FEDERAL COURT OF AUSTRALIA

Flogineering Pty Ltd v Blu Logistics SA Pty Ltd [2018] FCA 1479

ORDERS

THE COURT ORDERS THAT:

1.    The applicant submit to the Court within 14 days the formulation of a declaration the applicant proposes the Court might make having regard to the Reasons for Judgment published today.

2.    The respondents submit to the Court within 14 days any submissions they may wish to make on the question of whether a declaration is to be made and if so the terms of the declaration.

3.    The parties submit to the Court within 14 days submissions addressing the question of whether an injunction ought to be granted under s 232 of Schedule 2 to the Competition and Consumer Act 2010 (Cth) and the question of whether an order for costs ought to be made at this point in the proceeding and if so the order to be made.

4.    Costs reserved pending the outcome of Order 3.

5.    Liberty to apply.

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

REASONS FOR JUDGMENT

GREENWOOD ACJ:

Background

1    These proceedings are concerned with a claim that each respondent, on the particular dates identified in these reasons, engaged in conduct, in trade or commerce, that was misleading and deceptive or likely to mislead and deceive in contravention of s 18 of the Australian Consumer Law (“ACL”) contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth).

2    The contravening conduct of each respondent, put simply, is said to be marking a “milk flowmetering system” with (or affixing to such a system) the number or designation “No 5/6E/13A” (the “Approval number”) which is an approval number for a Certificate of Approval (the “Approval”) issued to the applicant (“Flogineering”) by the Chief Metrologist under the provisions of the National Measurement Act 1960 (Cth) (the “Act”) and the National Measurement Regulations 1999 (Cth) (the “Regulations”) in respect of “instruments” described in the Approval, where so marking the milk flowmetering system and relevant instruments is said to be an act or step exclusively reserved to the applicant as the holder of the Approval. That exclusivity is said to arise because the applicant, described for the purposes of the Approval as the “submittor”, was the entity that submitted an application for the approval of the “pattern” (as that term is understood in the Act and Regulations) for the milk flowmetering system and relevant instrument(s), and the right to mark such a system, or the relevant instruments for such a system, is said to be reserved exclusively to the submittor.

3    The relevant cohort said to have been misled and deceived or likely to have been misled and deceived by the conduct of each respondent is “any person within the dairy industry observing [the Approval number]”.

4    The applicant’s case is that any such person so observing that Approval number, in the relevant period, affixed to the “particular instrument” by each respondent, was likely to be led to believe that the particular instrument was (according to para 13(b) of the amended statement of claim, “ASOC”):

(i)    one which could be used legally to measure the volume of milk being transferred to or from a vehicle on which the particular instrument was installed (having regard to particular matters earlier pleaded in para 11A of the amended statement of claim); and/or

(ii)    approved or authorised by the applicant;

(iii)    certified by the applicant as complying with the Approval;

(iv)    certified by the applicant as complying with Technical Schedule [No. 5/6E/13A]; and/or

(v)    certified as complying with the Approval by someone authorised to provide such certification

in circumstances where each of those things was untrue.

5    The applicant also says that the conduct of each respondent of affixing the Approval number, as contended, was likely to lead “any person involved in the commercial bulk haulage of milk to believe that the applicant had affixed the [Approval number] when that was untrue”: para 13(c).

6    Next, the applicant says that the conduct of each respondent of affixing the Approval number, as contended, was conduct in connection with the supply of services, namely, the “bulk haulage of milk”: para 13(d).

7    The applicant says that on each occasion when each respondent affixed the Approval number, as contended, each respondent engaged in a contravention of s 18 and s 29(e), (f) and (g) of the ACL: para 13(e).

8    Finally, the applicant says that on each occasion that each respondent affixed the Approval number, as contended, it was passing off “certification delivered by itself as certification delivered by the applicant under the Approval”: para 13(f).

9    As against each respondent, the applicant seeks an injunction under s 232 of the ACL restraining any further contravening conduct as alleged, damages under s 236 of the ACL, interest and costs.

10    Each respondent admits that particular conduct, described later in these reasons, occurred but each respondent denies that its conduct is contravening conduct. Each respondent also denies the “passing off” claims.

Some aspects of the facts

11    Mr Carey McMahon is the Managing Director of the applicant. He is also the beneficial holder of the relevant shares in the applicant company. Mr McMahon says that he acquired the shares in the company in 2005. He says that he has been the Managing Director since 2005. Mr McMahon says that the applicant has more than 30 years’ experience in “supplying food processing equipment” and “engineering design services” to food manufacturing companies.

12    So far as the dairy industry is concerned, dairy farmers have a major interest in ensuring that the volume of milk collected each day from their on-farm collection tanks by bulk tanker operators who go from farm to farm, is measured as accurately as possible (with great precision). The quantum of their revenues from the processors depends, in part at least, upon accurate measurement of the volumes collected at the farm gate and the accurate measuring of the volume of milk transferred to the receiving tanks of the processor.

13    The processor also has a vital interest in ensuring that an accurate measure occurs of the volume of milk transferred from the road bulk tanker to the processor through use of a reliable milk flowmetering system, device or instrument. The measuring system, device or instrument must give the producer and the processor confidence about the precise measure of the volume of milk transferred (in a way which takes account of factors such as aeration, bubbles in the fluid etc).

14    Mr McMahon describes this imperative of accuracy in this way at para 7 of his affidavit:

Specifically in the Australian dairy industry, the use of trade approved technology to measure the volume of milk collected from farms across Australia on a daily basis provides both the farmer and the dairy processing companies with a robust and equitable system for payment for the milk by the daily processor to the farmer. The NMI Approval certifies that the flowmetering technology that bears the NMI Approval number meets the accepted standards of accuracy and complies with the approved system design.

15    The reference to the “NMI Approval” in para 7 of the affidavit is a reference to, as Mr McMahon describes it, a “Flow Metering and Data Acquisition System” for the daily measuring of milk collected by bulk tankers from Australian dairy farmers, approved for “trade use” by the National Measurement Institute (“NMI”) which is a Division of the Department of Industry, Innovation and Science. As to the NMI, Mr McMahon says that it is the peak body responsible for trade measurement and as to trade measurement, Mr McMahon understands that term to refer to all transactions in which the price of commodities or goods is based on measurement of quantity and quality. He understands that the primary purpose of the trade measurement system in Australia is to ensure that the pricing of traded goods is based on accurate measurement: para 5, McMahon affidavit, 26 July 2017.

16    It is now necessary to say some things about that approval, its origin and terms and the statutory arrangements under the Act and Regulations, under which the approval was issued.

17    The objects of the National Measurement Act 1960 (Cth) are these (s 4):

(a)    to establish a national system of units and standards of measurement of physical quantities; and

(b)    to provide for the uniform use of those uniform units and standards of measurement throughout Australia; and

(c)    to co-ordinate the operation of the national system of measurement; and

(d)    to bring about the use of the metric system of measurement in Australia as the sole system of measurement of physical quantities; and

(e)    to provide for a national system of trade measurement;

and this Act shall be construed accordingly.

18    To give expression to the objects of s 4, the Act provides in s 7 that, subject to s 7A(2), the Australian legal units of measurement of a physical quantity are the “sole legal units of measurement of that physical quantity”. Section 7A provides that the Regulations may “prescribe the Australian legal units of measurement of any physical quantity” and apart from the generality or ubiquity of that prescription, s 7A(2) provides that the Regulations may also prescribe “additional legal units of measurement for use for a particular purpose or for the purpose of a particular contract, dealing or other transaction or class of contracts, dealings or other transactions”.

19    Regulation 5 of the National Measurement Regulations 1999 (Cth) provides that the Australian legal unit of measurement for a physical quantity mentioned in an item in Schedule 1, is the unit of measurement, the name, symbol and definition of which, are mentioned in the particular item in the Schedule. Additional legal units of measurement are also prescribed by Schedule 2 for the purposes of s 7A(2) of the Act.

20    The units of measurement are either based on units of measurement within a “system” known as the International System of Units or “SI”, or they are “derived units of measurement” with special names such as hertz, newton, joule, etc. Thus, the definition of each Australian legal unit of measurement reflects precision derived from an international system for units of measurement.

21    For example, a “metre” is a measurement of “length”. It has the symbol “m” and although a metre is commonly understood by reason of the metric system as 100 centimetres or approximately 39.3701 inches (derived by the formulae 1 divided by 0.0254), a metre is defined as: “the length of the path travelled by light in a vacuum during a time interval of 1 [divided by] 299 792 458 of a second”. A “second” is itself a unit of measurement of “time”. It has the symbol “s”. It is defined as: “the duration of 9 192 631 770 periods of the radiation corresponding to the transition between the 2 hyperfine levels of the ground state of the caesium 133 atom”. A “day” is also a unit of measurement of “time”. It has the symbol “d”. It is defined as: “86,400 s”. A “litre” is a unit of measurement of “volume”. It has the symbol “L” or “l”. It is defined as: “10-3m3”. A millilitre is defined as “10-6m3” and the symbol is “mL” or “ml”. These units of measurement of, for example, “length” and “volume” so defined are then the subject of an International “metric system of measurement” which measures parts or multiples of those units of measurement on a decimal basis.

22    Not surprisingly, units of measurement of physical quantities must be accurately assessed, recorded or realised as and when deployed (especially in trade settings) by properly calibrated instruments, devices or measuring systems, as a true measure of the extent of, for example, elapsed time, distance travelled or the volume of a fluid flowing (in litres or millilitres or otherwise) from, for example, one vessel to another. To that end, the Act provides for the adoption of standards of measurement for each unit of measurement of a physical quantity or one or more known values of a physical quantity. It establishes a procedure for the certification of measuring instruments by a “certifying authority” and a procedure for applying for approval of the pattern of a measuring instrument and the approval of such a pattern by an “approving authority”. It also provides for test procedures for testing the accuracy of measuring instruments. It also establishes a verification process for ensuring that measuring instruments operate accurately. It is now necessary to identify some features of the statutory mechanism.

The statutory mechanism

23    The statutory arrangements relevant to the milk flowmetering system and the approval of the “suitability of the pattern” of the relevant instrument for use in trade (in respect of its metrological characteristics) in issue in these proceedings are these.

24    Section 18 confers the metrological functions of the Commonwealth on the Secretary of the Department. The Department under the present Ministerial Arrangements is the Department of Industry, Innovation and Science. Those functions include providing measurement services to industry, scientific organisations and government by (among other things) measuring physical quantities; providing calibration services; and examining and approving patterns for measuring instruments. The Secretary may delegate all or any of his or her functions or powers under the Act or Regulations to an SES (Senior Executive Service) employee of the Department, the Chief Metrologist or a relevant officer within the NMI: s 18C.

25    Section 18A establishes the position of the Chief Metrologist. The Chief Metrologist has the functions conferred on him or her under the Act and Regulations. The Chief Metrologist may delegate all or any of his or her functions or powers under the Act or Regulations to a relevant employee within the NMI: s 18D.

26    Section 17 establishes the NMI as an agency or division of the Department.

27    Section 19A is in these terms:

19A    Patterns of instruments

(1)    the regulations may make provision for or in relation to:

(a)    the examination of patterns of measuring instruments;

(b)    the approval and verification of patterns of measuring instruments as patterns of measuring instruments suitable for:

(i)    use for trade; and

(ii)    any other legal purpose;

(c)    the issuing of certificates in respect of the approval and verification of patterns of measuring instruments; and

(d)    the reception in evidence of a document purporting to be such a certificate and the admission as prima facie evidence of the matters stated in the document.

(2)    the regulations made under subsection (1) may provide that:

(a)    examinations may be carried out;

(b)    approvals may be given; and

(c)    certificates may be issued;

by the Chief Metrologist, a delegate of the Chief Metrologist or another person on behalf of the Chief Metrologist.

28    Section 19AAB is in these terms:

19AAB    Measuring instrument – accordance with pattern

(1)    the regulations may provide for:

(a)    the requirements that are to be satisfied before a measuring instrument with an approved pattern is taken, for the purposes of this Act, to be in accordance with the pattern; and

(b)    the procedures to be followed to ascertain whether measuring instruments with an approved pattern are in accordance with the pattern.

29    Section 19AAB(2) provides that the Regulations may provide that the procedures described in s 19AAB(1)(b) may be carried out by the Chief Metrologist or by the delegate of that person or by another person on behalf of the Chief Metrologist.

30    Section 19B is in these terms:

19B    Offences

A person shall not falsely represent:

(a)    that a pattern of a measuring instrument is in accordance with a pattern approved under the regulations; or

(b)    that a measuring instrument is in accordance with a pattern so approved.

Penalty: 60 penalty units.

31    These sections use the terms “pattern”, “approved pattern”, “measuring instrument”, “use for trade” and “verification”. These terms are given meaning by s 3 of the Act as follows:

pattern, in relation to a measuring instrument includes a sample of the measuring instrument.

approved pattern, in relation to a measuring instrument, means a pattern approved for the measuring instrument under section 19A that:

(a)    is currently in force; or

(b)    has expired or been cancelled (but not withdrawn) and was in force when the measuring instrument was manufactured.

measuring instrument means:

(a)    a thing by means of which a measurement may be made; or

(b)    a component of such a thing.

use for trade: a person uses a measuring instrument for trade if:

(a)    the person is actually or apparently in control of the measuring instrument; and

(b)    the person uses it, or makes it available for another person to use, for one or more of the following purposes:

(i)    determining the consideration in respect of a transaction;

(ii)    determining the amount of a tax;

(iii)    if the regulations prescribe circumstances in which the use of a measuring instrument for the purpose of determining the amount of a tax credit (including a fuel tax credit) or adjustment is a use for trade – determining an amount of that kind in those circumstances.

verification, in relation to a measuring instrument, has the meaning given by section 18GG.

32    The following terms should also be noted at this point:

certified measuring instrument means a measuring instrument that has been certified in accordance with the regulations and for which the certification is in effect.

measuring instrument with an approved pattern means a measuring instrument a pattern of which has been approved under this Act.

verification mark means:

(a)    …

(b)    in relation to any other measuring instrument:

(i)    an inspector’s mark; or

(ii)    a servicing licensee’s mark.

