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.