FEDERAL COURT OF AUSTRALIA

Harcourts WA Pty Ltd v Roy Weston Nominees Pty Ltd (No 6) [2016] FCA 1492

ORDERS

THE COURT ORDERS THAT:

1.    Save for the costs order dated 6 December 2012, the Respondent/Cross-Claimant pay to the Applicant/Cross-Respondent costs of the action:

(a)    up to and including 30 June 2014 on a party-party basis, and

(b)    from and after 1 July 2014 on an indemnity basis but so that such costs not include costs of an unreasonable amount or costs which have been unreasonably incurred.

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

ORDERS

THE COURT ORDERS THAT:

1.    The Applicant pay to the Respondent costs of the action:

(a)    up to and including 30 June 2014 on a party-party basis, and

(b)    from and after 1 July 2014 90% of the Respondent’s costs on an indemnity basis but so that such costs not include costs of an unreasonable amount or costs which have been unreasonably incurred.

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

REASONS FOR JUDGMENT

MCKERRACHER J:

INTRODUCTION

1    Harcourts WA Pty Ltd seeks its costs of these proceedings on an indemnity basis, having substantively succeeded. Previous judgments include Harcourts WA Pty Ltd v Roy Weston Nominees Pty Ltd (No 2) [2014] FCA 107 (Harcourts No 2); Harcourts WA Pty Ltd v Roy Weston Nominees Pty Ltd (No 3) [2014] FCA 133 (Harcourts No 3); Harcourts WA Pty Ltd v Roy Weston Nominees Pty Ltd (No 4) [2016] FCA 138; (2016) 116 IPR 269 (Harcourts No 4); and Harcourts WA Pty Ltd v Roy Weston Nominees Pty Ltd (No 5) [2016] FCA 983 (Harcourts No 5).

2    The application for costs on an indemnity basis follows as a consequence of settlement offers made in the course of the proceedings. Three broad issues arise. First, whether the evidence of the settlement offers or aspects of the settlement offers is inadmissible. Second, whether Harcourts WA is entitled to indemnity costs by reason of settlement offers made during the course of proceeding, and, if so, from which point in the proceedings Harcourts WA is entitled to indemnity costs. Third, whether Harcourts WA’s conduct in the proceedings has consequences for the award of costs.

BACKGROUND

3    Harcourts WA is the owner of trade marks ‘Roy Weston’ and ‘The House Sold Word in Real Estate’ (together, the Harcourts Trade Marks). Roy Weston Nominees Pty Ltd (RWN) is the registered owner of the trade marks ‘Roy Weston Real Estate’ and ‘Roy Weston Nominees the Trusted Name in Real Estate’(RWN Trade Marks).

4    On 22 July 2011, RWN filed an application pursuant to s 92 of the Trade Marks Act 1995 (Cth) (TMA) with the Registrar of Trade Marks for the removal of the Harcourts Trade Marks from the Register of Trade Marks by reason of non-use. On 6 September 2012, Harcourts WA commenced action number SAD 224 of 2012 against RWN alleging that RWN infringed the Harcourts Trade Marks by use of the Harcourts Trade Marks without authority and by registering the RWN Trade Marks and also alleging that the RWN Trade Marks were substantially identical or deceptively similar to the Harcourts Trade Marks. Numerous other claims were made in those proceedings, including claims under s 18 of Sch 2 to the Competition and Consumer Act 2010 (Cth), the Australian Consumer Law (ACL), claims for breach of a franchise agreement and common law claims of passing off.

5    On 14 March 2013, the Registrar of Trade Marks referred the RWN non-use application to this Court pursuant to s 94 TMA, which became WAD 167 of 2013.

6    The two proceedings were heard together in one trial. On 24 February of this year, I delivered reasons in Harcourts No 4 finding ‘in most respects (but not all), that Harcourts WA [had] succeeded in its claim’ (at [309]). RWN succeeded only to the extent of its effectively unopposed application that the ‘House Sold Word’ trade mark should be cancelled (Harcourts No 5 at [5]).

7    Consequent upon those orders and on submissions and arguments being considered, further orders were made on 22 August 2016 in Harcourts No 5 broadly in favour of Harcourts WA, which had the effect of:

(a)    cancelling the RWN Trade Marks;

(b)    restraining RWN from infringing or otherwise using the ‘Roy Weston’ trade mark;

(c)    restraining RWN from making various forms of representations concerning the ownership of the ‘Roy Weston’ trade mark or RWN’s association with Harcourts WA;

(d)    restraining RWN from passing off that it is associated with Harcourts WA;

(e)    directing RWN to carry out various activities to, effectively, remove reference to ‘Roy Weston’ in the conduct of the business and rectify the registration of various assets, including business names and domain names, and directing RWN to deliver up materials;

(f)    declaring that RWN engaged in misleading and deceptive conduct and passing off;

(g)    ordering that RWN pay to Harcourts WA an account of RWN’s profits between 1 September 2013 and 22 August 2016; and

(h)    ordering that RWN pay Harcourts WA costs of the proceedings on a basis to be determined by further order.

PRE-TRIAL OFFERS

8    It now emerges that on 22 May 2012, Harcourts WA offered to settle the proceedings subject to RWN entering into a licence agreement with Harcourts WA. Harcourts WA forwarded a proposed agreement (First Settlement Offer). It would have provided RWN with a limited, royalty free, irrevocable licence to use the Harcourts Trade Marks and the ‘Roy Weston Real Estate’ trade mark. The First Settlement Offer was made in response to a without prejudice offer from RWN dated 22 February 2012. Before this, there were several communications with respect to settlement by letters dated 15 September 2011, 24 November 2011, 5 December 2011, 16 January 2012 and 10 February 2012. It was made on a without prejudice basis. It did not at first fix a time within which RWN was required to respond.

9    Initially, no response was received from RWN. Harcourts WA followed up by an email on 20 June 2012 after it learnt that RWN had suggested to IP Australia that Harcourts WA had not taken any steps to resolve the matter. By email of 28 June 2012, RWN, through its solicitors, confirmed that it had received the correspondence from Harcourts WA and indicated that instructions were awaited. In the absence of a further response, on 6 August 2012 Harcourts WA advised RWN by email that if a substantive response to the First Settlement Offer was not received within seven days (by 13 August 2012) Harcourts WA would commence proceedings against RWN in this Court.

10    RWN, through it solicitors, responded by email on 15 August 2012, again acknowledging receipt of the First Settlement Offer made on 22 May 2012. It advised Harcourts WA that RWN had not received any instructions in respect of that offer. On the same day, Harcourts WA responded advising RWN that if a substantive response was not received by 17 August 2012, Harcourts WA would commence proceedings against RWN. No response was received from RWN or its solicitors. Harcourts WA made a further final attempt to avoid litigation on 27 August 2012 by email indicating draft pleadings had been prepared and the proceedings would be initiated if no response to the First Settlement Offer was received by 29 August 2012. No response was received.

