Kupang Resources Pty Ltd v Commonwealth of Australia (No 3)

The case before the Federal Court involved Kupang Resources Pty Ltd, a mining company, and the Commonwealth of Australia, which was represented by the Department of Agriculture and Water Resources. The dispute centred on the enforcement of an injunction against the company for non-compliance with certain environmental obligations. The Federal Court was tasked with determining the appropriate basis for quantifying costs between the parties, specifically focusing on whether the indemnity basis was applicable and the implications of a genuine offer of compromise made by the company.

The primary legal issue was whether the indemnity basis for costs should be applied and, if so, whether it should be affected by the company's offer of compromise. The court had to consider whether the offer of compromise, which proposed to replace the security for costs without specifying the terms, was reasonable and whether it justified rejecting the offer. The court also needed to determine whether the offer was genuinely made and whether it had any bearing on the costs order.

In delivering the judgment, the court held that the indemnity basis for costs was appropriate but did not necessarily mean that the party offering the compromise would automatically bear all costs. The court found that the offer of compromise made by Kupang Resources was not unreasonable and did not mandate the acceptance of the indemnity basis for costs. The court reasoned that the offer, while contemplating a replacement of security, did not specify the terms and was therefore not unreasonable to reject. The court concluded that the offer of compromise did not alter the basis on which the costs should be assessed.

The final orders of the court maintained the indemnity basis for costs but did not impose the full costs on Kupang Resources due to the genuine offer of compromise. The court ordered the Commonwealth to bear its own costs incurred up to the point of the offer and directed Kupang Resources to pay a proportion of the Commonwealth's costs from that point onward.