Nominal Defendant v Dighton (No 2)

The appeal concerned an application for indemnity costs following a judgment in favour of the respondent, Dighton. The appellant, the Nominal Defendant, had appealed the primary judge's decision, and the respondent had cross-appealed seeking an increase in damages. The Court of Appeal dismissed the appellant's appeal and allowed the respondent's cross-appeal, increasing the award of damages by $152,661.40, resulting in a final judgment of $687,743.24 in favour of the respondent.

The central legal issues before the Court of Appeal were whether the respondent was entitled to an award of indemnity costs, and whether the appellant's conduct in rejecting the respondent's settlement offers and making a substantially lower counter-offer constituted an imprudent or unreasonable failure to accept those offers. The respondent had made two "Calderbank offers" which were rejected by the appellant.

The Court held that the respondent's Calderbank offers were reasonable. In contrast, the appellant's counter-offer was found to fall "far short of the mark," indicating an unreasonable stance in settlement negotiations. Applying the principles governing costs, particularly in circumstances where offers of compromise have been made and rejected unreasonably, the Court determined that the general rule that costs follow the event should be departed from. Consequently, the appellant was ordered to pay the respondent's costs of the appeal on an indemnity basis.