11    A further settlement offer (Second Settlement Offer) was made a good deal later on 26 May 2014, when Harcourts WA, by its solicitors, repeated the First Settlement Offer and the terms of the proposed licence agreement with the following modifications:

(a)    the Second Settlement Offer increased the number of offices RWN was permitted to operate from 3 to 4, subject to certain conditions;

(b)    the Second Settlement Offer allowed RWN to grant non-transferrable sub-licences to the existing sub-licensees, subject to a prohibition upon the grant of any further sub-licences and a requirement that RWN obtain the written approval of Harcourts WA in respect of the intellectual property provisions of any sub-licence agreement;

(c)    the Second Settlement Offer allowed RWN to assign the proposed licence agreement to a third party purchaser without Harcourts WA’s consent, subject to certain conditions; and

(d)    the Second Settlement Offer required RWN to pay clearly identified fees to Harcourts WA and contribute a fixed amount to Harcourts WA’s costs in connection with the proceedings.

12    The Second Settlement Offer remained open until 30 June 2014, but was not accepted by RWN.

13    RWN draws attention to a settlement offer it made in October 2014 by way of various correspondence and a draft Licence and Settlement Agreement (RWN Settlement Offer). The relevant terms of the RWN Settlement Offer were broadly as follows:

(a)    Harcourts WA own all rights, title, interest and goodwill in the Harcourts Trade Marks;

(b)    RWN own all rights, title, interest and goodwill in the RWN Trade Marks as well as the Roy Weston Real Estate logo;

(c)    Harcourts WA agree to grant RWN an exclusive, perpetual, royalty free, irrevocable licence to use the Harcourts Trade Marks, subject to a licence fee of AUD$1 per annum; and

(d)    Harcourts WA redirect the www.roywestonpd.com domain name to the website operated by RWN, along with any other domain names in its possession, power or control which incorporate the name ‘Roy Weston’.

14    There is no evidence that Harcourts WA responded to the RWN Settlement Offer.

THE PRINCIPLES

Admissibility of the settlement offers

15    An issue arises as to whether the evidence of the settlement offers is admissible pursuant to s 131 of the Evidence Act 1995 (Cth). Section 131(1) and s 131(2)(h) relevantly provide as follows:

131    Exclusion of evidence of settlement negotiations

(1)    Evidence is not to be adduced of:

(a)    a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or

(b)    a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.

(2)    Subsection (1) does not apply if:

…

(h)    the communication or document is relevant to determining liability for costs; or

…

Costs consequences flowing from the settlement offers

16    It is well established that, despite the wide discretion under s 43(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act), the ordinary rule is that costs follow the event. There are occasionally circumstances for apportionment to individual issues, but any exercise of apportionment needs to be balanced against the consideration that the ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues which might be material to the resolution of the case.

17    Whether there has been an imprudent refusal of an offer to compromise is relevant to the question of indemnity costs: Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (at 233) per Sheppard J, cited more recently in Finishing Services Pty Ltd v Lactos Fresh Pty Ltd [2007] FCAFC 15 per Kiefel, Sundberg and Edmonds JJ (at [4]). It is well established that parties may make offers pursuant to the Federal Court Rules 2011 (Cth) or pursuant to common law principles in relation to Calderbank letters: Australian Postal Corporation v Digital Post Australia Pty Ltd (No 3) [2012] FCA 1049 per Marshall J (at [16]).

18    The considerations relevant to an application for indemnity costs following a Calderbank offer were recently summarised in Veda Advantage Limited v Malouf Group Enterprises Pty Limited (No 2) [2016] FCA 470 per Katzmann J (at [31]):

In contrast, however, to an offer of compromise made under r 25.01, refusal to accept an offer not made in compliance with the rules (a Calderbank offer, see Calderbank v Calderbank [1975] 3 All ER 333) does not give rise to any presumption in favour of the offeror. The offeror needs to show that there was a genuine offer of compromise, and that it was unreasonable for the offeree not to accept it: Black v Lipovac at [217]–[218]. In deciding whether it is unreasonable for an offer to be rejected, the following matters should ordinarily be considered:

•    the stage of the proceeding when the offer was made;

•    the time afforded to the offeree to consider the offer;

•    the extent of compromise involved;

•    the offeree’s prospects of success, assessed as at the date of the offer;

•    the clarity with which the terms of the offer were expressed;

•    whether the offer foreshadowed an application for indemnity costs in the event of refusal.

See Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 at [25].

Harcourts WA’s conduct

19    RWN stresses Harcourts’ duty in respect of the conduct of these matters. A party's duty in respect of the conduct civil proceedings before the Court is set out in the FCA Act, particularly within s  37M (the overarching purpose of civil practice and procedure provisions) and s 37N (parties to act consistently with the overarching purpose). They relevantly stipulate (emphasis added):

37M    The overarching purpose of civil practice and procedure provisions

(1)    The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes:

(a)    according to law; and

(b)    as quickly, inexpensively and efficiently as possible.

(2)    Without limiting the generality of subsection (1), the overarching purpose includes the following objectives:

(a)    the just determination of all proceedings before the Court;

(b)    the efficient use of the judicial and administrative resources available for the purposes of the Court;

(c)    the efficient disposal of the Court's overall caseload;

(d)    the disposal of all proceedings in a timely manner;

(e)    the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.

(3)    The civil practice and procedure provisions must be interpreted and applied, and any power conferred or duty imposed by them (including the power to make Rules of Court) must be exercised or carried out, in the way that best promotes the overarching purpose.

37N    Parties to act consistently with the overarching purpose

(1)    The parties to a civil proceeding before the Court 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.

(2)    A party's lawyer must, in the conduct of a civil proceeding before the Court (including negotiations for settlement) on the party's behalf:

(a)    take account of the duty imposed on the party by subsection (1); and

(b)    assist the party to comply with the duty.

(3)    The Court or a Judge may, for the purpose of enabling a party to comply with the duty imposed by subsection (1), require the party's lawyer to give the party an estimate of:

(a)    the likely duration of the proceeding or part of the proceeding; and

(b)    the likely amount of costs that the party will have to pay in connection with the proceeding or part of the proceeding, including:

(i)    the costs that the lawyer will charge to the party; and

(ii)    any other costs that the party will have to pay in the event that the party is unsuccessful in the proceeding or part of the proceeding.

(4)    In exercising the discretion to award costs in a civil proceeding, the Court or a Judge must take account of any failure to comply with the duty imposed by subsection (1) or (2).

APPLICATION FOR INDEMNITY COSTS

20    Harcourts WA argues that the First Settlement Offer is clearly set out, with the entirety of the offer captured within the terms of the proposed licence agreement. The Second Settlement Offer is also clearly set out, it says, with the additional terms of the amended proposed licence agreement. The settlement offers therefore meet the requirements of a Calderbank offer insofar as they are clear, precise and certain. In addition, when considering the propriety of refusal of the offer, the offer would need to be genuine and realistic in all the circumstances at the point of time when it was made: see Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 per Goldberg J (at [17]), see also Finishing Services per Kiefel, Sundberg, and Edmonds JJ (at [4]).

21    Harcourts WA contends that the settlement offers are admissible as genuine Calderbank offers and pursuant to s 121(h) of the Evidence Act.

22    There is little doubt, Harcourts WA says, that by the date of the First Settlement Offer, the issues between the parties had been expressly identified.

