In the matter of B&B Legal Pty Ltd trading as Borthwick and Butler Solicitors

In the Federal Court of Australia, the case of B&B Legal Pty Ltd trading as Borthwick and Butler Solicitors involved a dispute regarding the costs incurred by the plaintiff following the setting aside of a statutory demand. The plaintiff sought an order that the defendant pay its costs on an indemnity basis, relying on without prejudice letters as the foundation for their application. The defendant, however, opposed the plaintiff's application, arguing that costs should be limited to the standard basis or that there should be no order for costs at all. Additionally, the defendant requested a stay on the enforcement of any costs order, contending that such an order would be punitive and futile.

The court had to determine the appropriate basis for awarding costs in the proceedings. The primary issue was whether the plaintiff was entitled to indemnity costs due to the without prejudice letters and the Calderbank offer made, which was considered modest. The court considered the statutory provision under section 459G of the Corporations Act 2001 (Cth) and examined the precedents that set out the circumstances under which indemnity costs could be awarded. The court also assessed the defendant's argument that the costs order would be punitive and futile, taking into account the statutory mandate that costs follow the event unless there are exceptional circumstances.

The Federal Court held that the usual rule that costs follow the event would not be departed from in this case. The court found that the defendant was to pay the plaintiff's costs of the proceedings on the ordinary basis. The court did not find the circumstances exceptional enough to warrant an indemnity order or to consider the costs order punitive and futile. The court rejected the plaintiff's reliance on the without prejudice letters and the modest Calderbank offer as sufficient grounds to award indemnity costs. Consequently, the defendant was ordered to pay the plaintiff's costs on the ordinary basis, without any stay on the enforcement of the costs order.