Pinnacle Runway Pty Ltd v Triangl Limited

Federal Court of Australia|2020-09-25|Before: Murphy J

Counsel for the Applicant/Cross-Respondent: Mr T Cordiner QC and Mr A Sykes

Solicitor for the Applicant/Cross-Respondent: Actuate IP

Counsel for the Respondents/Cross-Claimant: Mr N Murray SC and Ms F St John

BETWEEN: PINNACLE RUNWAY PTY LTD Applicant

AND: TRIANGL LIMITED First Respondent

TRIANGL GROUP LIMITED Second Respondent

AND BETWEEN: TRIANGL GROUP LIMITED Cross-Claimant

AND: PINNACLE RUNWAY PTY LTD Cross-Respondent

order made by: MURPHY J DATE OF ORDER: 25 september 2020

The Applicant pay the Second Respondent's costs of and associated with the application alleging trade mark infringement (the infringement claim): (a) for the period from the commencement of the infringement claim against the Second Respondent until 12 February 2018, on a party-party basis; and (b) for the period from 13 February 2018, on an indemnity basis; as agreed or assessed.
The Second Respondent pay the Applicant's costs of and associated with the cross-claim for the period up to 12 February 2018 on a party and party basis, as agreed or assessed. Thereafter each party bear their own costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

INTRODUCTION 1 As I said in Pinnacle Runway Pty Ltd v Triangl Limited & Anor [2019] FCA 1662 (the liability judgment or LJ) these were ill-advised proceedings and there is no clear winner. The applicant and cross-respondent, Pinnacle Runway Pty Ltd (Pinnacle) alleged but failed to establish that the second respondent and cross-claimant, Triangl Group Limited (Triangl), infringed its registered trade mark, DELPHINE (the infringement claim). Triangl alleged but failed to establish that Pinnacle's registration of the DELPHINE trade mark should be cancelled on the basis that Pinnacle was not the first to use it (the cross-claim). Further, even if Pinnacle had been successful in the infringement claim, its damages entitlements would not have been worth the powder and shot. As I said (at LJ [2]): Pinnacle spent many times more in legal costs in bringing the claim than it could ever have reasonably hoped to recover by way of damages. Triangl spent many times more defending the claim and bringing the cross-claim than it could have possibly been required to pay in damages. This unfortunate litigation involved substantial expenditure of the parties' and Court resources and, for reasons which are unclear, the parties were unable to reach a commercial settlement. 2 These reasons concern the legal costs incurred by the parties. I have delayed in making a decision regarding costs as it seemed a better use of my time to await the decision of the Full Court in the appeal which has been commenced, given that costs are likely to follow the event. The hearing of the appeal has however been delayed, and it is plain from the submissions that because the costs incurred by the parties are so substantial in comparison to the damages that could have been recovered, the issue of costs looms large in the appeal. In response to a communication from my chambers both parties said that they would prefer the decision on costs to be made before the appeal is heard, and I have accordingly turned to the question. Unfortunately, I neglected to place a limit on the length of the costs submissions to be filed, and the parties filed costs submissions together with affidavits and annexures running to a total of 83 pages. As a result, to deal with the parties' various arguments these reasons are lengthier than I would have wished. 3 In summary, having been successful in the infringement claim Triangl seeks an order for its costs in that proceeding on an indemnity basis, and if not on a party-party basis. It seeks that the costs of the cross-claim lie where they fall. However, if the Court considers that Pinnacle should have its costs of successfully defending the cross-claim, Triangl argues they should be reduced to the Federal Circuit Court (FCC) Scale. Pinnacle's primary contention is that the Court should award it 25% of the difference between the, as asserted, higher costs incurred by Triangl for the whole proceeding (both the infringement claim and the cross-claim) as compared to Pinnacle's costs for the whole proceeding. If not, it having been successful in the cross-claim, Pinnacle seeks an order for its costs in relation to that part of the proceeding. 4 I have concluded that it is appropriate to order that: (a) Pinnacle pay Triangl's costs of and associated with the infringement claim from the commencement of the claim up to and including 12 February 2018 on a party-party basis on the Federal Court scale, and thereafter on an indemnity basis; (b) Triangl pay Pinnacle's costs of the cross-claim up to and including 12 February 2018 on a party-party basis on the Federal Court scale, and thereafter each party bear their own costs.

THE EVIDENCE 5 Pinnacle relies upon the following evidence; (a) an affidavit of Colin Cheung, a Principal of Pinnacle's solicitors, Actuate IP, affirmed 31 October 2019; and (b) an affidavit of Louella Willis, a lawyer employed by Actuate IP, affirmed 7 November 2019 which set out the results of internet searches she conducted on 6 November 2019. The searches disclose that, at that time, third parties appeared to be offering for sale products of the second respondent which continue to bear the style name DELPHINE; (c) an affidavit of Andrew Petale, a lawyer formerly employed by Actuate IP, affirmed 26 March 2018 which was filed in the substantive proceeding; and (d) an affidavit of Louis Lao, a lawyer employed by Actuate IP, affirmed 18 September 2018 which was filed in the substantive proceeding.

PINNACLE'S PROPOSED ORDERS 6 Pinnacle submits that in circumstances where the Court dismissed the infringement claim and the cross-claim and found that there was "no clear winner", and also found that both parties likely spent more on legal costs than their respective positions and claims were worth, that except for the matters Pinnacle raises it would be appropriate for the Court to refuse to award costs to either party. But Pinnacle's primary position is that the Court should make the following orders: (a) for the respondents to pay Pinnacle's costs thrown away by reason of it issuing proceedings against the first respondent, Triangl Ltd, the joining of Triangl as the second respondent, and the subsequent discontinuance of the proceeding against Triangl Ltd, in an amount to be agreed or assessed on a lump sum basis; (b) Triangl pay Pinnacle's costs thrown away by reason of its abandonment of the relevant grounds of the cross-claim in an amount to be agreed or assessed on a lump sum basis; and (c) pursuant to ss 43, 37N(3)(b) and (4) and/or 37P of the Act: (i) within seven days Triangl be ordered to file and serve a notice setting out their total legal costs, separately identifying total disbursements, including the hourly rates at which the legal practitioners worked; (ii) within seven days Pinnacle be ordered to provide the same; and (iii) if Triangl's costs are greater than Pinnacle's costs, Triangl pay Pinnacle 25% of the difference between their costs, or such other (or nil) amount as the Court deems fit; (the proposed orders). 7 Pinnacle points to the following matters in support of the contention that the Court should make the proposed orders. 8 Pinnacle contends that it suffered substantial costs thrown away because Triangl and its director, Craig Ellis, had misdirected or misled it as to the identity of the entity that used the DELPHINE name, which resulted in Pinnacle commencing the proceeding against the first respondent, Triangl Ltd, and then being forced to amend the proceeding to name the second respondent, Triangl, and to discontinue against the first respondent. It submits that Triangl should pay Pinnacle's costs thrown away by reason of those matters. 9 The asserted 'misdirection' is based on the following matters. Pinnacle relies on Mr Petale's affidavit in which he states that prior to sending the first letter of demand to Triangl Ltd in May 2016 he: (a) looked at the Triangl website to see whether it contained details of Triangl's owner, but it did not; and (b) conducted searches of the trade mark TRIANGL on the Australian online database of trade marks, which identified several registered trade marks for the word TRIANGL and listed Triangl Ltd as the owner of the trade marks, with a registered address in Hong Kong. Then in a letter from Corrs Chambers Westgarth (Corrs) dated 20 June 2016 responding to Actuate IP's letter of demand on behalf of Pinnacle, Corrs said that the firm was instructed by Triangl Ltd and that "our client uses its TRIANGL trade mark as the badge of origin for its goods and uses women's names, such as Delphine, as the equivalent of product line or style numbers" (emphasis added). On 12 July 2016 Pinnacle issued the infringement claim against Triangl Ltd. 10 Pinnacle commenced proceedings against Triangl Ltd in the belief that it was the proper respondent to its claim. It then experienced difficulty in serving the originating documents in Hong Kong and it applied for and obtained orders for substituted service and later for deemed service. Having been served through orders for deemed service, in its Defence dated 7 July 2017 Triangl Ltd denied that it was the appropriate respondent and alleged that another Triangl entity, Triangl Group Ltd (which I have called "Triangl"), was the company that promoted, distributed, supplied, offered for sale and sold TRIANGL branded products in Australia. That led Pinnacle to commence proceedings against Triangl as the second respondent and subsequently to discontinue against Triangl Ltd by consent, with costs reserved. 11 Pinnacle submits that it was reasonable for Mr Petale to expect that the promotional material on the Triangl website and online which founded its allegation of trade mark infringement were published by the owner of the TRIANGL mark, and that Mr Petale was entitled to rely on the results of his investigation into the registered owner of that mark. It also contends that it was reasonable for Mr Petale to rely upon the subsequent 'representation' in Corrs' letter that the firm acted for Triangl Ltd and referred to its TRIANGL trade mark, which Pinnacle contends misdirected or misled it. Pinnacle also complains that Triangl Ltd and Mr Ellis did nothing to inform it that it had issued proceedings against the wrong Triangl entity until after the proceeding had finally been served. 12 Pinnacle also relies upon the affidavit of Mr Lao in which he deposes to searches performed on 14 September 2018, after the commencement of the proceedings and after the joinder of Triangl as the second respondent, in relation to the TRIANGL mark on the Australian online database of trade marks. He annexed copies of the searches in relation to various TRIANGL marks which show that by a deed of assignment dated 30 June 2017, lodged on 8 August 2017 and accepted as effective from 30 August 2017, ownership of the TRIANGL marks was assigned to Triangl. Pinnacle also relies upon the affidavit of Mr Cheung, but in relation to this part of its submissions, Mr Cheung's affidavit does not add to the information set out in Mr Petale's and Mr Lao's affidavits. 13 Pinnacle argues that Triangl and Triangl Ltd were not passive bystanders to Pinnacle's error in issuing proceedings against Triangl Ltd. In reliance on Mr Lao's affidavit it submits that it was only after the proceeding was issued and after Triangl Ltd was finally served that ownership of the registered TRIANGL trade marks was assigned to Triangl. Pinnacle submits that as a result of Triangl's "misdirection" in respect of the correct entity against which to commence proceedings it wasted costs in bringing proceedings against Triangl Ltd, which included the expense and difficulties associated with serving them overseas, and the costs of amendment and discontinuance, which costs were thrown away. 14 Next, Pinnacle contends that it should have its costs thrown away by reason of Triangl amending its cross-claim to abandon grounds both at trial, and on the eve of trial. 15 Then, Pinnacle argues that Triangl engaged in excessive legal work and by doing so unnecessarily increased Pinnacle's costs in the proceeding. Pinnacle submits that the Court should infer that the costs were unnecessarily increased on the basis that: (a) the actual total costs of both parties should be ordered to be disclosed, and if Triangl's costs are "excessively greater" than Pinnacle's costs it may be inferred that: (i) Triangl led the way in excessively increasing the scope and cost of the proceeding; (ii) Pinnacle's costs in responding to such matters were unnecessarily increased; and (iii) the amount of unnecessary costs incurred by Pinnacle as a result of such conduct by Triangl may be measured by comparing the relative total costs of the parties, and applying a discount for what that excessive work would be taxed as; (b) Triangl unreasonably pressed an excessive number of grounds of cross-claim, and then abandoned a number of them at trial or shortly before trial, after significant costs were expended by Pinnacle in relation to those grounds, including the costs of obtaining an expert witness report from Dr Christine Schmidt; and (c) Triangl's cross-claim was bound to fail, it being based on no admissible or probative evidence. 16 Pinnacle notes that despite being requested by the Court during the trial to disclose an estimate of its costs, Triangl failed to do so. It contends that reticence is indicative of Triangl's concern that its legal costs were excessive, whereas Pinnacle held no such reservations and provided the Court with an estimate at the time it was requested. 17 Finally, Pinnacle submits that by comparison to Triangl, its legal costs are commensurate and reasonable given that Pinnacle was not only seeking pecuniary and injunctive relief, but was also seeking declarations that would make clear that the use of its registered trade mark as a "style name" by competitors was a trade mark infringement, and characterises the proceeding as a "test case" aimed at dissuading other competitors from using the DELPHINE mark as a "style name" on marketing material. 18 Pinnacle also notes that, despite seeking the proposed orders, it made a Calderbank offer on 25 October 2019 in which it offered not to appeal the liability judgment and to settle the issue of costs on the basis that each party bear their own costs. The offer was not accepted and Pinnacle subsequently filed an appeal.

