## Facts

- A quarrying partnership sought to operate a quarry at the Arab el‑Hayib site; planning authorities denied relevant approvals and litigation followed.
- A prior judgment directed revocation of a nonconforming-use permit for the site and stated that no quarry should be operated there.
- The partnership filed a contempt application in the supreme court alleging respondents were operating a quarry contrary to the earlier judgment.
- After filing, the partnership moved to withdraw (abate) its own contempt application upon learning the activity at the site was construction of a military base rather than quarrying.
- Respondents did not oppose withdrawal but sought an award of litigation costs, including requests framed as “exemplary” costs.
- The registrar ordered the contempt application abated and imposed costs liability on the partnership, reasoning the factual basis for the contempt filing could have been verified in advance.
- The remaining dispute concerned the proper standard and amount of costs and attorney’s fees: full reimbursement of actual expenses (“real costs”) versus a moderated award.

## Issues

1. When proceedings end by withdrawal/abatement and a party is ordered to pay costs, whether the prevailing party is entitled to full reimbursement of actual litigation expenses and attorney’s fees (“real costs”).
2. What criteria govern the court’s discretionary determination of the amount of costs and attorney’s fees, including when (if ever) exemplary or near-indemnity awards are appropriate.
3. How those criteria apply where a party withdraws an avoidable contempt application after failing to verify underlying facts.

## Decision

- The court held there is no automatic entitlement to full “real costs” once costs liability is imposed.
- Costs and attorney’s fees are assessed on a normative, reasonableness-based basis; actual private fee arrangements are not treated as binding benchmarks for fee shifting.
- The court applied a multi-factor approach, considering case outcome, party conduct, complexity and scope, proportionality, and the need to avoid deterring access to courts.
- The partnership remained liable for respondents’ costs because the contempt application was unnecessary and could have been avoided with reasonable diligence, but the amount was to be moderated rather than automatically set at the full claimed “real” fees.
- Requests for exemplary costs were treated as exceptional and not warranted on the showing made.

## Legal Principles

- A costs award involves two distinct inquiries: (1) who bears costs liability and (2) the reasonable quantum of costs and attorney’s fees.
- A prevailing party is not entitled as of right to full reimbursement of all actual expenditures and privately negotiated attorney’s fees.
- Courts set costs on a normative, moderated scale to balance compensation, deterrence of wasteful litigation, and access to justice.
- Relevant factors include: the effective outcome; diligence and good faith; whether proceedings were avoidable or unnecessarily prolonged; factual/legal complexity; proportionality between claimed fees and the dispute; and, where applicable, public-interest concerns and chilling effects.
- Exemplary or near-indemnity (“real costs”) awards require exceptional justification, such as bad faith or abuse of process.

## Conclusion

The court clarified that even when costs liability is imposed after proceedings end by withdrawal, fee shifting is not full indemnity by default; courts award moderated, reasonable costs guided by outcome, conduct, proportionality, and access-to-justice considerations, and reserve exemplary or “real costs” awards for exceptional cases.


Kinneret Quarries (Ltd. P’ship) v. Local Planning Comm’n Upper Nazareth, CA 2617/00, 60(1) PD 600 (Isr. 2005)