Manly Property Holdings Pty Ltd v Lisker Pty Ltd (No. 2)

In the Federal Court of Australia, the case of Manly Property Holdings Pty Ltd v Lisker Pty Ltd (No. 2) dealt with a dispute between two parties, Manly Property Holdings, the plaintiff, and Lisker Pty Ltd, the defendant. Lisker Pty Ltd cross-claimed against Manly Property Holdings, however, Lisker Pty Ltd did not pursue this cross-claim. The central issue before the court was the appropriate allocation of costs for the cross-claim and whether Lisker Pty Ltd could indemnify itself for its costs under the terms of its mortgage with Manly Property Holdings.

The court considered whether Lisker Pty Ltd, as the defendant and cross-claimant, should bear the costs of the cross-claim since it did not pursue the cross-claim. The court examined the general principle that costs follow the event, but also looked at the specific circumstances where a party does not pursue a cross-claim due to failing on its defence against the plaintiff’s claim. The court needed to decide if Lisker Pty Ltd could seek indemnity from Manly Property Holdings for the costs of the cross-claim based on the terms of their mortgage agreement.

The court held that Lisker Pty Ltd was not entitled to the costs of the cross-claim as it did not pursue the cross-claim. However, it found that Lisker Pty Ltd could be indemnified by Manly Property Holdings for the costs of the cross-claim under the terms of the mortgage agreement. This was because the mortgage agreement provided for Lisker Pty Ltd to be indemnified for costs in certain circumstances, including when the mortgagee (Manly Property Holdings) took steps to enforce the security. Consequently, the court ordered that Manly Property Holdings indemnify Lisker Pty Ltd for the costs of the cross-claim.