23    Accordingly, Harcourts WA seeks that its costs in relation to both the SAD proceedings and the WAD proceedings be payable on an indemnity basis. Harcourts WA does not appear to seek that its costs be payable on an indemnity basis from any particular point in time by reference to the settlement offers.

COUNTERVAILING CONTENTIONS

Admissibility of the settlement offers

24    RWN refers to Harcourts WA’s reliance on s 131(2)(h) of the Evidence Act in support of a contention that the correspondence in relation to settlement offers is admissible. RWN rejects this contention, asserting that s 131(2)(h) ‘merely acts to disapply the prohibition’ in subs (1). It does not provide an affirmative right to adduce the correspondence when determining the liability for costs: see Azzi v Volvo Car Australia Pty Ltd (2007) 71 NSWLR 140 per Brereton J (at [24]), where his Honour said:

I am inclined respectfully to agree with [Mansfield J in The Silver Fox Co Pty Ltd (as trustee for the Baker Family Trust) v Lenard’s Pty Ltd (No 3) (2004) ALR 621] that the admissibility of offers is a question of legal principle and not a matter of interparty agreement, and that in the context of a mediation which took place unprotected by any statutory prohibition on admissibility of evidence of its offers made at it are not inadmissible by operation of s 131(1), because of s 131(2)(h), although I think it is a mistake to regard such offers as being admissible pursuant to s 131(2)(h): that provision, as I have said, does not make evidence of negotiations admissible, but simply removes one bar to their admissibility, namely that otherwise imposed by s 131(1).

(emphasis added)

25    RWN stresses that subs (2) simply removes, as his Honour said, ‘one bar’ to the admissibility of the evidence of settlement negotiations, namely, that otherwise imposed by s 131(1). It does not, RWN submits, overcome the general prohibition of adducing without prejudice correspondence at any stage of the proceedings. That is the reason that parties to correspondence have the options provided by r 25 of the Rules or letters sent in the form of a Calderbank letter, both of which make clear to the recipient that the sender expressly reserves the right to adduce the documents if the question of liability for costs arises. RWN contends that the letters sent by Harcourts WA were not in either of those forms, nor did they give any indication that they might be relied upon at this stage of the proceedings. As such, it is argued by RWN that is not now open for Harcourts WA to seek to rely upon them. In contrast, RWN says that it did send, through its solicitors, Calderbank letters to Harcourts WA. Those communications were identified as such. However, privilege in those letters belongs to RWN and it does not waive the privilege.

26    RWN submits that there are additional complications with the admissibility of the material in that some of the correspondence directly refers to what was said and occurred in mediation. RWN relies on what was said in Pinot Nominees Pty Ltd v Federal Commissioner of Taxation (2009) 181 FCR 392, where Siopis J said (at [30]-[31]):

30    The provisions of s 53B of the Federal Court Act and s 30(4)(a) of the Civil Procedure Act are substantially to the same effect. More particularly, both statutes preclude “anything said” during the course of a mediation conference from being admissible in a court proceeding. Accordingly, the observations of Brereton J in Tony Azzi are equally applicable to the construction to be afforded to s 53B of the Federal Court Act. In my view, the provisions of s 53B of the Federal Court Act can be reconciled with s 131(2)(h) of the Evidence Act on the basis that s 131(2)(h) applies to “without prejudice” communications other than those communications which are made during the course of a mediation conference to which s 53B applies.

31    As I have said, the mediation conference in this case was convened pursuant to an order of this Court. It follows that s 53B of the Federal Court Act applies and anything said during the course of that conference is inadmissible in this proceeding. Accordingly, paragraphs 15-20 of Mr Romano’s affidavit are inadmissible.

27    RWN makes the point that by seeking to lift the veil on a fragment of the mediation, it would only be possible for the Court to properly assess the nature of that offer by making itself aware of the other offers and counter-offers that were tendered at the mediation, thus having to lift the veil on the entire mediation and render the protection provided to the parties in that process non-existent. That is the reason s 53B of the FCA Act is cast so widely and there is a prohibition on the admissibility of ‘anything’ that is said in mediation. RWN contends that the ‘Harcourts WA letter’ breaches that prohibition and so is not admissible. The precise letter to which RWN refers is unclear.

28    RWN makes the point that in the event I rule against RWN in respect of the inadmissibility of any of the without prejudice material opposed by RWN, it agrees to the admission of any without prejudice communications in which privilege vested in RWN. In those circumstances, it relies upon the affidavit of Mr Davies and, in particular:

(a)    the draft licence and settlement agreement provided on a counsel-to-counsel basis in October 2014; and

(b)    the email from the solicitors for RWN to the solicitors for Harcourts WA attaching a letter of 13 October 2014 referencing the draft licence and settlement agreement sent to counsel.

Costs consequences flowing from the settlement offers

29    RWN seeks orders that Harcourts WA pay its costs in both proceedings, being SAD 224 of 2012 and WAD 167 of 2013. RWN opposes any order for costs being payable to Harcourts WA on an indemnity basis.

30    RWN points to the following background, ostensibly in relation to both its non-acceptance of Harcourts WA’s settlement offers and its claim for costs on the basis of Harcourts WA’s conduct (which claim is set out in more detail below). It relies, amongst other things, on an affidavit in support from Mr Daniel Davies, Intellectual Property Consultant at Elevation Legal (RWN’s solicitors). RWN makes the point that it and its controlling shareholders, Mr and Mrs Taylor, were long-standing franchisees of ‘excellent’ standing in the Roy Weston Limited (later Roy Weston Pty Ltd) (Roy Weston Group) over many years. They had fulfilled a number of roles within the Roy Weston Group prior to and after the formation of RWN, including sitting on the Council of Management. RWN commenced trading as Roy Weston Morley in around 1996. The holding company of Harcourts WA purchased the Roy Weston Group in 2004. Two years later, Harcourts WA presented the franchisees a proposed change of the entire branding and culture of the Roy Weston Group from ‘Roy Weston’ to ‘Harcourts’. The majority of franchisees, including RWN, initially rejected the proposed change. The change to ‘Harcourts’ took effect in or around April 2007. RWN and a number of other franchisees rejected the change and refused to change their brand to ‘Harcourts’.

31    RWN and others argued that the ‘Harcourts’ rebranding was a repudiation of the relevant franchise agreement, relying on advice from then senior counsel as to that view. RWN notes that I accepted that point of view in Harcourts No 4 (at [249]).

32    RWN argued that, uniquely amongst the dissenting franchisees, the RWN company name included the words ‘Roy Weston’ along with the generic word ‘Nominees’. RWN elected therefore to continue to trade under its company name. In written submissions RWN noted that ‘[i]n December 2012 and afterwards, [RWN] wrote and communicated to [Harcourts WA], informing them that it intended to trade as Roy Weston Nominees.’ I note that a significant amount of time at trial was directed at precisely what was communicated in December 2012, particularly in a letter of 7 December 2012, and this broad statement is debatable. RWN and Harcourts WA settled a dispute about remaining franchise fees. RWN also submits that Harcourts WA wrote a letter of 17 July 2007 addressed to RWN accepting payment in full and final settlement concluding that ‘we wish you the very best in future’. This is an inaccurate statement of events. Evidence was led at trial that $4,000 was accepted by Harcourts WA to clear an outstanding debt, which was approximately a 50% reduction. In an accompanying letter confirming the arrangement, there was a statement that ‘we wish you the very best in the future’. The evidence was not that this payment and letter resulted in the full and final settlement of all disputes between Harcourts WA and RWN.