Consideration 19 Some of Pinnacle's contentions relate to the infringement claim alone, and others involve rolling up consideration of the costs of the infringement claim with consideration of the costs of the cross-claim. In the circumstances of the present case I am not persuaded that it is appropriate to roll up consideration of the costs in that way. The facts and circumstances relevant to which party should have the benefit of a costs order are different as between the infringement claim and the cross-claim and it is appropriate to consider them separately, at least largely. Having said that, and as I explain, my view that it was unreasonable for Pinnacle not to have accepted Triangl's second Calderbank offer made in relation to the whole proceeding (both infringement claim and cross-claim) has an effect on my view as to the appropriate order in relation to costs in the cross-claim. Once the issues in relation to the costs of the infringement claim are considered largely separately from those in relation to the costs of the cross-claim I can see little merit in Pinnacle's proposed orders. 20 First, I do not accept Pinnacle's contention that it should have its costs thrown away because it was misdirected or misled by Triangl and its director, Mr Ellis, which resulted in it commencing the proceeding against the wrong Triangl entity. 21 The evidence does not establish that Mr Ellis, Triangl Ltd or Triangl deliberately misdirected or misled Pinnacle's lawyers in relation to the correct Triangl entity such that it might be appropriate that Triangl bear the costs thrown away. It was put to Mr Ellis in cross examination that he did not alert Pinnacle to the fact that it had commenced the proceeding against the wrong Triangl entity because he wanted to make the case as difficult and expensive as possible for Pinnacle. Essentially Mr Ellis said that he did not inform Pinnacle of its mistake because he had a lot to do and he had to prioritise his work. He said, and I accepted (at LJ [86]), that the "last thing" he was thinking about in response to Pinnacle's demands was whether it had sued the right entity. 22 It was the task of Pinnacle's lawyers, Actuate IP, to commence the proceeding against the correct Triangl entity. I have no difficulty in accepting that it was reasonable for Mr Petale to commence the case against Triangl Ltd given the information that he had, but there were further available methods open for him to satisfy himself as to the correct Triangle entity, including by making a "trap" purchase so as to obtain an invoice, by making an application for preliminary discovery, or undertaking a search of entities within the Triangle group of companies. In the absence of evidence that Mr Ellis, Triangl Ltd or Triangl deliberately sought to misdirect or mislead Pinnacle or its solicitors, Pinnacle draws a long bow in arguing that the successful respondent to the proceeding should pay the costs of its failure to sue the correct party. I am not persuaded that the conduct of Mr Ellis, Triangl Ltd or Triangl rises to the level of justifying such an order. 23 It is also worth keeping in mind that the costs allegedly thrown away are not material given the quantum of the costs Pinnacle incurred in the proceeding. Mr Cheung deposes that Pinnacle's solicitor-client costs thrown away by it proceeding against the wrong Triangl entity total $36,500, of which approximately $26,500-$30,000 would be recoverable on a party-party basis. But that figure appears somewhat overstated. I doubt that such costs were thrown away when the factual substratum of the claim remained unchanged, and save for amendments to the pleadings to insert allegations as against Triangl and remove allegations as against Triangl Ltd, the allegations of fact and law by Pinnacle were the same. Further, had Pinnacle sued the correct entity from the start it would still have incurred costs for service under the Hague Convention because Triangl's registered office is in the Channel Islands. Also, Mr Cheung's estimate of recoverable party-party costs appears to proceed on the basis that the rule of thumb for estimating party-party costs is to allow 70% to 80% of solicitor-client costs. In my view a more accurate rule of thumb is to allow 60% of solicitor client costs. I consider the party-party costs actually thrown away are likely to be materially lower than $26,500-$30,000. 24 In my view this is not a case in which the Court should now pick through the different parts of the case to attribute different costs consequences to different aspects of the proceeding. Pinnacle brought the infringement claim in circumstances where the period of alleged trade mark infringement was only six weeks; the alleged infringing use ceased within three weeks of the letter of demand; Triangl had already stopped the impugned conduct before the proceeding was filed and had agreed to desist from again using the DELPHINE name; Mr Bucoy, Pinnacle's director, must have known that he could not establish any lost sales of women's swimwear by reason of any infringement because Pinnacle did not sell women's swimwear in the relevant period; Mr Bucoy should have known that any damages for loss of reputation would be very modest including because Pinnacle was a new company and had not yet built a strong reputation; and the circumstances did not indicate that an award of additional damages was likely or if made would be significant. 25 I estimate that the parties spent more than $150,000 each in relation to the infringement claim alone, when if Pinnacle could establish that claim I consider damages of only about $2,500 would be appropriate. Even if one takes a rosy view of Pinnacle's potential damages, say $20,000, the costs it incurred, and the risk of an adverse costs order it incurred, were grossly disproportionate to the value of the claim and the importance and complexity of the dispute. In the circumstances I will not make an order for Pinnacle to now claw back a small component of its costs when it did not establish such an entitlement, the costs are not material overall, and it was Pinnacle which brought a small case and then incurred disproportionate costs in fighting it. In my view Triangl should recover its party-party costs without any deduction for the costs Pinnacle incurred by initially suing the wrong Triangl entity. I note that Triangl Ltd does not seek an order for its costs. 26 Second, I will deal with Pinnacle's submission that it should have its costs thrown away by reason of Triangl amending its cross-claim to abandon grounds both at trial, and on the eve of trial in the context of the costs of the cross-claim. 27 Third, I do not accept Pinnacle's contention that because Triangl allegedly engaged in excessive legal work and by doing so unnecessarily increased its costs in the proceeding, there should be an order for Triangl to disclose the costs it has incurred and if they exceed Pinnacle's costs to require Triangl to pay Pinnacle 25% of the difference. 28 In my view Pinnacle's submission conflates the issue of liability for costs with the separate and subsequent question of the quantification of the costs to be paid pursuant to such an order. As part of any taxation or other costs assessment procedure it will be open to Pinnacle to argue that Triangl engaged in "excessive" and unnecessary legal work and on that basis that its costs are excessive and should be reduced. The issue of any "excessiveness" is a matter for the costs assessment process. 29 I accept that does not deal with Pinnacle's contention that the alleged excessive and unnecessary legal work in which Triangl engaged caused Pinnacle to undertake excessive and unnecessary legal work in response, thereby pushing up its costs. But Pinnacle concedes that it does not know the quantum of Triangl's costs, the evidence does not identify any particular legal work undertaken by Triangl in defence of the infringement claim that was excessive and inappropriately increased Pinnacle's costs, and it is unclear what Pinnacle means by "excessive" in this context. Because the evidence does not establish that Triangl engaged in excessive work there is no foundation for the proposed orders. 30 It is also relevant that Pinnacle's proposed orders assume that there should be a degree of parity in the parties' costs, when there is no proper basis for that assumption. Different lawyers charge different hourly rates and clients may ask for a fuller or leaner defence of a claim. Further, the evidentiary burden the parties took on was quite different. To establish infringement, Pinnacle only needed to adduce evidence to show its registration and Triangl's use, and use simpliciter was not contested. Triangl sought to, and did, establish a range of matters that supported its contention that its use of DELPHINE was not use as a trade mark, including the practice in the women's fashion industry of using style names, including women's names, to assist customers to distinguish between fashion products sold by the trader, that Pinnacle had itself used style names to distinguish between its own women's fashion products, and that other traders had sold women's fashion products in Australia under the name DELPHINE. 31 Further, the fact that one party engages in excessive or unnecessary legal work does not necessarily mean that the other party is forced to follow suit. Evidence that is unnecessary or irrelevant need not be answered or it may be objected to or ignored. Again, that tends to confirm that the issue of any "excessiveness" is a matter for taxation or other costs assessment procedure. 32 Nor do I accept Pinnacle's contention that by comparison to Triangl its costs are commensurate and reasonable. I do not accept that this was a "test case" about the use of style names by Pinnacle's competitors, or that Pinnacle saw it in that way. As I said in the liability judgment, the evidence shows that: (a) Mr Bucoy said that traders in the women's fashion industry commonly assign style names to their products as a convenient way of identifying particular products (at [40]); (b) the evidence showed that Pinnacle itself repeatedly used style names, including women's names in relation to DELPHINE products, including using names which were registered as Australian trade marks by other traders (at [41]); (c) Mr Bucoy accepted that on the website of Pinnacle's major online stockist consumers could see multiple uses of the name DELPHINE by different brands to identify their particular garments, which use had been going on for several years at least (at [44]); and (d) Mr Bucoy accepted that consumers do not remember style names and that they only remember the head brand. When asked about one of Pinnacle's own style names he said "I don't think it really matters" (at [183]). 33 Nor can Pinnacle's costs properly be described as commensurate and reasonable. Mr Cheung deposes that Pinnacle's costs and disbursements totalled approximately $231,466 as at 12 October 2018, which was eight days before trial. Taking account of the fact that it engaged senior and junior counsel for the trial, which ran for three days, I estimate it spent a further $50,000 after that, being a total of approximately $281,000. Taking off the costs Pinnacle incurred in defending the cross-claim, it appears likely that it incurred solicitor-client costs of approximately $187,500 (based on an estimate that the infringement claim accounted for about two thirds of the costs). I do not have great confidence in the accuracy of this estimate but little turns on whether it is somewhat off. I do not accept that it was reasonable for Pinnacle to run up costs of between, say $150,000-$200,000, in the infringement claim when the likely damages were so modest. In my view such costs are plainly disproportionate to the amount in dispute and the complexity and importance of the litigation. 34 In the finish, there is little to recommend the proposed orders Pinnacle seeks. It proposes a novel type of costs order, unsupported by authority, based on an unsubstantiated percentage of an unknown difference between the parties' solicitor and client costs. I am not persuaded that it is appropriate to make such orders.

