Manfate Pty Ltd v Krahe and Krahe (No 2)

In the Federal Court of Australia, Manfate Pty Ltd, the plaintiff, brought a case against Krahe and Krahe, the defendants, over a dispute concerning an alleged breach of contract. The plaintiff claimed that the defendants failed to fulfil certain contractual obligations, leading to financial losses. The defendants, in turn, contested these claims and presented their own evidence and arguments in response.

The central legal issue before the court was whether the plaintiff was entitled to indemnity costs incurred in addressing affidavits that were ultimately not pursued at trial. The affidavits in question, sworn by Ms Virtue and Mr Hammond on 15 October 2015, expanded upon the evidence in ways that were deemed unnecessary and peripheral to the core issues between the parties. The court had to determine if the defendants should be held responsible for these additional costs, given that the issues raised in these affidavits were not pursued during the trial.

The court ruled that the defendants were to bear the plaintiff's costs on the ordinary basis until 24 February 2016. However, from 25 February 2016, the defendants were to pay the plaintiff's costs on an indemnity basis. This included the costs associated with responding to the affidavits from Ms Virtue and Mr Hammond, as these affidavits were not central to the issues joined between the parties. The court found that the defendants' decision to serve these affidavits, which were only peripheral to the main dispute, was unjustified and thus warranted indemnity costs for the plaintiff.

The final orders required the defendants to pay the plaintiff's costs on the ordinary basis up until 24 February 2016 and on an indemnity basis from 25 February 2016 onwards. Additionally, the defendants were ordered to pay the plaintiff's costs on an indemnity basis for all costs incurred by the plaintiff in relation to the affidavits from Ms Virtue and Mr Hammond, including the preparation of any necessary affidavits from witnesses who were not ultimately called in the proceedings by the plaintiff.