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[2010] FCA 456
procedural. Applicants to pay DKSH’s party-and-party costs of the proceeding, excluding the specified estoppel and delay defence costs, Ms Huang evidence costs, and costs of the costs application; DKSH to pay...
DKSH did not obtain indemnity costs. Although Bodum lost its main claims and had been warned about weaknesses, the Court considered that the key question about consumer perception was fact-sensitive and was not hopeless. Bodum's rejection of DKSH's early offer was not shown to be plainly unreasonable, particularly because the offer did not adequately address Bodum's concern about the resemblance between the products. The main costs order was therefore party-and-party costs in DKSH's favour, with exceptions. DKSH had to pay Bodum's costs relating to the separate estoppel and delay defences, and each side bore its own costs of the costs application.
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2,290 words · generated 29/09/2026
This judgment is about costs, not a fresh determination of whether DKSH was liable for the sale of Euroline Coffee Plungers. The applicants were Peter Bodum A/S, Bodum (Australia) Pty Limited and PI-Design AG. The respondent was DKSH Australia Pty Ltd. Middleton J gave these costs reasons on 13 May 2010, after reasons in the proceeding and a related proceeding had been published on 2 February 2010 and orders had been pronounced on 14 April 2010 ([1]).
No linked legislation citations have been extracted yet.
DKSH asked for its costs on an indemnity basis. It advanced two grounds: first, that Bodum commenced and maintained a proceeding that it should have known had no chance of success; and second, that Bodum unreasonably rejected a Calderbank offer ([2]-[3]). The offer, made on 31 July 2008, proposed that Bodum discontinue the proceeding and that each side withdraw and bear its own costs. Bodum rejected it by letter dated 15 August 2008 ([11]).
The costs dispute also concerned whether DKSH's costs should be reduced because of particular issues. Bodum sought discounts relating to other coffee plungers said to dilute its reputation and to DKSH's estoppel and delay defences ([25]). It also raised the costs of affidavits by Ms Sarah Huang that DKSH did not rely on ([31]). The Court's final orders required the applicants to pay DKSH's party-and-party costs, but excluded costs relating to the estoppel and delay defences, Ms Huang's evidence, and the costs application. DKSH was ordered to pay the applicants' costs of the estoppel and delay defences. Each side bore its own costs of the costs application (orders 1-2; [30]-[32]).
The reasons refer to the underlying dispute only to the extent needed to decide costs. The central issue included whether sale of the Euroline Coffee Plunger represented an association with Bodum. The Court described the consumer-perception question as involving the visual resemblance between the Euroline and Bodum Chambord plungers, as well as branding, marketing, labelling and packaging ([6]-[9], [20]-[22]). The costs reasons should not be read as a new ruling on the substantive claim.
The first ground for indemnity costs was that Bodum's case had been hopeless. The Court began from the general rule that a successful party's costs are ordinarily paid on a party-and-party basis, while recognising power to order a different basis in an appropriate case. For indemnity costs, there must be a special or unusual feature justifying departure from the ordinary rule ([4]). DKSH relied on the proposition that Bodum should have recognised its case as hopeless ([5]).
The Court did not accept that characterisation. It recognised that it had reached clear views in deciding the underlying matter, but considered it important that the issue was not resolved by a single rule applied to undisputed facts. Whether consumers would be misled or deceived was a factual question involving degree and judgment. The relevant assessment could take account of branding, marketing, labelling and packaging ([6]-[7]). The Court also stated that the passage from Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd relied on by DKSH was not an insurmountable obstacle to Bodum's success ([7]). DKSH's pre-proceeding warning and later detailed correspondence about the weaknesses in Bodum's case were relevant, but did not establish that the claim was hopeless ([8]-[10]).
The second ground concerned the rejected offer. The Court stated that refusing a Calderbank offer does not automatically entitle the offeror to indemnity costs. The refusal itself must be unreasonable ([12]-[13]). It was not enough that the trial outcome was less favourable to Bodum than accepting the proposal might have been, or that DKSH had identified weaknesses. The Court had to consider whether the offer and rejection were unreasonable in all the relevant circumstances ([14]-[19]).
DKSH bore the onus of showing that Bodum's refusal was unreasonable. The assessment focused on the offer's reasonableness when made, including the stage the case had reached and the parties' relative strengths and weaknesses at that time ([19]). The Court considered Bodum's view that it had a substantial reputation, had extensively promoted the Chambord plunger and could point to similarities in the overall visual impression of the two products ([20]). It also considered that DKSH did not accept at that point that it had to distinguish its plunger by branding. Although DKSH later added a swing tag, the Court had not treated that as material to liability ([21]).
