FEDERAL COURT OF AUSTRALIA

Primary Health Care Limited v Australian General Practice Network Limited [2012] FCA 174

THE COURT ORDERS THAT:

1.    The applicants have leave to discontinue the proceedings on the following terms:

(a)    the applicants file a notice of discontinuance no later than 14 days from the date of this order;

(b)    subject to order 1(c) and any previous order made for the payment of costs by any party, each party to this proceeding is to bear its own costs;

(c)    the applicants pay the second to ninth respondents’ costs of the proceeding incurred after 15 June 2011.

2.    The applicants, or any of them, not commence further proceedings against the respondents, or any of them, in respect of the use by the respondents, or any of them of the expression, ‘Primary Health Care’ other than its use as a trade mark or badge of origin without the leave of the Court.

3.    The applicants pay the respondents’ costs of the application to discontinue the proceedings.

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

REASONS FOR JUDGMENT

Background

1        On 9 September 2011, the applicants in these proceedings filed an interlocutory application seeking leave to discontinue the proceedings against the second to ninth respondents on terms that each party bear its own costs. The applicants discontinued the proceedings against the first respondent, Australian General Practice Network Limited (AGPN) on 25 May 2011 by leave of the Court and with the consent of the first respondent. Consequently, reference in these reasons to the “respondents” should be understood as a reference to the second to ninth respondents.

2        In broad terms the respondents do not oppose the discontinuation although it may be more accurate to say that they accept that the Court would not force an unwilling applicant to litigate a case to a conclusion. They submit however that it should be on terms that the applicants pay their costs, including reserved costs, and also be restrained from commencing, without the leave of the Court, further proceedings against the respondents, or any of them, in respect of the use of the expression ‘Primary Health Care’.

Discontinuing a proceeding - relevant principles

3        Provision for discontinuing a proceeding before judgment has been given is made in Rule 26.12 of the Federal Court Rules 2011 as follows [notes omitted]:

(1)    A party claiming relief may discontinue a proceeding in whole or in part by filing a notice of discontinuance, in accordance with Form 48.

(2)    The party may file the notice of discontinuance:

(a)    without the leave of the Court or the other party’s consent:

(i)    at any time before the return date fixed in the originating application; or

(ii)    if the proceeding is continuing on pleadings — at any time before the pleadings have closed; or

(b)    with the opposing party’s consent — before judgment has been entered in the proceeding; or

(c)    with the leave of the Court — at any time.

(3)    The notice of discontinuance must:

(a)    state the extent of the discontinuance; and

(b)    if the discontinuance is by consent — be signed by each consenting party.

(4)    However, a litigation representative or a representative party must not discontinue a party’s claim without first obtaining the leave of the Court.

(5)    An application for a winding up order under section 459P or 461(1)(a) of the Corporations Act 2001 may be discontinued only with the leave of the Court.

(6)    A notice of discontinuance filed by one party does not affect any other party to the proceeding.

(7)    Unless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim, or part of the claim, that is discontinued.

4        The Court’s discretion to grant leave is unfettered and, although generally granted, leave is not automatic: Trade Practices Commission v Manfal Pty Ltd (No 3) (1992) 33 FCR 382 at 383. In considering an application for leave to discontinue it is not for the Court to predict the outcome of the case had it gone to trial, however the conduct of the parties during the course of the litigation may be a relevant factor in considering what, if any, conditions should be imposed on a grant of leave. Among the conditions imposed on a grant of leave may be an order in relation to costs and/or an order restraining the discontinuing party from commencing similar litigation against the same parties: Harvey Norman Holdings Limited v Fels (2002) ATPR ¶41-852.

5        The power to award costs is a discretionary power to be exercised judicially: see Mineralogy Pty Ltd v National Native Title Tribunal [1998] FCA 1700. Subject to that requirement it is an unfettered power. Rule 26.12(7) provides a default position in relation to costs where the notice of discontinuance is filed under subrule (2) thus, by implication, recognising that the Court’s discretion to award costs is unfettered. This approach is consistent with s 43(2) of the Federal Court of Australia Act 1976 (Cth) which provides that the award of costs is in the discretion of the Court “except as provided by any other Act”.

