The Real Thing Food Supplements CC v Media Tag Pty Ltd (No 2)

I published my principal judgment in these proceedings on 3 May 2018: The Real Thing Food Supplements CC v Media Tag Pty Ltd [2018] NSWSC 585.

I concluded that the proceedings must be dismissed with costs.

Media Tag seeks an order that it have its costs on an indemnity basis from 21 February 2017 by reason of a Calderbank offer it made on 20 January 2017, which expired 20 February 2018, that the proceedings be discontinued with each party to pay their own costs.

Media Tag has achieved a result better than the subject of its offer as there is no dispute that, in light of my reasons, the proceedings must be dismissed with costs.

However, it is well established that the making of an offer better than the result ultimately obtained does not automatically translate into an indemnity costs order (for example see Commonwealth of Australia v Gretton [2008] NSWCA 117 at [43]).

Generally, in order to enliven the Court’s discretion to award indemnity costs on the basis of a Calderbank offer it must be shown that the offer is a genuine offer of compromise and that the failure of the offeree to accept was unreasonable (for example see Leichhardt Municipal Council v Green [2004] NSWCA 341 at [21]-[24]).

Media Tag’s offer was made some 15 months before the hearing, before the pleadings had closed and before evidence was served (albeit after the parties had attended a mediation and had exchanged position papers for the purposes of that mediation).

It is true that the offer drew attention to one matter which I found to be fatal to the plaintiff’s case, namely the question of whether or not it could establish “requisite goodwill and reputation in Australia”.

However, a “walk away” offer such as this, made at a relatively early stage in the proceedings, really amounted to an invitation to the plaintiff to surrender.

I do not consider that it was unreasonable for the plaintiff not to accept the offer in those circumstances.

As the plaintiff submits, the nature of the case was one where the plaintiff was, at least at that early stage, entitled to await developments before abandoning its case; particularly bearing in mind the similarity between wording on its labels and those adopted by Media Tag (see generally the principal judgment at [75] to [81]).

The only order I make is that the proceedings be dismissed with costs.