33    Apart from those matters about which regulations may be made by reason of ss 19A and 19AAB, s 20 confers a regulation making power about a wide-range of matters including providing for the certification of measuring instruments: s 20(1)(d). The regulations define the following terms in the following way:

approval, of a pattern of a measuring instrument, means approval of the pattern under regulation 60.

approval holder, means the person in whose name a certificate of approval is in force.

approved pattern, of a measuring instrument, means the pattern approved under regulation 60.

approving authority means:

(a)    for patterns of measuring instruments generally – the Chief Metrologist; or

(b)    for a particular pattern of a measuring instrument – a body or person appointed under subregulation 76(1) in relation to patterns of measuring instruments of the same kind as the particular pattern of a measuring instrument;

certificate means:

(a)    a certificate of verification; or

(b)    a certificate issued under regulation 37 or 48; or

(c)    a certificate of approval.

certificate of approval means a certificate issued under regulation 60.

certified measuring instrument means a measuring instrument certified under regulation 37

certifying authority means:

(a)    for measuring instruments generally – the Chief Metrologist; or

(b)    for reference materials generally – the Chief Metrologist; or

(c)    for a particular measuring instrument or reference material – a body or person appointed under regulation 73 in relation to measuring instruments or reference materials of the same kind as the particular measuring instrument or reference material.

verifying authority:

(a)    for all standards of measurement and artefacts – means the Chief Metrologist; and

(b)    …

(c)    for a particular reference standard of measurement – includes a body or person appointed under regulation 73 in relation to reference standards of measurement of the same kind as the particular reference standard of measurement; and

(d)    …

34    Part 4 of the Regulations addresses the topic of “Measuring Instruments”.

35    By Reg 35, the term “measuring instrument” does not include “a measuring instrument in use for trade”. This phrase is not to be confused with “for use in trade”. The point of excluding measuring instruments in use for trade from Part 4 is that Part 4 (Div 2) is concerned with certifying measuring instruments for use in trade. Regulation 36 provides that an application may be made for certification of a measuring instrument. The application must be made using the prescribed form. It must be accompanied by the measuring instrument and given to the relevant certifying authority. Additional information may be required to be lodged. Once the application is properly made, the certifying authority may examine the measuring instrument (Reg 37(1)(a)) and may certify it (Reg 37(1)(b)).

36    If it does so certify the measuring instrument, it must issue a certificate for the instrument “to the applicant”: Reg 37(1)(c). However, the certifying authority may issue a copy of the certificate “to anyone else whom” the authority considers should be given a copy: Reg 36(1)(d).

37    For a measuring instrument to be certified, it must have “an approved pattern” (Reg 37(5)(a)) and “bear a mark that identifies” the particular instrument (Reg 37(5)(b)). The certifying authority must mark a certified measuring instrument with the date of certification: Reg 37(6).

38    The matters that must be recited in the certificate are these (Reg 42):

(a)    the name and address of the certifying authority; and

(b)    that the measuring instrument is certified:

(i)    if a certifying authority certified the instrument – by the certifying authority; or

(ii)    if a certifying authority supervised certification of the instrument – under the supervision of the certifying authority; and

(c)    the identity of the certified measuring instrument by reference to the identifying mark on, or attached to, the instrument; and

(d)    the number of the certificate; and

(e)    the date of certification; and

(f)    that the measuring instrument is found to operate within the maximum permissible errors for that type of measuring instrument; and

(g)    the accuracy with which the instrument is certified; and

(h)    the period, from the date of certification, for which the certificate is given.

39    The certification ceases to have effect at the end of the period stated in the certificate: Reg 43.

40    Part 6 of the Regulations addresses the topic of “Patterns for measuring instruments”.

41    Regulation 58 provides that applications may be made for approval of the pattern of a measuring instrument. The “pattern” is sometimes described in the literature as the “design” for the measuring instrument although that term is not used by the Act or Regulations. The application must be made in the prescribed form. It must be accompanied by detailed drawings and specifications of the pattern of the measuring instrument and it must be given to a relevant approving authority.

42    The approving authority may require the applicant to lodge the whole or part of a measuring instrument constructed in accordance with the pattern and lodge additional information as required: Reg 58(3). An application may be made by an “approval holder” to vary a pattern approved by an approving authority: Reg 59. A similar protocol to Reg 58(3) applies to applications to vary an existing approval: Reg 59(1) and (2).

43    Regulation 60 is, relevantly, in these terms:

60    Approval of patterns of measuring instruments

(1)    On application under regulation 58, the approving authority:

(a)    may, on payment of any relevant fee, examine the pattern of a measuring instrument; and

(b)    may approve the pattern of a measuring instrument by certifying that the instrument is suitable for use for trade or as a legal measuring instrument; and

(c)    if the pattern of the measuring instrument is approved – must issue a certificate of approval to the applicant; and

(d)    may issue a copy of the certificate to anyone else whom the authority considers should be given the copy.

…

(4)    Approval of the pattern of a measuring instrument is subject to:

(a)    a condition that a measuring instrument on which the number of the approval pattern is marked must comply with the pattern and any other condition to which the approval is subject; and

(b)    any other condition stated in the certificate of approval.

Note:    Regulation 90AA relates to certificates of approval of the patterns of measuring instruments issued before 1 July 2004.

[emphasis added]

44    As to the “Note”, the certificate of approval relevant to these proceedings was not issued prior to 1 July 2004.

45    As to an application by an approval holder under Reg 59 for variation of an approved pattern, Reg 61(1) provides that if the approval is varied, the approving authority must issue the certificate as varied by the authority, to the applicant. Regulation 61(1) confers a discretion on the approving authority to vary an approval of the pattern for a measuring instrument. The scope of the power to vary an existing approval is not expressed to be (as the approval under Reg 60(4) is expressed to be), subject to conditions of the kind described in Reg 60(4)(a) and (b). The power to vary seems to comprehend a discretionary power to vary the approval as the approving authority may determine (which seems to comprehend varying existing conditions or imposing conditions as part of the variation in relation to the approval). If varied, a certificate of approval of the pattern for the measuring instrument must be issued to the applicant, as varied: Reg 61(1)(c). However, the approving authority may issue a copy of the certificate, as varied, to anyone else the authority considers ought to be given a copy of it: Reg 61(1)(d).

46    As to certificates of approval, each certificate must (Reg 63):

63    Certificates of approval

A certificate of approval must:

(a)    state the name and address of the approving authority; and

(b)    describe the pattern of the measuring instrument to which the certificate relates; and

(c)    state the number of the approved pattern; and

(d)    state the date of issue of the certificate; an

(e)    state that the pattern of the measuring instrument is approved under these regulations as suitable for use for trade or as a legal measuring instrument; and

(f)    state any condition to which approval of the pattern is subject.

47    The NMI has established a Pattern Approval Laboratory for undertaking the testing of measuring instruments and other measuring systems. The administrative arrangements for applying for approval of a pattern are set out in a document described as NMI P 106; Approval and Certification Procedures for Measuring Instruments Suitable for Use for Trade and Other Legal Purposes (“NMI P 106”). That document contemplates that particular instruments and measuring systems will be examined and approved (or not) according to particular standards, some of which are based on international standards. The NMI is an issuing and approval authority for a category of measuring instruments described as “measuring systems for liquids other than water”. A document described as NMI R 117; Measuring Systems for Liquids Other than Water (“NMI R 117”) specifies the mandatory metrological and technical requirements for the pattern approval of such a system. It is not necessary to examine in these reasons the detail of that document. NMI P 106 says that a certificate of approval as issued recites the approval together with any conditions of the approval; a technical schedule; and a test procedure which specifies the tests to be performed for verification or certification of instruments conforming to the pattern: NMI P 106, Part 4.

The Applicant’s Certificate of Approval

48    In 2004, the applicant obtained an approval issued by the Chief Metrologist for an “instrument” described as a: “Diessel Model IZM-E DN50 G2 Milk Flowmetering System” (the “descriptor”). The certificate of approval was issued on 24 December 2004. There were then 10 variations to the approval between 13 November 2006 and 2 December 2014. The approval, the subject of these proceedings, is Variant 10, although the Certificate of Approval is described as “Rev [Revision] 11” because Rev 10 was the provisional approval of Variant 10 (with an interim certificate issued on 3 October 2014) and Rev 11 was the approval (final approval) of Variant 10 (with the certificate issuing on 2 December 2014). As mentioned earlier, the certificate of approval number is No 5/6E/13A. It approves, for use for trade, “the instruments” under the descriptor earlier mentioned. The certificate recites that instruments by that descriptor (and the application) were submitted by the applicant to the NMI. The subject matter of the approval is recited prominently on p 1 of the certificate in these terms:

NOTE: This Certificate relates to the suitability of the pattern of the instrument for use for trade only in respect of its metrological characteristics. This Certificate does not constitute or imply any guarantee of compliance by the manufacturer or any other person with any requirements regarding safety.

This approval has been granted with reference to document NMI R 117 Measuring Systems for Liquids Other than Water, dated June 2011.

This approval becomes subject to review on 1/01/18, and then every 5 years thereafter.

[emphasis added]

49    Page 2 of the certificate recites the Conditions of Approval. The text is in these terms:

CONDITIONS OF APPROVAL

General

Instruments purporting to comply with this approval shall be marked with pattern approval number ‘NMI 5/6E/13A’ and only by persons authorised by the submittor.

It is the submittor’s responsibility to ensure that all instruments marked with this approval number are constructed as described in the documentation lodged with the National Measurement Institute (NMI) and with the relevant Certificate of Approval and Technical Schedule. Failure to comply with this Condition may attract penalties under Section 19B of the National Measurement Act and may result in cancellation or withdrawal of the approval, in accordance with document NMI P 106.

Auxiliary devices used with this instrument shall comply with the requirements of General Supplementary Certificates No S1/0/A or No S1/0B.

Signed by a person authorised by the Chief Metrologist

to exercise their powers under Regulation 60 of the

National Measurement Regulations 1999.

[emphasis added]

50    Although it is not necessary to set out aspects of the technical schedule in detail having regard to the way in which the causes of action are framed, it is nevertheless helpful to explain some aspects of the technology. The pattern as approved on 24 December 2004 is concerned with a vehicle-mounted milk flowmetering system using a Diessel Model IZM-E DN 50 G2 electromagnetic flowmeter approved for measuring milk collected from a milk tank. The field of operation of the measuring system is determined, as approved, by the following characteristics:

1.1    Field of Operation

The field of operation of the measuring system is determined by the following characteristics:

•    Minimum measured quantity (V min)            200L

•    Maximum flow rate (Q max)                700 L/min

•    Minimum flow rate (Q min)                70 L/min

•    Maximum pressure of the liquid (P max)            800 kPa

•    Ambient temperature range                -10ºC to 55ºC

•    Accuracy class                        0.5

•    Vehicle-mounted operation

•    Product – milk at nominal controlled temperature

51    The system comprises a supply tank to which the measuring system is temporarily connected; a centrifugal pump to draw milk from the supply tank outlet; a check valve at the inlet of the pump; flexible piping; a gas elimination device which operates as a gas separator fitted between the pump and the meter measuring the flow; a transfer point defined by the electrodes of the electromagnetic flowmeter; a Diessel model calculator (or other approved calculator) for displaying the volume of flow in one litre increments; a measurement transducer; check valves; a flow control device; and a power supply.

52    Clause 1.5 of the Technical Schedule says this:

1.5    Descriptive Markings and Notices

Instruments are marked with the following data, together in one location, in the form shown at right:

Manufacturer’s mark, or name written in full        …..

Pattern approval number for the instrument        NMI 5/6E/13A

Meter model full    ………..

Serial number of the instrument                …..

Maximum flow rate, Q max                ….. L/min

Minimum flow rate Q min                ….. L/min

Minimum measured quantity (V min)            ….. L

Priming quantity                    ….. L

Approved for use with milk                …..

[emphasis added]

53    The Technical Schedule then describes the scope of each of the 10 variants. For example, Variant 1 lists, in Table 1, alternative electromagnetic flowmeters showing the data characteristics for the approved “pattern” and the relevant flow rates for the alternative electromagnetic flowmeters. Variant 7 contains a further list of alternative electromagnetic flowmeters at Table 2 with the data for the corresponding flowmeters. The approval provides that instruments are to be tested in accordance with tests specified in the NMI “Test Procedures”. Instruments are to be tested with milk and the “system” primed as directed. The basis for determining maximum permissible errors is to be found in Schedule 1 to the Regulations.

54    The applicant finds itself in a position where it has sought and obtained a Certificate of Approval from the Chief Metrologist of the suitability of the submitted pattern of the relevant instruments comprising a Diessel IZM –E DN 50 Milk Flowmetering System under Reg 60 of the Regulations taken in conjunction with s 19A and s 20 of the Act. In granting the approval under Reg 60(1), the Chief Metrologist approved the pattern subject to a condition contemplated by Reg 60(4)(a) that instruments, that is, measuring instruments, purporting to comply with the pattern approval shall be marked with the pattern approval number “NMI 5/6E/13”. The approval is also subject to a condition that measuring instruments purporting to comply with the approval be marked with that pattern approval number “only by persons authorised by the submittor [the applicant]”. The statutory source of the authority to impose that condition is s 19A of the Act and Reg 60(4)(b). Another condition is the requirement recited at cl 1.5 (set out at [52] of these reasons), to mark instruments with particular data which includes the pattern approval number for the instrument. The “General” Conditions of Approval also cast a “responsibility” upon the applicant as “submittor” “to ensure” that all instruments marked with the pattern approval number are constructed as described in documentation lodged with the NMI and in conformity with the Certificate of Approval and the Technical Schedule.

55    It is now necessary to refer to some further provisions of the Act. As earlier mentioned, verification in relation to a measuring instrument has the meaning given by s 18GG of the Act. That section is relevantly in these terms:

18GG    Meaning of verification

(1)    A measuring instrument is verified if:

(a)    either:

(i)    a verifier is satisfied that the measuring instrument complies with the requirements for verification set out in section 18GK when tested in accordance with the national instrument test procedures and the measuring instrument is marked with a verification mark; or

(ii)    if the measuring instrument is treated as one of a batch under the national instrument test procedures – a verifier is satisfied that measuring instruments of that batch comply with the requirements for verification set out in section 18GK when tested in accordance with those procedures and the measuring instrument is marked with a verification mark; and

(b)    if the instrument is of a class for which a re-verification period is prescribed – the period since it was last verified or re-verified does not exceed that re-verification period.

(2)    The Chief Metrologist may determine, in writing, the national instrument test procedures. The determination is not a legislative instrument.

