Justice Derrington's Costs Order: 80% Indemnity Basis — What It Means

The costs order handed down by Justice Derrington in Campbell v McIntyre (No 2) [2026] FCA 1279 is, in technical legal terms, highly significant. It is not a routine costs order. It is an indemnity costs order — a sanction reserved for the most serious misconduct in litigation.

The Order

Justice Derrington ordered Adrian James Campbell to pay 80% of the respondent's (McIntyre's) legal costs on an indemnity basis. The 80% figure reflects the court's assessment that not all of McIntyre's costs were caused by Campbell's misconduct — but the indemnity rate applies, meaning the base for calculation is actual legal costs, not the discounted party-party rate.

Why Indemnity Costs Were Imposed

The court found three material non-disclosures in Campbell's ex parte application:

1. Campbell misrepresented his country of residence as Australia when he in fact resides in Thailand
2. Campbell claimed personal losses of $25 million that were in reality losses of companies — not parties to the proceedings
3. Campbell denied any criminal history — history he subsequently acknowledged in a corrected affidavit

These non-disclosures breached the duty of full and frank disclosure that applies in ex parte proceedings — proceedings where only one party appears before the court and the court relies entirely on that party to present all material facts honestly.

"The non-disclosures were serious and exceptionally serious." — Justice Derrington, Campbell v McIntyre (No 2) [2026] FCA 1279

The Practical Effect

The practical effect of an indemnity costs order is that the losing party pays the winning party's legal bill — the real bill, at the rates their lawyers actually charged. In Federal Court litigation, involving experienced commercial solicitors and counsel, those rates are substantial. An indemnity costs order effectively transfers the entire cost of the litigation to the party whose misconduct caused it.