Vagg v McPhee (No 2)

In *Vagg v McPhee (No 2)*, the New South Wales Court of Appeal considered an application for indemnity costs of an appeal. The dispute concerned the validity of an offer of compromise made by the respondents.

The primary legal issue before the Court of Appeal was whether the appeal was so demonstrably lacking in merit that it should be characterised as "hopeless," thereby justifying an award of indemnity costs from a particular date. This required the Court to assess the prospects of success of the appeal at the time the offer of compromise was made and subsequently.

The Court reasoned that an appeal would be considered hopeless if it had no reasonable prospect of success. Applying this principle, the Court found that the appeal, when viewed from the perspective of the offer of compromise, was indeed hopeless. Consequently, the Court ordered that the appellants pay the respondents' costs of the appeal. These costs were to be assessed on the ordinary basis up to and including 5 July 2012, and on the indemnity basis from 5 July 2012 onwards.