…

56    The definition of a “verification mark” for the purposes of the Act is set out at [32] of these reasons.

57    Section 18GH identifies each of the persons permitted to verify a measuring instrument, subject to the limitations contained in the section. Those persons are a trade measurement inspector; a servicing licensee; or an employee of a servicing licensee. Section 18GJ provides that the Secretary must keep a register of prescribed particulars relating to verification marks. A verification mark in relation to measuring equipment other than utility meters is defined to mean “an inspector’s mark” or “a servicing licensee’s mark”. The requirements for verification are contained in s 18GK which is in these terms:

18GK    Requirements for verification

The requirements for verification of a measuring instrument are:

(a)    the measuring instrument must operate within the appropriate limits of error that are permitted under the regulations; and

(b)    the measuring instrument must be of an approved pattern.

[emphasis added]

58    The determination of whether the requirements for verification under s 18GK have been complied with must be made as required by s 10 of the Act which identifies the relevant standards of measurement to be applied for the purposes of verifying the relevant instrument.

59    Section 18GA creates two classes of offences concerning measuring instruments used for trade. The first offence involves a fault element and the other is a strict liability offence. The section provides that a person commits an offence if the person “uses a measuring instrument for trade” and the measuring instrument “is not verified”. Section 18GB also creates two classes of offences addressing the topic of installing measuring instruments not of an approved pattern. The first offence involves a fault element and the second is a strict liability offence. Section 18GB provides that a person commits an offence if the person “installs in or on any premises or vehicle a measuring instrument; and the measuring instrument is installed for use for trade; and the measuring instrument is not of an approved pattern”.

Some further aspects of the facts

Mr Carey McMahon

60    Mr Carey McMahon gave the following oral evidence.

61    Flogineering imports the electric components for its flowmetering system. There are about 50 different components in a system and some of these components are locally designed and locally manufactured. The applicant has been involved in developing some of the equipment used in the “plumbing and the air elimination side of that system which – does not come from overseas”. The applicant has components manufactured to its requirements: T, p 30, lns 24-32. As to Mr McMahon’s understanding of the role of the pattern approval, Mr McMahon accepts that “what the approval actually does is certify that the design [as] submitted, the sample [as] submitted, of the pattern, in other words, meets the accepted standards” but the approval is not “expressing a view as to the technology [itself]”: T, p 31, lns 20-23.

62    At para 9 of Mr McMahon’s affidavit sworn 26 July 2017, he sets out a list of 19 companies who are or have been customers of Flogineering including entities such as Fonterra Limited, Murray Goulburn Co-operative Co Limited (“Murray Goulburn”) and Parmalat Australia Pty Ltd. As to the former customers, Mr McMahon accepts that some of Flogineering’s former customers are some of the respondents in this case and that one of Mr McMahon’s concerns is that these respondents no longer purchase the products of Flogineering.

63    At para 22 of the same affidavit, Mr McMahon describes the process for affixing a pattern approval number to measuring instruments. He says this:

The process for affixing the Approval Numbers is as follows:

(a)    Flogineering typically supplies a number of Instruments [which he describes as a Diessel model IZM-E DN50 G2 Milk Flowmetering System (Instrument[s])], together with multiple computers to licensed installers who install these on a number of trucks;

(b)    the installer then informs me of the:

(i)    Truck number;

(ii)    Computer serial number;

(iii)    Instrument serial number;

(iv)    Priming quantity; and

(v)    Pulse rate.

(c)    Flogineering then prints a marking label, which is sent to the installer to be affixed to each specific truck.

64    Mr McMahon describes these steps making up the process as “our common practice”. He accepts that there may have been, over the last 10 years, occasions in which “that doesn’t happen”: T, p 32, lns 5-8. He also accepts that it is “probably true” that if the purchaser/customer does not contact Flogineering and inform the applicant of those matters (at steps (b) and (c) of the process), Flogineering “doesn’t follow them up”: T, p 32, lns 10-14.

65    Mr McMahon was asked about paras 40 and 41 of that affidavit. At para 41, Mr McMahon says that despite demand having been made upon the respondents, they have continued to affix the pattern approval number to tankers without the authorisation of Flogineering. Although agreement was reached that para 40 would not be read, Mr McMahon was asked whether the demand to which he was referring is the demand mentioned in para 40 which is a reference to a letter dated 23 March 2016 by which the applicant asked the respondents to cease using the pattern approval number. In that context, Mr McMahon was asked whether he was willing to accept that none of the respondents had affixed that pattern approval number to equipment on trucks since 23 March 2016. Mr McMahon said this: “That might be true. I don’t know. They certainly continued to certify and calibrate those systems using our approval number since that time”: T, p 32, lns 21-27. A proposition was put to Mr McMahon that his contention in para 41 that the respondents had continued to affix the pattern approval number after that date was “speculation” to which he responded: “I was pretty sure that they had purchased new equipment in that time and had [af]fixed that number”. Mr McMahon did not concede that he was wrong about that and said: “No. I don’t concede it’s wrong. I concede that I just don’t know 100 per cent”: T, p 32, lns 29-34.

66    Mr McMahon explained that Flogineering does not install systems for its customers. The applicant supplies the drawings and the various components that comprise the system and usually the tanker manufacturers install the flowmetering system. Either the customer or, more usually, a contractor engaged by the customer installs the flowmetering system to the applicant’s specification: T, p 33, lns 5-18. Mr McMahon says that “quite often” but “not always”, the applicant checks the installation. Mr McMahon rejected the proposition that because para 22 of his affidavit does not, in terms, describe inspection of an installed system by the applicant, that inspection does not occur. He said in response: “It does happen” and, as to the proportion of cases in which the applicant “goes and inspects a system”, the proportion is “well over half”: T, p 33, lns 20-29. Mr McMahon accepts that in the 50% of cases where the installation is not inspected by the applicant, the applicant would not know whether the installation has been conducted correctly. In those cases, Mr McMahon accepted that he could not ensure that instruments marked with the pattern approval number by the respondents were constructed as described in the documentation: T, p 33, lns 34-44. The proposition was put to Mr McMahon that, as a result, in the case of approximately half of the customers of Flogineering, Mr McMahon could not ensure that instruments marked with NMI 5/6E/13A had been constructed as described in the documentation. In response, Mr McMahon said this (T, p 33, ln 47, T, p 34, lns 1-18):

Can I answer the question this way: we supply this technology to two well-known tanker manufacturers who for years have followed our drawings and designs on installing this equipment. So we supply the key components that ensure that we eliminate air from the system [b]ecause air can be counted as volume and then we would give an erroneous level of accuracy. So we have built up a relationship over a long period of time with these tanker manufacturers. And we have a high level of confidence that when we send them the piece of equipment, it’s going to comply with our design. The only variant that happens beyond that point when they buy the complete system from us is the length of the pipework involved. And that then, if you go back to [para 22(b), item iv], the volume of the pipework then determines the priming quantity. And that’s the variant. So we can’t issue the system to a tanker manufacturer with that label because we don’t know what the priming quantity is going to be until they have manufactured the pipework. And it might vary from 38 litres to 42 litres. We don’t know. It’s a critical piece of the measure accuracy. So only after they have then installed our complete system and they then measure that primary [priming] quantity do they then send that information to us and then we are able to produce that label and add in that primary [priming] quantity.

67    As to the rationale for deciding which installations are to be checked and those which are not, Mr McMahon said this at T, p 35, lns 11-21:

The technology has changed over the last 10 years. It’s – the level of additional technological sensors and items involved in the system has grown and grown and that’s a reason for all the revisions in the NMI because we introduce a new sensor for measuring air or pressure. Then that has to be approved and hence there’s a variant in the NMI approval. So when we are selling a standard system which we have sold heaps of to a manufacturer that we know very well who we have a lot of confidence in their ability to install the systems, we wouldn’t bother going down there to inspect that system and commissioning it. If we’re installing a newer piece of technology as we did with Murray Goulburn in 2014 where they bought 134 systems, we inspected 134 systems because it was a very new technology.

68    Mr McMahon gave evidence that when the vehicle is first used it has to be calibrated and it has to be calibrated by a certifying authority like Byron Dallas Raddatz (who also gave evidence in these proceedings) and he has to measure the priming quantity in determining the calibration of the system. Mr McMahon accepts that by that time, the pattern approval number may have already been affixed to the instruments (system). Mr McMahon accepts that “in the number of cases where we don’t inspect [the installation], when they [the system instruments] are installed by a customer”, Flogineering “can’t ensure that those instruments are constructed as described in the documentation”: T, p 34, lns 22-35.

69    In Mr McMahon’s third affidavit sworn 26 October 2017, he says at para 5 that since 2004 when the applicant first began selling flowmetering systems to which pattern approval number NMI 5/6E/13A was applied, the applicant has sold approximately 500 such Diessel model IZM-E DN50 G2 Milk Flowmetering Systems to which it has authorised the affixing of the pattern approval number NMI 5/6E/13A in accordance with the method outlined in paras 22 and 23 of his affidavit of 26 July 2017.

Mr Antony Miller

70    Mr Antony Miller is, and has been since March 2017, the “Vendor and Optimisation Manager” employed by “Visy”. For most of 2016 he was the Logistics Manager for “Patties Foods” and prior to that he was responsible for “Transport Safety and Compliance” at one entity, and supply chain excellence at another entity. Relevantly for present purposes, he was employed for 15 years before that by “Fonterra Co-operative Group” (“Fonterra”) and in the last 10 years of that period he was solely involved in the activity of “milk transport”. He says that Fonterra is the world’s largest exporter of dairy products; a leader in dairy science and innovation; and the owner of a significant portfolio of brands in the Asia Pacific area. Fonterra has its headquarters in New Zealand and has a presence in 40 countries worldwide. From 2003 to 2013, he was employed as the “National Milk Transport Manager” at Fonterra. In that role, he was responsible for 200 drivers and 75 heavy vehicles carting milk in Victoria, Tasmania, New South Wales and South Australia. Until 2011, the role also included responsibility for “milk collection” in Western Australia. He says that he was also involved in a “dairy transport collaboration project” with Murray Goulburn. He says that when he first started in the role with Fonterra, the fleet was in part comprised of trucks operated by subcontractors and in part a company fleet. Mr Miller was responsible for transitioning the fleet to almost a 100% company-owned fleet. He also says that from 1998 until 2003, he was the National Logistics Manager at Fonterra. In that role, he managed the “farm milk collection fleet” which consisted of “mixed insourced and outsourced transport providers, as well as export shipping and domestic warehousing”. He says that in his role as National Milk Transport Manager at Fonterra, Fonterra was a customer of Flogineering.

71    Mr Miller says that when he was working at Fonterra (and he says the same situation prevailed as at the date of his affidavit on 22 August 2017), any person or company conducting “milk pick up from farms via flowmeters” was required, by law (as he understands it) to operate a system that complied with the NMI “standard of the day”. He says that this was particularly important as non-compliant systems could financially penalise either the farmer or the processor. He also says that, in any event, it was important to ensure that the “standard in Australia” was complied with. He says that dipsticks used to be used to measure the volume of milk transferred but that method gave way to the use of flowmetering systems. Because the tolerance for error in measurement is small, flowmetering systems are much more accurate than earlier measures. Mr Miller says that in his experience farmers were however sceptical of the new flowmetering technology as inaccuracies in measurement had previously generally worked in their favour. He says that there was a lot of scrutiny over the technology and any questions from farmers or the processing facilities concerning volume were “escalated to me”. Mr Miller says that in order to ensure that the Fonterra fleet complied with NMI “standards”, Fonterra used the services of a company called CMV Truck and Bus Pty Ltd (“CMV”) as a contractor to conduct annual calibrations on flowmetering systems used by the company. CMV was accredited by the NMI to conduct these calibrations. Mr Miller says that the flowmetering systems installed on the Fonterra fleet of trucks were purchased from Flogineering. He says this at para 15 of his affidavit of 22 August 2017:

We knew that Flogineering held a Pattern Approval Number and were therefore confident in their accuracy. About once a year we would check on the NMI website to ensure that Pattern Approval Number was still current and whether changes had been applied to either the rules of the certification or to see if other companies were now selling alternate systems.

72    Mr Miller explained and accepted in oral evidence that “it’s the fact that the pattern had been approved by NMI that gave [him] confidence in its accuracy” and “not the fact that it was given a number that gave [him] confidence in its accuracy”: T, p 39, lns 19-21. Mr Miller was pressed with the notion that he was checking to see whether the approval had been obtained or altered rather than whether the pattern had been given a number. As to that, he said this at T, p 39, lns 32-46; T, p 40, lns 1-2:

Mr Miller:    We would check the entire – there were a number of approvals that were within there [NMI website] both with Flogineering and with other companies. We would look in there to see when our systems were being calibrated annually through an external body certified by NMI … We would check what the number was that they were proving against and then we would check what the specifics were within that – that particular number we were proving against.

Mr Forrest:    Yes. You’re talking about the approval thought aren’t you: the certificate of approval issued by NMI?

Mr Miller:    Yes. So we would check on the NMI website to make sure that we were – that we knew which was the approval we were operating under because there were several as technologies changed, in particular. And then we had a calibration organisation that we’re required to make sure that they were calibrating our flowmeters. Our decision was to do that annually. I think from the rules at the time it … had to be done at least every second year. And so, yes, we needed to know that – for us we needed to know the number and we needed to know that it was on the NMI website as an approved system.

73    Mr Miller also said this (T, p 40, lns 4-10):

Mr Forrest:    But when you say that the pattern approval number was still current and whether changes had been applied to either the rules of certification, the changes you’re referring to are changes to the approval, isn’t it?

Mr Miller:    Possibly. It was the – certainly within the approval there was some level of detail that we needed to make sure that we were complying with. And whether or not that would change during the course of the year we weren’t sure. We just needed to make sure that when we did look at it, that it was still correct.

[emphasis added]

74    As to this question of the relationship (if at all) between the pattern approval number and the approval itself, Mr Miller was asked to explain his understanding of the role of “the number stated in the approval verses the approval itself”. As to that, he said this (T, p 40, lns 24-28):

My understanding would be that the two are integrally linked. The number was the reference that needed to be made during the calibration process of the flow meters. It was important to us to know which was the approval and that was – we would know that by the number that was assigned to it.

75    Mr Miller was also asked to explain what documents he would look at on the NMI website when he undertook his process each year of checking the NMI website to ensure the pattern approval number was still current. He said this at T, p 40, lns 38-44:

So we go [onto] the NMI website. We would be checking what was the approval number we’re running to. We would then go into that to see what is the description of the system that we are running to and we would be checking that that was the certification number or the approval number that our calibration company, CMV Truck & Bus – that that was the number that they were referencing within their calibrations.