33    In 2007, the The Sunday Times newspaper contacted Harcourts WA raising a query about RWN’s use of its new logo featuring the words ‘Roy Weston’. The logo was used in the The Sunday Times newspaper and elsewhere. There is no evidence, RWN says, to suggest that Harcourts WA objected to the use of the logo to RWN or to The Sunday Times newspaper.

34    On 9 January 2007, RWN applied for registration of the trade mark ‘Roy Weston Nominees the Trusted Name in Real Estate’. Harcourts WA wrote to RWN, through its solicitors, demanding that the trade mark application be withdrawn. RWN responded by telephone to Harcourts WA’s solicitors. Precisely what was said in that conversation was disputed, but in any event, RWN did not withdraw its trade mark application and did not change its trading style. RWN points to the fact that through 2007 and 2008 Harcourts WA’s solicitors wrote further letters to RWN. These focused on the trade mark application and threatened to launch opposition proceedings if the application was proceeded with and was approved by IP Australia. RWN says the application was accepted on or around 10 August 2010 and was advertised for opposition purposes on 26 August 2010 in the usual way. These dates are inconsistent with my reasons in Harcourts No 4: see for example [37]-[38] of Harcourts No 4. They do not appear to add further to RWN’s costs arguments. No opposition proceedings were taken out by Harcourts WA within the IP Australia framework in respect of the registration of the RWN Trade Marks.

35    In early 2011, RWN’s solicitors applied to the WA Department of Commerce (WA DoC) to remove Harcourts WA’s registered business name ‘Roy Weston Real Estate’ (amongst other names incorporating the words ‘Roy Weston’) on the grounds of non-use. No response was filed by Harcourts WA, despite Harcourts WA seeking and obtaining an extension of time from the WA DoC. The WA DoC confirmed by letter of 24 June 2011 that the business name was cancelled.

36    RWN points to the fact that on 22 July 2011, it applied to remove the Harcourts Trade Marks on the grounds of non-use. That was opposed. In correspondence opposing an application, there was a demand that RWN cease and desist from using the name ‘Roy Weston’. RWN contends that Harcourts WA did not engage in the IP Australia proceedings, other than to request a series of extensions of time to file its evidence of use. Seven extensions of time were sought, including the retrospective extension of time. The day before the final deadline for filing of the evidence of use, Harcourts WA commenced action number SAD 224 of 2012. At that time, no evidence of use had been tendered and Harcourts WA wrote to IP Australia seeking (unsuccessfully) to avoid its obligation to file any evidence.

37    By order on 16 September 2013, the statutory declaration of Ms Musca was admitted as Harcourts WA’s evidence in chief in WAD 167 of 2013.

38    One week before the original trial date was set down, Harcourts WA sought leave to have evidence in the SAD proceedings admitted as evidence in the WAD proceedings, and vice versa, including an affidavit of Ms Bronwyn Furse of 12 February 2014 filed in the SAD proceedings. That application was dismissed in Harcourts No 2. At [33], I indicated that I accepted the submission from RWN that, given Harcourts WA bore the onus of proof in relation to use of the Harcourts Trade Marks in the WAD proceedings, such an application should have been made long before the commencement of trial the following week.

39    Harcourts WA made a further application that was dealt with in Harcourts No 3. In particular, Harcourts WA sought to have specific passages of the material filed in the SAD proceedings admitted in the WAD proceedings. In the disposition of that application, relevantly, I said (at [5]-[10] and [13]-[14]):

5    This is the last business day before the trial is due to commence. There is no doubt that Roy Weston is entitled to respond to the evidence (Trade Mark Regulation 5.9). It is highly unlikely that it would be possible to do so in the few business hours prior to commencement of the trial on Monday, 24 February 2014.

6    At the interlocutory hearing, senior counsel for Harcourts sought to reduce the affidavit evidence on which it would rely but even then, with the case changing so late in the piece, it was impossible to rule out the possibility that Roy Weston would be prejudiced by the need to explore the circumstances surrounding the evidence on which Harcourts sought to rely. It may be that there could be no answer to the evidence on which Harcourts seek to rely (as senior counsel asserts) but, until matters are investigated and having regard to the fact that the disputation arises out of events some several years ago, it is certainly not possible to conclude that Roy Weston would not be prejudiced.

7    The Roy Weston Proceeding, (as defined in Harcourts No 2), having been transferred from IP Australia, is not supported by pleadings or particulars. For that reason the evidence on which Harcourts could rely in discharging its onus of proving use of the trade mark was specifically identified and confined by order of the Court. As indicated, that dispute has been on foot for a number of years. There has been ample opportunity prior to the day before commencement of trial to identify which further evidence Harcourts would seek to adduce and lead in support of its usage case.

8    Putting the issue of which party is responsible for delay to one side, I remain firmly of the impression, (as I have been for at least two weeks), that this dispute is not ready for trial. The modern conventional trial procedures have not been finalised. To the extent that Harcourts have been extremely active in the last few days, the late activity has either been directed towards changing the case or preparing the case for trial at a time when Roy Weston has been preoccupied with Harcourts’ proposed changes.

9    As I indicated in Harcourts No 2, the restructuring of the case certainly had merit but the parties (in particular, Roy Weston), needed the opportunity to respond to the late changes. I remain of the view, as indicated in Harcourts No 2, that most of the changes sought in the three interlocutory applications heard this week would be beneficial providing there is the proper opportunity to respond to them.

10    The further difficulty occasioned by the very late changes which have been sought by Harcourts in this application is that Roy Weston have necessarily been focussed on attempting to address those proposed changes rather than preparing for trial. Clearly, that activity has distracted from trial preparation and also given rise to considerable cost.

…

CONCLUSION

13    While Roy Weston do not oppose Harcourts’ reshaping its case, they oppose being required to respond to the reshaped case at the shortest possible notice. I accept both that the further evidence may be relied upon should Harcourts wish to do so and that trial of both matters should proceed together with the evidence in one being the evidence in the other subject only to the trial dates next week being vacated and being listed as soon as reasonably convenient, probably in late May. In my view, Roy Weston’s arguments on this topic are correct and I have made orders substantially in accordance with the minute provided by Roy Weston.

14    In relation to costs, I have not made the costs orders sought by Roy Weston at this stage but will consider further argument on costs on all the applications heard this week following delivery of judgment at trial. …

40    RWN says that Harcourts WA failed to participate in any meaningful way in the IP Australia proceedings or subsequent to its transfer to this Court until it sought to take steps in February 2014, on the eve of the original trial date. In trade mark removal proceedings the burden of proof rests, not with the applicant, but with the owner of the trade mark: see s 100 TMA. Consequently, RWN argues that if an owner wishes to settle such an application, it is beholden on them to present to the applicant any evidence it will rely upon to resist the application. Otherwise, the owner of the trade mark may appear to be in a situation where it has no hope of resisting the application and any negotiations will be predicated on that basis. RWN contends that to suggest that there were properly informed settlement negotiations in 2012 is disingenuous and ‘RWN’s letter to IP Australia saying that negotiations were not ongoing was correct’.

