Naomi Marble and Granite Pty Ltd v FAI General Insurance Company Ltd (No 2)

Naomi Marble and Granite Pty Ltd sought damages from FAI General Insurance Company Ltd over an insurance claim related to a fire incident. The insurance company filed an application for indemnity costs against the plaintiff, arguing that the plaintiff had unreasonably refused settlement offers made under the Calderbank procedure and had pursued fraudulent claims. The case reached the Supreme Court of New South Wales where Justice Giles assessed the merits of the application. The central legal issue was whether the plaintiff had unreasonably refused the settlement offers, thereby justifying an order for indemnity costs. The court had to consider whether the plaintiff's refusal to accept the settlement offers was reasonable and whether the claims against the insurance company were fraudulent.

Justice Giles concluded that the plaintiff had unreasonably refused the settlement offers, which if accepted, would have resolved the case to the plaintiff's benefit. The court found that the plaintiff had not only failed to achieve a better result but also engaged in fraudulent conduct by submitting false evidence and exaggerating claims. The judge adopted the approach that there should be a prima facie presumption of indemnity costs when an offer of compromise is rejected and the recipient fails to achieve a more favorable outcome. Justice Giles found the plaintiff's claims to be fraudulent and held that the plaintiff's actions constituted an attempt to deceive the court. Based on these findings, the judge ruled in favor of the insurance company, ordering the plaintiff to pay the defendants' costs on an indemnity basis.