6        The circumstances in which a party may seek leave to discontinue proceedings and the reasons for discontinuing vary considerably. In Smith v Airservices Australia (2005) 146 FCR 37 at [36]-[49] I expressed the view that for this reason there is no settled rule as to the allocation of costs where leave to discontinue is sought: see also O’Neill v Mann (2000) 175 ALR 742 and Clark v ING Life Limited [2007] FCA 1960. In Re the Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624, McHugh J commented on the factors relevant to exercise of the discretion where leave to discontinue is sought:

In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. …

… in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. … But such cases are likely to be rare.

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.

[Emphasis added and footnotes omitted]

7        Considerations relevant to the exercise of the Court’s discretion generally, and in this case, are: whether the proceedings were reasonably commenced; whether, in all the circumstances, the parties’ conduct in maintaining and defending the proceedings was reasonable; and the nature of the applicants’ reasons for seeking to discontinue the proceedings.

Commencement of proceedings

8        The proceedings were commenced by application filed on 10 March 2010 supported by a statement of claim. There have been several iterations of the pleadings, the last of the applicants’ being the second further amended statement of claim (which I will refer to as the statement of claim) filed on 9 February 2011. Each of the respondents has filed a defence and, at the time when the applicants had sought leave to discontinue, a hearing had been listed on 28 February 2011 for approximately 14 days commencing on 27 September 2011.

9        In the statement of claim it is alleged that the first applicant, Primary Health Care Limited (PHC) has “at all material times” operated medical centres in Australia either by itself or its subsidiaries. The statement of claim lists a large number of medical centres in New South Wales, South Australia, Queensland, Victoria, the Australian Capital Territory and Western Australia. While the names of many of these incorporate the term, ‘Primary Health Care’ this is by no means true of all.

10        According to the applicants, since 1994 PHC, a publicly listed company, and its predecessors and subsidiaries have “extensively advertised, marketed, promoted, offered and provided” various services, including educational, IT support, medical, professional support and recruitment services under or by reference to the name, ‘Primary Health Care’. As a result PHC claims to have an established reputation in the name and has applied for registration of the word mark, PRIMARY HEALTH CARE other word marks incorporating the words PHC as well as for a device mark featuring PHC’s corporate logo, in a variety of classes.

11        The applicants allege that each of the respondents has taken steps towards advertising and promoting services similar to those provided by PHC, “under or by reference to a name incorporating” the words ‘Primary Health Care’. They allege that the second and third respondents have lodged trade mark applications for a mark containing the words, Primary Health Care and that they intend to operate by reference to that trade mark. They also claimed that the respondents had been involved in passing off and misleading and deceptive conduct.

12        The applicants claim that they first became aware of the respondents’ use of, or intention to use, the term, Primary Health Care, in about September 2009. They expressed their objections in a letter dated 29 September 2009, to the solicitors for the first respondent. Between January and March 2010, letters of demand were sent to each of the respondents asserting PHC’s claims and seeking certain undertakings. No undertakings were given and the applicants commenced the proceedings on 10 March 2010.

13        In the circumstances where the applicants were aware of the respondents’ intentions to use ‘Primary Health Care’ in connection with their businesses and/or that they had applied for company names, domain names and/or business names, it was not unreasonable for them to be concerned that this might give the impression of a connection between PHC and the respondents. Whether this concern would have been vindicated had the matter gone to trial is not the point. It follows that it was not unreasonable for them to commence the proceedings.

Maintaining the proceedings and seeking leave to discontinue

14        The applicants claim that central to the proceedings has been their purpose to restrain the respondents from using the words, ‘Primary Health Care’ as part of their corporate names, business names, domain names or as trade marks. The applicants submit that their only concern has always been with:

(a)    the secondary meaning of the words “PRIMARY HEALTH CARE” and how use of those words as a mark signifies the applicants and the services provided by the applicants;

(b)    the use by the respondents of the words “PRIMARY HEALTH CARE” as a name or mark in a trade mark or branding sense.