76    Mr Miller says that when calibrated, the variations in measurement very rarely changed much more than +/- 0.1%. Mr Miller says that CMV would calibrate test vessels for him and certify the accuracy of the vessel. Mr Miller says that in his role at Fonterra he regularly looked at calibration records and any variation in accuracy recorded at each calibration. He also attended each depot to check the audited records. He says that the difference in accuracy on the flow meters supplied by Flogineering was negligible, “to within +/- 0.1%”. He says that this gave him “confidence in the [Flogineering] flow meter systems”. He also says that drivers at Fonterra were also asked to report any inaccuracy in the flow meter measurements if they believed that to be occurring for their truck. This happened rarely. Mr Miller says it occurred maybe twice a year across a fleet of 60 trucks and any inaccuracy was usually due to a damaged part. Mr Miller says the policy was to notify farmers with an affected milk reading and arrange a credit if a short payment had occurred.

77    Mr Miller says that accuracy of flow meters is important throughout the dairy industry. It is the basis upon which farmers are paid and the basis upon which milk companies measure “inbound milk”. He says that because it is common practice to collect milk from more than one farm on the same truck, accuracy of measurement when the milk is loaded onto the truck is essential. Mr Miller says that this requirement for accuracy of measurement of milk is “vital” in the industry as it is how farmers get paid and it is part of an integral system for the milk processors to control inbound milk volumes along with a process for control of fat, protein and quality measurement.

78    Mr Miller says that after leaving Fonterra, he worked as a consultant to two contractors working for Murray Goulburn which was also a customer of Flogineering. Mr Miller says that he was involved in the flow meter installation project at Murray Goulburn and later assisted with calibration support.

79    Mr Miller says that flow meters cannot be used in Australia “without an approval number attached”.

Mr Stephen Wastell

80    Mr Stephen Wastell is a director of the first respondent, Blu Logistics SA Pty Ltd (“Blu Logistics”), a director of the second respondent, Wastell Milk Haulage Pty Ltd (“WMH”), and a director of the third respondent, Wadene Pty Limited (“Wadene”).

81    When Mr Wastell first became involved in the bulk milk haulage industry in the early 1990s, milk was not “metered” by the haulage contractor and milk tankers were not equipped with metering systems. Milk is collected from a refrigerated vat at a dairy farm. Prior to the introduction of truck-mounted metering systems, each vat had its own calibrated dipstick. The truck driver would measure the volume in the vat by reading the dipstick. Milk in the vat was then pumped into a tanker which would then typically be driven to other dairy farms where the process was repeated until the tanker was at capacity. The milk would then be transported to a processing plant where it would be pumped into a “silo”. The driver would hand over a docket showing the volume of milk delivered, measured according to the above process.

82    Mr Wastell says that in about the early 2000s tanker mounted milk metering systems were introduced into the industry in Australia. Initially, there was only one system on the market. It incorporated a calculator/indicator manufactured by Diessel, a Danish company. Mr Wastell says that he understood that the applicant held the sole Australian distribution rights for that system. At that time, Wadene acquired this metering system for all of its tankers, from the applicant.

83    Mr Wastell says that after tanker-mounted metering systems were introduced, drivers would still measure the milk volume in the refrigerated vat at a dairy farm using the calibrated dipstick method but as the milk was pumped into the tanker, the metering system would also measure the volume and print out a docket which would be given to the farm operator. This would be compared with the dipstick measurements taken by the driver. Eventually, parallel measurement of the volume by use of a calibrated dipstick was phased out in favour of the accuracy of the tanker-mounted measuring system. Milk producers were anxious to ensure that the measuring equipment provided accurate and reliable measurements of the volume of milk transferred. Mr Wastell says that at around the same time that tanker-mounted metering systems were introduced into the industry, milk processing plant operators also began introducing metering systems to accurately measure the volume of milk pumped from the tanker into the silo at the processing plant. This procedure was used by the processors as a back-up mechanism to check the volume of milk transferred to the processor. Mr Wastell says that he recalls discussions with farmers when these tanker-mounted metering systems were introduced and used more extensively, to the effect that farmers wanted to be assured that the metering systems were calibrated and accurate.

84    Mr Wastell says that from about 2009, Wadene began re-fitting tankers with a measuring unit manufactured by “DME” and supplied by the applicant. Mr Wastell says that over time he became dissatisfied with the pricing and level of support from the applicant with the result that Mr Wastell entered into discussions with GB Control Systems Pty Ltd (“GB”) as an alternative source of supply. He says that Blu Logistics, WMH and Wadene all began acquiring “DME units and entire flowmetering systems (and their parts), including refurbished second hand systems and parts from GB Control Systems instead of Flogineering”.

85    Mr Wastell says that “since that time”, WMH has acquired nine metering systems from GB and has had them installed on its tankers. He says that, on each occasion, pattern approval number NMI 5/6E/13A was affixed to the flowmetering system on behalf of WMH. He says that the particular tankers installed with the flowmetering system, and the approximate dates upon which the pattern approval number was affixed, are these:

(a)    Tanker 151, registration number 257QNI - 20 January 2010;

(b)    Tanker 162, registration number 746QPX - 9 February 2010;

(c)    Tanker 168, registration number 554QSU - 27 November 2010;

(d)    Tanker 171, registration number 320QUB - 30 June 2011;

(e)    Tanker 172, registration number 321QUB - 31 January 2012;

(f)    Tanker 173, registration number 644QUJ - 2 April 2012;

(g)    Tanker 174, registration number 785QVA - 15 October 2012;

(h)    Tanker 176, registration number 772QYT - 17 October 2014;

(i)    Tanker 178, registration number 887UBZ - 24 November 2015.

86    Mr Wastell also says that on or about 7 May 2011, WMH replaced pattern approval number NMI 5/6E/13A which was marked on a flowmetering system installed on tanker T169, registration number 918 QTI, by affixing a plaque bearing pattern approval number NMI 5/6E/13A “for the purpose only of including on the plaque additional information in relation to the [flowmetering] system”. Mr Wastell also says that Wadene had affixed pattern approval number NMI 5/6E/13A to a tanker on only one occasion, that is, Tanker 167, registration number 894 QSB on or about 1 June 2010.

87    Mr Wastell explained in evidence that in the period between about 1992 and 2008 he was learning the milk haulage business as a driver/mechanic and in about 2008, he transitioned into management. He says that by then he “knew the business reasonably well”: T, p 54, lns 25-29. He says that he was aware of the “importance of getting measurements right when milk is being pumped on to and off the truck”: T, p 54, lns 31-32. He says that by the time he transitioned to the management stage in 2008, he was aware of the NMI (T, p 54, lns 34-35) although he was not always aware that the NMI published approvals like the pattern approval in use in this case, exactly: T, p 54, lns 37-38. He says that he became aware of the fact that “metering systems needed to have a pattern approval number on them” when he engaged the services of a third party “to do the calibration” (T, p 54, lns 40-42) and someone told him that it had to have a pattern approval number: T, p 54, lns 44-45.

88    Mr Wastell thinks that it was “about January 2010” that he became aware that pattern approval number NMI 5/6E/13A was required to be affixed to metering systems on the tankers to which it was affixed as referred to in his evidence (and as described at [85] and [86] of these reasons): T, p 55, lns 1-6. Mr Wastell did not make himself familiar with the reason why a pattern approval number needed to be affixed to the measuring instruments mounted on his company’s trucks but he accepts that it is fair to say that he now understands that it is part of an approval process under the Act (T, p 55, lns 8-12): something he has come to be familiar with “over the last few months”: T, p 55, lns 14-15. Mr Wastell also accepts that he understands that the people he carts milk to, the dairy companies, “regard it as important that metering systems operate compliantly”. He accepts that he has held this understanding “for a while now” and “it [the understanding] wouldn’t have only come about because of this case”: T, p 55, lns 17-26. Mr Wastell also accepts that it is fair to say that the reason the pattern approval number NMI 5/6E/13A “is affixed to [his] tankers is to indicate that there has been compliance with the approval” (T, p 55, lns 28-30) and in his experience “as a person participating in the industry, that’s how people would read the pattern approval number being applied to a particular machine”: T, p 55, lns 32-34.

89    Mr Wastell denies that WMH or Wadene has ever affixed the pattern approval number to any flowmetering system otherwise than as admitted and as described at [85] and [86] of these reasons. Mr Wastell says that WMH and Wadene have taken steps to replace the flowmetering systems in all of their vehicles including the vehicles described at [85] and [86] of these reasons with an alternative system supplied by Smarta Industrial Pty Ltd (“Smarta”). Wadene and WMH have retained the fourth respondent, JR Bulk Liquid Transport Pty Ltd (“JRB”) to install the new system and “verify” the system.

Mr Brian Robertson

90    Mr Brian Robertson is a director of Blu Logistics and a director of the fifth respondent, Jurss Robertson Pty Ltd (“Jurss Robertson”).

91    Mr Robertson says that Jurss Robertson carries on a bulk milk haulage business operating from Rockhampton. It owns a number of prime movers and tankers with installed flowmetering systems. He says that, historically, Jurss Robertson purchased its flowmetering systems from the applicant. However, since 2010, it has acquired three flowmetering systems from a partnership called Jurss Transport. The partners in that business were Mr Timothy Jensen who is also a director of Blu Logistics and JR Bulk (“JRB”), and Mr Dennis Jurss. Those three systems were installed on tankers operated by Jurss Robertson. Pattern approval number NMI 5/6E/13A was affixed to each flowmetering system on behalf of Jurss Robertson, by it seems, Jurss Transport as part of the installation process. Mr Robertson says that in respect of one of those examples, Tanker T137, registered number 275 QTG, pattern approval number NMI 5/6E/13A has since been removed. Mr Robertson says that the remaining tankers and the approximate dates upon which the pattern approval number NMI 5/6E/13A was affixed, are set out below:

(a)    Tanker 126, registration number 328QQN - 21 January 2010;

(b)    Tanker 127, registration number 296QRE - 9 March 2011;

(c)    Tanker 20, registration number 283QBP - 7 June 2010.

92    Mr Robertson also gave this evidence. He has been involved in the “milk haulage business” since 1991 and in that regard, he has been a “reasonably senior person in the business in one form or another” since 1991: T, p 56, lns 37-45. Mr Robertson says that when “we first put meters in I didn’t have any idea” about a regulatory regime under the Act “because they were all done by Flogineering”: T, p 57, lns 1-4. Mr Robertson accepts that going back in time before this present litigation started, he had “generally been aware for a while of the need to comply with a regulatory regime under the Act” (T, p 57, lns 9-11) and he accepts that that understanding could be seen, to some extent at least, from the circumstance that pattern approval number NMI 5/6E/13A had been affixed to some of his company’s tankers on 21 January 2010, 9 March 2011 and 7 June 2010: T, p 57, lns 13-16. He accepts that although he “didn’t really know the legislation at that point”, he “would have wanted the tankers fitted up so that [he] would have no more problems with it”: T, p 57, lns 18-20. He accepts that, by that reference, he means that he decided to get some tankers fitted with meters; he knew there was a regulatory regime in 2010/2011; and he wanted to comply with that regulatory regime: T, p 57, lns 35-38.

93    He accepts that it is fair to say that at that time, he understood that it was important to the “companies to whom he was transporting the milk that there be compliant systems”: T, p 57, lns 40-42. He also accepts that that understanding had “come from the fact that those companies had communicated that to [him] over time”: T, p 57, lns 44-45.

94    Mr Robertson denies that Jurss Robertson has ever affixed pattern approval number NMI 5/6E/13A to any flowmetering system otherwise than as described at [91] of these reasons.

Mr Timothy Jensen

95    Mr Timothy Jensen is a director of Blu Logistics and JRB.

96    Mr Jensen explains some aspects of the relationship between some of the individuals involved with a number of the respondents. He says that in about 2004 he became a partner with Mr Dennis Jurss in Jurss Transport and became the General Manager of that business. It conducted a bulk milk transport undertaking in the Gympie/South Burnett/Darling Downs region of Queensland. From 2005, Mr Dennis Jurss became a shareholder with Mr Brian Robertson in Jurss Robertson. In about May 2010, Mr Robertson and Mr Jensen incorporated JRB for the purpose of tendering for bulk transport of milk for Norco Co-Operative Ltd (“Norco”). In late 2009, Mr Wastell, Mr Robertson and Mr Jensen incorporated another entity for the purpose of securing the bulk milk haulage transport business of Parmalat Australia Ltd (“Parmalat”). That company was called Mooloo Sanctuary Pty Ltd (“Mooloo”). It owned the business name “Jurss Group” which was later changed to Blu Logistics Solutions. Mooloo ultimately won the relevant contracts with Parmalat and others for bulk milk haulage. Mr Robertson subsequently resigned as a director of JRB. Mr Stephen Fraser became a director of JRB. In July 2014, Mr Fraser, Mr Robertson and Mr Stephen Wastell incorporated Blu Logistics, the first respondent to carry on bulk milk haulage.

97    Mr Jensen says that when he first became a partner in Jurss Transport it owned approximately 15 tankers each of which was installed with a milk flowmetering system incorporating a Diessel model calculator/indicator. All of these systems had been purchased from the applicant. Those systems produced a paper printout of milk collection data which would then need to be manually entered into a database for the purpose of generating invoices.

98    In 2009, Mr Jensen began making enquiries to identify whether a system was available that enabled data to be transmitted from the metering system wirelessly over a mobile phone network enabling the data to be imported electronically into a database so as to avoid the need for manual data entry. Apparently no solution was available. Mr Jensen spoke with the New Zealand based company, GB Control Systems Pty Ltd, earlier mentioned. GB supplied Jurss Transport with a DME model MOBICOM calculator/indicator and installed it into the flowmetering system installed on one of the Jurss Transport tankers. Mr Jensen says that the DME MOBICOM model had been approved by NMI as part of the milk flowmetering system approved under Certificate of Approval No. 5/6E/13A (as a result of a variation to the certificate). This had occurred, he understood, on the application of the applicant, Flogineering. The software installed on the DME model calculator/indicator had to be configured so as to provide data in a particular format. This was done by Poul Tarp A/S in Denmark.

99    The software reconfiguration did not affect the “metering process” of the approved flowmetering system which, Mr Jensen says, Poul Tarp did not alter. The flowmetering system with the Poul Tarp alteration to the software for formatting (and modem) purposes was subjected to a trial. It was successful. Additional flowmetering systems were purchased from GB and installed on Jurss Transport tankers. Mr Jensen says that this “did not require us to affix pattern approval number NMI 5/6E/13A because an applicable pattern approval number was already affixed to the system in each of those tankers”. Disagreements arose between Mr McMahon of Flogineering, Mr Jensen and Mr Poul Tarp, the principal of Poul Tarp A/S. As a result of discussions, Jurss Transport subsequently purchased approximately 12 DME MOBICOM units from Flogineering. Nevertheless, Jurss Transport continued to rely upon technical support from GB.

