Colgate-Palmolive Company v Cussons Pty Limited (1993) 118 ALR 248

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  • Judgment was ordered in the underlying proceedings on 11 May 1993.
  • The orders included orders that the applicants’ application be dismissed.
  • Paragraph 5 of the orders required the applicants to pay the respondent its costs of the application and cross-claim.
  • Paragraph 6 reserved liberty to the respondent, within 28 days after the disposal of all appeals from the orders, to apply for an order that the costs which the respondent was entitled to recover from the applicants be assessed or taxed on an indemnity basis.
  • The respondent, predictably, applied for indemnity costs.


  • When is a party entitled to indemnity costs?


  • In determining the application for indemnity costs, his Honour Justice Sheppard (as he then was) reviewed the relevant authorities and identified the circumstances where the Court will exercise its discretion to award costs on an indemnity basis:
    • Where a party alleges fraud knowing them to be false or makes irrelevant allegations of fraud;
    • Where there is evidence of misconduct that causes a loss of time to the Court and other parties;
    • Where proceedings were commenced for an ulterior motive or reason;
    • Where proceedings were commenced/continued in blatant disregard of known facts or clearly established law;
    • Where allegations were made which should never have been made;
    • Where the proceeding was unreasonably prolonged by groundless contentions; or
    • Where there was an imprudent refusal of an offer to compromise.
  • Sheppard J considered it appropriate to award indemnity costs.


…the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England…

(Sheppard J at paragraph [4])

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