THE INFRINGEMENT CLAIM 35 Pinnacle was unsuccessful in establishing that Triangl had infringed its registered DELPHINE trade mark, and its application was dismissed. 36 Triangl seeks an order for its costs in defending the infringement claim on an indemnity basis and, if not on a party-party basis. It also seeks an order that the costs of the cross-claim fall where they lie, but if Triangl be ordered to pay them they should be they assessed on the FCC scale. I largely deal separately with the costs of the infringement claim and the cross-claim, but the appropriate order in respect of the costs of the cross-claim is affected by my view that it was unreasonable for Pinnacle to reject the second offer made in relation to the whole proceeding. 37 Pursuant to s 43 of the Federal Court of Australia Act 1976 (Cth) (the Act) the Court has a wide discretion in relation to costs. The discretion is unfettered but, of course, it must be exercised judicially and not arbitrarily or capriciously. Subject to certain limited exceptions generally linked to the disentitling conduct of the successful party, a successful party in litigation is usually entitled to an award of costs, and the Courts have been slow to order a successful party to pay the costs where it has been unsuccessful on some issues: Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61 at [303]-[305] (Bennett, Besanko and Beach JJ). Although the ordinary rule is that costs follow the event, a successful party may be awarded less than its costs, or costs may be apportioned, based upon success on the issues: Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) (2015) 327 ALR 192; [2015] HCA 53 at [6] (French CJ, Kiefel, Nettle and Gordon JJ).

Party-party costs 38 Triangl's submissions focus on its application for indemnity costs, but implicit in that application is the contention that it is, at least, entitled to its party-party costs of the infringement claim, it being the successful party. There was nothing in Pinnacle's submissions which persuaded me that it was appropriate to depart from the usual rule and in my view Triangl should have its costs of successfully defending the infringement claim. Thus, had Triangl not succeeded in its application for indemnity costs, it would have had its costs of the infringement claim on a party-party basis.

The relevant principles 39 The ordinary rule is that the Court will order the unsuccessful party to pay the costs of the successful party, on a party-party basis. Indemnity costs may however be awarded where there is some special or unusual feature in the case justifying the Court exercising its discretion in that way. One of the well-established circumstances justifying an award of indemnity costs is when it was unreasonable for a party to reject the offer to settle having regard to all of the circumstances as they existed at the time the offer was made. The relevant factors include those referred to in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 at [25] (Warren CJ, Maxwell P and Harmer AJA), which were applied by the Full Court in Anchorage Capital Partners Pty Limited v ACPA Pty Ltd (No 2) [2018] FCAFC 112 at [7] ((Nicholas, Yates and Beach JJ). Those factors are: (a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; and (f) whether the offer foreshadowed an application for an indemnity costs in the event of the offeree rejecting it. 40 In Anchorage at [6] the Full Court said: In such cases, a key question is whether the offeree's refusal of the offer was "unreasonable" when viewed in light of the circumstances existing at the time the offer was rejected (Black v Lipovac (1998) 217 ALR 386 at 432 per Miles, Heerey and Madgwick JJ; CGU Insurance Ltd v Corrections Corporation of Australia Staff Superannuation Ltd [2008] FCAFC 173 at [75] per Moore, Finn and Jessup JJ). Their Honours also observed (at [8]): An unsuccessful party is not liable to pay indemnity costs merely because it received an offer to settle on terms more favourable than it achieved at trial and rejected that offer (CGU Insurance at [75]; Black at [217]-[218]). As we observed in the Appeal Reasons, albeit in the context of r 25.14(2) of the FCRs, assessment of the "unreasonableness" of an offeree's refusal of a settlement offer is a broad-ranging inquiry that is not restricted to consideration of the extent or quantum of the compromise offered.

The settlement offers 41 Triangl made four offers to settle the whole proceeding. The first offer was made before the issue of the infringement claim and did not involve monetary compensation, the latter three offers were made after the proceeding had commenced and provided for a lump sum payment to Pinnacle in increasing amounts of $40,000, $45,000 and $70,000 inclusive of costs and damages. 42 Pinnacle did not accept any of the offers, but it made a counteroffer in which it offered to accept $56,000 inclusive of costs and damages. 43 Triangl contends that Pinnacle acted unreasonably in rejecting each of the offers and it seeks an order under r 40.02 of the Federal Court Rules 2011 (the Rules) that Pinnacle pay its costs of the infringement claim on an indemnity basis. Pinnacle's primary position is that, even if the offers could be characterised as being better than what it achieved at trial, which it does not accept, it was not unreasonable for Pinnacle to have rejected the offers. It argues that there was a reasonable prospect that Pinnacle would succeed in obtaining declaratory relief and pecuniary relief in the infringement claim, especially since at the time of the offers, either Triangl's expert, Mr Saunders, had not yet given evidence or he and Pinnacle's expert, Mr Downes, were credibly in direct conflict on the critical issues of style names and sub-branding in the fashion industry. It says that the argument in the case was novel which also goes to show Pinnacle's reasonableness in pursuing the case and in rejecting Triangl's offers.