15        The applicants say that, despite suggestions to the contrary by the respondents, the proceedings were not directed to obtaining a monopoly over words that have a descriptive meaning. For their part, the respondents allege that use of the words in a descriptive sense has been the subject of complaint by the applicants since the proceedings commenced including in the various iterations of the statement of claim. The respondents base this allegation on their belief that ‘Primary Health Care’ is an inherently descriptive term that is not capable of being a badge. Alternatively they say that the applicants, in all their pleadings, objected not only to the use of the term in a name but also “under or by reference to” such a name which they say would be the use of ‘Primary Health Care’ in a descriptive sense.

16        Irrespective of this debate however, the fact that in their initial defences each of the respondents admitted that it intended to provide (and in the case of the eighth respondent, had provided) services in the relevant area under and by reference to a trade mark or business name incorporating ‘Primary Health Care’ indicates that there was a real dispute between parties. The respondents rejected PHC’s claim to have goodwill and reputation in the name and asserted that the term was well known and utilised both in Australia and internationally, as a description of the first level of care provided to consumers of health services. They rejected the claim that the term denoted an association with PHC.

17        Apart from their participation in the mediation which resulted in settlement of the dispute with the AGPN, the applicants made other attempts to settle the proceedings. Offers of compromise were sent to all respondents on 21 May 2010. The gist of the applicants’ proposals was that if the respondents would make a specified contribution to the applicants’ costs and undertake not to use the relevant registered names the proceedings could be discontinued with no order as to costs. These offers were not accepted.

18        Following the filing of the second further amended statement of claim there was a fundamental change to the defences of the sixth, seventh and ninth respondents. In their amended defences filed on 14 March 2011, each of those respondents denied that it intended to use the trading name it had registered. These respondents linked the changes to the Commonwealth Government’s introduction of Medicare Locals and the Government’s naming requirements. The introduction of Medicare Locals had been announced on 11 May 2010. In her affidavit sworn on 9 September 2011 Siabon Seet, solicitor for the applicants, explains Medicare Locals as follows:

[A] development in government policy which occurred in May 2010 when the Commonwealth Government released the “2010-11 Portfolio Budget Statement for the Department of Health and Aging”. This Portfolio Budget stated that (emphasis added):

The Government will build on its responsibility for general practice and primary health care with the introduction of primary health care organisations known as Medicare Locals …

The first Medicare Locals are expected to commence operations in mid-2011. In many instances and where possible, Medicare Locals may be drawn from Divisions of General Practice with the capacity to take on the roles and functions expected of Medicare locals … Over the next few years, Medicare Locals will replace the current Divisions of General Practice Network.

19        On 22 February 2011, the Government had issued guidelines for those who wished to become Medicare Locals. The guidelines emphasised that “Medicare Locals will be subject to common communications, marketing and branding protocols, which will be reflected in future funding agreements”. In the light of this policy and other indications from some of the respondents that they did not intend to use ‘Primary Health Care’ in their business names, the applicants agreed to AGPN’s proposal for a mediation which took place in May 2011. As previously mentioned, the mediation resulted in settlement of the dispute with AGPN but not with any of the other respondents. The details of the mediation are confidential and so there is no evidence as to why an agreement was not able to be reached with the other respondents.

20        It would seem that the distinction between using ‘Primary Health Care’ as a name or mark in a trade mark or branding sense and using it in a descriptive sense seems to have been at the heart of the parties’ inability to settle the proceedings. The relevance of, and the dispute about the distinction came to the fore at a directions hearing on Wednesday, 15 June 2011, at which among other things, a dispute about discovery was to be resolved. At the outset of the hearing, senior counsel for the applicants, Mr Studdy, advised the Court that in the period from the date when the proceedings against the first respondent had been discontinued, “the landscape in which these proceedings have been conducted … has changed very, very significantly”. He referred in particular to two affidavits that had been served on his instructing solicitors the previous evening, 14 June 2011. They were both sworn by Brett John Heath, the instructing solicitor for the third to ninth respondents.