100    Apart from this history of engagement with flowmetering systems and the applicant, Mr Jensen says that after JRB was incorporated in May 2010 it purchased a number of trucks and tankers second-hand. Most of those tankers already had flowmetering systems installed on them. JRB replaced the existing Diessel calculator/indicator units with the DME MOBICOM. Mr Jensen says that this did not require JRB to affix pattern approval number NMI 5/6E/13A because “an applicable pattern approval number was already affixed to the system in each of those tankers”. Mr Jensen says that, over time, JRB replaced the Diessel model IZM-E DN 50 flowmeters with a DME model PD340 flowmeter. He says that sometimes, the flowmetering system on a tanker was marked with pattern approval number “5/6E/13”. That approval number did not provide for the DME model PD340 flowmeter and in those cases JRB replaced the existing pattern approval number with a plaque bearing pattern approval number NMI 5/6E/13A.

101    Mr Jensen says that, over time, JRB acquired additional tankers and most of those tankers already had installed functioning flowmetering systems. He says that JRB replaced the Diessel calculator/indicator in those units with a DME MOBICOM unit. He says that in seven of those tankers JRB replaced the entire flowmetering system with a system purchased from GB and JRB affixed a plaque to the flowmetering system bearing pattern approval number NMI 5/6E/13A.

102    Mr Jensen says that JRB has affixed that pattern approval number to a tanker or prime mover in respect of which it has installed an entire flowmetering system on nine occasions. He says that those tankers and prime movers, and the approximate dates upon which those pattern approval numbers were affixed, are these:

(a)    Tanker 131, registration number 571QTD – 22 June 2010

(b)    Tanker 132, registration number 123QSN – 21 June 2010

(c)    Tanker 135, registration number 330QQZ – 17 February 2012

(d)    Tanker 136, registration number 331QQZ – 14 February 2012

(e)    Prime mover 141, registration number 669TUJ – 19 November 2014

(f)    Prime mover 143, registration number 671TUJ – 18 November 2014

(g)    Prime Mover 148, registration number 906VBK – 26 February 2015

(h)    Prime mover 149, registration number 905VBK – 2 April 2015

(i)    Prime mover 152, registration number 319VOI – 12 August 2015

103    Mr Jensen also says that on or about 19 November 2014, JRB replaced pattern approval number NMI 5/6E/13A which was already marked on a flowmetering system installed on Tanker T130, registration number 314 QXI, by affixing a plaque with approval number NMI 5/6E/13A “for the purpose only of indicating on the plaque additional information in relation to the system”.

104    Mr Jensen, who is a director of Blu Logistics, says that that company has only affixed pattern approval number NMI 5/6E/13A to a flowmetering system on one occasion on or about 29 April 2017. That was applied to an entire flowmetering system installed on behalf of Blu Logistics to a prime mover described as PM207, registration number SB-50-MT.

105    Mr Jensen denies that JRB has ever affixed pattern approval number NMI 5/6E/13A to any flowmetering system otherwise than as described at [102] and [103] of these reasons.

106    Mr Jensen gave this further oral evidence.

107    Mr Jensen says that he was aware of the approval by NMI on the application of Flogineering and Certificate of Approval number 5/6E/13A “back in 2009”: T, p 49, lns 21-22. Mr Jensen gave evidence that the reason why he wanted to mark the pattern approval number in the way described at para 34 of his affidavit (and as set out at [102] of these reasons) is that people want to see the mark (NMI 5/6E/13A) in order to know that the metering equipment (measuring instruments) is compliant: T, p 49, lns 24-27. He gave evidence that JRB (“we”) would not have put it on collecting milk (equipment) if “we couldn’t approve it” (that is, if there was no applicable pattern approval number): T, p 49, lns 27-28. Mr Jensen also says that “we needed a mark [a reference, in context, to the pattern approval number] to verify [undertake verification]”: T, p 49, lns 28-29. Mr Jensen gave evidence that he “knew that there had to be verification … and that prior to verification there had to be a mark like the pattern approval number”: T, p 49, lns 36-38. Mr Jensen also understood that dairy companies (processors) to which he was hauling milk “would want to see that the meters [the metering equipment] were compliant” (T, p 49, lns 40-41) and he accepts that the reason for that was that the processors “wanted to be sure that they weren’t paying too much and they weren’t going to get claims from farmers that they were paying too little”: T, p 49, lns 43-47.

108    Mr Jensen says that JRB holds a servicing licence (No. SL-0584) issued to it on 7 March 2013 under the provisions of the Act. He says that prior to that, Jurss Transport held a servicing licence (No. SL-0272) from 10 February 2011 to 11 February 2013. He says that JRB provides “verification services” to each of the respondents. He says that those services involve verification under the Act of the flowmetering systems owned by each of those respondents, at least annually. He says that some instruments are verified by JRB every six months and this occurs where there is a requirement in the contract between a relevant respondent and the milk producer for verification every six months. He says that when an instrument is verified, JRB prepares “a bulk milk flowmeter test report” which is then lodged with NMI. The appropriate limits of error specified in the pattern approval is +/- 0.3% for calibration adjustment of the meter.

109    Mr Jensen also says that Blu Logistics and JRB have decided to replace the flowmetering systems in all vehicles owned and operated by those companies with an alternative system supplied by Smarta Industrial Pty Ltd. The transition to the new system was thought to be likely to be completed by 1 January 2018.

Mr Byron Raddatz

110    Mr Byron Raddatz operates a business providing mechanical and technical maintenance services under the name “BDR Maintenance”. He commenced that business in 2001. Prior to doing so, he was employed by Mercedes Benz Brisbane as a technician working on passenger cars. Since August 2008, he has specialised in the installation and maintenance of “tanker mounted milk pumping and metering systems”. Mr Raddatz is a “certified valuer” under the Act. He recalls that the first tanker he worked on with an installed metering system was a tanker owned by Jurss Transport and this occurred in August 2008. That system had been acquired from Flogineering and installed by Jurss Transport. He says that he has installed metering systems acquired from Flogineering, on behalf of Jurss Transport, Reeve Transport and Cooloola Milk. Mr Raddatz says that: “I have marked pattern approval number NMI 5/6E/13A [on such metering systems] on each occasion on which I have installed metering systems that complies with that pattern approval”. He says that he does this by making up an aluminium plaque which he arranges to be engraved with the pattern approval number which he affixes to a flowmetering system.

111    Mr Raddatz says that he has never been “expressly authorised by Flogineering to mark any metering system with a pattern approval number on any system acquired from Flogineering”. He says that of each of the systems he has installed, acquired from Flogineering (for example, by Reeve Transport), Flogineering has sent the system to the customer in a box. He says that he installed each system and marked it with NMI 5/6E/13A. He says that he has “never had any direct discussion with anyone (with the exception of Cooloola Milk), or received specific authorisation from anyone, at Flogineering about the affixing of pattern approval no. NMI 5/6E/13A”.

112    Mr Raddatz says that he knows Mr Jensen and JRB. He says Mr Jensen has always been at the forefront of adopting and implementing technical systems in his industry. He also says that when the first milk metering computer systems became available, Flogineering was not “pushing them”. That company was, he says, “heavily marketing an antiquated system”. Mr Raddatz said that Mr Jensen bought from New Zealand the first computerised systems capable of wireless data transmission. It was a unit called MOBICOM manufactured by DME. The person at Jurss Transport who was most responsible for working on metering systems apart from Mr Jensen was Mr Kidd. Mr Kidd was an expert on the original Diessel metering systems which involved wireless data transmission capabilities. Mr Raddatz says that Jurss Transport had to take steps to get the system to work and they did so by engaging with the New Zealand entity and a Denmark entity about the installation. Some new software had to be written. Once the DME MOBICOM unit was working, Jurss Transport bought a couple more systems second hand from New Zealand in 2008/2009. Jurss Transport then replaced all of its systems with the DME MOBICOM systems. Mr Raddatz says that the DME MOBICOM unit was approved for use in flowmetering systems under a supplementary approval number S393 issued on 27 July 2004. That Supplementary Certificate of Approval was issued to Flogineering as the submittor certifying that an approval for use for trade had been granted in respect of the “DME Model MOBICOM Calculator/Indicator for Liquid-measuring Systems”. It too was granted on condition that: “Instruments purporting to comply with this approval shall be marked with approval number ‘NMI S393’ and only by persons authorised by the submittor”. Mr Raddatz says that when he replaced a Diessel calculator/indicator unit (that is, instruments described as “Diessel Model IZM-E DN50 G2 Milk Flowmetering System”) with a DME MOBICOM unit for any of the respondents, he did not need to affix pattern approval number NMI 5/6E/13A and did not do so.

113    Mr Raddatz says that since in or about 2010, the respondents have purchased entire flowmetering systems from New Zealand and these systems were refurbished second hand systems purchased by the New Zealand DME agent and bought from Fonterra. Mr Raddatz says that he and Mr Kidd were the technicians who installed these systems on the respondents’ tankers or prime movers on behalf of either Jurss Transport or JRB. He says that all of the parts and hardware had been purchased from DME’s New Zealand agent and all of the software updates have been supplied directly by DME in Denmark.

114    Mr Raddatz says that when he has installed any flowmetering system for any of the respondents he has marked it with pattern approval number NMI 5/6E/13A by marking up an aluminium plaque in the way earlier described and affixing it to the flowmetering system. Mr Raddatz says that he has also affixed a plaque in that manner, on occasion, to systems which he has not installed and he has done that for one of two reasons. First, on occasion he has replaced a Diessel model IZM-E DN50 or DN65 flowmeter, within a flowmetering system marked with NMI 5/6E/13, with a DME model PD340 flowmeter. Because the DME model PD340 is not approved under NMI 5/6E/13 but rather is approved under NMI 5/6E/13A, that pattern approval number was affixed. Second, Mr Raddatz says that on occasion he has simply replaced NMI 5/6E/13A already installed on a system by affixing a plaque as earlier described for the purpose only of including on the plaque additional information, apart from NMI 5/6E/13A in relation to the system.

115    Mr Raddatz says that verifying flow meters is virtually his full time job. He says that as well as conducting verifications for each of the respondents, he does that work for seven other nominated companies. He says that he has also been called upon by Flogineering to perform warranty work for its customers.

116    In oral evidence, Mr Raddatz was taken to Supplementary Certificate of Approval No. S393 as attached to his affidavit as “BR-3”. Mr Raddatz accepted that this document was one of the things that he would read when undertaking his work as described in his evidence generally: T, p 52, lns 37-39. Mr Raddatz accepted that on the occasions when he did his work, he would have looked at that document to understand what it was that he was supposed to do: T, p 52, lns 41-43. Mr Raddatz seemed to accept that there were two reasons why it was important to have regard to the pattern approval number and the pattern approval (T, p 52, lns 45-47). One reason is that it is a pre-condition for undertaking the verification process: T, p 53, lns 1-3. As to the second or other reason, Mr Raddatz accepted this proposition: “And you would understand also that it’s important to people who are looking to see if the metering system that we’re talking about complies with the approval”: T, p 53, lns 5-8. In addition, Mr Raddatz accepted that in his experience, it is fair to say that the people at dairy companies “are interested to make sure that the meters comply”: T, p 53, lns 9-12.

Mr Nevil Kirk

117    Mr Nevil Kirk is an operations manager employed by WMH. Mr Kirk who was not cross-examined gave the following evidence by affidavit. Mr Kirk has been employed by WMH since 2010. Between December 2010 and May 2016 he was a driver/mechanic. He says that from the time he started as a driver, all tankers on trucks that he drove were equipped with a flowmetering system. Mr Kirk says that at all dairies he visits as a tanker driver, the primary means of measuring the volume of milk collected is the tanker mounted measuring system. Mr Kirk says that typically, when he attends a dairy, he parks his truck/tanker next to the refrigerated vat containing milk and the first thing he does is to open the hatch on the tanker to gain access to the DME MOBICOM computer attached to the metering system. He then does a number of other things which do not need to be set out in these reasons. However, he says that next to the DME MOBICOM computer on each WMH tanker is a plaque with some numbers marked on it and when the hatch is closed, the plaque cannot be seen. Mr Kirk says that as a driver he has never paid any attention to the plaque. He also says that he has never seen a farmer, or any other person, pay any attention to such a plaque on any tanker he has driven. He also says that in his experience, “farmers take very little notice of the truck and the pumping gear”. He also says that he has never had any discussion with any person about the regulatory regime in relation to metering systems. He says that he has never been asked any questions by any person about “whether a metering system is approved, calibrated or how it works”. He says that occasionally he is asked about the volume of milk measured by the meter as compared with the volume shown by use of the dipstick on the refrigerated vat. The question usually is: “how many litres did I get today?” So far as the milk processing plant is concerned, Mr Kirk says that the milk is unloaded from the tanker using the computers of the milk processing factory. He says that he has never seen any person at a milk processing factory pay any attention to the plaque next to the DME MOBICOM computer or ask any questions about the metering system.

The separate questions

118    On 6 June 2017, the Court ordered that the following questions be tried separately from, and prior to, the balance of the questions raised in the pleadings in the proceeding:

a.    whether the requirements of the National Measurement Act 1960 (“the Act”) with respect to the approval and verification of measuring instruments, as well as the practice of the Chief Metrologist (within the meaning of the Act) in issuing approvals which authorise a particular individual to assess compliance with the particular approval have, at all times material to this proceeding, been well known to those involved in the commercial bulk haulage of milk;

b.     whether, at any time material, any person has been able lawfully to mark an instance of the Instrument (as that term is defined in the statement of claim) as complying with the Approval (as that term is defined in the statement of claim) other than with the authority of the applicant;

c.     whether, since 2004, the applicant has marked instances of the Instrument in compliance with the Mark Condition (as that term is defined in the statement of claim) so as to permit their legal usage;

d.     whether, on the basis pleaded in the statement of claim, the applicant has established reputation in the Mark (as that term is defined in the statement of claim);

e.     whether, on each occasion on which a respondent has marked an instance of the Instrument with the Mark, such conduct was

i.     in contravention of any of sections 18, 29(e), (f), and (g) of the Australian Consumer Law for the reasons pleaded in paragraph 13 of the statement of claim; or

ii.     an occasion on which the respondent in question passed off certification delivered by itself as certification delivered by the applicant under the Approval;

f.    whether, either pursuant to section 232 of the Australian Consumer Law, or under the general law, injunctions should issue restraining such conduct.

