Stephenson v Dental Corporation Pty Ltd (No 2)

The case of Stephenson v Dental Corporation Pty Ltd (No 2) involved the plaintiffs, Mr. Stephenson, and the defendants, Dental Corporation Pty Ltd, who were engaged in a contractual dispute. The plaintiffs alleged breaches of contract by the defendants and sought damages. The matter was heard in the Supreme Court of Queensland. The defendants successfully defended the claims and sought indemnity costs against the plaintiffs, arguing that the plaintiffs had rejected three offers to resolve the matter without proceeding to trial.

The court had to determine whether the defendants could establish special circumstances that would warrant an order for indemnity costs. The defendants contended that by rejecting their offers to settle, the plaintiffs had acted unreasonably and without merit, thus justifying the indemnity costs. The plaintiffs argued that the offers were not genuine or comprehensive enough to warrant acceptance, and that their decision not to settle was reasonable and in the best interest of their case. The court needed to weigh the evidence and arguments presented by both parties to determine if special circumstances existed.

The court found that the defendants had indeed made genuine offers to resolve the dispute that were not accepted by the plaintiffs. These offers were made at a stage when the prospects of success for the plaintiffs were diminishing, and accepting the offers would have been a reasonable course of action. The court held that the plaintiffs' rejection of these offers constituted an unreasonable position, as it exposed them to unnecessary costs and risks. Consequently, the court determined that special circumstances existed, justifying an order for indemnity costs from a certain date onwards.

The final orders were that the plaintiffs pay the defendants’ costs up to and including 4 August 2022 on the standard basis, and the costs from 5 August 2022 on the indemnity basis.