Total & Universal Pty Ltd v Kingsway Property Investments (No 2) Pty Ltd

Total & Universal Pty Ltd, the plaintiff, brought proceedings against Kingsway Property Investments (No 2) Pty Ltd, the defendant, seeking compensation for alleged breaches of contract. The case was heard in the Supreme Court of New South Wales. The plaintiff was unsuccessful in its claim, and the defendant subsequently initiated a cross-claim against a third party, which was also unsuccessful. The matter before the court was the allocation of costs, specifically whether the default rule that costs follow the event should be departed from, and whether indemnity costs were warranted.

The court needed to determine whether the departure from the default rule was justified in the circumstances. It also had to decide whether indemnity costs were appropriate, given that the defendant's cross-claim failed. Additionally, the court needed to consider the effect of Calderbank letters on the costs order, specifically whether an invitation to surrender in the form of an offer of compromise triggered an entitlement to indemnity costs. The court further had to decide whether the defendant should be denied costs based on conduct that constituted the alleged cause of action and whether the plaintiff, rather than the defendant, ought to have joined the cross-defendant to the proceedings.

The court found that departure from the default rule that costs follow the event was not warranted in the circumstances. The invitation to surrender in the form of an offer of compromise did not trigger an entitlement to indemnity costs. The conduct constituting the alleged cause of action was irrelevant in determining whether the successful defendant should be denied costs. The plaintiff, rather than the defendant, ought to have joined the cross-defendant to the proceedings. Therefore, the plaintiff was ordered to pay the defendant's costs of the proceedings and the costs of the unsuccessful cross-claim. The court also ordered that the plaintiff bear the costs of the successful cross-defendant.