Consideration

119    I will return to the questions set out at [118] of these reasons in due course but it is convenient and necessary at this point to identify the essential contentions of the parties.

The applicant

120    The applicant says that the statutory scheme contemplates, by s 19A, provision being made (by Regulations) for the examination of patterns of measuring instruments and the approval and verification of such patterns of measuring instruments “suitable for use for trade”. The applicant also refers to a “certification” stage “pursuant to the approval” although it should be noted that the applicant, by this term, is actually talking about a reservation to Flogineering by reason of a condition of the approval, of the sole right to authorise the affixing of the pattern approval number on instruments purporting to comply with the approval. Certification is also, however, a term of art. A “certified measuring instrument” has a particular meaning under the Act and Regulations which engages, in particular, Regs 37 and 38. “Certification” also has a particular meaning for the purposes of the Regulations. Certification, so far as a measuring instrument is concerned, means certification of the instrument under Reg 37.

121    The applicant says that s 19AAB of the Act recognises two states by which a measuring instrument with an approved pattern is “in accordance with the pattern”. The first derives from the requirements to be satisfied before a measuring instrument with an approved pattern is taken to be in accordance with the pattern and the second derives from procedures to be followed to ascertain whether such a measuring instrument is in accordance with the pattern. The applicant uses the term “conform to a pattern” (T, p 17, lns 41-47) but seems to be saying that in order to conform with, or be in accordance with the pattern, the measuring instrument must have been “certified” (e.g. the authority of the applicant obtained) under the approval to “mark” or affix the pattern approval number to a measuring instrument purporting to comply with the approval.

122    The source of the power to approve a pattern on condition that instruments purporting to comply with the approval be marked with the number NMI 5/6E/13A and be so marked only by persons authorised by Flogineering, is Reg 60(4)(a) and (b). The condition must be recited in the Certificate of Approval: Reg 63(f).

123    The applicant says that under Reg 73, the Chief Metrologist may appoint, as a “certifying authority”, an applicant (as contemplated by Reg 72) who is capable of certifying a measuring instrument. A certifying authority for a particular measuring instrument means a body or person appointed under Reg 73: Reg 3; [33] of these reasons. From this, the applicant derives a statutory policy objective of conferring a power to grant an approval on terms that reserve to the party undertaking the application process for that approval, an authority to approve the marking or affixing of an approval number to, or on, any measuring instruments purporting to comply with that approval.

124    The applicant describes this as a policy of “third party certification” reserving to the “submittor” of the approval application “the right to determine whether it certifies [gives its authority] or not” (T, p 20, lns 45-47) to mark instruments purporting to comply with the approval with the number NMI 5/6E/13A.

125    The applicant says that because s 19AAB(1)(a) provides for the requirements to be satisfied before a measuring instrument with an approved pattern is taken to be in accordance with the pattern, and Regulations have been made for that purpose conferring a power to condition an approval on an exclusive right in the applicant to grant (or not) its authority to mark the relevant instruments with NMI 5/6E/13A, such measuring instruments can only “be in accordance with the pattern” if the applicant has “effectively certified [used in the sense of approved or authorised]” marking the instruments (purporting to comply with the approval), with NMI 5/6E/13A.

126    Moreover, the applicant says that when the Act uses the phrase “of an approved pattern”, such as the requirement for verification in s 18GK(b) of the Act (that the measuring instrument “must be of an approved pattern”), the phrase means a measuring instrument “certified” (authorised by the applicant) as being so authorised under the terms (conditions) of the approval.

127    The applicant says that there is no provision of the Act that expressly creates a prohibition upon a person (a third party) marking measuring instruments with pattern approval number NMI 5/6E/13A: T, p 20, lns 35-42; T, p 21, lns 19-25. The applicant says that the “right” to “authorise” the marking of measuring instruments with the pattern approval number has been left by s 19AAB of the Act and Reg 60(4) to the exercise of the power to impose conditions in granting the approval of a pattern.

128    The applicant says that the condition that instruments purporting to comply with the approval can only be marked by persons authorised by the applicant, cannot be intended to operate in simply a bilateral or binary way as between the Chief Metrologist and the applicant for approval, otherwise the condition would have no purpose. The text and statutory context of the condition is said to suggest that only the submittor can authorise any person to mark any particular instrument with the number NMI 5/6E/13A.

129    The applicant says that the conduct admitted by the respondents (described at [85], [86], [91] and [102]-[104] of these reasons) of affixing NMI 5/6E/13A to the relevant measuring instruments installed on trucks, constituted engaging in conduct that was misleading or deceptive or was likely to mislead or deceive “dairy companies” (T, p 64, lns 31-33) to believe that the particular instruments so marked were instruments which “could be used legally to measure the volume of milk transferred to or from the vehicle on which the particular instrument was installed” (para 13(b)(i) of the ASOC), when that was not so for three reasons engaging para 11A of the ASOC.

130    First, such measuring instruments could only be “of an approved pattern” if marked with NMI 5/6E/13A according to the requirements of the Act and with the authority of the applicant according to the approval.

131    Second, such measuring instruments in order to meet the requirements at s 18GK(b) for verification must be “of an approved pattern” which could only be so for the reason just mentioned.

132    Third, by reason of s 18GG(1)(a)(i) (relevantly), which cross-references s 18GK, a measuring instrument only enjoys a statutory state of being “verified” if the measuring instrument is “properly verified” (para 11A(c), ASOC) and that could not be so, it is said, if the measuring instrument is not “of an approved pattern”, not having been marked according to the condition of the approval and thus in accordance with the Act.

133    It should be noted that s 18GG(1)(a)(i) (see [55] of these reasons) turns on whether (apart from the question of the verifier’s mark requirements) a verifier “is satisfied” that a measuring instrument complies with the s GK “requirements for verification” when tested in accordance with the national instrument test procedures.

134    So, the proposition is that the admitted conduct of the respondents was misleading and deceptive or likely to mislead and deceive dairy companies because the conduct of affixing NMI 5/6E/13A to instruments carried with it a representation made to them that the particular instruments bearing the pattern approval number could be used lawfully to measure the relevant milk flows when it could not be so used because the s 18GK(b) requirement for verification could not be satisfied because the measuring instrument could not be “of an approved pattern” unless marked with the pattern approval number with the authority of Flogineering. The applicant accepts that the contentions at para 13(b)(ii), (iii) and (iv) of the ASOC are “really all the same case”: T, p 24, lns 16-22. That case is that the conduct of the respondents in marking a measuring instrument with the pattern approval number constitutes a representation to “someone who cares” (T, p 76, lns21-22) at the moment in time when it is displayed to such a person that Flogineering has approved the application of the number to the instrument.

135    The applicant says by para 13(b)(v) that even if the market does not know that only the applicant is entitled to authorise the affixing of the number to instruments purporting to comply with the approval, the “market” knows the regulatory regime involved and knows that “someone” is entitled, as a matter of law, to affix the number and therefore the acts of the respondents of affixing the number gives “the impression” (T, p 24, ln 29) or, put another way, conveys a “representation”, that the number has been affixed by a person entitled, under the regime, to affix it.

136    The applicant says that that impression or representation is untrue by reason of the reservation to Flogineering of the sole right to authorise the affixing of the number to instruments “purporting to comply with the approval”.

137    The applicant says that the conduct of the respondents has also caused “confusion” in the minds of the “dairy companies” as to “whose services have been provided” (T, p 64, lns 10-12; lns 32-34; T, p 65, lns 20-21) so as to give rise to the consequence that the respondents are passing off their services as those of the applicant. However, the applicant also says that the evidence of Mr McMahon, Mr Miller, Mr Wastall and Mr Jensen shows a “fairly intimate knowledge” of the regulatory regime (T, p 64, lns 35-36) and its importance in a more widely held way than merely the dairy companies.

138    The respondents provide the services of bulk haulage of milk and by doing so they facilitate the transmission of milk from the dairy farm to the tanker and then from the tanker to the processor. In the process they have deployed, at least to the extent admitted by the respondents, a flow metering system marked with the pattern approval number NMI 5/6E/13A. The applicant is a supplier of components of a flow metering system to its customers and it generally does that by delivering the components (so supplied) directly (in a box) to one or other of the two preferred contract installers who install the assembled system on the trucks of the customers in the manner described in Mr McMahon’s evidence.

139    The applicant says that in order to demonstrate passing off, it is not necessary to show that Flogineering and the respondents are “competitors” or rivals although the applicant says that they are rivals in providing a “service” of affixing, or authorising the affixing of, the pattern approval number to the relevant measuring instruments purporting to comply with the approval: T, p 64, lns 12-19; the so-called “service of marking”. The applicant says that by affixing the number, each respondent is not just “certifying” “whether compliance has been achieved: (T, p 64, ln 28) as between the buyer, supplier and installer but is also representing “to the world” that compliance has been achieved, because “other people” “care about” that matter: T, p 64, lns 24-28.

140    Nevertheless, the applicant’s case is that it is the dairy companies that stand to be “confused” because of the importance they place on the regulatory scheme and those companies stand to be misled for the purposes of s 18 and s 29. The applicant says that Mr McMahon’s evidence and Mr Miller’s evidence supports an inference that at least the larger dairy companies knew of the terms of the approval and thus knew of Flogineering’s “rights and obligations” under it. As to the respondents, the applicant says that the cross-examination shows that they were “aware of the approval” and had enough awareness of it to know what the number was and to affix it to the measuring equipment: T, p 68, lns 32-34.

141    The applicant also says that even if Flogineering and the respondents are not rivals in the service of marking instruments, the conduct of the respondents has in any event occurred in connection with the “supply of milk haulage services” for the purposes of s 29.

142    As to the “lawfulness” of the “use” of the measuring instruments to measure milk volume transferred (see [129] to [134], the first misrepresentation), the applicant says that the statutory notion of an instrument being “of an approved pattern” means being of an approved pattern because someone “able to do so pursuant to an approval” under the Regulations (in this case, Flogineering) has “analysed it” and “come to that conclusion”: T, p 69, lns 31-38. The lawfulness point, as an element of the misrepresentation case, goes to whether the measuring instrument could be lawfully “used” rather than whether the mark was “lawfully applied”: T, p 76, lns 12-14.

143    As to the lawfulness of use, the applicant’s argument is this. A person commits an offence if he or she uses a measuring instrument for trade and it is not verified: s 18GA. A measuring instrument is verified under, relevantly, s 18GG(1)(a)(i) if a verifier is satisfied that the instrument complies with the s 18GK requirements when tested (and it is marked with a verification mark). One of these requirements is that it “must be of an approved pattern”: s 18GK(b). It cannot be of an approved pattern, it is said, without the applicant’s authority to mark the instrument with the number. Section 19B is said to be “a shorter version of that argument”: T, p 73, lns 44-45. It provides, relevantly, that a person shall not “falsely represent” that a measuring instrument is “in accordance with” a pattern approved under the Regulations. Both these contentions are said to make good the element of unlawfulness of use in the misrepresentation case.

144    As to the cohort to whom, or to which, the contended representation is said to have been made by the conduct of affixing the number to the relevant measuring instruments, the applicant says that the conduct was directed to a “section of the public” and thus it is necessary to isolate “by some criterion” a representative member of the class so as to test, with respect to that hypothetical individual, whether the contended misconception has arisen or was likely to arise when made: Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45 at [100] to [103], the Court. The isolating “criterion” which is said to identify representative entities to which the contended misrepresentation was made is the evidence of, particularly, Mr Miller. He identifies two significant milk processors, Fonterra and Murray Goulburn, about which he can speak directly: see [70] to [78] of these reasons. As to Fonterra, the number and the approval were significant matters for the reasons he addresses as earlier described and that seemed to be the position of Murray Goulburn as well: [70], [77] and [78] of these reasons. The representation is said to be made at the moment in time when the pattern approval number is displayed to “someone who cares” even though the representation is pleaded as made at the time at which the measuring instrument was marked by the relevant respondent with the number: T, p 76, lns 21-23.

145    As to the contentions at paras 13(b)(ii), (iii) and (iv), the contention really is that the conduct of the respondents in marking a measuring instrument with the pattern approval number constitutes a representation to someone seeing the number so marked that Flogineering has given its approval to mark the instrument with the number.

146    As to the contention at para 13(b)(v), the contention is that people who would see the number marked on a measuring instrument, knowing the regulatory regime, would have understood that someone was entitled to mark the number on the instrument even though they might not have known the name of the entity, Flogineering, that enjoyed that right.

The Respondents

147    The respondents essentially contest each of the contentions of the applicant.

148    They say that the applicant is engaged in the business of importing and selling measuring equipment and none of the respondents are engaged in that business. Each of them is in the business of bulk milk haulage and they say that this differentiation in the business activities is enough to dispose of the passing off claim. The respondents say that they are customers of the applicant not its competitors.

149    They say that as to the claim in reliance of s 18 that affixing the pattern approval number to measuring equipment engages misleading and deceptive conduct, the applicant needs to establish that the conduct of affixing the number constitutes a representation as pleaded and in order to do that, the applicant needs to demonstrate on the evidence that the number itself had acquired, in the minds of persons in the dairy industry, secondary meanings of the kind pleaded and earlier described.

150    The respondents say that the statutory construct erected by the applicant going to the issue of the lawfulness of use of measuring instruments marked with the pattern approval number is flawed. They say that an “approved pattern” is a defined term and it means, in relation to a measuring instrument, a pattern approved for that instrument under s 19A of the Act which is currently in force, or alternatively, has expired or been cancelled (but not withdrawn) and was in force when the instrument was manufactured. That being so, the requirements for verification of a measuring instrument under s 18GK are that the instrument must operate “within the appropriate limits of error” permitted under the Regulations (s 18GK(a)) and it must be of an “approved pattern” (s 18GK(b)), as that term is defined. The respondents say that those requirements focus upon accuracy of operation (s 18GK(a)) and whether a pattern approved for the relevant instrument is, relevantly, currently in force (s 3; s 18GK(b)). As to verification itself, an instrument is verified if a verifier is satisfied that the measuring instrument complies with the s 18GK requirements when tested in accordance with the applicable national instrument test procedures and the instrument is marked with a verification mark: s 18GG(1)(a)(i). The respondents also observe that verification rests upon the state of satisfaction of the relevant matters, of the verifier. The short point of the respondents is that none of those elements engages the condition in the Certificate of Approval concerning the reservation to the applicant of the right to authorise the affixing of the pattern approval number to a particular instrument. The respondents say that the applicant’s construction requires the verifier to check the provenance of the marking of an instrument with a pattern approval number whenever such a person is verifying an instrument. The respondents say that the applicant’s construction is not consistent with the text of the Act: see the respondents’ submissions; T, p 44, lns 3-39; T p 87, lns 10-14.

