Kitchen v Vision Eye Institute Ltd

Kitchen, an appellant, brought an appeal against a decision of Vision Eye Institute Ltd, the respondent, in which the respondent had been awarded damages in a prior action. The appeal was dismissed and the appellant subsequently abandoned numerous grounds of appeal. During the appeal process, the respondent made two offers of compromise pursuant to Calderbank. These offers were substantially more favourable to the appellant than the trial judge’s order. The appellant unreasonably refused both offers. Both parties agreed that the appellant should be ordered to pay the respondent's costs of the appeal. The question before the court was whether those costs should be assessed on the standard basis or on the indemnity basis.

The primary legal issue the court had to address was the appropriate basis for assessing the costs of the appeal. Under Australian law, costs can be assessed on either a standard basis or an indemnity basis. The standard basis means that the losing party pays the winning party’s costs, but only to a limited extent. The indemnity basis means that the losing party pays the winning party’s costs in full, regardless of whether those costs are reasonably incurred. The court needed to determine whether the appellant’s unreasonable refusal of the Calderbank offers justified an indemnity assessment of costs.

The court found that the appellant's unreasonable refusal of the Calderbank offers warranted an indemnity assessment of costs. It held that the appellant's conduct in refusing the offers without justification constituted an abuse of the court process. Therefore, the appellant should be liable for the respondent's costs of the appeal, assessed on the indemnity basis for costs incurred after 5.00 pm on 12 February 2016, and on the standard basis otherwise.

Accordingly, the court ordered that the appellant pay the respondent's costs of and incidental to the appeal. The costs were to be assessed on the indemnity basis in respect only of costs incurred by the respondent after 5.00 pm on 12 February 2016, and otherwise to be assessed on the standard basis.