The offer had been made when the proceeding had been on foot for only about three months. DKSH's costs were not then substantial, and the offer required little apparent sacrifice from the offeror ([23]). In light of that early timing, the concern about the products' visual resemblance and the offer's terms, the Court could not be satisfied that rejection was so imprudent or plainly unreasonable that it justified indemnity costs ([20]-[24]).
The issue-based costs decision turned on separability. The Court declined to discount costs for the other coffee plungers, referring to the reasons in the related proceeding ([26]). By contrast, the estoppel and delay defences were independent grounds, considered without substance and capable of separation from the other issues ([27]-[29]). Though they occupied little trial time, the Court cautioned that this did not necessarily reflect the preparation costs ([27]). It had no proper basis simply to estimate a reduction in DKSH's costs to reflect an offset ([29]). The separate costs order in favour of Bodum was therefore made, with the parties left to agree on the amounts ([30]).
This judgment applies, rather than purports to comprehensively restate, the costs principles it discusses. Before the Court's ruling, the ordinary basis of costs was party-and-party costs, and indemnity costs were available where a special or unusual feature warranted departing from that basis ([4]). The reasons give two possible features raised by DKSH: an allegedly hopeless case and an allegedly unreasonable rejection of an offer. Neither was sufficient on these facts.
For a rejected settlement offer, the Court's formulation is expressly contextual. Refusal must be unreasonable; the mere refusal is not enough ([12]-[13]). Reasonableness is assessed at the time of the offer and takes account of the status of the proceeding and the relative strengths and weaknesses of the parties ([19]). The Court did not treat the label “Calderbank” or the fact that the offer was refused as determinative. It looked at the extent of the offer alongside the surrounding circumstances ([18]-[20]).
The judgment also addresses issue-based costs. It acknowledges that courts may be reluctant to investigate which party succeeded on particular issues, but treats the separability and independent character of the estoppel and delay defences as material in this case ([28]). It does not establish a general formula for quantifying such costs. Instead, it rejected an estimated set-off because it had no proper basis for making that order, and awarded costs of the identified defences directly ([29]-[30]).
The judgment does not provide a subsequent account of how the law changed after 13 May 2010, nor does it identify later decisions adopting or rejecting its approach. Any claim about the current state of the law or later treatment would require sources beyond this judgment. The principles described here are therefore limited to what Middleton J stated and applied in this costs decision.
At [4], the Court says indemnity costs may be awarded where there is “some special or unusual feature” justifying departure from the ordinary rule. In plain English, a party's success in the case does not automatically mean it receives costs on the more generous indemnity basis. Something about the case must justify that departure.
At [7], the Court says the question whether consumers will be misled or deceived is “a question of fact” involving “matters of degree and judgment.” In plain English, the question could not be answered simply by pointing to one legal proposition or to the fact that the products carried different labels. The overall circumstances mattered. That was why the Court did not view Bodum's underlying claim as hopeless for the costs application, despite Bodum's ultimate failure to obtain the relief sought.
At [19], the Court says unreasonableness depends on the reasonableness of the offer “at the time it was made.” In plain English, the assessment is not made solely with hindsight from the eventual result of the case. The parties' positions, the progress of the proceeding and the offer's terms at the time must be considered.
At [24], the Court says it could not be satisfied that Bodum's rejection was “so imprudent or plainly unreasonable” as to justify a different costs basis. In plain English, DKSH did not meet the required threshold for indemnity costs. The outcome of the underlying case and DKSH's warnings about Bodum's case did not, by themselves, prove that rejecting this particular offer was unreasonable.
At [28]-[30], the Court treats the estoppel and delay defences as independent and separable, then orders DKSH to pay Bodum's costs relating to them. In plain English, the general costs result did not prevent a different order for clearly distinct issues on which the Court found against DKSH.
The judgment is most directly relevant to costs disputes where a successful party seeks indemnity costs on the basis that the opposing case should have been recognised as hopeless. It illustrates that a claim's failure at trial does not itself establish that it had no reasonable prospects. The nature of the underlying question matters: Middleton J considered consumer perception to involve factual evaluation and matters of degree, with several features of presentation relevant ([6]-[10]).
