Pawlowska v Zajglic (Costs)

The case of Pawlowska v Zajglic concerned a dispute over indemnity costs in the Federal Circuit and Family Court of Australia. The applicant sought costs on an indemnity basis following a successful application for orders in relation to the care and control of a child. The respondent had previously offered to settle the case on terms that were less favourable than the orders ultimately granted. The central legal issue was whether the applicant was entitled to indemnity costs given that the orders obtained were more favourable than the respondent's offer of compromise.

The court examined the principles governing indemnity costs and noted that such costs are typically awarded where the defendant's conduct is unreasonable, oppressive, or vexatious, and where the plaintiff obtains an order that is more favourable than the defendant's offer. In this instance, the court found that the respondent's conduct was not unreasonable or vexatious, and thus, the applicant was not entitled to indemnity costs. Instead, the court awarded costs on the standard basis.

The reasoning of the court was grounded in the principle that indemnity costs are not a matter of right but are awarded at the court's discretion based on the circumstances of the case. The court concluded that while the applicant had obtained more favourable orders, this alone did not justify an award of indemnity costs. The court emphasised that the respondent's conduct did not meet the threshold for unreasonableness or vexatiousness required for such an award.

The final orders of the court were that the applicant was entitled to costs on the standard basis but not on an indemnity basis. This decision underscores the importance of assessing the defendant's conduct when determining the appropriate basis for awarding costs.