41    In relation to the question of costs, RWN says the Court should view the steps taken by the parties prior to February 2014 in the following context. The statutory declaration of Ms Musca was, until the eve of the original trial in February 2014, the only evidence relied on by Harcourts WA to resist RWN’s application to remove the Harcourts Trade Marks by reason of non-use.

42    RWN contends, but I reject, that Ms Musca’s evidence was essentially limited to:

(a)    roywestonpd.com domain name and website;

(b)    the Roy Weston Medal;

(c)    the ‘Wall of Fame’; and

(d)    internal company brochures.

43    RWN took the view that this evidence was not sufficient to prevent the removal of the Harcourts Trade Marks for non-use, specifically, RWN says (a) and (b) were not used in the promotion of real estate sale services and (c) and (d) were not uses of the Harcourts Trade Marks as trade marks, as they were inaccessible to the public.

44    RWN says that:

(a)    at trial, Ms Musca admitted that she had been provided with the web archive evidence that she attached to the statutory declaration in respect of roywestonpd.com;

(b)    Ms Musca’s evidence on its own would not have been admitted and, in any event, would not have been sufficient to establish use; and

(c)    all of the evidence in Ms Musca’s statutory declaration was expressly rejected as evidence of use.

45    I pause to note that RWN has substantially overstated the position in these arguments. I do not accept the assertions. RWN appears to be attempting to re-agitate a lost cause. Importantly, the evidence contained in Ms Musca’s statutory declaration was not the evidence of use relied upon by me in finding in favour of Harcourts WA in respect of use of the ‘Roy Weston’ trade mark.

46    RWN points to the fact that I relied on the evidence provided by Ms Furse in her affidavit to establish use, particularly the evidence in relation to royweston.com.au and the White Pages advertisements.

47    RWN submits that its assessment of the evidence in Ms Musca’s statutory declaration was correct and, at the very least, reasonable. Until the evidence of Ms Furse and others was adduced ‘at the very last moment’, before the original trial date, RWN contends it was rightly of the view that it was very likely to prevail in the non-use application in WAD 167 of 2013. Moreover, it took the view that if it has succeeded in that matter, it was bound to succeed in most of, if not all, the issues in dispute in SAD 224 of 2012. RWN says that Harcourts WA had almost three years to produce evidence of its use of trade marks before it filed and relied on the affidavit of Ms Furse in February 2014. Again, this is an overstatement.

48    RWN says that even if the correspondence conveying the various settlement offers is admitted, throughout the period in which offers were made between 24 November 2011 and 27 August 2012, and during the currency of the proceedings at IP Australia, Harcourts WA failed to adduce any evidence of use to support its opposition to the application to remove the trade marks. Consequently, RWN was entitled to consider any offers made and respond in that context.

49    RWN submits that receipt of the evidence of Ms Musca simply confirmed RWN’s view that it would prevail in the non-use proceedings, which would have a consequent knock-on effect on the infringement action in the SAD proceedings.

50    RWN contends that it was entirely reasonable for it to take the view it did. No weight should be given, it argues, to any of the negotiations.

51    As to the Second Settlement Offer, this was made after the original aborted trial date and mediation had occurred. There had been a number of interlocutory hearings and considerable costs had been incurred by both parties in preparing the matter for trial. RWN also argues that the Second Settlement Offer came far too late, with two onerous conditions requiring payment of $200,000 towards Harcourts WA’s costs.

52    Contrary to the impression given by Harcourts WA, RWN says that it did respond to the offer, both through counsel and its solicitors. The response is set out in the affidavit of Mr Davies, referred to above, on which RWN relies. This appears to be by way of counter-offer that did not reference either settlement offer made by Harcourts WA. The offer was also made at the time of commencement of the re-listed trial.

53    RWN says that the settlement offer made by RWN shows that a response was made. This is contrary to what is said in the Harcourts WA submissions and affidavit. Even if those communications were admitted in evidence with respect to the question of costs, RWN submits they are not probative and do not provide a basis to make an award beyond the ordinary party and party basis.

Harcourts WA’s conduct

54    RWN submits that the evidence proving determinative in WAD 167 of 2013 was not difficult to obtain. The use of web archives is well-known to lawyers in this field and Harcourts WA would have known that the primary domain name and website used by them prior to the rebranding was royweston.com.au. If Harcourts WA intended to rely on that as evidence of use in the proceedings, it should have been adduced during the time that the matter was with IP Australia, before the Registrar of Trade Marks, and it should either have been included in the statutory declaration of Ms Musca or in evidence from another witness. Likewise, Harcourts WA knew that it had paid for advertisements in the White Pages and it was a simple matter to either locate and present that evidence from within the organisation or obtain it from the publisher, which was what Harcourts WA eventually did. RWN stresses that this evidence was easy to obtain and it should have been tendered before both the SAD proceedings and the WAD proceedings were commenced in this Court.

55    Up until 12 February 2014, RWN had conducted the proceedings on what proved to be a false understanding of what Harcourts WA’s evidence would be. RWN suggests that it was ‘misled’ by Harcourts WA in this regard. By the time the new evidence was tendered and admitted in the proceedings, considerable costs had been incurred by both parties on the false basis that Ms Musca’s statutory declaration was the only evidence in the non-use proceedings in WAD 167 of 2013.

56    The new evidence was, RWN says, ‘a game changer’ in the sense that it gave Harcourts WA realistic, but by no means certain, prospects of success in the proceedings, whereas previously it had had none. RWN says that ‘changing the game’ immediately prior to the original trial date, although Harcourts WA had the capacity to adduce the evidence for a number of years and significant cost had already been incurred, was a clear and flagrant example of ‘misconduct’.

57    RWN contends that this is a case that requires an order that does not follow the usual application of the rule. For the reasons set out below, RWN says there are special circumstances that apply in this case, following Harcourts WA’s misconduct of the proceedings both before the Registrar of Trade Marks and in this Court. In Commissioner of Taxation v AusNet Transmission Group Pty Ltd (No 2) [2015] FCAFC 124 Kenny, Edmonds and Greenwood JJ said (at [12]-[14]):

12    We accept that, in an appropriate case, an appellate court may depart from the usual order as to costs. This much is confirmed by the following passage from the judgment of McHugh J in Oshlack v Richmond River Council 193 CLR 72 at [69], where his Honour said:

In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [[1951] 1 All ER 873 at 874], Devlin J formulated the relevant principle as follows:

“No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.”