The first offer 44 On 2 June 2016, Mr Ellis, on behalf of Triangl Ltd offered to stop using the DELPHINE name and issue an apology, but only if Pinnacle agreed to forgo any claim for monetary compensation. On 3 June 2016 Mr Ellis emailed Mr Petale to say that Triangl had "in good faith" removed the name DELPHINE from all of its global websites and changed the name of the relevant bikini style to DELILAH. On the presumption that this step would be sufficient to quell the dispute, Mr Ellis requested that Pinnacle provide Triangl with a letter stating that no further action would be taken by it. 45 On 20 June 2016 Corrs sent a letter to Actuate IP setting out Triangl's view that its use of DELPHINE was not use as a trade mark, and arguing in summary that: (a) even if Triangl's use of DELPHINE was use a trade mark Triangl does not and did not generate any profit from the use of that style name; (b) Pinnacle had not suffered any damage whatsoever as there was no basis for suggesting that the sales made of TRIANGL bikinis using the name DELPHINE would have been sales made by Pinnacle with or without the use of that name. The letter contained the following offer: Proposed resolution Our client has, as a gesture of good faith (and without any admission of liability), ceased and hereby agrees to forever desist from using the name Delphine in relation to its swimwear products. Indeed, our client was invited to do so by your firm as a way of resolving the entire issue and now considers this matter closed. 46 Triangl says, and I accept, that the several offers in that short period were all substantially to the same effect, and it refers to them collectively as "the first offer". I take the same approach. Pinnacle did not accept the first offer and on 13 July 2016 it commenced the infringement claim. 47 An effective Calderbank offer may be made before a proceeding is commenced and an offer need not expressly warn that it will be relied on to seek indemnity costs. In Ofria v Cameron (No 2) [2008] NSWCA 242 at [27] the New South Wales Court of Appeal said: The offers were in respect of the same cause of action and they would, if accepted, have obviated the need for the subject proceedings. We cannot discern any reason for ignoring them, and in our view they should be given as much, if not more, weight than an offer made in the course of pending proceedings. The courts treat as relevant tenders of payment and other conduct by the defendant before action such as admissions and offers of undertakings and in our view Calderbank offers should be treated in the same way." 48 Triangl argues, and I accept, that its offer to settle was on terms more favourable than Pinnacle achieved at trial. The offer was effectively for each party to "walk away" paying their own costs, coupled with an agreement by Triangl to forever desist from using the DELPHINE mark. At trial Pinnacle did not establish trade mark infringement, and it will be ordered to pay Triangl's costs of the infringement proceeding. At that point the cross-claim had not been commenced. 49 Triangl submits that it was unreasonable for Pinnacle not to accept its offer which it contends was certain and capable of acceptance; would have obviated the need for the proceeding; and involved a genuine element of compromise because Triangl was offering to stop using the name DELPHINE, which Pinnacle ultimately was found to have no entitlement to demand. 50 Pinnacle is not, however, liable to pay indemnity costs merely because it rejected an offer to settle on terms more favourable than it achieved at trial. Having regard to all the circumstances I am not persuaded that Pinnacle's rejection of the offer was unreasonable or justifies an order for indemnity costs. The offer was very early and at a point at which: (a) Pinnacle could not have definitively known the scope of the alleged infringing conduct; (b) it could not have been expected to understand that there was a real risk of failure in making out a case that Triangl's use of the name DELPHINE constituted use as a trade mark; and (c) at that early point it was open to Pinnacle to suspect that the similarities between the name DELPHINE used by Triangl and the DELPHINE trade mark indicated deliberate copying, which would indicate a potential for additional damages. Further, while it is not determinative, the offer did not foreshadow an application for indemnity costs in the event Pinnacle rejected it. 51 It is also relevant that the offer was made by Triangl Ltd which is no longer a party to the proceeding, and was not the correct respondent in any event. There are difficulties for Triangl in seeking to rely on Triangl Ltd's offer to forever cease using the DELPHINE mark, when Triangl Ltd was not in fact the entity which marketed Triangl DELPHINE bikinis in Australia. 52 I am not persuaded that it is appropriate to order Pinnacle to pay indemnity costs based on its rejection of the first offer.

