Hatziandoniou v Ruddy (No 2)

The appeal concerned costs orders made by the District Court following a personal injury claim. The appellant, Mr. Hatziandoniou, had appealed a judgment in favour of the respondent, Ms. Ruddy, after the District Court had rejected expert evidence tendered by the appellant. The Court of Appeal had previously ordered a new trial and found the appellant entitled to the costs of that appeal, but the assessment of those costs was subject to further determination. The appeal before the Court of Appeal in this instance concerned the assessment of costs, including the costs of the first trial and special costs orders.

The primary legal issues before the Court of Appeal were: (a) whether the appellant was entitled to indemnity costs of the appeal, or if costs should be assessed on an ordinary basis; (b) the appropriate disposition of the costs of the first trial; and (c) whether special costs orders should be made given the partial success of both parties. The court also considered the impact of an unaccepted offer of compromise made by the appellant under rule 20.26 of the Uniform Civil Procedure Rules 2005 (NSW).

The Court of Appeal reasoned that the erroneous rejection of expert evidence by the District Court judge was an ordinary hazard of litigation, and therefore, the costs of the first trial should be left to the discretion of the judge presiding over the new trial. Regarding the costs of the appeal, the court noted that the appellant had achieved substantial success in overturning the initial judgment and securing a new trial. While the appellant's award of damages was contingent on the outcome of the retrial, the court determined that costs of the appeal should be assessed on an ordinary basis, not indemnity, as the appellant's success on one ground of appeal was significantly diminished by the limited success on other grounds, including an unsuccessful appeal against the assessment of damages. The court also declined to make special costs orders, finding that both parties had achieved partial success.

Consequently, the Court of Appeal set aside the District Court's costs order, ordered that the respondent pay the appellant's costs of the appeal on an ordinary basis (excluding costs of the special costs application), and directed that the costs of the first trial be at the discretion of the judge conducting the new trial. The respondent was also granted a certificate under the Suitors’ Fund Act 1951 (NSW) in respect of the costs of the appeal.