In the matter of Nahas Construction Pty Limited

Nahas Construction Pty Limited recently appeared before the Supreme Court of New South Wales to determine a dispute regarding indemnity costs under the Uniform Civil Procedure Rules 2005 (NSW) rule 42.1. The case involved a construction project where Nahas Construction had been engaged to complete a building. A dispute arose over the quality of work and the costs incurred, leading to litigation. The plaintiff sought indemnity costs, claiming that the defendant's conduct warranted such an order.

The court was tasked with deciding whether the defendant's conduct justified the imposition of indemnity costs under the relevant rule. The primary issue was whether Nahas Construction's actions were so egregious that they warranted an order for indemnity costs, or whether the usual rule that costs follow the event was sufficient. The court needed to balance the need to deter undesirable conduct with the principle that costs should not be disproportionate to the outcome.

The court found that while Nahas Construction's conduct was problematic, it did not reach the level necessary to warrant indemnity costs. The court emphasised that indemnity costs should only be awarded in exceptional circumstances where the conduct of the losing party is egregious. The court concluded that the usual order for costs to follow the event was appropriate in this case. The ruling highlighted the importance of proportionality in cost awards and the need to ensure that such awards are not excessive or punitive without just cause. The court made no order for indemnity costs but did order the defendant to pay the plaintiff's costs of the proceeding.