Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 2)

Macquarie International Health Clinic Pty Ltd (Macquarie) and Sydney South West Area Health Service (Area Health) were parties to proceedings concerning a dispute that had proceeded through multiple stages, including a first instance hearing and an appeal. The matter before the Court of Appeal of New South Wales involved the determination of costs following these proceedings, where neither party had been entirely successful.

The central legal issue before the Court of Appeal was how to exercise its discretion regarding the costs of the proceedings, given that the successful party at first instance had nonetheless lost on some issues, and the appeal and cross-appeal also involved mixed success. The court was required to consider the principles governing the award of costs in such circumstances, particularly where a party has achieved a degree of success but has also incurred costs in relation to issues on which they did not prevail.

The Court of Appeal applied the general principle that costs follow the event, but acknowledged that this principle is subject to the court's broad discretion. In exercising this discretion, the court considered the extent of success and failure of each party on the various issues litigated. The court reasoned that a departure from the usual order for costs was warranted due to the mixed success of the parties.

Consequently, the Court of Appeal ordered that Area Health pay 25 percent of Macquarie's costs of the proceedings at first instance, including the costs of a cross-claim. Further, Area Health was ordered to pay one-half of Macquarie's costs of the appeal and cross-appeal, encompassing the costs associated with an application for a separate hearing of a specific issue and the costs incurred in arguing the present costs application.