It is also relevant where a party relies on rejection of an offer framed as a Calderbank offer. The decision focuses on the actual terms and timing of the offer, the correspondence surrounding it, the stage of the case, and whether the offer addressed the other party's stated concern ([18]-[24]). Here, the Court took account of Bodum's concern about the apparent resemblance between the products and the fact that the proceeding was still relatively early when the offer was made ([20], [23]).
For issue-based costs, the judgment may be pertinent where a party seeks a separate costs order for independent and separable defences. The Court distinguished the time those issues occupied at trial from the possible cost of preparing to meet them, and required a proper basis for any proposed set-off ([27]-[30]). The reasons do not set out a general test for every form of apportionment, so the decision should be used within the particular reasoning it actually gives.
The judgment's usefulness is limited where the facts are materially different, such as a substantially later offer, different settlement terms, or a record that does not show what concerns were communicated before rejection. The Court made its assessment on the evidence and circumstances described in this proceeding; it did not say that an offer requiring each party to bear its own costs will always be inadequate, or that such an offer can never support an indemnity costs order ([18]-[24]).
This judgment does not describe any later court's treatment of Peter Bodum A/S v DKSH Australia Pty Ltd. It cannot, on its own, establish whether later courts followed, distinguished, applied or questioned the costs ruling. No later cases or subsequent procedural history are set out in the supplied judgment.
What the reasons do show is how Middleton J used earlier authorities. The Court referred to Re Wilcox for the special-or-unusual-feature approach to indemnity costs ([4]). It considered Parkdale in assessing whether Bodum's claim could be treated as hopeless ([7]). It referred to decisions including Hazeldene's Chicken Farm and Seven Network in explaining that rejection of an offer must be unreasonable before it may justify indemnity costs ([12]-[13]). It then referred to authorities on the nature of an offer and the contextual assessment of a rejection ([18]-[19]).
Those references describe the authorities as used by this Court in 2010. They are not evidence of how subsequent courts treated this decision. A reliable account of later treatment would need later judgments or other legal sources, which are not included in the text being analysed.
Several matters are left unresolved by these reasons. First, the judgment does not provide the full reasoning in the related proceeding that it relies on for the treatment of other coffee plungers and Ms Huang's evidence ([26], [31]). The costs order specifies that the costs of preparing Ms Huang's evidence are excluded from DKSH's recoverable costs, but the present reasons do not detail the underlying calculation or factual assessment.
Second, the judgment leaves the amounts attributable to the estoppel and delay defences for the parties to agree, expressing the hope that they could do so ([30]). It does not provide a formula for calculating those amounts or decide how they would be assessed if the parties could not agree.
Third, the reasons do not quantify the costs excluded from DKSH's award, or explain the practical assessment process for each excluded category. The operative order identifies the categories, while paragraph 31 says the Court proceeded in the same way as in the related proceeding.
Finally, the decision does not resolve how its fact-sensitive approach applies to offers with different terms, made at different stages, or against a different evidentiary and litigation background. Its own conclusion rests on the circumstances identified in the reasons, particularly the nature of the consumer-perception issue, the concerns about visual resemblance, and the early timing and terms of DKSH's offer ([19]-[24]). It also supplies no later authorities with which to assess subsequent doctrinal development.
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Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.
INTRODUCTION 1 On 2 February 2010 Reasons for Judgment were published in this proceeding and the related proceeding VID 423 of 2008. Orders were pronounced on 14 April 2010. The question on costs fell for my determination upon the making of those orders. On 13 May 2010 I pronounced costs orders. The following are the reasons for those costs orders.
INDEMNITY COSTS 2 DKSH sought an order that Bodum pay its costs of the proceeding on an indemnity basis. 3 DKSH relied on two grounds as the special circumstances that justify an order for an indemnity of costs: (a) Bodum commenced and maintained a proceeding in circumstances where properly advised it should have known it had no chance of success; (b) Bodum unreasonably rejected a Calderbank offer.