The second offer 53 On 25 September 2017 Triangl filed the cross-claim. On 1 February 2018 (shortly after a mediation on 18 January 2018), Corrs sent a detailed email to Actuate IP reiterating the view that Triangl had strong prospects of establishing that its use of the name DELPHINE was not use as a trade mark, and arguing, in summary: (a) Pinnacle would be unable to obtain additional damages for the period of approximately two weeks of sales after the deadline in the letter of demand during which Triangl was obtaining legal advice; (b) Pinnacle would be unable to establish that it suffered any loss at all as a result of Triangl's use of the DELPHINE mark. It would be unable to establish that Triangl made any profits from the use of that name and at best Pinnacle might obtain an order for nominal damages, which "could well be less than $1,000"; and (c) that Pinnacle was unlikely to achieve an order for costs on the Federal Court scale and might not be awarded any costs at all because of "the paltry sums at stake". 54 The email contained the following offer: In light of the foregoing, in order to bring this matter to a conclusion, our client has instructed us to offer to your client the following by way of a complete settlement: 1. Our client will provide a confirming written undertaking to you that it will not again use the name Delphine in respect of its products. 2. Our client will pay your client the total sum of $40,000 inclusive of costs and damages. We are prepared to attribute the sum of $2,000 to damages and $38,000 to costs. 3. The Federal Court proceedings to be dismissed with no orders. … This offer is put to your client as being made in accordance with the principles enunciated in the decision of Calderbank v Calderbank. It is made "without prejudice" except as to costs. The offer was initially available for one week but was extended at Pinnacle's request to 12 February 2018. Pinnacle did not accept the offer. 55 Pinnacle denies that its rejection of the offer was unreasonable. It does not accept that the offer can properly be characterised as being better than what it achieved at trial, but even if it was better it was not unreasonable for Pinnacle to have rejected it. It argues that the offer was made over four months after the (failed) cross-claim was filed, and also after costs had been thrown away by reason of Triangl's conduct in misleading Pinnacle as to the identity of the Triangl entity that was using the DELPHINE name. In reliance on Mr Cheung's affidavit it says that its solicitor-client costs at that point totalled $91,135, of which upon success in the proceeding it could anticipate recovering 70%-80% on a party-party basis, being approximately $65,000 - $73,500. It says a significant portion of that total was costs wasted by reason of Triangl's conduct in misdirecting Pinnacle so that it initially brought the proceeding against the wrong Triangl entity. 56 Pinnacle also contends that no weight can be placed on the pre-mediation disclosure by Triangl of total profits from sales of Triangl DELPHINE bikinis in affidavits by Mr John Davis and Mr Ellis, which disclosed the total sales and profits of the relevant bikinis. It says that the profit figure given at mediation was approximately 45% higher than the figure later provided pursuant to Court order. It says that the discrepancy evidences the difficulties Pinnacle faced in trusting information provided by Triangl when considering offers and why it was justified in pressing for open discovery on issues of quantum, which was resisted by Triangl. 57 Pinnacle argues that the proceeding was then in its early stages, prior to expert evidence, and there was a reasonable prospect that Pinnacle would succeed in obtaining declaratory relief and pecuniary damages. Thus Pinnacle says it was not unreasonable for it to reject the offer on the basis that it did not properly account for pecuniary relief and costs, citing Anchorage (at [14]) as authority for the proposition that the fact that the evidence was not yet on is a relevant factor. 58 I take a different view, and in my view it was unreasonable for Pinnacle to reject the second offer in the circumstances as they existed at the time. 59 The authorities in relation to Calderbank offers are founded in a policy aimed at promoting the sensible compromise of legal disputes. That policy is promoted if a party which rejects a realistic settlement offer risks an order for indemnity costs if it refuses the offer and ultimately obtains a result no better than that which it would have got by accepting the offer. The Calderbank principle is designed to bring home to the parties the need to carefully consider the consequences of proceeding with their dispute: Mowie Fisheries Pty Ltd v Switzerland Insurance Australia Ltd [1996] FCA 931 (Tamberlin J). Parties "cannot lightly act in disregard of the difficulties [they confront] in prosecuting a particular version of events to trial"; they have "an obligation to come to grips with the strengths and weaknesses in their case, and the extent of that obligation in the face of an offer (the rejection of which might put the offeree at risk of indemnity costs)": Black v Tomislav Lipovac BHNF Maria Lipovac [1998] FCA 699; (1998) ALR 386 at [217]-[218] (Miles, Heerey and Madgwick JJ). In my view, in refusing the second offer Pinnacle failed to grapple with the reality of its position. 60 First, Pinnacle knew or ought to have known various matters that indicated that it would be unreasonable to reject the offer. The evidence shows that: (a) within three weeks of Pinnacle's initial letter of demand Triangl ceased the impugned conduct, being the use of the style name DELPHINE, and changed the style name of that line of bikinis to DELILAH (LJ [2], [80]); (b) shortly thereafter Triangl agreed that it would forever desist from using DELPHINE in relation to its products (LJ [2]); (c) Pinnacle did not suffer any lost sales by reason of the impugned conduct. It did not actually sell any women's swimsuits in the relevant period and thus Triangl's bikinis were not substitutes for Pinnacle's products (LJ [29]), and Pinnacle elected to seek damages rather than an account of profits; and (d) the DELPHINE brand was relatively new and had not built a strong reputation by the relevant period. Any reputation it had was better described as budding or nascent (LJ [223]). 61 Amongst other things: (a) the case was not factually complex. Triangl conceded that it used the name DELPHINE, but said that the use was not use as a trade mark; (b) the argument that Triangl's use of DELPHINE did not constitute use as a trade mark had been articulated by Triangl's lawyers from the start. It was based in how consumers were likely to perceive the content of the TRIANGL website and EDMs, which materials Pinnacle had before it commenced the proceeding. In regard to how consumers were likely to perceive those matters there was not much to be learned from any lay evidence; (c) Pinnacle must have known that it was relevant to understand the context in which consumers were likely to come to the relevant pages of the TRIANGL website, as found in the liability judgment. Pinnacle knew that the EDMs were only sent to people who had signed up to Triangl's mailing list, as that was how it received an EDM; (d) Pinnacle's lawyers must have taken instructions from Mr Bucoy and they therefore knew or ought to have known that Mr Bucoy considered that consumers do not remember style names and they only remember the head brand. That pointed away from the inference that DELPHINE, as used by Triangl, might be so distinctive as to be perceived by consumers as a Triangl sub-brand; (e) Pinnacle knew that during the short period that Triangl offered the Triangl DELPHINE bikinis for sale Pinnacle did not offer any women's swimwear for sale and thus it knew, or ought to have known, that had not suffered any or at best de minimis lost sales; (f) Pinnacle did not ultimately elect an account of profits, but in the event such a claim was ever to be made, Pinnacle knew or ought to have known by 15 December 2017 that an account of profits would not yield significant compensation. Prior to the mediation and to the second offer it had the affidavits of Mr Davis and Mr Ellis disclosing that the total sales of Triangl DELPHINE bikinis were less than $40,000 and the approximate profits from those sales were significantly less than $20,000. Had Pinnacle succeeded in the infringement claim and elected an account of profits it would have been entitled to a proportion of the profits, being that amount of profits which it could establish was caused by or resulted from Triangl's use of DELPHINE. Given Mr Bucoy's instructions that consumers do not remember style names and that they only remember the head brand, Pinnacle's lawyers should have known that Pinnacle faced a real risk that it would not be able to establish that consumers purchased Triangl DELPHINE bikinis because of the use of DELPHINE; (g) Pinnacle knew that it was a small company, having recently started up, with modest sales, and should have understood that it did not yet have a strong reputation. By this point it knew or ought to have known that Triangl's bikinis were not counterfeit or "knock off" products of inferior quality and that it did not offer any comparable swimwear under the DELPHINE mark. Thus it knew or ought to have known that there was a real risk that any damages for loss of reputation would be de minimis; and (h) Pinnacle should have understood by this time that this was not a case of intentional copying. Mr Ellis had consistently said that from the start. Further, there was no obvious benefit to a company such as Triangl, which sold bikinis around the world, seeking to accrue the reputation of small, relatively new Australian-based brand which had not by that point developed a strong reputation. Thus Pinnacle knew or ought to have known that the prospect of it achieving additional damages which were more than modest, or at all, was low. 62 Second, contrary to Pinnacle's submissions, it cannot seriously be questioned that the offer of $40,000 inclusive of costs, coupled with a written undertaking that it would not again use the name DELPHINE in respect of its products, is more favourable than the result Pinnacle achieved at trial. Amongst other things: (a) the offer incorporated an undertaking not to use DELPHINE again, which as it eventuated at trial Pinnacle was not entitled to; (b) given the very modest damages Pinnacle could have reasonably expected to receive had it been successful at trial, a payment of $40,000 was substantial; and (c) the $40,000 offer was approximately equivalent to a payment of modest damages plus a payment of Pinnacle's party-party costs of the proceeding. Mr Cheung said that Pinnacle's solicitor-client costs at that point totalled $91,135. Using the rule of thumb that approximately 60% of those costs would be recoverable on a party-party basis would mean that Pinnacle could expect to recover approximately $54,681 if successful, but that total includes the costs Pinnacle incurred in suing the wrong Triangl entity which in my view are not recoverable. When those costs are taken off, based on Mr Cheung's (overstated) estimate of $26,500-$30,000, Pinnacle's recoverable costs were approximately $25,000-$28,000 at that point (calculated as follows: $54,681 minus $26,500-$30,000 = $24,681-$28,181). In my view the party-party costs actually thrown away are likely to have been less than $26,500-$30,000, and taking that into account the offer of $40,000 gave Pinnacle something modest for damages and approximately covered Pinnacle's party-party costs; (d) there are also good reasons to treat Pinnacle's recoverable party-party costs as lower again than $25,000-$28,000. Triangl said it would make an application pursuant to r 40.08 of the Rules to reduce Pinnacle's recoverable costs to the FCC scale on the basis that the damages would be substantially less than $100,000. Given the likelihood any damages would be very modest, any such application had a reasonable prospect of success. On that basis Pinnacle should have taken into account the risk that the offer of $40,000 inclusive of costs gave Pinnacle a greater level of costs recovery; (e) that compares to the result achieved at trial where Pinnacle received nothing in damages, nothing for its costs in circumstances where it incurred approximately $281,000 in solicitor-client costs, and it faces a substantial adverse costs liability to Triangl; and (f) at the time of the second offer the cross-claim had not been on foot for long and the costs incurred by Pinnacle in defending it are likely to have been relatively modest. The offer would have put cash in Pinnacle's hand on account of damages and costs with an undertaking not to engage in the impugned conduct. The result at trial for Pinnacle is substantially worse. 63 Third, turning to the relevant factors discussed in Anchorage, I consider the offer was: (a) made at a stage in the proceeding where Pinnacle had sufficient information to allow proper consideration of the offer. By that date the pleadings had closed and the issues between the parties had crystallised, and there had been a mediation at which information and arguments were exchanged. Pinnacle knew or ought to have known each of the matters I referred to above (at [61]). Many of those matters were ventilated in the correspondence between the parties and I am satisfied that Pinnacle understood the arguments it would face at trial; (b) there was a real risk that Pinnacle would be unable to establish that Triangl's use of DELPHINE was use as a trade mark. Pinnacle itself used 'style names' to differentiate products within the DELPHINE range, including names which were registered trade marks. As I have said, the view held by Mr Bucoy that consumers do not remember style names and only remember the head brand, pointed away from a conclusion that Triangl's use of DELPHINE was such that consumers would understand it is a badge of origin; (c) Pinnacle was given sufficient time to consider the offer. It asked for and was granted an extension in that regard; (d) the offer involved a substantial compromise. Triangl had reasonable prospects of successfully defending the infringement claim, and if it did Pinnacle would receive no damages, no party-party costs of the infringement claim and Pinnacle would be required to pay Triangl's costs of that claim. In the context of the likely very modest damages and the quantum of costs already incurred at that point the offer was reasonable; (e) the offer was expressed in clear terms; and (f) the offer expressly foreshadowed an application for indemnity costs in the event it was rejected. 64 Fourth, the overarching purpose in civil proceedings under ss 37M and 37N of the Act required the parties to facilitate the just resolution of disputes according to law, and as quickly, inexpensively and efficiently as possible. Section 37M(2) includes the objective of resolving disputes at a cost that is proportionate to the importance and complexity of the matters in dispute. Section 37N(1) provides that the parties to a civil proceeding must conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose. Section 37N(4) requires the Court to "take account of any failure to comply with the duty imposed by subsection (1) and (2)" in exercising the discretion to award costs. 65 By the time of the second offer it was or should have been clear to Pinnacle, and its lawyers, that: (a) Pinnacle faced a real risk that it would not be successful in the infringement claim; (b) if it was successful in the infringement claim, any damages awarded were likely to be paltry in comparison to the costs it was incurring in bringing the claim, and the costs Triangl was incurring in defending it; (c) the costs Pinnacle had incurred were disproportionate to the amount in dispute and importance and complexity of the claim, which position could only worsen the longer the case ran; and (d) if it was successful in the claim the shortfall between the solicitor-client costs it had spent and the party-party costs it would recover would be significantly more than any damages it was likely to receive, and it was likely to suffer a significant loss. That shortfall would be even greater if Pinnacle's costs were only allowed on the FCC scale. In my view the proceeding was ill-advised and it cried out to be settled. Pinnacle should have accepted the offer, and not doing so was inconsistent with the overarching obligation. In the finish Pinnacle ran up approximately $281,000 in solicitor-client costs on a case worth approximately $2,500 if it was successful. Even if one takes a rosy view of the potential damages, say $20,000, by the time of the second offer Pinnacle had incurred costs which were disproportionate to the subject matter of the litigation, and the position would only get worse the longer the case went. 66 Fifth, I do not accept Pinnacle's contention that no weight can be placed on Triangl's disclosure of its profits from the sales of Triangl DELPHINE bikinis. There appears to be a difference in the evidence in that regard but whichever view is taken Pinnacle knew that Triangl's profits from the sales were not substantial, and given DELPHINE's reputation (or rather the lack of it) Pinnacle knew or should have known that its chance of establishing that the sales were made as a result of Triangl's use of DELPHINE were low. 67 Sixth, and fundamentally, Pinnacle should have known that by rejecting the second offer and choosing to continue with the proceeding and thereby incurring further substantial legal costs Pinnacle's costs position could only become worse. 68 Pinnacle's suggestion that it proceeded with the case beyond the second offer because it was a "test case" in relation to the use of style names in the women's fashion industry, is not supported by any evidence. It is also inconsistent with Mr Bucoy's view that consumers do not remember style names and that they only remember the head brand, and Pinnacle's own use of style names including names that were registered as trade marks by other traders. In my view that contention is most likely a lawyer's construct; an attempted 'after the event' justification for the expenditure of a plainly disproportionate amount of costs in relation to a small trade mark dispute that could, and should have been settled. 69 Nor is Pinnacle's suggestion that it continued with the case to obtain a declaration to protect Pinnacle's rights in the future in relation to use of the name DELPHINE supported by any evidence. Contrary to Pinnacle's submissions I would not infer that it rejected the offer and continued with the case in order to obtain a declaration or to stop such infringing conduct; the impugned conduct had already ceased before it commenced the proceeding and Triangl had agreed to desist from again using the name DELPHINE. 70 Nor in all the circumstances do I infer that Pinnacle rejected the offer and continued with the proceeding because it considered it had an entitlement to recover substantial compensation. Instead it is appropriate to infer that, rather than facing the harsh reality that it should accept the second offer and cut its losses, Pinnacle chose to roll the dice by rejecting the offer and continue on in the hope of getting an improved offer. 71 In part I draw that inference having regard to Pinnacle's counteroffer of 22 February 2018. In the counteroffer it offered to accept the sum of $56,000 in settlement of the whole proceeding (broken down into $19,000 for damages and $37,000 for costs). Having regard to Mr Cheung's evidence that by the point Pinnacle had incurred $98,200 in solicitor-client costs, the counteroffer shows that Pinnacle was prepared to resolve the infringement claim for substantially less than the costs it had incurred, and no damages; it just wanted something more than the $40,000 which Triangl had offered. 72 One can readily see why it would have been an unhappy result for Pinnacle to accept a settlement offer of $40,000 inclusive of costs; it being less than it had incurred in solicitor-client costs. But its recoverable party-party costs were much less than that, there was a real risk it would not be able to establish the infringement claim, and if it was successful damages were likely to be low. Rejecting the offer and pushing on with the case meant that its costs would increase further, the margin between its (potentially) recoverable party-party costs and its solicitor-client costs would continue to grow without there being any, or any commensurate, increase in potential damages. Pinnacle's costs were already disproportionate to the value of its claim and that could only get worse as it continued to spend money on the case. By rejecting the offer and pushing on with the case Pinnacle failed to grapple with the reality of its position. 73 The question is whether Pinnacle's failure to accept the offer, in all the circumstances then existing, warrants departure from the ordinary rule as to costs: SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37] (Gyles JA). As the Victorian Court of Appeal said in Hazeldene, deciding whether the rejection of an offer or other conduct is "reasonable" or "unreasonable" will involve matters of judgement and impression (Hazeldene at [24]). These are questions about which different judges might properly arrive at different conclusions. 74 Had Pinnacle accepted the second offer it would have brought to an end a claim alleging trade mark infringement in which it faced a real risk on liability; in which, if successful, the damages would be very modest; in which the costs incurred and likely to be incurred were disproportionate to the size and complexity of the dispute; and it would have received payment of the modest damages it had suffered and a payment approximately covering its party-party costs, plus an undertaking that Triangl would not again use DELPHINE. Triangl would have been left carrying its own substantial costs of the proceeding. Pinnacle was obliged to come to grips with the reality of its position, under threat of a costs penalty, and in my view it failed to do so. In all the circumstances its rejection of the offer was unreasonable, keeping in mind that the authorities show that adopting "an especially high standard of unreasonableness would operate as a fetter on the discretion to award indemnity costs and diminish the effectiveness of the Calderbank offer as an incentive to settlement": Black at [218]. 75 I am satisfied that it was unreasonable of Pinnacle not to accept the second offer, and appropriate to order that Pinnacle pay Triangl's costs of the infringement claim on an indemnity basis on and from 13 February 2018.