151    The respondents say that the crux of any representation actually made by affixing the pattern approval number to a particular instrument is to represent that that instrument complies with the approval and, moreover, that is what affixing the number to the instrument would mean to any person who was reasonably familiar with the regulatory regime: T, p 45, ln 47; T p 46, lns 1-3. The respondents say that milk producers and people within the dairy industry more broadly, particularly dairy farmers, focus upon the “accuracy of the system and not upon whether or not regulatory requirements have been kept”. Such people want to know that “the systems work” and that such systems “measure the milk accurately”: T, p 83, lns 39-44. The respondents say that to the extent that affixing the pattern approval number to an instrument could be properly characterised as a representation, marking an instrument with the number serves “as a prima facie indication that a particular instrument is one the design of which has been approved for use”: T, p 88, lns 7-14. Put another way, to the extent any representation is made by marking the instruments with the number, the representation is said to be that the measuring instruments, so marked, are of a design that has been approved: T, p 96, lns 22-26.

152    As to the condition upon which the pattern was approved, the respondents say that the condition simply provides some further level of regulatory control, by the regulatory authority, over the submittor by ensuring that “identification is taken by someone who is deemed by the submit[or] to be responsible”. The respondents say that this requirement operates as between the authority and the submittor and not to the world at large. Importantly, the respondents say that the condition of an approval granted under a regulation cannot ultimately inform the proper construction of the text of the Act in the face of a definition of the term “approved pattern”, in s 3 of the Act. However, the respondents recognise that the condition cannot operate as a “true condition” such that the grant of the approval could be impugned: T, p 88, lns 28-30.

153    As to the question of establishing, within the minds of dairy processors, a proper understanding of what might be conveyed by marking an instrument with the relevant number (being the group or cohort particularly identified by the applicant), the respondents say that Mr Miller’s evidence upon which the applicant particularly relies simply establishes that he checked the approval annually and the approval number to see whether there had been any changes. However, Mr Miller did not say that he was familiar with the condition recited in the approval as to a reservation to Flogineering to authorise marking of instruments with the number. The respondents say that to the extent that the applicant relies upon the cross-examination of the respondents’ witnesses, those individuals are directors of bulk milk haulage contractors and not individuals who are giving evidence about the state of knowledge of “milk producers”. The respondents say that there is no evidence from any witness that anyone is aware of the condition. The respondents also say that they do not cavil with the proposition that the industry is concerned with the accuracy of measuring instruments and meters nor the proposition that metering of milk flows is very important. Further, the respondents accept that the existence of an approval regime, administered by NMI, in which patterns are submitted for approval, investigation and scrutiny, is a matter upon which the industry places reliance: T, p 94, lns 36-42. However, the respondents say that it does not follow from an acceptance of those things that someone, such as Mr Miller, who accesses an approval to determine whether the flowmetering system remains approved or whether there have been any changes to the approval, would have been focused upon the existence of the critical condition recited in the Certificate of Approval. The respondents say that the evidence of Mr Kirk and Mr Wastell demonstrates that they have never known anyone to take any interest in the pattern approval number.

154    The respondents say that even if a misconception arose in the minds of putative observers as identified by the applicant, that misconception is “so commercially insignificant” as to deprive the conduct of proper characterisation as “misleading and deceptive conduct” within s 18. In other words, the conduct is sufficiently insignificant, even if made out, as to meet the statutory description.

Conclusions on the various questions in issue in the proceedings

155    As to the evidence, I am satisfied that each witness was properly seeking to explain his understanding of the factual circumstances about which he speaks reflected in the affidavits and where relevant the oral evidence. As to the evidence of Mr Kirk (who was not cross-examined), I accept that his own experience as a driver/mechanic in the period December 2010 to May 2016 was as described at [117] of the reasons. He says that as a driver he has never paid any attention to the plaque bearing the approval number and he has never seen a farmer or any other person pay any attention to such a plaque. He also says that in his experience farmers take very little notice of the truck/tanker and the pumping gear and he has never been asked any questions about whether the metering system is approved, calibrated or how it might work. I also accept the evidence of Mr Raddatz although his oral evidence as described at [116] needs to be noted carefully as does the evidence of Mr McMahon at [66] to [69] of these reasons. I accept the evidence of Mr McMahon, Mr Miller, Mr Wastell, Mr Robertson and Mr Jensen. The cross-examination of Mr Wastell and Mr Jensen should be particularly noted.

156    I also take judicial notice of certain contextual matters and they are these. I take notice of the widespread public discussion over approximately 10 years about structural adjustments within the dairy industry which have resulted in governments establishing adjustment packages to encourage some dairy farmers to quit the industry largely with a view to seeking to establish efficiencies and greater productivity in the sector. I also take judicial notice of the public discussion over many years about the costs of production of milk on the part of dairy farmers and the rates of return dairy farmers experience in conducting their dairy farms. This public discussion has taken place in major daily newspapers of record and especially in the form of financial commentaries in the financial pages of The Australian newspaper, and The Financial Review and also in electronic news broadcasts. As a result, I take judicial notice of the proposition that dairy farmers are not only interested in the revenues they derive from the production and sale of milk but rather such a matter is a critical question of interest. Dairy farmers have a very particular interest in understanding the mechanisms by which the volume of their milk production is measured and a very particular interest, to the fraction of a cent, in the revenues they derive from the daily sale of milk to a milk processor. Fundamentally this means that dairy farmers are interested in ensuring that the volume of milk transferred from their refrigerated vats to the tanker and then from the tanker to the processor is measured with a high degree of accuracy. Dairy processors who receive the milk also have a very particular interest in ensuring the accurate measurement of the volume of milk transferred from the tanker to the processor. None of this is inconsistent with the evidence of Mr McMahon, Mr Miller, Mr Wastell, Mr Robertson and Mr Jensen and for that matter, Mr Raddatz.

157    I also accept that dairy processors and dairy farmers know and understand that in the dairy industry (their industry) there is a regulatory regime in place which, put loosely, governs the processes by which approvals and related steps are taken the result of which enables particular measuring instruments to be used in the process of transferring milk from a dairy farmer’s refrigerated vat to the tanker and then from the tanker to the processor so as to ensure the high degree of accuracy required of such an activity by both the dairy farmer and the processor.

158    I accept that dairy farmers are not in the habit of examining, as a regular matter, a plaque reciting a particular approval number, attached to measuring instruments. I also accept that on the balance of probabilities dairy farmers are unlikely to be familiar with a particular pattern approval number such as NMI 5/6E/13A. I also accept that dairy farmers are unlikely to engage in conversation with a truck driver about the regulatory regime within their industry and are unlikely to be asking a truck driver about whether a metering system installed on the truck is approved or properly calibrated. That would naturally follow because dairy farmers, knowing that there is a regulatory regime in place governing such a fundamental matter as the measurement of the volume of milk transferred from each farm to the tanker and then to the processor, would undoubtedly proceed on the basis that the tanker could not pull up at the farm gate and at the farmer’s refrigerated vat and undertake any transfer operation unless all regulatory requirements were satisfied, whatever they may be.

159    As to the pattern approval number, the particular sequence of letters and digits would likely be unknown to the dairy farmer. The pattern approval number could just as easily be “ABC/1234567”. However, whatever the particular pattern approval number allocated by the Chief Metrologist to an approval might be, the important matter is that there is a correlation between the measuring system deployed on tankers to transfer milk and a number affirming that that measuring system is approved under the regulatory regime in place. Some dairy farmers may come to know the particular number relevant to that approval, but I accept that most of them, even though they might not know or not be able to recall the particular sequence of letters and digits, nevertheless know and understand that a number signifying an approval of a pattern or design for a milkflow metering system is an important matter. This is particularly so on the part of the more sophisticated entities in the dairy industry being the milk processors. The milk processors, as Mr Miller’s evidence affirms, have systems and structures in place, no doubt as a function of scale, by which they recognise, on balance, that a particular approval and a corresponding approval number is an important matter. The milk processors are in a different position to the extent that they are much more likely to become familiar with the particular pattern approval number and its corresponding relationship with that which is approved. They are more likely to recognise the particular pattern approval number as a number which corresponds to a particular approval of a particular system.

160    The dairy industry is no doubt made up of a large number of participants who, or which, engage at many functional levels of that industry. However, the dairy farmers and the milk processors are not simply “consumers” of services or goods in a sense relevant to these proceedings. They are key participants with a very particular interest in the topic of and matters related to the mechanisms by which milk volumes are transferred and measured in the transfer as between farm, bulk haulage contractor and milk processor. In that sense, they are informed consumers in a key sectoral part of the market.

161    These proceedings, at one level at least, are concerned with whether the conduct of the respondents of affixing the particular pattern approval number to the measuring instruments (system) installed on their trucks/tankers, without the approval of the applicant, is conduct which carries with it a representation to the dairy farmers and, on the applicant’s case particularly, the milk processors, as and when the respondents go about the activity of bulk haulage of milk (and thus the transfer activity as described), that the particular instruments so marked are instruments that “could be used legally to measure the volume of milk transferred to or from the vehicle on which the particular instrument was installed”, when that was not so for the reasons identified at [130] to [132] of these reasons.

162    As to the principles to be applied in determining whether conduct is misleading and deceptive, the parties are agreed about those principles. There is no need in these reasons to restate the principles. They are to be found in these authorities: Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594; Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216; Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at [98]-[103]; Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at [202], Deane and Fitzgerald JJ; Lumley Life Ltd v IOOF of Victoria Friendly Society (1989) 16 IPR 316; Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302; SAP Australia Pty Ltd v Sapient Australia Pty Ltd (1999) 169 ALR 1; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191.

163    In these reasons I have described in some detail the applicant’s argument going to the contended unlawfulness of use of measuring instruments which is said to render the contended representation a misrepresentation. I have taken into account the applicant’s argument based upon the objects of the legislation and the references to the Explanatory Memorandum and the construction attributed, in particular, to ss 18GA, 18GG, 18GK, 19A, 19AAB, 19B and Regulation 60. However, I am not satisfied that the conduct of the respondents of affixing the pattern approval number to measuring instruments carries with it the representation as contended. I am not satisfied that the use of the measuring instruments by the respondents is rendered unlawful, as the applicant contends. That follows as a matter of statutory construction of the relevant provisions for the reasons identified by the respondents at [150] of these reasons which I accept as correct. It is not necessary to restate those matters again, other than to emphasise the point that none of statutory provisions, when correctly construed, engages the condition in the Certificate of Approval concerning the reservation to the applicant of the right to authorise the affixing of the pattern approval number to a particular instrument.

164    The conduct of the respondents of affixing the pattern approval number to measuring instruments installed on their trucks carries with it a representation that the measuring instruments accurately measure, within the tolerances recognised by the approval, the volume of milk transferred from the dairy farmers refrigeration vat to the tanker and then to the processor.

165    It is no part of the applicant’s case that that representation is a misrepresentation.

166    The next level of the applicant’s case is that the conduct of the respondents in affixing the pattern approval number to measuring instruments installed on their tankers carries with it a representation to those persons seeing the pattern approval number that Flogineering has given its approval to mark the instruments with the number. As to the dairy farmers, I am not satisfied that the evidence demonstrates that dairy farmers are sufficiently familiar with the pattern approval number so as to associate it with an entity called Flogineering so as to reach the conclusion that affixing the mark carries with it a representation that Flogineering has given its approval to mark the instruments with the number. I am not satisfied that there is the degree of recognition or reputation subsisting in Flogineering by reason of the pattern approval number to reach the point that a dairy farmer, seeing that number, would be led or likely be led to believe that the number was applied to the instruments with the approval of the entity called Flogineering.

167    That conclusion might be less true of the milk processors. However, I am not satisfied on the current state of the evidence that affixing the number carries with it the representation that Flogineering has given its approval to mark the instruments with the pattern approval number.

168    The next level of the applicant’s case is a contention that the conduct of the respondents of affixing the particular pattern approval number to the measuring instruments installed on their trucks/tankers is conduct which carries with it a representation to the milk processors and, in a wider sense, to the dairy farmers, that the regulatory regime governing the processes undertaken by relevant participants in the transfer of milk from a dairy farmer’s refrigerated vat to a tanker and from the tanker to the milk processor (in a way which guarantees the integrity of the accuracy of the measurement of the volume of milk so transferred), provides for a right, in someone, whoever it might be, to apply a pattern approval number (whatever it might be), to measuring instruments used for that purpose as a regulatory signification of an authority to so mark the measuring instruments.

169    I accept that the conduct of the respondents in so affixing the pattern approval number to the relevant measuring instruments carries with it that representation.

170    The question is whether that representation is a misrepresentation because the regulatory right to authorise the marking of instruments purporting to comply with the approval, with the pattern approval number NMI 5/6E/13A, was reserved to only persons authorised by Flogineering under the conditions of approval having regard to s 19A of the Act and Reg 60(4) of the Regulations; see [27], [43], [46] and [48]-[54] of these reasons. The second question is whether the conduct, if it be a misrepresentation, falls within the statutory description of misleading and deceptive conduct.

171    The first question raises a difficult question of construction of the Act and Regulations in relation to the proper role to be attributed to a condition of approval of a pattern when the condition, on its face, appears to regulate the conduct of authorising only a particular person to mark instruments with the number NMI 5/6E/13A.

172    To recap briefly the earlier part of these reasons, s 19A of the Act provides that regulations may make provision for the approval and verification of patterns of measuring instruments as patterns of such instruments suitable for use for trade and any other legal purpose. The Regulations provide that an approving authority may approve the pattern of a measuring instrument by certifying that the instrument is suitable for use for trade or as a legal measuring instrument: Reg 60(1)(b). Regulation 60(1)(d) contemplates that the approving authority may issue a copy of the Certificate not merely to the applicant but also “to anyone else whom the authority considers should be given the copy”. That express discretionary power conferred upon the approving authority to issue a copy of the Certificate to “anyone” (apart from the applicant for approval) the authority considers ought to be given a copy of it, might be thought to be consistent with the scope of a condition (as an expression of the power to approve the pattern of a measuring instrument), authorising only a particular person to mark any instruments (purporting to comply with the approval), with the approval number NMI 5/6E/13A. Approval of the pattern of a measuring instrument “is subject to”, by operation of Reg 60(4), a condition that a measuring instrument on which the number of the approved pattern is marked must comply with the pattern “and any other condition to which the approval is subject” (Reg 60(4)(a)) and any other condition “stated in the certificate of approval”: Reg 60(4)(b).

