Koolan Iron Ore Pty Ltd v Infrassure Ltd (No 4)

In Koolan Iron Ore Pty Ltd v Infrassure Ltd (No 4), the court was tasked with determining the costs of a proceeding that involved complex issues relating to a business interruption insurance policy. Koolan, the insured party, and Infrassure, one of the insurers, had previously engaged in a dispute that was comprehensively addressed in a main judgment, Koolan Iron Ore Pty Ltd v Infrassure Ltd (No 2). This costs decision follows the final judgment that resolved the substantive issues between the parties. The court needed to decide which party, if any, was entitled to a costs order, to what extent that order should be apportioned, and whether Koolan should be liable for costs on an indemnity basis following Infrassure's Calderbank offer.

The legal issues before the court included whether Infrassure was entitled to a costs order in its favour, the extent to which the costs order should be apportioned between the parties, and whether Koolan should be liable for costs on an indemnity basis after Infrassure's Calderbank offer. Both parties argued for their entitlement to a costs order in their favour, with Koolan contending it should be the primary beneficiary due to its success in obtaining payment, and Infrassure arguing it was more successful on the dominant issue. The court considered the mixed success of both parties and the nature of Infrassure's offer, which was an 'all up' offer without a separate component for costs or interest. The court found that Infrassure was more successful overall, particularly on the dominant issue of the policy's interpretation, and that Koolan's rejection of Infrassure's offer was not unreasonable. Therefore, the court ordered Koolan to pay 70% of Infrassure's costs, excluding certain specified hearings, and rejected the notion of indemnity costs.

In its reasoning, the court emphasised that when parties have mixed success on separable issues, the focus should be on the overall evaluation of success and failure rather than a binary outcome. The court found that Infrassure's success on the dominant issue outweighed Koolan's success in obtaining payment, leading to the conclusion that Infrassure deserved a significant portion of its costs from Koolan. The court also noted that while rolled-up offers may generally not be unreasonably refused, there could be circumstances where such an offer supports a claim for indemnity costs, which was not the case here. The court concluded that Koolan's rejection of Infrassure's offer was not unreasonable and thus did not warrant indemnity costs. The final orders required Koolan to pay 70% of Infrassure's costs, with no party to bear the costs of the costs dispute itself.