Federal Court of Australia

Helicopter Aerial Surveys Pty Ltd v Insurance Australia Limited (No 3) [2025] FCA 1624

ORDERS

THE COURT ORDERS THAT:

1.    The Respondent pay the Applicant’s costs of the proceedings in the lump sum of $108,159.49.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

JACKMAN J:

1    I gave judgment in these proceedings on 7 November 2025 in favour of the Applicant in the amount of $507,510.61 plus interest: Helicopter Aerial Surveys Pty Ltd v Insurance Australia Ltd (No 2) [2025] FCA 1360 (the Principal Judgment). Defined terms used in this judgment bear the same meaning as given in the Principal Judgment. I expressed the preliminary view at [66] that in light of HAS having succeeded (although not to the full extent claimed), it is entitled to an order for costs in its favour, and I set a timetable for the filing and service of evidence and written submissions in relation to costs.

2    HAS submits that the Court should make a lump sum costs order, including that IAL pay HAS’s costs on the indemnity basis from 1 October 2025, those costs to be fixed in the lump sum of $108,159.49. IAL submits that the Court should award HAS its costs on the ordinary basis to be agreed or assessed, and alternatively that any lump sum award should be discounted from that claimed by HAS.

3    The first issue is whether costs should be awarded on a lump sum basis. The Court’s preference, wherever it is practicable and appropriate to do so, is for the making of a lump-sum costs order: Costs Practice Note (GPN-COSTS) at [4.1]. In my view, it is both practicable and appropriate to make a lump-sum order in the present case.

4    The next issue is the consequence, if any, of IAL’s non-acceptance of an offer of compromise made by HAS on 26 September 2025 pursuant to r 25.1 of the Federal Court Rules 2011 (Cth) (the Rules). That offer was expressed as follows:

The offer is that the Respondent pay to the Applicant the sum of $600,000.00.

This offer is in addition to costs.

5    The judgment sum pursuant to the Principal Judgment, with the inclusion of interest, comes to $618,620.94. Accordingly, HAS has achieved a result more favourable than that offered in its offer of compromise. HAS submits that, pursuant to r 25.14, HAS is entitled to an order that IAL pay its costs on a party and party basis up to 30 September 2025 (being the second business day after the offer was served), and thereafter on an indemnity basis.

6    IAL submits that the offer was silent as to the treatment of interest, and it could not be automatically inferred that the offer was inclusive of interest. IAL relies on the affidavit of its solicitor, who states that, as the offer was silent as to whether interest was included or excluded from the offer, he considered that interest was excluded from the offer. In my view, that was not a reasonable position for him or IAL to take. Rule 25.03 of the Rules provides relevantly that if the offer is of a sum of money, the notice “may” (not must) separately specify the amount that represents the offer in respect to the claim and interest (if any). The absence of any reference to interest in the offer made by HAS conveyed to the reasonable reader of that offer that the offer included every part of HAS’s claim, other than costs. Interest was always part of HAS’s claim in the proceeding, that claim being referred to expressly in the originating process and Concise Statement, as was understandable given that the proceedings involved a debt arising from a judgment given approximately four years and ten months before the offer was made. There was thus no ambiguity in the offer. As HAS has achieved an outcome more favourable to it than the offer, HAS is entitled to indemnity costs from 1 October 2025.

7    The next issue concerns the amount of costs claimed by HAS by way of lump sum. HAS relies on a Costs Summary prepared by an experienced solicitor specialising in legal costs, Ms Sharon Drew. Ms Drew quantifies the costs in the amount of $108,159.49, on the basis of party and party costs being payable to 11.00 am on 30 September 2025 and on an indemnity basis thereafter. Ms Drew has applied a broad-brush reduction of 15% on the amount of solicitors’ fees on a party and party basis, but with a 5% loading for skill, care and responsibility, and has also applied a broad-brush reduction of 10% to the amount of counsel’s fees actually incurred. In relation to indemnity costs incurred from 1 October 2025, Ms Drew applies a 7.5% broad-brush reduction to solicitors’ fees and a 5% broad-brush reduction to counsel’s fees.

8    Those discounts are criticised by IAL as insufficient, in light of the evidence of their solicitor that, in his experience, it is usual on a costs assessment for a party to recover 60–70% of solicitor-client costs on the ordinary party and party basis. While that may well be the usual position, Ms Drew has carefully analysed the costs incurred in the particular case at hand, and compared them to the scale rates for solicitors and the Court’s National Guide to Counsel Fees. I am satisfied that the broad-brush reductions made by Ms Drew are appropriate in this particular case.

9    Further, IAL submits that HAS was successful to the extent of 72.12% of its claim, and that there should be a corresponding reduction in the amount of costs awarded. I reject that submission. It does not appear that there was any substantial work on the part of HAS that would have been avoided if HAS had made concessions before the hearing on the matters on which it did not succeed. There was no clear separation of the issues and the evidence which would justify an apportionment of the costs to which HAS is entitled.

10    Accordingly, HAS is entitled to the costs order which it seeks.

Associate:

Dated:    17 December 2025