21        Mr Studdy explained that on 6 June 2011, the then Commonwealth Minister for Health and Ageing, the Hon Nicola Roxon MP, had announced that, from 1 July 2011, 19 organisations across urban and rural Australia were to become the nation’s first “Medicare Locals” and would conduct their activities under that name or, at least, incorporate it in their name. Mr Studdy said he understood that the third, fifth, sixth and, possibly, the ninth respondents were included in the group of 19. The consequence, he said, was that, “as we understand the evidence particularly that was served late last night”, those respondents would not be using ‘Primary Health Care’ in a branding sense. Mr Studdy also said he had been informed that while the second respondent was not included in the group of 19, it proposed to apply in the second tranche of approvals and was confident that it would ultimately succeed.

22        It appears that in the week or so before the hearing on 15 June there had been further correspondence between the parties as to the prospect of settlement and that offers and counter-offers of compromise had been exchanged without success. In their offers, which were accompanied by Calderbank letters, the applicants sought the consent of each respondent to a permanent injunction restraining it from “advertising, marketing, promoting, offering or providing its health related goods and services in Australia under or by reference to” either the respondent’s trade mark application or its business or company name including the disputed term, as for instance in the case of the ninth respondent, Barwon Primary Health Care Network.

23        In her affidavit of 16 September 2011, Susan Bennett deposed that on 9 June 2011, the solicitors for Hunter Rural wrote to the solicitors for the applicants referring to the Minister for Health’s announcement on 6 June. The letter said:

It is now apparent from the Minister’s announcement that there is no need for Hunter Rural to reserve to itself the ability to use the name HUNTER MANNING PRIMARY HEALTH CARE NETWORK. In fact it appears the Government has now concluded that those organisations administering the primary health care reforms instead must use the words MEDICARE LOCAL in their names.

For the avoidance of doubt, Hunter Rural, if it is ultimately selected as an organisation for the administration of primary health care reform, does intend to use the description “primary health care” from time to time at least in the following contexts:

Hunter Rural Medicare Local, primary health care provider

Hunter Rural Medicare Local, primary health care is the focus of Hunter Manning

Hunter Rural Medicare Local, a primary health care organisation.

In light of these events, we invite you to consider the utility of the continuation of the proceedings.

[Emphasis added]

24        On the same day Hunter Rural also sent a Calderbank letter to the applicants offering to agree to the proceedings being discontinued on terms consistent with the letter and that the applicants “pay 60% of Hunter Rural’s costs of $365,000”. The applicants countered in their letter dated 14 June 2011 with the proposal that “the matter return to mediation in an attempt to resolve the outstanding issues in dispute between the parties”.

25        In her affidavit Ms Bennett noted that at the hearing on 15 June 2011 senior counsel for the second respondent, Mr Burley, drew the Court’s attention to a number of points. The written submissions of the second respondent also refer to this aspect of the hearing:

Senior counsel for the second respondent drew the Court’s attention to the following:

(a)    that the case as pleaded is one that is critical of the second respondent using “in relation to services, words under, or by reference to, a name incorporating the words ‘Primary Health Care’”;

(b)    the breadth of the applicants’ claim is not using only the words ‘Primary Health Care’ but “incorporating by reference”;

(c)    that the second respondent made no secret of the fact that it intended to use “Medicare Local” in conjunction with words that include the words ‘Primary Health Care’;

(d)    the Identified Uses would fall within the case as pleaded by the applicants;

(e)    that the issue of whether such use is descriptive or a trade mark use remains a “live issue”;

(f)    the applicants’ opportunity to reconstitute their case in light of the proposed identified use by the respondents. The applicants did not avail themselves of this opportunity; and

(g)    that there was a possibility that the hearing would not proceed if the applicants were to say “The conduct which is now proposed won’t cause us a concern”.

