Henley Arch Pty Ltd v Henley Constructions Pty Ltd (No 2)

• Jurisdiction: Australia Federal only
• Judgment Date: 17 March 2022
• Neutral Citation: [2022] FCA 231
• Date: 17 March 2022
• Court: Federal Court

Federal Court of Australia

Henley Arch Pty Ltd v Henley Constructions Pty Ltd (No 2) [2022] FCA 231

File number(s):	VID 1240 of 2018
Judgment of:	ANDERSON J
Date of judgment:	17 March 2022
Catchwords:	COSTS - where the Respondents refused an offer made under r 25.14 of the Federal Court Rules 2011 (Cth) – whether to award indemnity costs – whether rejection of first Calderbank offer was unreasonable– whether the state of affairs provided for by the judgment was more favourable, as a matter of substance, to the offeror, compared with the state of affairs had the second offer been accepted – Respondents ordered to pay Applicant’s costs on an indemnity basis from 11am on the second business day after the second offer was made – indemnity costs awarded in accordance with r 25.14(3) of the Federal Court Rules 2011 (Cth)
Legislation:	Federal Court of Australia Act 1976 (Cth) Federal Court Rules 2011 (Cth)
Cases cited:	Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 2) [2018] FCAFC 112 CGU Insurance Ltd v Corrections Corporation of Australia Staff Superannuation Ltd[2008] FCAFC 173 Damagold Pty Ltd v Blindware Pty Ltd (No 2) [2018] FCA 364 Gribbles Pathology Pty Ltd v Health Insurance Commission(1997) 80 FCR 284 Hardingham v RP Data Pty Limited (No 2)[2021] FCAFC 175 Henley Arch Pty Ltd v Henley Constructions Pty Ltd[2021] FCA 1369 Lack v Lipovac & Ors(1998) 217 ALR 386 Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61 Management 3 Group Pty Ltd (in liq) v Lenny’s Commercial Kitchens Pty Ltd (No 3)[2011] FCA 725 Re Wilcox; Ex Parte Venture Industries Pty Ltd (No 2)(1996) 72 FCR 151 Stead v Fairfax Media Publications Pty Ltd (No 2)[2021] FCA 65
Division:	General Division
Registry:	Victoria
National Practice Area:	Intellectual Property
Sub-area:	To be Completed for Commercial and Corporations, and IP NPAs
Number of paragraphs:	35
Date of hearing:	10 March 2022
Counsel for the Applicant:	Tom Cordiner QC and Lucy Davis
Solicitor for the Applicant:	Ashurst Lawyers
Counsel for the Respondent:	Bruce Caine QC and Andrew Sykes
Solicitor for the Respondent:	Gestalt Law

ORDERS

		VID 1240 of 2018
BETWEEN:	HENLEY ARCH PTY LTD ACN Applicant
AND:	HENLEY CONSTRUCTIONS PTY LTD First Respondent ; PATRICK SARKIS Second Respondent

order made by:	ANDERSON J
DATE OF ORDER:	17 March 2022

THE COURT ORDERS THAT:

1. The Respondents pay the Applicant’s costs pursuant to Order 9 of the Court’s orders dated 25 November 2021 in a lump sum and on an indemnity basis from 11am on the second business day after the 26 November 2019 offer was served pursuant to rules 40.02(b) and (c) of the Federal Court Rules 2011 (Cth) (Rules).

2. If the parties cannot agree, within three weeks from the date that this judgment is delivered on the amount of the lump sum, then that costs dispute be referred to a Registrar of this Court to fix the amount of the referred costs dispute and:

   1. within five weeks, the Applicant file and serve any costs summary and submissions in accordance with the Costs Practice Note (GPN- COSTS).

   2. within eight weeks, the Respondents file and serve any costs response and submissions in accordance with the Costs Practice Note (GPN- COSTS).

   3. pursuant to rule 1.37 of the Rules, the Registrar determine the quantum of costs in any referred costs dispute in such manner as they think fit, including, if thought appropriate, on the papers, and within four weeks of the making of the determination, make orders for the payment of the amounts so determined.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

ANDERSON J:

Introduction

1. On 5 November 2021, I delivered my decision on liability in Henley Arch Pty Ltd v Henley Constructions Pty Ltd[2021] FCA 1369 (Liability Judgment). In essence, I found that Henley Constructions infringed Henley Arch’s intellectual property rights with respect to a number of its trade marks, and that Henley Constructions also contravened the ss 18 and 29 of the Australian Consumer Law (ACL) by using various marks branded with the name “Henley”, or variations of that name in its building, construction and design business.

2. On 25 November 2021, I ordered that the Respondents pay the Applicant’s costs of and incidental to the hearing of liability on the claim, and the costs of and incidental to the cross-claim, on a basis to be determined both as to whether costs should be awarded on a standard or indemnity basis, and whether its costs are to be assessed as a lump sum or by taxation.

3. On 10 March 2022, I heard the parties’ submissions as to the appropriate method of determining the quantum of those costs.

4. The Applicant submits that its costs should be paid on an indemnity basis and in a lump sum to be determined by the Registrar in default of agreement.

5. The Respondents do not contest that the costs should be assessed on a lump sum basis, but submit that costs should be paid on a party and party basis.

6. As the parties are in agreement as to costs being awarded on a lump sum basis, I will not deal with this particular matter further.

The offers of settlementSeptember 2017 Calderbank OfferHenley Arch submissions

7. Henley Arch primarily relies upon a Calderbank offer that was made in a letter from Ashurst on behalf of Henley Arch to HP Legal (the solicitors that were then acting on behalf of Henley Constructions) dated 20 September 2017 (September 2017 Offer).

8. Henley Arch submits that by 20 September 2017, the parties had engaged in extended and detailed correspondence regarding the dispute. Prior to the September2017 Offer, by letters dated 13 April 2017 and 22 May 2017, Henley Arch had provided an explanation of the strengths of its case and offered to resolve the matter by Henley Constructions agreeing to change its company name and to cease using “Henley” in the promotion of its building and constructions services, with a grace period to inform customers of the name change ahead of it taking effect. That offer was not accepted by the Henley Constructions.

9. Henley Arch submits that the offer was a real compromise of the dispute. Henley Arch submits that the September 2017 Offer, if accepted, would have allowed the Respondent to continue to use the name “HENLEY CONSTRUCTIONS” subject to a geographical limitation, and only in respect of particular building types (those which contain less than 10 apartments).

10. Henley Arch submits that it obtained judgment more favourable in substance than what was offered in the September 2017 Offer. This is so despite, in Henley Arch’s submissions, the September 2017 Offer including a...