FEDERAL COURT OF AUSTRALIA

Buchanan Turf Supplies Pty Limited v Premier Turf Supplies Pty Ltd [2003] FCA 230

TRADE PRACTICES – Plant Breeders Rights – misleading and deceptive conduct

DISCOVERY – inferences arising from failure to discover documents

DAMAGES – whether the applicant suffers damage where the demand for the applicant’s product exceed available supply

Plant Breeders Rights Act 1994 (Cth) s 44(4), 53(1)(c)

Trade Practices Act 1974 (Cth) s 52, 75B

Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81 applied

Chamberlain v The Queen (No 2) (1983-1984) 153 CLR 521 applied

Jones v Dunkel (1959) 101 CLR 298 referred to

Allen v Tobias (1957-1958) 98 CLR 367 followed

Steinberg v Commissioner of Taxation (1975-1976) 134 CLR 640 applied

Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 applied

Chen v Karandonis [2002] NSWCA 412 cited

The Ophelia (1916) 2 AC 206 followed

Armory v Delamirie (1722) 1 Stra 505; 93 ER 664 applied

Cross on Evidence Sixth Australian Edition [17600]

BUCHANAN TURF SUPPLIES PTY LIMITED v PREMIER TURF SUPPLIES PTY LTD & ORS

 

N 473 OF 2002

 

 

HELY J

25 MARCH 2003

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 473 OF 2002

 

BETWEEN:	BUCHANAN TURF SUPPLIES PTY LIMITED ACN 056 449 435) APPLICANT
AND:	PREMIER TURF SUPPLIES PTY LTD (ACN 089 846 408) FIRST RESPONDENT   PETER GARAY SECOND RESPONDENT   MELINDA GARAY THIRD RESPONDENT
JUDGE:	HELY J
DATE OF ORDER:	25 MARCH 2003
WHERE MADE:	SYDNEY

 

THE COURT ORDERS THAT:

 

1.         The first and second respondents be restrained by themselves, their servants or agents from:

-                     representing to anyone that the respondents are authorised to sell the Sir Walter variety of grass; and

-                     representing to anyone that any other grass turf sold by the respondents is the Sir Walter variety of grass.

2.         The claim for damages is dismissed.

3.         The matter be relisted on a date to be fixed for argument on the question of costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 473 OF 2002

 

BETWEEN:	BUCHANAN TURF SUPPLIES PTY LIMITED (ACN 056 449 435) APPLICANT
AND:	PREMIER TURF SUPPLIES PTY LTD (ACN 089 846 408) FIRST RESPONDENT   PETER GARAY SECOND RESPONDENT   MELINDA GARAY THIRD RESPONDENT

 

JUDGE:	HELY J
DATE:	25 MARCH 2003
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1                     The applicant carries on the business of growing and supplying turf for residential and commercial purposes on a wholesale and retail basis.  It also carries on the business of development of new varieties of grass.

2                     Brett William Redman is a director of the applicant.  In 1987 he developed and released to the market a breed of soft leaf buffalo grass called “Shademaster” (Shademaster).  In 1995 he developed a new variety of soft leaf buffalo grass called “Sir Walter” (Sir Walter).  Many of the older breeds of buffalo grass such as Shademaster and “Sydney Common” turn a purple or brownish colour in winter.  Shademaster develops a purple stalk in winter. 

3                     On 30 September 1996 the applicant applied for plant breeders rights (“PBR”) under the Plant Breeders Rights Act 1994 (Cth) (“the PBRA”) for the variety of Sir Walter.  The form of application disclosed that the most similar variety of grass is Shademaster.  The characteristics which make Sir Walter distinct from Shademaster were stated in the application as follows:

“This variety ‘Walter’ differs in

1.         It is less shade tolerant than ‘Shademaster’.

2.         It produces less thatch than ‘Shademaster’ or other varieties such as ST85 or Common.

3.         Colour differences to be described using R.H.S. Standards.

4.         More active winter growth than ‘Shademaster’ or other varieties.”

On 27 March 1998 the Registrar of PBR certified that PBR have been granted under s 44(4) of the PBRA to the applicant for the variety Sir Walter.  The expiry date of this right is 27 March 2018.

4                     Since 1 November 1996 the applicant has grown numerous crops of Sir Walter turf and has advertised and sold Sir Walter extensively throughout NSW.  In particular, the applicant has advertised and sold Sir Walter throughout the Hunter Valley, Newcastle and Central Coast regions.  Until about October 1992 (when the applicant began to sell Sir Walter interstate), the bulk of the applicant’s sales of Sir Walter were in the Hunter Valley area.