173    In this case, there are three conditions recited on page 2 of the Certificate of Approval under the heading “CONDITIONS OF APPROVAL” (see also, for the precise text, setting and format, [49] of these reasons): first, instruments purporting to comply with the approval shall be marked with pattern approval number NMI 5/6E/13A; second, instruments purporting to comply with the approval shall be marked with that number “only by persons authorised by the submittor”, which was Flogineering; and third, it is Flogineering’s responsibility to ensure that “all instruments marked with this approval number” are “constructed as described in the documentation lodged with the NMI, and with the Certificate of Approval and Technical Schedule”.

174    The document then recites two matters under the heading CONDITIONS OF APPROVAL the first of which is not a condition but which draws Flogineering’s attention to the notion that failure to comply with “this Condition” (which is the three elements recited above and the fourth element below) may attract penalties under s 19B of the Act “and may result in cancellation or withdrawal of the approval, in accordance with document NMI P 106”. The second matter is a condition and it says: “Auxiliary devices used with this instrument shall comply with the requirements of General Supplementary Certificates No S1/0/A or No S1/0B”.

175    As to s 19B of the Act (see [30] of these reasons), it provides that “a person” shall not “falsely represent” that a pattern of a measuring instrument is “in accordance with a pattern approved under the regulations” or falsely represent that a measuring instrument is “in accordance with a pattern approved” under the Regulations.

176    As to the document NMI P 106 described as Approval and Certification Procedures for Measuring Instruments Suitable for Use for Trade and Other Legal Purposes, that document addresses topics of cancellation and withdrawal of a Certificate of Approval. Clause 4.3 contemplates that the holder of a Certificate of Approval may apply to have the certificate cancelled. Apart from that possibility, cl 4.3 recognises that the NMI may have grounds for cancelling a Certificate of Approval in the following circumstances: first, an instrument does not comply with the metrological criteria required by Australian pattern approval specifications; second, an instrument is not manufactured or used in accordance with the approved pattern as described in drawings and specifications lodged with the NMI; third, the certificate expires; or fourth, “other appropriate reasons”. As to withdrawal, cl 4.4 recognises that the NMI may withdraw a certificate of approval “where cancellation is not considered appropriate”. After a Certificate of Approval has been withdrawn, all instruments must be removed from use for trade.

177    As to conditions, cl 5 recognises that conditions may be stipulated to which the approval of the pattern is subject. Examples of conditions which might be imposed are set out in cl 5 and they include these: first, a review date is generally nominated which is normally five years from the date of approval subject to certain exceptions; second, a condition might stipulate whether the certificate relates to a single instrument or a small number of instruments as distinct from a pattern of an instrument; and third, any additional conditions thought appropriate by the NMI subject to the type of measuring instrument or component the subject of the approval.

178    Clause 11 addresses the topic of the “Certificate Documents” and recites that the Certificate of Approval nominates the pattern and variants (if any), applicant’s name, manufacturer, date of approval, review date, approval number and conditions of approval. The pattern is described in the Technical Schedule and the test procedure specifies the tests necessary to confirm the performance of the instrument. Clause 11.3 recognises that at the same time that the applicant receives the Certificate of Approval (which includes the Technical Schedule and test procedure), a copy of it is placed on the NMI website for all to see and read. Clause 11.5 addresses the topic of Responsibility for Compliance of Instruments with the Certificate. Clause 11.5 says this:

It is the responsibility of the applicant nominated in the certificate of approval, whether as agent or manufacturer, to ensure that all instruments manufactured to a pattern and installed for trade use, comply with the certificate of approval, its technical schedule and the drawings and documentation retained by the NMI. Instruments shall not deviate in any significant structural or metrological fashion from the sample instrument, or its approved variants.

It is an offence for a person, other than the applicant or an agent nominated to the NMI in writing by the applicant, to mark an approval number on any instrument for which they do not hold the certificate or an authority to manufacture (or import) from the applicant, thereby purporting that it complies with that certificate. This may constitute an offence under the National Measurement Act 1960 (Cth).

However, a supplier/installer may copy an approval number from one part of an instrument to a central nameplate, for example when a dial is replaced with a digital indicator and the basework number which appears on the dial has to be transferred to the digital indicator.

[emphasis added]

179    At one level, the power to impose a condition of the approval might operate at a binary or bilateral level as between the Chief Metrologist/NMI on the one hand and an applicant for an approval of the pattern of a measuring instrument, on the other hand. However, it seems clear enough that the condition does not operate on the footing of a true condition such that instances of the marking of measuring instruments with the pattern approval number without the authority of Flogineering would or could give rise to a revocation, cancellation or withdrawal of the approval. Plainly that cannot be the statutory intention.

180    The approving authority has exercised a power arising under Reg 60(4) in furtherance of s 19A of the Act to impose a condition of approval of the pattern for the measuring instrument in question in these proceedings. The conditions impose a responsibility on Flogineering to ensure that all instruments marked with the approval number NMI 5/6E/13A are constructed as described in the documentation lodged with the NMI and in accordance with the relevant Certificate of Approval and the Technical Schedule. That obligation is a significant responsibility. It reflects the condition that instruments purporting to comply with the approval must be marked with the pattern approval number NMI 5/6E/13A and so marked only by persons authorised by the submittor of the application for the approval. The scheme of the Act engages enabling provisions such as s 19A which makes provision for regulations conferring power on an approving authority to cast a responsibility upon the submittor to “ensure”, as a condition of regulatory approval of the pattern of instruments for use for trade, that “all instruments” marked with the approval number are constructed as described in the documents and Technical Schedule. The statutory scheme contemplates that, as part of that regulatory approval process, instruments purporting to comply with the approval must be marked with the number and only marked by persons authorised by the party bearing the responsibility of ensuring that the instruments are constructed in accordance with the documentation, the Certificate of Approval and the Technical Schedule.

181    The instruments marked with the pattern approval number by the respondents were not so marked with the approval of Flogineering. Flogineering was the party that had the relevant responsibility cast upon it as a condition of approval and, consistent with that responsibility, an obligation arose to ensure that instruments purporting to comply with the approval are marked with the pattern approval number and only marked by persons authorised by Flogineering. That part of the condition might be characterised as an obligation symmetrical with the responsibility cast upon Flogineering by the conditions. In any event, only persons authorised by Flogineering are entitled to mark instruments purporting to comply with the approval, with the pattern approval number NMI 5/6E/13A.

182    The instruments marked by the respondents with the approval number (or caused to be marked by the respondents with the approval number), were not so marked by persons with the authority of Flogineering.

183    The representation described in [168] of these reasons constitutes a misrepresentation made to the dairy farmers and the dairy processors. The misrepresentation, in a real and practical sense, is misleading or deceptive or likely to mislead or deceive, either or both of, the dairy processors and the dairy farmers into believing that the flowmetering instruments are marked with a regulatory signification in the form of an approval number by persons who hold the right to do so. The conduct, viewed as a whole, demonstrates a real and not simply a remote chance that those market participants will be misled or deceived or be likely to be misled or deceived.

184    Although the respondents say that the conduct is commercially insignificant, I am not satisfied that that is so. Endorsing the measuring instruments with a number signifying a regulatory relationship between the measuring instruments of the respondents and the approval obtained by the applicant for the pattern for those instruments for use in trade, is not an insignificant thing. Whatever the pattern approval number might have been, both the dairy farmers and the milk processors understood that the respondents were required to conduct their businesses in compliance with all aspects of the regulatory requirements.

185    Accordingly, as to the aspects of the matter described at [168] of these reasons, the respondents have engaged in misleading or deceptive conduct or conduct likely to mislead and deceive either or both of the milk processors and the dairy farmers. Such conduct constitutes a contravention of s 18 of the Australian Consumer Law. The respondents have also engaged in such conduct in connection with the supply, to milk processors, of the services of bulk haulage of milk. Accordingly, the respondents have engaged in contraventions of s 29(1)(e) and (g) of the Australian Consumer Law, as to the limb of those sections which addresses a misleading representation.

186    I am not satisfied that the passing off case has been made out having regard to the deficiency in establishing a particular reputation in the pattern approval number and its corresponding relationship with an entity described as Flogineering.

187    In these proceedings an order was made that for the questions set out at [118] to be tried separately. Those questions involve providing an answer to particular matters and giving consideration to the question of whether an injunction should issue under s 232 of the Australian Consumer Law or under the general law restraining the respondents from continuing to engage in any conduct found to be contravening conduct. As to the particular questions, in the language as framed, at [118] (a) to (e), the position is this.

188    Question (a) asks whether the requirements of the Act with respect to the approval and verification of measuring instruments, as well as the practice of the Chief Metrologist in issuing approvals which authorise a particular individual to assess compliance with the particular approval have, at all material times to the proceeding, been well known to those involved in the commercial bulk haulage of milk. It is not clear to me on the present state of the evidence that those persons involved in the commercial bulk haulage of milk necessarily “well knew” the particular requirements of the Act with respect to approval and verification or well knew that the Chief Metrologist had approved the particular pattern in issue in these proceedings on condition that instruments purporting to comply with the approval be marked only by persons authorised by the applicant. The evidence tends to suggest that the respondents may well have come to know of that condition or reservation in the approval in favour of the applicant, but I am not satisfied, on the balance of probabilities, that at all material times relevant to these proceedings the respondents well knew that matter. I accept, however, that at all material times, the respondents well knew that the pattern approval number could only be marked on the relevant instruments with the approval of someone as a function of the regulatory regime with which they were required to comply and the relevant someone, by operation of the condition, was the applicant.

189    Question (b) asks whether at any time material to the proceedings, any person has been able lawfully to mark an instance of an instrument as complying with the approved pattern, other than with the authority of the applicant. The condition of the approval reserves to the applicant the right to authorise the marking of instruments purporting to comply with the approval, with the pattern approval number, NMI 5/6E/13A. In these reasons I have already explained the apparent basis of the operation of that condition in the context of the Act and Regulations. I am not satisfied, having regard to the construction of the provisions of the Act, that a person who marks an instrument with the pattern approval number without the authority of the applicant engages in unlawful conduct. Of course, the Act creates a range of offences directed to very particular conduct falling within the statutory integers of the relevant provisions. For example, s 18GA provides that a person commits an offence if the person uses a measuring instrument for trade and the instrument is not verified. Section 18GE provides that a person commits an offence if the person uses a measuring instrument for trade and the instrument gives an inaccurate measurement or gives other information inaccurately. Section 18GM provides that a person commits an offence if the person marks a measuring instrument with a verification mark and the person is not entitled to do so. Section 19B provides that a person shall not “falsely” represent that a pattern of a measuring instrument is in accordance with a pattern approved under the Regulations or that a measuring instrument is in accordance with a pattern so approved. That section contemplates a false representation which may engage a mental element beyond simply conduct characterised as misleading or deceptive conduct or conduct likely to mislead or deceive and in any event, for the reasons earlier mentioned, the conduct contemplated by s 19B does not engage the condition relating to the authority of the applicant reserved to it by the condition. The conduct of marking an instrument with the number NMI 5/6E/13A gives rise to the contraventions earlier described and in that sense the conduct of marking is unlawful. However, I do not accept that the conduct of marking the relevant measuring instruments, without the authority of the applicant, is rendered unlawful per se by the Act and Regulations.

190    The answer to question (c) is that since 2004 the applicant has marked instances of the relevant measuring instruments with the number NMI 5/6E/13A in compliance with the condition in the approval reserving to it the sole right to so mark instruments.

191    As to question (d), I am not satisfied that the applicant has established “reputation” as contended.

192    As to question (e), I am satisfied that on each occasion which a respondent marked measuring instruments with the number NMI 5/6E/13A each respondent engaged in the contraventions earlier described. I am not satisfied that passing off has been made good.

193    As to [118] (f) a question arises as to whether, either pursuant to s 232 of the ACL, or under the general law, injunctions should issue restraining the respondents from engaging in particular conduct. Section 232(1) of Sch 2 to the Competition and Consumer Act 2010 (Cth) confers a discretionary power on the Court to grant an injunction in such terms as the Court considers appropriate if satisfied that a person has engaged, or is proposing to engage, in conduct in contravention of, relevantly, s 18 or s 29(1) of that Act. The power may be exercised whether or not it appears to the Court that the person intends to engage in conduct “of a kind” engaging a contravention of s 18 or s 29(1) of that Act: s 232(4). In this case, the evidence suggests that each of the respondents has from 1 January 2018 transitioned to using on their tankers flowmetering instruments that do not engage the approved pattern in issue and do not have affixed to the relevant instruments the pattern approval number NMI 5/6E/13A corresponding to the approval in issue. If that is so, there may be now no utility in exercising the discretion to grant an injunction under s 232 of the Act although there remains utility in granting a declaration as to the particular contravention in question. I would like to hear the parties further on the question of whether there is any utility in exercising the discretion under s 232 to now grant an injunction, before making final orders on this part of the proceeding. Submissions ought to be filed by the parties within 14 days addressed to that question. I propose to decide that matter on the papers unless a party wishes to be heard.

194    As already mentioned the separate questions addressed in this part of the proceeding are those set out at [118]. The only question going to a remedy is the issue of whether an injunction ought to be granted. Inherent in the determination of the questions and the matters in issue going to those questions is the making of a declaration explanatory of the conduct involving a contravention of s 18 and s 29(1) of the ACL. The wider remedies sought by the applicant against each respondent in the originating application involves a claim for damages pursuant to s 236 of the ACL, interest, costs and such order as the Court considers appropriate. The nature of the monetary claims are those set out at para 15 of the ASOC. It may be that the question of costs ought not to be resolved until all claims have been resolved or determined and especially whether the question of the monetary claims for loss and damage set out at para 15 can properly be characterised as loss or damage suffered because of the conduct of a person in contravention of s 18 and or s 29(1)(e) and (g), that is to say, whether the applicant has suffered a “reliance loss” according to the jurisprudence on that question.

195    The parties will be directed to put on written submissions within 14 days on the question of costs, addressing the disposition of the costs on the assumption that an injunction is granted and on the alternative assumption that the discretion is exercised to not grant an injunction. That might be the case in the event that none of the respondents are continuing to engage with flowmetering instruments the subject of the approval and not affixing the pattern approval number to flowmetering instruments.

Associate:

Dated:    28 September 2018

SCHEDULE OF PARTIES