated proceedings against Nomad Sydney Pty Ltd, seeking damages for breach of contract and associated claims. The dispute centred on an agreement for the lease and sale of a property, with Hanave alleging that Nomad failed to fulfil its contractual obligations. The case reached the Court following a prior decision in which Nomad had successfully challenged Hanave's application for an interlocutory injunction. Nomad then sought costs on an indemnity basis, arguing that Hanave's application was without merit and that its success in resisting the application warranted indemnity costs.

The primary legal issue before the Court was whether Nomad was entitled to indemnity costs, given the unsuccessful nature of Hanave's application. The Court had to assess the circumstances under which such costs could be awarded, considering the principles established in authorities such as Aon Risk Services Australia Limited v ACCC and the relevant provisions of the Federal Court Rules. The Court needed to determine if Hanave's application was frivolous, vexatious, or otherwise without merit to the extent that it warranted indemnity costs.

In its judgment, the Court held that Nomad was not entitled to indemnity costs. The Court found that while Hanave's application for an interlocutory injunction was unsuccessful, it was not so lacking in merit as to warrant the award of indemnity costs. The application was not frivolous or vexatious, and the Court found that there were reasonable grounds upon which Hanave could have believed that it had a viable case. The Court emphasised that indemnity costs should only be awarded in exceptional circumstances and noted that the unsuccessful party's conduct or the nature of the application did not reach the threshold for such an award. Instead, the Court ordered that Nomad pay costs on the standard basis.