26        The “Identified Uses” referred to at (d) above are the uses that “For the avoidance of doubt” were set out in the second respondent’s letter of 9 June 2011 as illustrations of the use it proposed to make of the term, ‘Primary Health Care’: see [23] above.

27        The second respondent contends that it was at the directions hearing on 15 June, that, for the first time, the applicants distinguished between use of the disputed term in a branding sense and its use as a descriptor. In doing so the applicants characterised the proceeding in a narrower way than appears from their pleading which was in terms described in [25](a) and (b) above. As the second respondent sees it, despite this narrower characterisation, after the directions hearing on 15 June there was still an unresolved issue as to whether the applicants would consider the Identified Uses as involving the promotion of Hunter Rural’s services under or by reference to a name incorporating the words ‘Primary Health Care’ with the consequences alleged by the applicants in the statement of claim.

28        The second respondent accepts that the applicants made their position as to the Identified Uses clear at a directions hearing on 31 August 2011 when Mr Studdy said that the applicants did not have a problem with the Identified Uses because, “we say that is descriptive use and the case is not about descriptive use”. It submits, however, that the failure of the applicants to make this clear resulted in the respondents incurring significant costs for expert evidence directed to establishing the scope of the descriptive nature of the term, ‘Primary Health Care’ and whether any of the Identified Uses would amount to a promotion of Hunter Rural’s services under or by reference to a name incorporating ‘Primary Health Care’.

29        Accepting the inherent uncertainty as to whether the use of ‘Primary Health Care’ in a particular context operates as a badge of origin or as a merely descriptive term, the settlement of the proceedings with the first respondent in May 2011 indicates that the distinction was, at least to some extent, operative before 15 June. The applicants submit that when it became apparent that at least some of the respondents did not intend to use the disputed term in their trading names, they attempted to settle their dispute through mediation which was conducted on 5 May 2011. Ms Seet deposed that following settlement on 26 May 2011:

By agreement between AGPN and the applicants, AGPN released a statement to its members about the terms of settlement as follows (emphasis added):

AGPN has agreed with PHC that it will not use the words primary health care as part of its name, logo or brand.

Otherwise, AGPN is free to use the words descriptively. For example, AGPN is involved in the provision of primary health care services.

30        The applicants make much of the fact that at the directions hearing on 15 June the second respondent opposed the matter returning to mediation despite having questioned the utility of continuing with the proceedings. For its part the second respondent submits that the reasonable response of the applicants to the 9 June letter would have been to apply for leave to discontinue the proceedings against Hunter Rural forthwith. It appears from correspondence between the applicants and the second respondent that the applicants did not regard the concessions made by the second respondent as fully resolving all the issues and proposed that the parties return to mediation. While the exchanges between the parties lacked a crisp articulation of the issues that each regarded as outstanding, it is nevertheless clear that, in addition to the question of costs, they had not reached either a consensus or a compromise on the distinction between the use of ‘Primary Health Care’ in a branding sense and in a descriptive sense. In particular it was not clear whether the use that the respondents proposed to make of the term would cause the applicants concern.

31        To some extent, this is not surprising in the case of such an expression. The difficulty was recognised by Stephen J in Hornsby Building Information Centre Proprietary Limited v Sydney Building Information Centre Limited (1978) 140 CLR 216. Commenting on the advantages to the respondent, Sydney Building Information Centre, of a name which very clearly described its activities, his Honour observed that there is a price to be paid for these advantages and added, at 229:

Because [the name] is descriptive it is equally applicable to any business of a like kind, its very descriptiveness ensures that it is not distinctive of any particular business and hence its application to other like businesses will not ordinarily mislead the public.