The third offer 76 Having regard to my conclusion that it is appropriate to order Pinnacle to pay Triangl's costs on an indemnity basis from 13 February 2018, it is unnecessary to decide whether the further offers made by Triangl justify an order for indemnity costs. But in circumstances where the issues were fully argued and there is an appeal on foot it is appropriate to also consider the indemnity costs issue by reference to Triangl's third and fourth offers. 77 On 5 June 2018, Corrs sent a letter to Actuate IP which reiterated essentially the same arguments as Triangl advanced in relation to the second offer. Under cover of another letter of the same date, Corrs provided a formal undertaking by Triangl not to again use the name DELPHINE. The letter contained the following offer: Our clients would be prepared to settle this dispute on the following terms: (a) within 28 days of acceptance of this offer, Triangl Group Limited pay to your client the sum of $45,000 (Settlement Sum) in full and final satisfaction of your client's claim against Triangl Group Limited and Triangl Limited, being comprised of: (i) an amount for your client's damages claim ($2,000); and (ii) an amount for legal costs incurred by your client ($43,000); (b) upon payment of the Settlement Sum, the parties will sign and file consent orders for the discontinuance of the proceeding with each party to bear its own costs; (c) the terms of settlement to be recorded in a short form deed of settlement to be drafted by Corrs including mutual releases and general terms usually included in a deed of this nature; and (d) for the avoidance of doubt there is no binding agreement between the parties until execution of the deed referred to at (c) above. We note that compared with the offer made by our client in our 1 February email, our client has reasonably increased the costs component of their offer by $5,000, in light of the evidence that has since been filed by your client in the proceeding. This offer is made in accordance with r 25 of the Federal Court Rules. If your client does not accept our clients' offer and the proceedings are dismissed or your client obtains a judgment less favourable than the terms of the offers, our clients will seek to recover their costs pursuant to r 25.14(1) or (2), respectively. This offer will remain open for acceptance until 5 pm on 20 June 2018. 78 Rule 25.14(2) provides that if a respondent makes an offer and the applicant unreasonably fails to accept the offer and the applicant's proceeding is dismissed, the respondent is entitled to an order that the applicant pay the respondent's costs incurred after the time for acceptance of the offer, on an indemnity basis. 79 Pinnacle argues that the third offer was only $5,000 greater than the second offer, and again disputes that the offer is more favourable than the result it achieved at trial. It makes essentially similar arguments in relation to the reasonableness of its rejection of the offer. 80 Pinnacle contends that it was not unreasonable to reject the third offer in circumstances where it was made only approximately four months prior to trial and by that time, according to Mr Cheung's affidavit, Pinnacle's solicitor-client costs were $128,193 of which party-party costs would $95,200-$108,000, being 70%-80%. As I said earlier, in my view a more accurate rule of thumb is to estimate party-party costs at 60% of solicitor-client costs, being $76,915. Pinnacle submits that the offer was a confusing backward step in negotiation. It says that the offer was much less attractive than its predecessor, coming approximately three months after Pinnacle had replied to the second offer with its own offer to resolve the proceeding for a "slightly higher" sum of $56,000. 81 It argues that it was not unreasonable to reject the offer because the evidence in answer on the question of trade mark use had not been received at that point. 82 Pinnacle also argues that the offer had unclear terms that made it incapable of acceptance, namely that the settlement was to be expressly subject to a deed of settlement including "general terms usually included in the deed of this nature". Pinnacle contends it is unclear what those terms are intended to be and that the offer was too vague and subjective. 83 I do not accept Pinnacle's contentions in relation to the third offer for essentially similar reasons to those set out in relation to the second offer. It is unnecessary to reiterate all of those reasons, but I note the following in relation to Pinnacle's submissions specific to this offer. 84 First, Pinnacle knew or ought to have known each of the matters set out at [61] above. 85 Second, for essentially the same reasons to those explained (at [62] above) it is plain that the third offer was more favourable than the result Pinnacle achieved at trial. 86 Third, I see little force in Pinnacle's argument that the terms of the third offer were incapable of acceptance. Rule 25.03 required the content of the offer to be set out in clear terms and state whether costs are all in or exclusive, and it did so. In my view Pinnacle's contention seeks to put form before substance. There is no good reason to think that there would have been any difficulty with the parties agreeing the terms. If Pinnacle was content with the quantum of the offer, but concerned about the potential terms, it could easily have raised that issue at the time but it did not. In my view this contention is another 'after the event' attempt by Pinnacle to justify its refusal of the offer. I infer that it, in fact, it refused the offer because it sought a higher amount. 87 Fourth, while it is true that not all the evidence was on at the time of the third offer, by that time Pinnacle had all the same information it had at the time the second offer was made, as well as the benefit of its own work in preparing its evidence in chief. The first of Pinnacle's affidavits in chief was affirmed on 26 March 2018, and work on its other evidence must have already been underway. Pinnacle was sufficiently informed to allow it to give consideration to the offer. Indeed, the fact that Pinnacle was able to assess its position on liability, quantum and costs is shown by its earlier counteroffer of $56,000 inclusive of costs. I infer that the real reason Pinnacle did not accept the offer was because it wanted a higher amount, not because of any difficulty with assessing the strengths and weaknesses of its case. 88 Fifth, I accept that notwithstanding the $5,000 increase the third offer was less attractive for Pinnacle, and in that sense represented a backwards step for it in the negotiations. That is so because, based upon Mr Cheung's affidavit, in the period between the second and third offers Pinnacle's solicitor-client costs had increased by approximately $30,000. But that does not show that it was reasonable for Pinnacle to reject the offer. Indeed, that contention illustrates the problem with Pinnacle's approach to the settlement negotiations. 89 Pinnacle's decision to reject the second offer and to push on with the case meant that it incurred further solicitor-client legal costs without there being any or any commensurate increase in the underlying value of the claim, and thus costs became even more disproportionate to the damages which were likely to be recoverable if it was successful. It was inconsistent with the overarching obligation for Pinnacle to take that course. The evidence tends to show that Pinnacle understood that the case had become uneconomic for it to continue, as shown by its offer to accept $56,000, being an amount which was less than the solicitor-client costs it had incurred at that date. 90 Had Pinnacle faced the reality of its position and acted consistently with the overarching obligation, it would have accepted the third offer. Instead, it again rolled the dice and pushed on with the infringement claim in the hope of achieving a higher offer. According to Mr Cheung's affidavit, by this point Pinnacle had incurred solicitor-client costs of approximately $128,000, even though it could reasonably expect only very modest damages. The continuation of this strategy ultimately meant that Pinnacle incurred solicitor-client costs of approximately $281,000, and was also exposed to the risk of a substantial adverse costs liability to Triangl (which risk ultimately crystallised). This approach to settlement not only wasted the parties' resources, it also wasted Court resources and such an approach must be deprecated. 91 In the circumstances as they existed at that time Pinnacle's rejection of this offer was in my view unreasonable. Had I not found the rejection of the second offer sufficient to justify an order for indemnity costs, it would be appropriate to order Pinnacle pay Triangl's costs on an indemnity basis from the expiry of the time for acceptance of the third offer. 92 If on appeal I am found to be wrong in ordering Pinnacle to pay indemnity costs from 13 February 2018, I consider it should pay indemnity costs from 21 June 2018.

