Indemnity costs ordered in Brother case
In Brother Industries, Ltd v Dynamic Supplies Pty Ltd [2008] FCA 126 the applicants (Brother) sought an order for indemnity costs against the respondent (Dynamic Supplies) following successful trade marks infringement proceedings in Brother Industries, Ltd v Dynamic Supplies Pty Ltd [2007] FCA 1490; 73 IPR 507. See our earlier article on the Brother case HERE.
Order 23, rule 11(4) of the Federal Court Rules 1979 (Cth) provides that if an offer is made by an applicant and not accepted by a respondent, and the applicant obtains a judgment on the claim to which the offer relates which is not less favourable than the terms of the offer, then, unless the Court otherwise orders, the applicant is entitled to an order against the respondent for costs incurred in respect of the claim up to the day when the offer was made taxed on a party-party basis and after that day taxed on an indemnity basis. The exercise of the discretion requires the Court to see if the relevant offer of compromise is less favourable than the overall effect of the final relief ordered.
Brother had made three offers of compromise to Dynamic Supplies before the trade mark infringement hearing. The third offer of compromise was far more modest in its scope than the first two offers, for example: it referred to ‘all packaging’ rather than the ‘all goods’ reference in the first two offers. Brother was awarded costs on an indemnity basis against Dynamic Supplies from the date of the third offer.
Dynamic Supplies was also ordered to pay costs, calculated on an indemnity basis, in respect of three other specific matters on which there was, ultimately, no real dispute, and for an untenable cross-claim it had brought against Brother.
So what?
This matter illustrates that the correct (and most practical) approach is to run your case skinny and not over-egg your pudding when making an offer of compromise.
