Richard Gillam v Cumberland Council (No 2)

In the Federal Circuit and Family Court of Australia, the case of Richard Gillam v Cumberland Council (No 2) was heard. The Plaintiff, Mr. Gillam, had previously brought an action against the Cumberland Council, the Defendant, but failed to establish liability in the principal proceedings. The Defendant then sought indemnity costs as the Plaintiff had not accepted three offers of compromise made during the litigation. The Plaintiff argued that the Court should not order indemnity costs as it did not act unreasonably and requested an alternative order be made. The Court was required to determine whether the Plaintiff acted reasonably and if the circumstances warranted an alternative order under the relevant provisions of the Uniform Civil Procedure Rules 2005 (Cth).

The central legal issue before the Court was whether the Plaintiff had acted unreasonably in not accepting the Defendant’s offers of compromise and consequently whether the Defendant was entitled to indemnity costs. The Court considered the relevant provisions of the Uniform Civil Procedure Rules, specifically UCPR 20.26 and 42.15A, which provide for the recovery of costs on an indemnity basis if a party fails to accept a compromise offer that is more favourable than the eventual outcome. The Court also considered whether the circumstances warranted an alternative order under UCPR 42.15A, which allows the Court to order that costs be paid on a different basis if it is satisfied that the party who failed to accept the compromise offer acted reasonably.

In determining the appropriate costs order, the Court found that the Plaintiff had not acted unreasonably in failing to accept the Defendant’s offers of compromise. However, the Court held that this was not sufficient to displace the operation of UCPR 42.15A. The Plaintiff had not demonstrated any circumstances that warranted the Court making an alternative order. The Court concluded that indemnity costs were appropriate and ordered that the Plaintiff pay the Defendant’s costs on an ordinary basis to a certain date and on an indemnity basis thereafter.