Similar views were expressed by Hill J in Equity Access Pty Ltd v Westpac Banking Corporation (1989) 16 IPR 431 at 448. Justice Hill’s comments were approved by the Full Federal Court in Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 269. The distinction between use as a badge of origin and use as a trade mark was also considered in Mantra Group Pty Ltd v Tailly Pty Ltd (No 2) (2010) 183 FCR 450 and Nature’s Blend Pty Ltd v Nestle Australia Ltd (2010) 272 ALR 487.

32        As I have already remarked, it is not to the point whether the applicants would have succeeded in their claims that ‘Primary Health Care’ is capable of being used as a trade mark, that PHC had developed an established reputation in the name, Primary Health Care, or whether they would have succeeded in their passing off claims against the respondents. Justice Stephen’s comments about the advantages and disadvantages of “an eloquently descriptive trade name” illustrate why there may be uncertainty about the distinction between the use of ‘Primary Health Care’ as a brand name and its use as a descriptive term. That uncertainty may well have been resolved at trial however a consequence of discontinuing the proceedings means that it will not now be sorted out, at least in this proceeding.

33        Despite the difficulty to which Stephen J referred, the uncertainty in this case stems largely from the failure of the applicants to clarify their position. If, as they now contend, the applicants’ objection all along had been limited to the respondents using ‘Primary Health Care’ as a badge of origin rather than as descriptive of the services offered by the respondents, the limitation could have been made very clear. Certainly by the time the proceedings were settled with the first respondent (25 May 2011) the crucial nature of the issue must have been obvious to all parties.

34        The third to ninth respondents have adopted the submissions made by the second respondent, especially in relation to the directions hearing of 15 June 2011. In particular they refer to the affidavit of Mr Brett John Heath sworn on 14 June 2011 in which Mr Heath deposed that he had been instructed by the fifth to ninth respondents that they did not intend to use and would not use, any words which incorporate the term ‘Primary Health Care’ as a corporate name, business name, trade mark or domain name. A similar statement was made in relation to the practice of the third respondent, namely that it proposed to give up the use of the words “South East Primary Health Care Network Limited” as a company name, business name, domain name or trade mark by 1 July 2012. The fourth respondent also was prepared to give up ‘Primary Health Care’ as part of its company name, business name, domain name or trade mark but wished “to reserve for itself the right to use the term ‘Primary Health’ as part of its company name, business name, domain name or trade mark. It gave as an example “Primary Health Queensland Limited”.

35        These decisions of the third to ninth respondents were expressly stated to be made “without in any way conceding the substance or veracity of the claims advanced by the applicants with respect to their alleged branding or reputation in the term ‘Primary Health Care’. Mr Heath also added that notwithstanding the above, the third to ninth respondents wished to retain the right “to employ the term ‘Primary Health Care’, from time to time, in a descriptive sense or as part of their logo or branding” in a manner similar to the Identified Uses of the second respondent.

36        Despite the failure of the parties to come to agreement in the period before the hearing on 15 June, Mr Studdy submitted that, in the changed circumstances, it would not be a productive use of the Court’s time for the discovery issues to be pursued. He requested that the matter be stood over to allow for a further mediation between the parties. This suggestion did not find favour with the respondents however eventually they agreed to participate in a mediation to be held on Friday 24 June and that, if not settled, the matter should be listed for 29 June.

37        Although the matter did not settle on 29 June Mr Studdy still expressed optimism that the matter would be resolved without going to trial but was unable to give assurances in that regard. In view of the imminence of the hearing, it was necessary to resolve some issues in relation to discovery as well as in relation to costs. At that hearing all parties were alive to the need for expedition in their preparation for the hearing. There was no suggestion that it would be necessary to vacate the dates set aside for the hearing. At the conclusion of the hearing orders were made with respect to these issues and for the filing of the remainder of the affidavit evidence by all parties.