The fourth offer 93 On 12 October 2018, nine days before trial, Corrs sent a letter to Actuate IP which reiterated essentially the same arguments as Triangl had advanced in relation to the second and third offers. Amongst other things, it: (a) repeated the warning that even if Pinnacle succeeded in the infringement claim it was unlikely to be awarded significant financial compensation, and it might have its costs reduced because it should have filed the proceeding (if at all) in the FCC; and (b) referred to Pinnacle's particulars of loss and damage and asserted that: (i) Pinnacle's evidence as to its reputation is sparse and it did not establish that it had a reputation for originality. Even if Pinnacle was able to establish that it enjoyed a reputation for originality, it is not proved that any such reputation had been damaged by Triangl's conduct. Thus, the claim for loss of reputation was entirely speculative: see, for example, Bing! Software Pty Ltd v Bing Technologies Pty Ltd (No 1) (2008) 79 IPR 454 at [123]-[126]; (ii) Pinnacle's claim for lost sales could not succeed as the evidence showed that it had not offered any women's swimwear for sale in the relevant period, and that the sales of the products it relied on as substitutable for the Triangl DELPHINE bikinis had in fact increased over that period; and (iii) in circumstances where Triangl had removed the name DELPHINE from its website less than two weeks after the deadline specified in the initial letter of demand, where it professed a genuine belief that its conduct did not constitute a trade mark infringement, which belief it continued to hold, and that the case was not one in which additional damages would be warranted. Further, Triangl's profits from the sale of the relevant products was significantly less than $20,000 and it "stretched credulity" to suggest that a substantial part of such profits were derived from the use of the name DELPHINE, instead of from the strength of Triangl's brand, or the quality and competitive pricing of its products. It said that even a nominal award of damages would more than deprive Triangl of any benefit acquired from the infringement; (c) contended that, if successful on liability, Pinnacle faced a "grave risk" of having its costs completely or substantially disallowed, by application of r 40.08, and said it would not recover its costs of suing the wrong Triangl entity. In light of these facts, Triangl said that the costs which Pinnacle would be able to recover will be significantly less than the amounts set out in your without prejudice letter dated 25 September 2018, noting that Pinnacle said its costs by that point were in the order of $200,000. 94 The letter then made the following offer: Recognising that certainty is impossible in calculations of this kind, and without any admission as to liability, our clients offer $70,000 in full and final settlement of the proceeding, as follows: (a) The respondents pay the applicant the sum of $70,000, inclusive of costs. (b) Paragraph 2 of the Notice of Discontinuance filed on 13 April 2018 be vacated. (c) The applicant files a Notice of Discontinuance, discontinuing the balance of the proceeding with no order as to costs. (d) The second respondent files a Notice of Discontinuance in the cross-claim, discontinuing the cross-claim with no order as to costs. (e) The parties provide mutual releases from the claims in the proceeding. This offer is open to be accepted until 4pm on 19 October 2018. The "without prejudice" nature of this letter is not to apply in relation to a question of legal costs at the conclusion of these proceedings and in this regard we refer you to Calderbank v Calderbank [1975] 3 WLR 586. If it is rejected, and our client is successful in the proceeding, it will produce this letter to the Court in support of an application for indemnity costs and in relation to the Court's discretion on costs generally. We await your clients' response. 95 Pinnacle argues that its rejection of the fourth offer was not unreasonable as it was made on a 'without admissions' basis at a very late stage of the proceeding. Based on Mr Cheung's affidavit it says that the offer comprised less than one third of Pinnacle's total costs at the time it was made. It contends that the timing of the offer, after the bulk of the costs of preparing for hearing had been incurred, indicated that it was not unreasonable to reject the offer, citing Eskine v 72-74 Gordon Crescent Lane Cove Pty Ltd [2019] FCAFC 73 at [7]. 96 Pinnacle submits that in circumstances where the offer was made after evidence had closed it had good reason to believe that the cross-claim would fail and that "there was a good debate, if not a winning case, to be had on the infringement claim". It argues that the fact that the Court concluded differently does not make Pinnacle's belief unreasonable, citing Damorgold Pty Ltd v. Blindware Pty Ltd (No 2) [2018] FCA 364 at [67] (Middleton J). 97 Pinnacle concedes that by that point in time it was aware that it faced the prospect of a low award of damages if it succeeded in the infringement claim, but it argues that the remedies it sought still had value and its costs were well in excess of the total figure offered. It contends that a declaration had a particular value in circumstances such as this where the Triangl DELPHINE bikinis had been sold internationally and, as Ms Willis' affidavit shows, were still offered overseas by third parties. Hence it says that there was a risk of parallel imports from third parties. 98 It submits that the decision was important to Pinnacle in the future enforcement of its trade mark in relation to similar conduct, and that the importance of a declaration on the novel issue is a valid consideration which the Court should take into account, citing GM Global Technology Operations LLC v. S.S.S. Auto Parts Pty Ltd (No.2) (Costs) [2019] FCA 1813 at [20] (Burley J). It also argues that the fact that it had offered to settle the proceeding against Triangl approximately six months earlier for $56,000 ought not to be held against its reasonable belief in its case. It says that offer was made as a matter of commercial common sense and compromise. 99 I take a different view for essentially similar reasons to those set out in relation to the second and third offers. It is unnecessary to reiterate all of those reasons, but I note the following in relation to Pinnacle's submissions specific to this offer. 100 First, Pinnacle knew or ought to have known all of the matters set out at [61] above, and by this time it had a complete understanding of the evidence it was required to meet and the risks it faced. The offer was made nine days before trial, at a point when all the evidence was on and Pinnacle's legal team were fully engaged with the case. 101 Contrary to Pinnacle's submissions, the fact that the offer was made at a late stage does not show that Pinnacle was justified in refusing to accept it. In my view Pinnacle tries to have it both ways. It contends that the first, second and third offers were made too early, when it was not in a position to properly assess the strengths and weaknesses in its case. Then in relation to the fourth offer, which was made when all the evidence was on, it argues that the offer was made too late. The reality is that Triangl offered $40,000 inclusive of costs in February 2018, then $45,000 in June 2018 and then $70,000 in October 2018 and Pinnacle rejected each offer. If, contrary to my view, there was any difficulty inhibiting Pinnacle in its assessment of the reasonableness of the earlier offers, they had fallen away by the time of the fourth offer. 102 Second, for essentially similar reasons to those explained (at [62] above) I can see no basis for Pinnacle's submission that a lump sum offer to pay it $70,000 was not more favourable to it than the result it achieved at trial. 103 Third, Pinnacle concedes that by the date of the fourth offer it knew that, if it succeeded in the infringement claim, it faced the prospect of receiving only modest damages. In my view it knew that much earlier, as shown by its counteroffer of $56,000. By the date of the fourth offer Pinnacle's costs had ballooned even further, the margin between its solicitor-client costs and recoverable party-party costs had grown even further, the size of any adverse costs liability that eventuated had grown even further, and the disproportion between costs and the subject matter of the litigation had grown even greater. 104 It is plain on the materials that the trial only proceeded because of the costs incurred to that date, which costs were seriously disproportionate to potential damages. The requirement for Pinnacle to act consistently with the overarching obligation was a continuing one. 105 In the face of the prospect of receiving only very modest damages, Pinnacle chose to again roll the dice in the hope of achieving a greater level of cost recovery by succeeding at trial. I do not consider that Pinnacle could realistically have expected to receive substantial damages; or at least damages worth the powder and shot of a trial with senior and junior counsel for both sides. In the circumstances of the case, rejecting the offer and pushing on to trial in the face of a $70,000 offer was not reasonable and it was inconsistent with the overarching obligation. 106 Again, Pinnacle had an "an obligation to come to grips with the strengths and weaknesses in their case, and the extent of that obligation in the face of an offer (the rejection of which might put the offeree at risk of indemnity costs)": Black at [217]. In my view it again failed to do so. Pinnacle paid insufficient regard to the risk it faced that it would not succeed in the claim; the difficulties it faced in obtaining more than paltry damages if it did succeed at trial; and the gross disproportion between the costs and the subject matter of the litigation. 107 Fourth, the fact that the offer was made on 'without admissions' basis carries no weight in deciding whether Pinnacle's rejection of the offer was unreasonable. That is a standard position taken in litigation and an insufficient reason to refuse an otherwise reasonable offer. 108 Fifth, for the reasons previously explained I do not accept Pinnacle's suggestion that it was reasonable to reject the fourth offer because Pinnacle sought declaratory relief. I give little weight to Ms Willis' affidavit which concerns internet searches she conducted in November 2019 in relation to the sale of Triangl DELPHINE bikinis by third parties. The fourth offer was made on 22 October 2018 and her affidavit discloses little as to whether, at the time Pinnacle rejected the fourth offer, it did so, even in part, out of a concern to obtain declaratory relief. I note also that Triangl had rebranded the Triangl DELPHINE bikinis as DELILAH in June 2016, there was no suggestion that Triangl had failed to honour the undertaking it had given Pinnacle to cease using the name DELPHINE, and no evidence that it had made any threat to recommence the alleged infringing conduct. By the time of trial it was approximately 16 months since the impugned conduct had ceased. I doubt that declaratory relief was a matter of any great significance to Pinnacle. 109 Nor do I accept Pinnacle's contention that a decision was important to Pinnacle in the future enforcement of its trade mark, or that a decision on the novel issue of style names was a matter of significance to it. There was no evidence in that regard. This was not a case like GM Global Technology. I infer that Pinnacle rejected the fourth offer not because it sought declaratory relief but because it wanted a higher amount. In my view this contention is another 'after the event' attempt by Pinnacle to justify its unreasonable refusal to accept the offer. 110 In the circumstances as they existed at that time, Pinnacle's rejection of the fourth offer was again unreasonable. If on appeal I am found to be wrong in ordering Pinnacle to pay indemnity costs from 13 February 2018, or from 21 June 2018, I consider it should pay indemnity costs from 19 October 2018.

THE CROSS-CLAIM 111 Pinnacle was successful in its defence of the cross-claim and it was dismissed. 112 Although Pinnacle's primary submission was in support of its proposed orders, it was explicit in contending that it was entitled to its costs of the cross-claim.