First Ground 4 It has been accepted that the general rule is that the costs of a successful party should be paid by the unsuccessful party on a party and party basis. Nevertheless, it is well established that the Court has power to make an order for costs on a different basis in the appropriate case, including an indemnity basis. Indemnity costs may properly be awarded where there is some special or unusual feature in the case justifying a departure from the ordinary rule: see Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151. 5 DKSH relied upon the proposition that on proper consideration Bodum should have seen this case to be 'a hopeless case': see in J-Corp Pty Ltd v Australian Builders Labourers' Federation Union of Workers [No 2] (1993) 46 IR 301, 303 per French J. 6 One of the essential issues in this case has whether the sale of Euroline Coffee Plungers constituted an actual representation of association with Bodum. Whilst the Court came to some very clear views in determining this matter, I do not think that it is open to conclude that Bodum had no reasonable prospects of success based upon known facts and well established law. Every case must be looked upon by considering all the relevant circumstances including the matter of branding, marketing, labelling and packaging. 7 Whether or not consumers will be mislead or deceived is a question of fact, one in which involves matters of degree and judgment. In particular, I do not think the statement of Gibbs CJ in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at p 200 was an insurmountable obstacle to Bodum's success: see for example Sydney Wide Distributors Pty Ltd v Redbull Australia Pty Ltd (2002) 55 IPR 354 and Reckitt and Colman Products Ltd v Borden Inc 1990 RPC 341. 8 I do accept that prior to the institution of the proceedings DKSH's solicitors sent a letter to Bodum's solicitors expressly referring of the decision in Puxu and the fact that Bodum and Euroline plungers were both clearly labelled. Even after the proceedings were commenced, DKSH's solicitors wrote to Bodum's solicitors setting out in detail the legal and factual reasons why its proceedings had no reasonable prospects of success. 9 However, once it is accepted that the question of whether there was a misrepresentation is one of degree and depends upon a number of facts and circumstances, I do not think it can be said that the case should have been seen as 'a hopeless case'. 10 Therefore, I have not accepted DKSH's first ground for seeking indemnity costs.
Second Ground 11 On 31 July 2008, DKSH made an offer to settle the proceeding on the basis that Bodum discontinue the proceeding and that each party would withdraw and bear their own costs. The offer was rejected by a letter from Bodum's solicitors dated 15 August 2008. 12 It is well established that an unreasonable rejection of an offer of compromise may, by itself, be a proper ground for exercising the discretion to award indemnity costs: see Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, at [28]. 13 The mere refusal of Calderbank letter does not entitle the offeror to indemnity costs. The refusal must be unreasonable: see Hazeldene's Chicken Farm at [23] and [28] and Seven Network Ltd v News Ltd [2009] FCAFC 166 at [60]. 14 It was submitted that Bodum's rejection of DKSH's Calderbank letter was unreasonable having regard to the following: (a) the outcome of the trial was less favourable to Bodum than acceptance of the offer; (b) the weakness of Bodum's case was manifest at the time of the offer and was set out in detail in the Calderbank letter and previous correspondence; and (c) given the manifest weakness of Bodum's case and the amount of cost involved in the proceeding, the offer involved a reasonable compromise. 15 Bodum essentially failed in its claims and will be liable to pay DKSH's costs on a party and party basis. 16 There is also no doubt that DKSH's solicitors had pointed out to Bodum the deficiencies in Bodum's case; not to the extent of indicating that the case was hopeless, but at least indicating that the case was not strong. 17 A question then arises to whether or not there was an attempt to offer a genuine compromise. 18 There are authorities to the effect that a defendant's offer to settle on the basis that each party bears it's own costs is not a Calderbank offer and in any event may not be considered a genuine offer of compromise: see Dresna Pty Ltd v Linknarf Management Services Pty Ltd (in liq) (No 2) [2006] FCA 755 at [20]; Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd (No 2) (2002) 201 ALR 618 at [59]-[60]; McKerlie v State of New South Wales (No 2) [2000] NSWSC 1159; Vasram v AMP Life Limited [2002] FCA 1286 at [12]; and Fyna Foods Australia Pty Ltd v Cobannah Holdings Pty Ltd (No 2) [2004] FCA 1212 at [10]. It seems to me that the correct approach is to look at the extent of the offer of compromise, viewed with all the other relevant circumstances, to determine whether the rejection of the offer was unreasonable: see Aljade at [78] to [81] per Redlich J; Szencorp Pty Ltd v Clean Energy Council Ltd (No 2) [2009] FCA 196 at [15] per Goldberg J; Fyna Foods at [11]; Vasram at [13]; Nutrientwater Pty Ltd v Baco Pty Ltd (No 2) [2010] FCA 304 and Rosemin Pty Ltd v Gasp Jeans Chadstone Pty Ltd (No 2) [2010] FCA 406. This is how I have proceeded to consider this application for indemnity costs. 