5                     The applicant has granted a number of commercial licenses to selected turf growers under which those growers have been granted specific rights to propagate Sir Walter turf for sale, and to use the name Sir Walter in relation to those sales.  A licence has been granted to one grower in the Hunter Valley (Ag Turf Supplies of Lorn) and one grower in the Central Coast (Yarramalong Turf Supplies Pty Ltd near Wyong).  In addition, the applicant sells Sir Walter to four nurseries in the Lower Hunter region for on-supply to their customers.

6                     The first respondent (“Premier Turf”) was formed in October 1999.  Apparently, the second and third respondents previously carried on business in partnership under the name Premier Turf.  The second and third respondents are directors of Premier Turf, having been appointed as such on 19 October 1999.  Premier Turf carries on the business of supplying and laying turf, but does not itself grow turf.  More recently Premier Turf has expanded its business into other areas including landscaping, paving, construction of driveways, fencing, construction of retaining walls and concreting.  Its turnover is approximately $2 million per year.

7                     Mr Garay’s main duty is to chase work for Premier Turf.  He drives around every day looking for work.  He travels from Wyong to Taree looking for potential customers.  He targets new estates and properties where he believes the owners need a new lawn.  Mr Garay estimates that 80 per cent of Premier Turf’s business comes from doorknocking and recommendations from previous clients.

8                     Premier Turf is one of the applicant’s main competitors in supplying and laying grass.  Originally Mr Garay purchased turf from the applicant, but Mr Redman stopped supplying Mr Garay with turf many years ago.  According to Mr Redman Mr Garay did not pay his bills. He ceased to deal with him for that reason.  Whatever the reason, the letters in Exhibit 1 record a consensus between the solicitors for the parties that the applicant has refused to do business with Mr Garay since 1996.

9                     Shortly stated, the applicant’s complaint in the present proceedings is that on various occasions since January 2000, Premier Turf has supplied or offered to supply customers with turf represented to be Sir Walter when it was another variety of buffalo grass.

10                  This is not the first occasion on which such a complaint has been made by the applicant against Premier Turf.  On 24 August 1999 the applicant’s solicitors asserted that Mr Garay was in breach of the law by misrepresenting to customers that the turf he was supplying was Sir Walter Buffalo, when it was not. Undertakings were requested, and legal proceedings threatened.  On 30 August 1999 Mr Garay’s solicitors responded to this demand asserting that Mr Garay was in fact supplying his customers with “Sir Walter Buffalo”, which he had purchased from Windsor Turf Supplies Pty Ltd, an authorised licensee under the PBRA.  Although Mr Garay denied the allegations contained in the letter, he undertook to comply with the requirements of the relevant legislation.  Mr Garay’s solicitors complained that Mr Redman had been denigrating Premier Turf Supplies to potential customers, which had resulted in a loss of business.  On 8 September 1999 the applicant’s solicitors stated that their instructions were that Mr Redman would not denigrate Mr Garay’s business.

11                  Under the old form of licence agreement issued by the applicant, licensees were able to sell Sir Walter to Mr Garay.  The current forms of growers licence issued by the applicant contains a stipulation that the licensee will only sell or supply Sir Walter to bona fide end-user retail customers or licensed resellers who hold a current resellers licence granted by the applicant.  Premier Turf is not an “end user retail customer” or the holder of a resellers licence.  The evidence does not establish when the change in the form of licence agreement occurred.

12                  These proceedings were instituted on 23 May 2002 after letters of demand were sent to Premier Turf on 16 October 2001, 30 October 2001 and 15 May 2002.  Paragraph 11 of the Amended Statement of Claim (which is denied) is as follows:

“11.     At various times since about January 2000 the First Respondent:

            (a)        represented to its customers that the buffalo grass turf it supplied or supplied and laid for them was Sir Walter when it was another variety of buffalo grass;

            (b)        represented to its customers that the buffalo grass turf it would supply or supply and lay to them was Sir Walter, only to supply and lay another variety of grass turf with or without a discount to the customers;

            (c)        represented to potential customers that it could supply or supply and lay Sir Walter.