Triangl's submissions 113 Triangl submits that the costs of the cross-claim should lie where they fall. Alternatively, if the Court considers that Triangl should pay Pinnacle's costs of the cross-claim, it contends that those costs should be assessed on the FCC scale or otherwise allowed at a reduced rate to reflect the fact that the case should have been filed, if at all, in that Court. 114 Triangl contends that it would never have filed the cross-claim if it had not been sued by Pinnacle, and notes that it did not seek to have the Court determine the cross-claim if the infringement claim failed (LJ [241]). It argues that it had no independent interest in Pinnacle's trade mark: it had already undertaken not to use DELPHINE again and it only sought to invalidate that mark as part of its defence of the proceeding (LJ [241]). 115 Triangl says further that the cross-claim was narrow, as it relied only on s 58 of the Trade Marks Act 1995 (Cth). It submits that the costs of the cross-claim were only a small proportion of the overall costs of the proceeding, noting that the bulk of the evidence and the bulk of the witnesses, including the experts, and the bulk of the hearing time were devoted to the infringement claim. I estimate that the costs associated with the cross-claim would be no more than one third of the overall costs, and could well be less. Triangl also contends that some of the evidence that was relevant on the cross-claim would have been necessary on the infringement claim anyway. For example, it says that Pinnacle's evidence about its use of its trade mark was relevant to defeating the cross-claim, but also relevant to attempting to establish its reputation for the purposes of the infringement claim. 116 Triangl relies on the decision in Bohemia Crystal Pty Ltd v Host Corporation Pty Ltd [2018] FCA 892 in which the applicant succeeded on part of its infringement claim but the respondents succeeded on its cross-claim for revocation, meaning that it was the real victor in the proceeding because it had avoided liability. In that case Burley J said that the evidence adduced in the time spent at trial on the question of infringement was "relatively trivial" (at [10]). His Honour considered that it was not appropriate to award costs of the infringement claim separately and instead he awarded the respondent the costs of both the main claim and the cross-claim "as this appropriately reflects the success that it had in the proceedings" (at [10]). Triangl contends that the facts of the present case are similar and there should be a similar result, although it does not go so far as to seek that Pinnacle pay its costs of the cross-claim as occurred in Bohemia; it argues only that Triangl should not be ordered to pay Pinnacle's costs of the cross-claim. 117 Alternatively, if the Court is minded to order Triangl to pay Pinnacle's costs of the cross-claim Pinnacle contends that the order should be for payment on the FCC scale or be otherwise reduced. Rule 40.08 provides that a party may apply for an order that costs and disbursements payable to another party be reduced if the applicant has been awarded less than $100,000 or if the proceeding could more suitably have been brought in another court. Triangl submits that on either basis r 40.08 is applicable to the present case and there is no reason why the proceeding could not have been filed in the FCC. 118 On Triangl's submission the infringement claim was within the FCC's jurisdiction; it was not unduly complex or lengthy; and there was no order splitting liability from quantum. Further, Triangl argues that Pinnacle cannot have reasonably thought, at the time it filed the proceeding, that it was likely to be awarded more than $100,000 in damages. As discussed above, it knew that Triangl had used the name DELPHINE for a matter of only six weeks, on one of its many bikini styles, and that it ceased using DELPHINE prior to the commencement of the proceeding. 119 Triangl relies on the decision in Kismet International Pty Ltd v Guano Fertiliser Sales Pty Ltd (No 2) [2013] FCA 705, in which the respondent succeeded on part of the cross-claim. The applicant sought an order under r 40.08 to reduce the costs payable by the applicant on the basis that the cross-claim did not need to be in the Federal Court. The Court refused that application on the basis the respondents did not choose the forum in which the applicant commenced the proceeding and was required to bring the cross-claim in the same court and thus incur costs on the Federal Court scale (at [37]). 120 Based on Kismet Triangl argues that it was Pinnacle's decision to bring the proceeding in the Federal Court and that it was "forced" to bring its cross-claim in the same court. Thus it submits it should not be ordered to pay Pinnacle's costs of the cross-claim on the Federal Court scale and instead, if it is to be ordered to pay Pinnacle's costs at all, pursuant to r 40.08 the Court should exercise its discretion to order that those costs be payable on the FCC scale or be otherwise reduced.

Consideration 121 I have concluded that it is appropriate to order Pinnacle to pay Triangl's costs on an indemnity basis on and from 13 February 2018 on the basis that Pinnacle's rejection of the second offer was unreasonable. That conclusion is also important to my view in relation to the costs on the cross-claim. That is so because if Pinnacle had not unreasonably refused the second offer the entire controversy would have been quelled. 122 For the reasons I explain, I consider Triangl should pay Pinnacle's costs of the cross-claim on a party-party basis on the Federal Court scale up to an including 12 February 2018. Thereafter in light of Pinnacle's unreasonable rejection of the second offer it is not entitled to recover its costs from Triangl. I will not however order Pinnacle to pay Triangl's costs of the cross-claim after 12 February 2018. Each party shall bear its own costs of the cross-claim after 12 February 2018. 123 First, in respect of the period from filing of the cross-claim on 22 September 2017 to 12 February 2018, I am not persuaded by anything in Triangl's submissions that the circumstances justify a departure from the ordinary rule that costs follow the event: Firebird at [6]; Les Laboratoires Servier at [297] to [298]). 124 Triangl describes its attempt to invalidate Pinnacle's registration of the DELPHINE trade mark as an "orthodox defensive cross-claim" made in circumstances where it had already undertaken not to use the name DELPHINE again, and just "part of its defence of the proceeding." That may be so but it is no answer to the application for costs. Triangl chose to bring and maintain a cross-claim which turned out not to be substantiated by admissible or probative evidence. I accept that Triangl's position worsened because its main witness was overseas, but in my view the claim was never a strong one. The cross-claim having failed Triangl should be held responsible for the costs Pinnacle incurred in defending it up until Pinnacle unreasonably rejected the second offer. 125 Second, I have no difficulty in accepting that Triangl would not have commenced the cross-claim had it not been sued by Pinnacle, but that does not show that Pinnacle should not have its costs up to 12 February 2018. Triangl commenced the cross-claim for its own forensic reasons, thereby expanding the proceeding, and in doing so it put Pinnacle to expense of meeting that claim. It was a choice Triangl made and, having been unsuccessful, it should pay Pinnacle's costs on a party-party basis up to the point the whole controversy would have been quelled had Pinnacle accepted the second offer. Had Pinnacle done so it would not have incurred costs in defending the cross claim past that point. 126 Third, while I accept Triangl's submission that the costs associated with the cross claim do not make up much of the costs overall, on my estimate probably no more than one third and perhaps less, that is still a substantial amount. It was Triangl's decision to bring the cross-claim, which ultimately failed. Pinnacle should have its costs of defending the cross-claim up until its unreasonable rejection of the second offer. 127 Fourth, it is true that Pinnacle incurred costs in preparing its defence of the cross claim, and that Triangl then abandoned some of the grounds late in the day, but Pinnacle would not have incurred the majority of those costs had it not unreasonably rejected the second offer. The cross-claim had not been on foot long when the second offer was made 128 Fifth, initially I saw some merit in Triangl's argument that Pinnacle's costs should be reduced to the FCC scale or otherwise, having regard to the very modest damages which it could reasonably have expected to achieve to achieve. Given the considerable expertise and experience in the case management and determination of intellectual property disputes in this Court I do not lightly conclude that this case would have been more appropriately heard elsewhere (Kismet at [33]), but the present case is one such case. In my view Pinnacle should not have commenced the infringement claim in this Court and had it been successful in the infringement claim there is a real question as to whether I would have awarded it costs on the Federal Court scale. One policy rationale for r 40.08 is to dissuade the bringing of proceedings in the Federal Court that may more appropriately be brought elsewhere: Magenta Nominees Pty Ltd v Richard Ellis (Western Australia) Pty Ltd [1994] FCA 302 (Carr J). 129 Triangl's contention is, however, based in the proposition that it was "forced" to file the cross-claim in the Federal Court because Pinnacle commenced the infringement claim in this Court. The evidence shows that not to be the case and the present case can therefore be distinguished from Kismet. 130 In a letter from Actuate IP to Corrs dated 22 February 2018, six months before trial, Pinnacle made a counteroffer; offering to accept $56,000 in settlement of the whole proceeding. In that letter Actuate IP argued that Pinnacle had a sound basis for commencing the proceeding in the Federal Court, and maintained that it was the appropriate choice of forum given the character and complexity of the dispute, and because use of the Fast Track List was intended to facilitate efficient and timely disposal of the dispute. However, and importantly, the letter then said: …notwithstanding the above, should [Triangl] not accept our client's above offer and you maintain the view that the proceeding should be transferred to the Federal Circuit Court, we invite you to provide us with proposed minutes of consent order to effect such a transfer. (Emphasis added.) I accept Pinnacle's submission that it took a pragmatic approach in inviting transfer to the FCC; Pinnacle maintained that the Federal Court was the appropriate forum but it was willing to consent to a transfer, and it said so in clear terms. 131 Triangl did not accept Pinnacle's invitation. Instead, Corrs continued to argue the point of forum in subsequent communications with Actuate IP. I infer that Triangl's choice to remain in the Federal Court was forensic, given that Pinnacle's invitation had no deadline and came with no preconditions. Thus, at least after February 2018, if Pinnacle considered it was in the wrong forum it was there by its own choice. It appears from Triangl's conduct that it wanted to both stay in the Federal Court but reserve the right to complain about the greater costs associated with doing so. Given Pinnacle's invitation, I do not accept that Triangl was "forced" to conduct the cross-claim in this Court. 132 These orders may be seen to visit some unfairness on Pinnacle because it was successful in defending the cross-claim, or upon Triangl because the second offer which would have resolved the entire proceeding was unreasonably rejected by Pinnacle. But I do not consider Pinnacle should have its costs of successfully defending the cross-claim after the date of the second offer in circumstances where it was unreasonable to reject that offer. Nor do I consider that Triangl should recover its costs of the cross claim when it did not seek an order for the costs of the cross-claim and only sought that they lie where they fall, the cross-claim had little merit, and Triangl abandoned a number of the grounds both prior to and on the eve of trial. 133 In the circumstances it is appropriate to order that Triangl pay Pinnacle's party-party costs of and associated with the cross-claim on the Federal Court scale up to and including 12 February 2018 and that on and from 13 February 2018 each party bear their own costs. I certify that the preceding one hundred and thirty-three (133) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Murphy.

At a glance

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Before

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Judgment (26 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (21)

Cited By (4)