Henley Arch Pty Ltd v del Monaco (No. 2)

In *Henley Arch Pty Ltd v del Monaco (No. 2)*, the Federal Court of Australia was asked to determine the appropriate costs orders following a copyright infringement proceeding. The applicant, Henley Arch Pty Ltd, had been unsuccessful in its claim against the respondent, del Monaco.

The primary legal issues before the Court were whether costs should be awarded on an indemnity basis, whether costs should be ordered as a lump sum, and whether the Federal Court scale of costs was appropriate. Central to these questions was whether there were justifying circumstances to depart from the usual order for costs on a party and party basis, particularly in light of an offer to compromise made by the respondent which the applicant had allegedly unreasonably refused.

Justice Baird considered the principles governing indemnity costs orders, noting that they are exceptional and require demonstrating "justifying circumstances." His Honour found that the respondent's offer to compromise, which was significantly more favourable than the outcome ultimately achieved by the applicant, constituted such a circumstance. The applicant's refusal of this offer was deemed unreasonable, leading the Court to conclude that an indemnity costs order was warranted. The Court also determined that a lump sum order for costs was appropriate in the circumstances.

The Court ordered that the applicant pay the respondent's costs of the proceeding on an indemnity basis, to be assessed as a lump sum.