                                                Particulars

            A.         The Applicant is aware of about 75 occasions when the First Respondent has conducted itself as pleaded above.

            B.         The Respondent supplied and laid turf at addresses including the following in accordance with what is pleaded at (a) or (b) above:

                        (i)         12 Knight Street, Cardiff South (Dr Peter Vaughan);

            (ii)        6 Toucan Street, Edgeworth;

            (iii)       309 Minmi Road, Fletcher;

            (iv)       5 Rosemount Road, Eleebana;

            (v)        17 Robina Street, Garden Suburb;

            (vi)       1 Geraldton Drive, Redhead (Ken Hocking);

            (vii)      Laurina Street, Medowie;

            (viii)     147 Somerset Drive, Thornton (Rodney Ayton);

            (ix)       Louth Park Road, Maitland;

            (x)        65 Cottonwood Chase, Fletcher (Robinson);

            (xi)       63 Cottonwood Chase, Fletcher (Geoff Lingard);

            (xii)      52 Green Point Road, Belmont.

C.        The First Respondent conducted itself in accordance with the facts pleaded in (c) above to the following people at about the time stated:

            (i)         Lisa Maxfield of Garden Suburb in March 2002;

            (ii)        Ken Hocking of Redhead in December 2000;

            (iii)       Rodney Ayton of Thornton in January 2001;

            (iv)       Steven Hawes;

            (v)        Dr Peter Vaughan of Cardiff South in August 2001;

            (vi)       Geoff Lingard of Fletcher;

            (vii)      Robinson of Fletcher;

            (viii)     Lisa Maree Worrall of Swansea;

            (ix)       Shane Charles Boswood of Raymond Terrace;

            (x)        Colin James Hindle of Fletcher.”

That conduct allegedly constitutes an infringement of the applicant’s plant breeders right in respect of Sir Walter pursuant to s 53(1)(c) of the PBRA, as well as a contravention of s 52 of the Trade Practices Act 1974 (Cth) (“the TPA”).  Section 53(1)(c) of the PBRA states:

“53(1) … a plant variety is infringed by:

            (c)        a person using a name of the variety that is entered in the Register in relation to:

                        (i)         any other plant variety of the same plant class; or

                        (ii)        a plant of any other variety of the same plant class.”

Mr and Mrs Garay are persons allegedly involved in the contravention of s 52 of the TPA pursuant to the provisions of s 75B of that Act.  Injunctive relief and damages, including exemplary damages are sought.

13                  On 26 June 2002, by consent, Allsop J granted an interlocutory injunction against Premier Turf and Mr Garay, restraining them from:

(a)        representing to anyone that the respondents are authorised to sell the Sir Walter variety of grass; and

(b)        representing to anyone that any other grass turf sold by the respondents is the Sir Walter variety of grass.

Incidents of infringement

14                  It is convenient to start with an exposition of Mr Garay’s position in general terms before considering particular instances of alleged infringement.  Mr Garay’s evidence is that he was always aware that he was not allowed to grow and sell Sir Walter.  Prior to reading a letter dated 22 May 2001, which was handed to him by Mr Redman in late May or early June 2001, he was unaware that he did not have the authority to purchase Sir Walter and resell it.  He was aware that he was not able to sell other soft leaf buffalo and describe it as Sir Walter turf.  Mr Garay’s affidavit of 24 October 2002 [par 4] includes the following:

“After receiving that letter I ensured that I did not sell Sir Walter turf.  If my clients wanted Sir Walter laid I would have the client order the turf themselves.  I would usually tell them to order the turf from Buchanan Turf Supplies Pty Ltd.”

In such cases, Premier Turf merely laid Sir Walter turf which the customer had purchased from the applicant or one of its licensees.

15                  Mr Garay denied ever intentionally supplying people with turf which was not Sir Walter buffalo and claiming that it was Sir Walter.  In his affidavit of 24 October 2002 he said [par 8]:

“… I have inadvertently supplied a few customers with the wrong turf.  When I have become aware of the mistake I have either gone and replaced the turf with ‘Sir Walter’ or refunded the money.  In the situations where the grass was replaced with Sir Walter we would get the customer to order the turf from Buchanan Turf ….”

16                  The applicant sought to establish infringement/contravention by evidence from five persons with whom Mr Garay had dealings, by cross-examination of Mr Garay as to his dealings with four other persons, and by evidence from a former employee of Premier Turf, Mr Shane Worrall.  I now turn to that evidence and record my findings in relation to it.

