A bigger bang for your buck; indemnity costs order when action pursued against legal advice

The Federal Court has ordered a former university academic to pay almost $1m in costs to Monash University and former colleagues who she had unsuccessfully pursued alleging sexual harassment and unlawful discrimination whilst she was employed at the University.
The order for costs was on an indemnity basis, meaning that she has been ordered to pay their actual costs of $900,000, rather than the normal costs order for “party and party costs’, which are much less and are determined by a court scale. Party and party costs lag dramatically behind the legal fees market which is used when indemnity costs are ordered. Such orders are rare and are reserved for occasions when a party acts unreasonably in the case. When I practised as a lawyer, party and party costs were often between half and two thirds of market rates, or indemnity costs.
Justice Tracey said the professor’s “subjective view in the rightness of her cause and her conviction that she had an arguable case” were at odds with the advice she received in January 2013 from a senior lawyer to the effect that her Federal Court claim would not be “meritorious”.
Zahra v Pharmacy Management Avoca Beach Pty Ltd (No.2) (2015)] FCCA 1515 delivered 2 June 2015