Skalkos v Assaf (No 2)

The appeal concerned an application for indemnity costs by the respondents following a decision of the Court of Appeal of New South Wales. The appellants had ignored an offer of compromise made by the plaintiff (respondent) prior to the hearing of the appeal.

The Court of Appeal was required to determine whether it should exercise its broad discretion to award indemnity costs against the appellants. This involved considering whether the judgment obtained by the respondents constituted a substantial improvement on the terms offered in the compromise, and whether the appellants' conduct in ignoring the offer could be characterised as unreasonable, thereby justifying an award of indemnity costs.

The Court reasoned that while a *Calderbank* letter is a relevant factor in the exercise of discretion regarding costs, it is not determinative. In this instance, the judgment obtained by the respondents was a substantial improvement on the offer of compromise. Furthermore, the Court found that the appellants' conduct in disregarding the offer of compromise was unreasonable, justifying the exercise of its discretion to award costs on an indemnity basis.

Consequently, the Court ordered that the appellants pay the respondents' costs of the appeal on an indemnity basis.