“Misconduct” in this context means misconduct relating to the litigation [King & Co v Gillard & Co [1905] 2 Ch 7; Donald Campbell & Co Ltd v Pollak [1927] AC 732 at 812], or the circumstances leading up to the litigation [Bostock v Ramsey Urban District Council [1900] 2 QB 616]. Thus the court may properly depart from the usual rule as to costs when the successful party by its lax conduct effectively invites the litigation [Jones v McKie [1964] 1 WLR 960; [1964] 2 All ER 842; Bostock [1900] 2 QB 616 at 622, 625 and 627]; unnecessarily protracts the proceedings [Forbes v Samuel [1913] 3 KB 706]; succeeds on a point not argued before a lower court [Armstrong v Boulton [1990] VR 215 at 223]; prosecutes the matter solely for the purpose of increasing the costs recoverable [Hobbs v Marlowe [1978] AC 16; [1977] 2 All ER 241]; or obtains relief which the unsuccessful party had already offered in settlement of the dispute [Jenkins v Hope [1896] 1 Ch 278].

13    As Campbell JA (Macfarlan JA and Young JA agreeing) noted in Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256, 288 ALR 385 at [98], although McHugh J’s judgment was in dissent, there is nothing in the joint judgment of Gaudron and Gummow JJ or in Kirby J’s judgment that indicates that their Honours disagreed with this statement of principle.

14    We also accept that, as Campbell JA said in Tomanovic 288 ALR 385 at [98], the examples to which McHugh J referred are not an exhaustive statement of the circumstances in which a successful party may be deprived of its costs. Further, we emphasise that it falls to the court in each case to determine whether it is in fact appropriate to depart from the usual order as to costs even in a case that may appear, broadly speaking, to fall within the class of cases to which McHugh J referred. As Black CJ and French J said in Ruddock v Vadarlis (No 2) 115 FCR 229 at [16], “[t]he discretion conferred on the Court enables it to respond to the wide variety of circumstances that may arise in relation to the making of costs orders”.

58    RWN makes many complaints about the conduct of Harcourts WA. It says that:

(a)    Harcourts WA and its lawyers failed in their duty to conduct the litigation in accordance with the overarching principle;

(b)    the evidence of use in the WAD proceedings should have been tendered by Harcourts WA prior to (or at least during) the negotiations between the parties in 2012;

(c)    no satisfactory explanation for the ‘extreme delay’ in tendering this evidence has ever been offered, nor is it readily imagined;

(d)    section 37N(4) of the FCA Act requires that ‘[i]n exercising the discretion to award costs ... a Judge must take account of any failure to comply with the duty imposed by subsection (1) or (2).’ Those subsections require a party and their lawyer to conduct the proceedings (including negotiations) ‘in a way that is consistent with the overarching purpose’. Harcourts WA’s failure to tender crucial evidence until the week prior to the original trial dates fails abjectly in this duty. I ‘must’ take this into account when considering the award of costs in these proceedings;

(e)    the grievous nature of the breach of duty and the impact it had on the position of the parties in the litigation supports RWN's submission that this is a case where the usual order of costs being awarded to the successful party should not be followed;

(f)    this is litigation that Harcourts WA invited through its failure to take action in a timely fashion at various stages, and also in its failure to tender evidence that was readily available to it and proved determinative at the correct time, citing Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129, in which a failure on the part of a party to give reasons for denying a claim provoked the litigation. In Verna Trading the successful defendant was ordered to pay the plaintiff's costs (up to and including the first day of trial) because it had provided the information that it eventually relied on at the appropriate time, the litigation may have been avoided and the matter resolved on a commercial basis;

(g)    the approach to the award of costs in Verna Trading sits squarely with the facts in this case as vital evidence was not ‘disclosed’ until the eve of the original trial date, by which time the vast majority of the costs in these matters had been incurred and those costs served to entrench the parties' positions when reviewing their situation following the ‘game changing’ disclosure of evidence and order that it be admissible in both proceedings; and

(h)    it should be noted that, despite the admission of that evidence, the dispute between the parties with regard to the non-use proceedings remained finely balanced. The difference in this case is between RWN having an application that was almost certain to succeed and one where there was a genuine dispute and controversy between the parties. The game was changed, but not so that RWN's position was hopeless, rather that Harcourts WA’s position was no longer hopeless.

59    RWN relies on the following examples of alleged misconduct on the part of Harcourts WA in these proceedings:

(a)    repudiation of the 2002 Franchise Agreement - giving rise to the ‘entirety’ of this dispute. Harcourts WA does not come to these proceedings with ‘clean hands’;

(b)    failure to prevent The Sunday Times from accepting the RWN logo and adverts in 2007;

(c)    failure to oppose RWN’s trade mark applications - the opposition proceedings would have provided a cost effective forum for the parties to ventilate the primary issues in dispute earlier and in a cost effective forum provided by statute for that purpose;

(d)    failure to prevent the removal of its registered business name;

(e)    failure to engage in the IP Australia Proceedings - preventing the parties from resolving the non-use proceedings in a cost-effective forum. In the removal process at IP Australia, the onus is cast upon the trade mark owner to relevantly establish use (s 100 TMA). Until that onus has been satisfied, RWN submits that the trade mark owner has no prospect of success at IP Australia. Any attempts to settle the matter should occur after the evidence has been tabled.

(f)    failure to tender ‘in principal evidence’ in WAD 167 of 2013 until the eve of the original trial dates - RWN proceeded on the basis of Ms Musca's statutory declaration and took the view that it would succeed in removing the trade marks when faced with that evidence of use; and

(g)    failure to take any timely action - allowing RWN to trade for over 5 years before commencing action number SAD 224 of 2012.

60    For the reasons set out above, RWN seeks its costs in both sets of proceedings.

61    In addition, RWN seeks the costs of Harcourts WA’s application of 2 September 2013, seeking urgent injunctive relief in respect of RWN’s licensees. That application was predicated on the basis that Harcourts WA had only recently become aware of the existence of RWN’s licensees and so an application for urgent injunctive relief was justified. To the contrary, RWN says it has always been the position, which was not in dispute at trial, that Harcourts WA had long been aware that there were two other offices, apart from RWN’s office in Morley, using the Roy Weston name. Harcourts WA knew that these offices were both operated independently of RWN by former Harcourts WA’s franchisees. Consequently, RWN submits there was no legitimate basis for Harcourts WA to apply for urgent injunctive relief in respect of RWN’s licensing of the Roy Weston trade mark in 2013. RWN says that Harcourts WA should have raised this objection far earlier, ideally before these proceedings or, at the very latest, when these proceedings were commenced. It could have sought RWN’s agreement not to extend its number of licensees, but it did not need to make the urgent application that it made on 2 September 2013, which required two hearings before the matter was compromised between the parties. RWN seeks the costs of and occasioned by that application in any event.

CONSIDERATION

Admissibility of the settlement offers

62    It is true that the settlement offers did not expressly foreshadow that they would be relied upon in an application for indemnity costs in the event that RWN rejected them. However, this is merely one factor that the Court may consider in exercising its discretion, and is not determinative: see generally Hazeldene's Chicken Farm Pty Ltd v Workcover Authority (Vic) (No 2) (2005) 13 VR 435 per Warren CJ, Maxwell P and Harper AJA (at 442).