19 DKSH as the party seeking indemnity of costs bears the onus of demonstrating that Bodum's refusal of its offer of settlement was unreasonable: see Black v Tomislav Liqova BHNF Maria Lipovac (1998) 217 ALR 386 at 432; Maniotis v JH Lever & Co Pty Ltd (No 2) [2006] FCAFC 28 at [7]; CGU Insurance Limited v Corrections Corporation of Australia Staff Superannuation Pty Ltd [2008] FCAFC 173 at [75] and Seven Network Limited v News Limited [2009] FCAFC 166 at [1089]. The question of unreasonableness depends upon the reasonableness of the offer at the time it was made. This includes the status of the proceedings and the relative strength and weaknesses of the parties at the time the offer was made. 20 It seems to me that the offer made and the letters of the DKSH's solicitors did not adequately address at least one of the principal concerns raised by Bodum, namely whether in all the circumstances consumers would be likely to be misled, having regard to the fact the Euroline Coffee Plunger did bear a visual resemblance to the Bodum Chambord Coffee Plunger. It is significant to recall that at this time, Bodum's view was that: (a) it had a substantial reputation as a manufacturer of coffee plunger products and household accessories; (b) Bodum had an extensive promotion in sales of the Bodum Chambord Coffee Plunger; and (c) there were some similarities in the design features in the overall visual impression of the Bodum Chambord Coffee Plunger when compared to the Euroline Coffee Plunger. 21 I observe that at the time the offer was made, DKSH did not accept that it had to distinguish the Euroline Coffee Plunger by way of branding. Nevertheless, DKSH added a swing tag later in October 2008. However, it is to be noted that I did not regard the addition of the swing tag as making any material difference, and placed no significance on the swing tag in reaching my conclusion on liability. 22 Bodum's concern and views were not unreasonably held, although for the reasons given in my judgment on liability, Bodum did not succeed in ultimately obtaining the relief sought. 23 It is also relevant to remember that on 31 July 2008 the proceeding had been on foot for only three or so months. Any costs incurred as at that date by DKSH would not have been substantial and there would be little element of giving away anything on behalf of the offeror. 24 In the end, I cannot be satisfied that Bodum's rejection of DKSH's offer in August 2008 was so imprudent or plainly unreasonable so as to enable DKSH to costs in the proceedings different from on a party/party basis.
Other Issues 25 Bodum submitted that in relation to two distinct claims of DKSH, discounts should be made: one based on the extensive list of other coffee plungers alleged to so resemble the Bodum Chambord so as to dilute Bodum's reputation, and the other relating to the estoppel and related defences. 26 As to the question of the other coffee plungers in the market and the issue of dilution, no discount should be made, and I refer to the reasons set out in the related proceeding, action VID 428 of 2008. 27 As to the estoppel and related defences, I can appreciate how some preparation by Bodum would have been required to deal with those matters at trial. These issues did not occupy much trial time. In fact, the issue of estoppel and delay occupied a very small proportion of the time at trial. However, this may not be indicative of the costs associated with the preparation by Bodum of dealing with these defences. 28 I accept the courts are sometimes reluctant to undertake an enquiry as to which party has succeeded on particular issues for the purposes of determining whether there should be an apportionment of costs against the successful party. However in this particular case, these defences were independent grounds which in my view were without substance. As discreet grounds, they can be separated from the other matters agitated in the proceedings. 29 Whilst the simpler and cheaper approach would be to allow DKSH to recover only part of its costs to reflect Bodum's right to set off the costs of the failed defences based upon delay and estoppel, I have no proper basis to make such an order: see Hansen Beverage Company v Bickfords (Australia) Pty Ltd (No 2) [2008] FCA 601. 30 A costs order in favour of Bodum in relation to those defences should be made. The parties hopefully will be able to reach an agreement in relation to the actual amounts involved. 31 In relation to the other matter in contention, namely the affidavits prepared by Ms Huang that were not relied upon by DKSH, I refer to the reasons in the related proceeding in action VID 423 of 2008. I do consider there is any significant difference to the circumstances surrounding Ms Huang's evidence between the two proceedings. I proceed in the same way by making similar orders as in the related proceeding. 32 As to the application for costs itself, each party had some success and in my view should each bear their own costs. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton.
Peter Bodum A/S
DKSH Australia Pty Ltd
(2002) 201 ALR 618
(1998) 217 ALR 386
(2005) 13 VR 435
(1993) 46 IR 301
(1982) 149 CLR 191
(1996) 72 FCR 151
(2002) 55 IPR 354
Applicants to pay DKSH’s party-and-party costs of the proceeding, excluding the specified estoppel and delay defence costs, Ms Huang evidence costs, and costs of the costs application; DKSH to pay the applicants’ costs relating to the estoppel and delay defences; each party to bear its own costs of the costs application.