38        Although at that time it was not expected that it would be necessary to make any further directions prior to the trial, the parties were given liberty to apply on two days’ notice. The applicants availed themselves of that liberty and at their request the proceedings were relisted on 31 August 2011. Mr Studdy explained that, in the light of the evidence served by the respondents, in particular an expert report of Mr Stuart Whitwell filed on 17 August 2011, the applicants had “serious concerns” about the utility of the proceedings going to trial as scheduled on 27 September. The concerns were that, irrespective of the outcome of the proceedings, the respondents no longer intended to use ‘Primary Health Care’ in a ‘badge of origin’ sense as opposed to a descriptive sense.

39        Following their review of the respondents’ evidence, the solicitors for the applicants wrote to the respondents’ solicitors on 25 August 2011 indicating their intention to file an application for leave to discontinue the proceedings with each party bearing its own costs and asking if the application would be opposed. The applicants said that they needed to be advised of the respondents’ attitude as a matter of urgency because they were in the process of preparing evidence which, if the proceeding were not to proceed, would involve considerable and unnecessary expenditure. Following some further discussion I directed the respondents to inform the solicitors for the applicants by 4.15 pm on Friday 2 September 2011 of the orders they would be seeking if the applicants applied to discontinue the proceedings and relisted the proceedings for directions on 5 September. By 5 September the parties had clarified their positions and the application for leave to discontinue was listed for hearing on 4 and 5 October 2011.

40        In oral submissions, Mr Studdy again reiterated that the applicants’ offers of compromise and the Calderbank letters that accompanied them, made it clear that their concerns “were limited to the use by the respondents of the trade names in a trademark sense” and that they were not concerned by use of ‘Primary Health Care’ in any descriptive sense. The offers of compromise followed the Government’s Portfolio Budget Statement referred to at [18] above.

Conclusion

41        As indicated above the applicants and respondents disagree as to the ambit of the claims made by the applicants. This has a material bearing on the reasonableness of the parties’ conduct of the proceedings and, in particular, whether the proceedings, while properly commenced, were reasonably continued and, in particular, whether the applicants should have sought to discontinue them at an earlier point.

Leave to discontinue

42        It would not be in the interests of any of the parties for leave to discontinue to be refused and the respondents have not argued for this to be the case. The applicants should be given leave to discontinue the proceedings on the conditions outlined below. Given the length of time since the proceedings were first commenced and the fact that the long-standing schedule for hearing their application was vacated at comparatively short notice, it is in the interests of all parties that their notice of discontinuance be filed without delay that is within fourteen days of leave being given.

Restriction on commencement of further proceedings

43        The applicants submit that leave to discontinue should be granted with each party to bear its own costs. Apart from the issue of costs to which I will come shortly, the respondents have submitted that leave should only be given on terms that the applicants not commence further proceedings in respect of the use by the respondents of the expression ‘Primary Health Care’ without the leave of the Court.

44        I do not regard a restriction on further proceedings in such wide terms as appropriate however, as the applicants seek leave to discontinue on the basis that their concern has always been only to limit the use of the term in a branding or trade mark sense such a limitation would be appropriate. Whether it is possible to use the term purely as a badge of origin is not for me to say. The difficulties were sufficiently summarised by Stephen J in Hornsby Building Information Centre discussed above at [31]. Nevertheless, that is the position on which the applicants rest their claim for leave and it is fair that they be required to stand by it.

Costs

45        As I have already indicated I consider that the proceedings were reasonably commenced. While I have some reservations on the issue, on balance I also consider that it was reasonable for the applicants to maintain the proceedings to a certain point. The reservations relate to the failure of the applicants to clarify the precise nature of their position. I suspect that this could have been achieved somewhat earlier than it was however I also suspect that there was a degree of intransigence on both sides. I am, however, satisfied that at least from 15 June the position of the respondents was tolerably clear and that the applicants could have applied for leave to discontinue the proceedings from that point without materially prejudicing the position that they now hold.

46        That being so the appropriate orders as to costs are that the parties should bear their own costs to and including 15 June 2011 and that the applicants pay the respondents’ costs incurred after 15 June 2011. The applicants must also pay the costs of the application for leave to discontinue the proceedings.

Associate:

Dated:    2 March 2012