Metro North Hospital and Health Service v Pierce (No. 2)

Metro North Hospital and Health Service (the appellant) sought indemnity costs against Pierce (the respondent) in relation to an appeal and cross-appeal. The dispute concerned the appropriate basis for awarding costs following the determination of the appeal and cross-appeal.

The primary legal issue before the Court of Appeal of Queensland was whether the respondent was entitled to an order for indemnity costs from a specific date, notwithstanding that the offer of compromise related to both the appeal and the cross-appeal, and that no question of principle was involved.

The Court of Appeal reasoned that the offer of compromise, which was made by the respondent, was broad enough to encompass both the appeal and the cross-appeal. The Court noted that the offer was made after the substantive hearing of the appeal and cross-appeal had concluded, and that the offer was not conditional on the outcome of any particular aspect of the proceedings. The Court applied the principles governing offers of compromise, which generally favour awarding indemnity costs where a party makes a reasonable offer that is not accepted and subsequently obtains a more favourable outcome. In this instance, the respondent had obtained an order for costs on the ordinary basis up to 20 March 2017, and the Court found that the offer of compromise was sufficiently broad to justify an order for indemnity costs thereafter.

The Court ordered that the appellant pay the respondent’s costs of the appeal and cross-appeal on the ordinary basis up to and including 20 March 2017, and thereafter on the indemnity basis.