Riechelmann v McCabe (No 2)

In *Riechelmann v McCabe (No 2)*, the Court of Appeal of the Supreme Court of New South Wales considered an application for indemnity costs and the appropriate orders for costs in the District Court following a late and substantial amendment to a cross-claim. The dispute concerned the costs associated with the cross-claim, particularly in light of an amendment that significantly altered the nature of the proceedings.

The primary legal issues before the Court of Appeal were whether the appellant was entitled to indemnity costs, and how the costs of the cross-claim in the District Court should be apportioned, given the late amendment to the cross-claim. The Court also had to determine the costs of the parties' applications to vary the Court's earlier orders.

The Court rejected the application for indemnity costs, finding that neither a purported offer of compromise nor a *Calderbank* offer justified such an award. Regarding the District Court costs, the Court varied its previous order, setting aside the original costs orders made by the District Court in relation to the cross-claim. In lieu thereof, the Court ordered that the cross-defendant pay 75% of the cross-claimant’s costs of the cross-claim. This adjustment reflected the fact that the amendment to the cross-claim, even if made earlier, would have been vigorously contested, and an allowance was made for the consequent lengthening of the hearing. The Court also directed that the papers in the proceeding be referred to the Office of the Legal Services Commissioner.

Finally, the Court dismissed the appellant's application for indemnity costs and made no order as to costs in relation to the parties' applications to vary the Court's earlier orders.