63    The lack of that formality does not preclude reliance on the settlement offers. Each is admissible pursuant to s 131(2)(h) of the Evidence Act, which allows evidence of documents ‘relevant to determining liability for costs’ to be adduced. The equivalent provision in the Evidence Act 1995 (NSW) has been used to adduce evidence of:

(1)    a letter marked ‘Without Prejudice’, notwithstanding that it was not in the commonly accepted Calderbank form: Nobrega v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (No 2) [1999] NSWCA 133 per Powell JA, Priestley JA and Sheppard AJA agreeing); and

(2)    an offer of compromise not expressed to be without prejudice: Bruinsma v Menczer (1995) 40 NSWLR 716 per Santow J (at 719), approved in Ann Street Mezzanine Pty Ltd v KPMG [2011] FCA 453 per Kenny J (at [20]).

64    In relation to RWN’s submissions as to the inadmissibility of correspondence evidencing settlement negotiations that refer to what occurred at mediation, Harcourts WA submits, and I accept, that s 53B of the FCA Act does not prevent a party from repeating an offer made at a mediation. The Second Settlement Offer was made after the mediation had closed. It was a new offer made outside the mediation process, and it is therefore admissible pursuant to s 131(2)(h) of the Evidence Act as it ‘is relevant to determining liability for costs’.

65    If the offer contained in the Second Settlement Offer had only been made at the mediation then s 53B may have operated to exclude it. But the Offer was made later and merely referenced the mediation. Section 53B does not operate to exclude the admissibility of an offer made outside of the mediation.

66    The RWN Settlement Offer is therefore admissible by reason of RWN’s concession recorded above (at [27]), that is, because I have ruled against RWN in respect of the inadmissibility of the First Settlement Offer and Third Settlement Offer.

67    Accordingly, in my view, each of the settlement offers are admissible.

Costs consequences flowing from the settlement offers

68    On their face, in my view, the First and Second Settlement Offers each represented genuine compromises on behalf of Harcourts WA, insofar as:

(1)    in the case of the First Settlement Offer, the proposed licence agreement would have enabled RWN to continue its existing business, under the existing branding, without cost; and

(2)    in the case of the Second Settlement Offer, the amended proposed licence agreement would have enabled RWN to continue (and potentially expand) its existing business, under its existing branding, subject to payment of clearly identified fees to Harcourts WA and contributing a fixed amount to Harcourts WA’s costs in connection with the proceedings.

69    I note and accept the following submissions from Harcourts WA:

(a)    The First Settlement Offer was made 10 months after RWN had filed its non-use application with the Registrar of Trade Marks. If accepted, it would have resolved that application and avoided the need for Harcourts WA’s action commenced on 6 September 2012 in SAD 224 of 2012.

(b)    RWN had approximately 11 weeks to consider the First Settlement Offer. The solicitors for Harcourts WA followed up on multiple occasions to seek a response to the offer, but no substantive response (either accepting or rejecting the First Settlement Offer) was ever received. The First Settlement Offer was capable of immediate acceptance – there was no information to be obtained and no details to be completed in the proposed licence agreement – it simply needed to be executed.

(c)    RWN had approximately 5 weeks to consider the Second Settlement Offer. No substantive response (either accepting or rejecting the Second Settlement Offer) was ever received. The RWN Settlement Offer cannot properly be regarded as a response to either of Harcourts WA’s settlement offers. The Second Settlement Offer was capable of immediate acceptance – the amendments to be made to the proposed licence agreement were clearly identified.

70    It follows from the above submissions that the time afforded to consider the First Settlement Offer was reasonable, and supported by numerous requests by Harcourts WA that RWN respond to the offer. Further, the First Settlement Offer represented a significant compromise on the part of Harcourts WA. The terms of the offer were clear.

71    Notably, at the time of the First Settlement Offer, neither the SAD proceedings nor the WAD proceedings had commenced. I accept the submission for Harcourts WA that by the date of the First Settlement Offer the issues between the parties, which were subsequently claimed across both proceedings, had been expressly identified. This is evidenced by correspondence including the letter from Harcourts WA to RWN dated 24 November 2011, the letter from Harcourts WA to RWN dated 5 December 2011, and the letter from Harcourts WA to RWN dated 22 May 2012. Nevertheless, there is some merit in RWN’s contention that the First Settlement Offer must be considered within the evidentiary context at that stage. Harcourts WA was yet to file the statutory declaration of Ms Musca dated 24 October 2012. However, RWN was aware of the website redirection: Mr Taylor’s statutory declaration of 12 February 2009 and Mr Taylor’s statutory declaration of 14 July 2010. RWN was also aware of the White Pages advertisements: Mr Taylor’s statutory declaration of 12 February 2009. The substratum of facts upon which the claims would be based was, in substance, well-known by both parties.

72    The terms of the First Settlement Offer were such that it was imprudent for RWN to refuse the offer. The unreasonableness of RWN’s response (or, rather, lack of substantive response) is heightened by the fact that RWN did not actually respond to the First Settlement Offer.

73    At the time of the Second Settlement Offer, the legal issues were well-established by the parties and the evidentiary issues had been resolved. The latter point is particularly important. RWN’s submission that, by this stage, ‘[t]here has been a number of interlocutory hearings and considerable costs incurred’ is an inadequate answer for RWN’s failure to accept the offer. The parties’ prospects of success could be assessed with relative certainty. The terms of the offer were clear. Once again, RWN provided no substantive response to this offer. Accordingly, in my view, it was also imprudent for RWN to refuse the Second Settlement Offer.

74    The question is then whether the submissions by RWN as to the RWN Settlement Offer and Harcourts WA’s conduct affect this conclusion.

75    In relation to the RWN Settlement Offer, the draft licence and settlement agreement was provided at the time of the trial in October 2014. Importantly, if accepted by Harcourts WA, the settlement proposal would have resulted in a far less favourable outcome for Harcourts WA than was obtained in the judgment. It is sufficient to refer to the absence of any limitation on the grant of sub-licences by RWN and the nominal licence fee of $1 per annum payable to Harcourts WA. Harcourts WA was not imprudent in refusing to accept the RWN Settlement Offer by reason of its content and timing. The RWN Settlement Offer is of no weight in the final determination of costs.

Harcourts WA’s conduct

76    RWN’s complaints as to the conduct of Harcourts WA in these proceedings are exaggerated.

77    It seems tolerably clear that, despite Harcourts WA’s minimal involvement with the IP Australia proceedings, the IP Australia proceedings were a driving factor in an attempt to negotiate an agreement with RWN from Harcourts WA’s perspective. Additionally, the sole issue in those proceedings was whether the Harcourts WA Trade Marks ought be removed for non-use. There was no relief available to Harcourts WA in those proceedings and IP Australia had no jurisdiction to hear the allegations which it wished to raise in this Court. It has raised those allegations successfully. From the perspective of Harcourts WA, a significant investment in the IP Australia proceedings was not a particularly cost effective forum for the overall resolution of the dispute.

78    The question of the vacation of the first trial date has previously been raised by RWN. Harcourts WA point to the fact that no finding was made that RWN was prejudiced by the evidence on which Harcourts WA sought to (and did) rely in the non-use proceedings. No responding material was subsequently sought to be filed by RWN in answer to the evidence on which Harcourts WA was given leave to rely and no evidence has been advanced by RWN demonstrating that any prejudice was actually suffered as a result of the application by Harcourts WA filed in February 2014.

79    In any event, it is not correct to assert that the evidence admitted as a result of the applications by Harcourts WA in February 2014 was determinative of the outcome of the WAD 167 of 2013 proceedings. I refer to my finding at [223] in Harcourts No 4 that, while I was satisfied that RWN’s non-use application in respect of the ‘Roy Weston’ trade mark should be dismissed, if necessary, I also would have exercised the discretion under s 101(3) TMA to not grant the application the subject of WAD 167 of 2013 in respect of that trade mark on the basis of a clear chain of ownership of the ‘Roy Weston’ trade mark.

80    Once again, the debate about whether the ‘game changer’ evidence should be so described arises. In relation to that, as I have previously noted, if the evidence was indeed a ‘game changer’, it was still possible for RWN to consent to judgment and seek an order for its costs up until the filing of the supposedly ‘game changing’ evidence. However, the evidence filed by RWN shows that the RWN Settlement Offer was sent about 7 months after the additional evidence sought to be adduced by Harcourts WA came to light. Moreover, the Offer makes no reference to Harcourts WA’s additional evidence, states that RWN ‘remain confident to continue to trial’, proposes that RWN will continue to trade under the ‘Roy Weston’ name, and states that neither party is presently entitled to costs (save for one costs order in favour of RWN).

81    In the absence of settlement, RWN continued to deny at trial that its conduct amounted to an infringement.

82    It is not clear at all, in my view, that the additional evidence filed by Harcourts WA was a ‘game changer’ as contended for RWN where:

(a)    the fact that consumers were redirected from one website to another was of significance in defeating RWN’s non-use application in respect of the ‘Roy Weston’ trade mark (Harcourts No 4 (at [196]-[200])). It was common ground that the ‘Roy Weston’ website redirected users to the Harcourts WA website as deposed by Mr Taylor in his statutory declaration sworn on 12 February 2009 and the statutory declaration of 14 July 2010;

(b)    the law in relation to redirections had been set out in Solahart Industries Pty Ltd v Solar Shop Pty Ltd (2011) 281 ALR 544, which decision predated the settlement offers;

(c)    in relation to the White Pages advertisements, these were a matter of public record and the matter in respect of which the Court could take judicial notice. Additionally, Mr Taylor had known since at least 12 February 2009 that Harcourts WA had posted advertisements in the Yellow Pages; and

(d)    RWN has not adduced evidence of prejudice suffered as a result of the alleged failure by Harcourts WA to take action in a timely fashion.

83    In all those circumstances, I would not consider it appropriate to describe Harcourts WA’s decision to seek to adduce additional evidence in the non-use proceedings immediately prior to trial as being ‘misconduct’. Rather, it evinced a preference to resolve the dispute without litigation, an approach not to be criticised. As to the question of Harcourts WA’s delay, I repeat what I observed in Harcourts No 5 (at [15]):

In relation to delay, in my view, RWN’s submissions overstate the position. The practical reality is that the two sets of proceedings have been running side by side during the directions hearings. As a result, there is no doubt, as is evident on reading the reasons in Harcourts No 4, that the two sets of proceedings were and are inextricably linked. The SAD 224 of 2012 proceedings commenced by Harcourts WA have been on foot since September 2012 and were preceded by a number of demands, some of which are referred to in Harcourts No 4. For example, a demand on 15 September 2011 (Harcourts No 4 at [43])). Further, following the transfer of the RWN non-use proceedings to the Western Australian Registry of this Court, it is clear that both parties sought extra time. For example, the Court ordered by consent, on 3 December 2013, that the time for the parties to file and serve their evidence in chief be extended to 23 December 2013 and the time for the parties to file and serve their evidence in response be extended to 29 January 2014. The record shows that there was late compliance by RWN with these orders, which in turn gave rise to a further extension of the time for the parties to file evidence in response (by consent). Accordingly, the evidence filed in response by Harcourts WA was not late.

84    Nevertheless, Harcourts WA’s application to have evidence in the SAD proceedings admitted in the WAD proceedings was belated: see for example Harcourts No 2 (at [33]); Harcourts No 3 (at [5], [7], [10]). The application was a significant reason for the deferral of the trial from February 2014 to October 2014. While the delay on the part of Harcourts WA did not impact the final orders made in Harcourts No 5, it is appropriate that it be considered in relation to the question of costs. In particular, by reference to the considerations set out by McHugh J in Oshlack, it could be said that Harcourts WA unnecessarily protracted the proceedings.

85    As I recorded in Harcourts No 5 (at [17]), in relation to the WAD proceedings, ‘Harcourts WA are entitled to most of its costs, but I consider that costs should be discounted partially in relation to the trade mark issue on which it lost and partially, and more importantly, in relation to the delay in applying for evidence in the SAD proceedings to be evidence in this proceeding.’

86    I also recorded in Harcourts No 5 (at [55]) that Harcourts WA conceded the delay at trial. It accepted that it was aware of an infringement at the time of the end of the 2002 Franchise Agreement when the first of a series of five letters of demand was sent.

87    RWN is also correct to point to the fact that Harcourts WA has been ordered to pay, in any event, RWN’s costs of the interlocutory application dated 12 October 2012 in respect of the transfer of proceedings from South Australia to Western Australia.

88    Finally, in relation to RWN’s claim for the costs of Harcourts WA’s urgent application of 2 September 2013 seeking urgent injunctive relief in respect of RWN’s licensees (set out above at [61]), I note that RWN undertook not to offer or enter into any licence or franchise agreement in respect of the name “Roy Weston” or “Roy Weston Real Estate” with any third party. This undertaking was subsequently extended pending the trial or further order. I accept Harcourts WA’s contention that, as Harcourts WA was successful in establishing that RWN infringed its trade marks, Harcourts WA should not be penalised for seeking injunctive relief to prevent such infringement. In my view, the costs of the interlocutory application of 2 September 2013 should be assessed consistently with the overarching costs conclusion.

CONCLUSION

89    In relation to the three questions posited at the outset, first, I consider that the settlement offers are admissible for reasons set out above at [62]-[66].

90    Second, Harcourts WA is entitled to indemnity costs by reason of both the First Settlement Offer and the Second Settlement Offer. The point in time from which Harcourts WA is entitled to indemnity costs is affected by the conduct of these proceedings.

91    Third, in relation to Harcourts WA’s conduct of these proceedings, RWN has significantly exaggerated its complaints about the conduct of Harcourts WA. There was no misconduct on the part of Harcourts WA. However, it is relevant that there was delay on the part of Harcourts WA in pursuing the infringement claims from the time that it was first aware, as well as delay in filing adequate evidence in the non-use proceedings (which ultimately resulted in the deferral of the trial).

92    In all those circumstances, in my view, and subject to the specific costs orders made in the course of the proceedings, Harcourts WA is entitled to indemnity costs in both the SAD proceedings and the WAD proceedings from the date on which the time for acceptance of the Second Settlement Offer closed, 30 June 2014.

Associate:

Dated:    9 December 2016