Evidence of Garry Robinson

17                  Mr Robinson (and his wife) own premises situated at 65 Cottonwood Chase, Fletcher.  Their neighbour, at 63 Cottonwood Chase, is Mr Jeff Lingard.  Mr Lingard was not called to give evidence.  On 18 May 2001 Mr Garay approached Mr Robinson in the front yard of his house, which at that stage was unturfed and not landscaped.  Discussion occurred in relation to the supply of grass.  Paragraphs 4, 5 and 6 of Mr Robinson’s affidavit of 17 July 2002 are as follows:

“4.       Peter Garay initially said that he would get us ‘Shademaster’ grass but I said: ‘No, it has to be the same as our neighbours grass.’

5.         Peter Garay said: ‘Don’t worry, I will supply you the top of the range soft leaf buffalo the same as we gave your neighbour, the stuff they’ve got on Burke’s Backyard.’

6.         I took that to mean that Premier Turf would supply Sir Walter breed grass the same as they recently supplied and laid at 63 Cottonwood Chase, Fletcher, the home of Mr Jeff Lingard.”

18                  In October 2000 the television program, “Burke’s Backyard” devoted a segment to Sir Walter.  The compere of the program, Don Burke, gave a favourable account of the variety and its beneficial characteristics such as the ability to grow in shady environments.  Other grass varieties are sometimes featured on Burke’s Backyard and according to Burke’s Backyard webpage, Don Burke grows two varieties of soft leaf buffalo in his own garden – Sir Walter and Shademaster.

19                  The grass was laid on Mr Robinson’s premises on 8 June 2001.  Mr Garay was present for part of the time.  About $5,000 worth of damage was done to Mr Robinson’s driveway which was deeply scratched by a backhoe during the turf laying operation.  Mr Robinson commenced proceedings against Mr Garay which had not been resolved at the time of swearing his affidavit.

20                  After a couple of months it became obvious to Mr Robinson that the grass supplied to him was not the same grass as had been supplied to his neighbour.

21                  Premier Turf supplied the turf for Mr Lingard’s home at 63 Cottonwood Chase, Fletcher.  The uncontradicted evidence of Mr Redman is that the turf laid at Mr Lingard’s home in both front and back yards was Sir Walter.  The nature strip or footpath area was Shademaster.  The turf laid on Mr Robinson’s property was Shademaster.  Mr Redman so advised Mr Robinson in October or November 2001 and later confirmed that advice after comparing samples of grass taken from the relevant areas with Sir Walter in his nursery.

22                  Mr Garay did not contradict any of the evidence given by Mr Robinson, or by Mr Redman in relation to Mr Robinson’s property or Mr Lingard’s property.  However, in cross-examination Mr Robinson accepted that at the time of his conversation with Mr Garay on 18 May 2001:

-         he did not know the name of the grass which had been laid on Mr Lingard’s property;

-         he did know it was not Shademaster;

-         the words Sir Walter were not mentioned in the conversation; and

-         he did not know what Mr Garay meant by the reference to Burke’s Backyard – “just that it legitimised it to me”.

23                  I accept Mr Robinson’s evidence.  I do not accept that his evidence was exaggerated or coloured by animosity against Mr Garay arising from the damage done to his driveway, or that his evidence should in some unexplained way be discounted having regard to the pending litigation against Mr Garay. 

24                  The operation of s 53(1)(c) of the PBRA is only enlivened by a person “using a name of the variety that is entered in the Register” in relation to another plant variety or plant.  The evidence falls short of establishing that Mr Garay used the name Sir Walter in relation to the grass which he proposed to supply or which he in fact supplied to Mr Robinson, hence infringement of s 53(1)(c) of the PBRA has not been established.

25                  However, there is a clear case of contravention of s 52 of the TPA.  Mr Garay laid Sir Walter on Mr Lingard’s property (other than on the nature strip).  Mr Robinson made it clear to Mr Garay that he wanted the same grass laid on his property as his neighbour’s grass, and that he did not want Shademaster.  Mr Robinson was induced by Mr Garay to believe that the grass which was laid on his property was the same as his neighbour’s grass.  It was not.  The fact that a small amount of Shademaster was laid on the nature strip outside Mr Lingard’s property does not lead to any different conclusion.  The same grass was required for the two properties because “our two yards actually run onto one another”.  There is no border between the two properties.

Evidence of Dr Vaughan

26                  On 18 August 2001 Dr Vaughan was given a verbal quote by Mr Garay to supply and lay 500m² of Sir Walter.  In Mr Garay’s affidavit of 24 October 2002 [par 27] Mr Garay states:

“I admit to saying to Mr Vaughan ‘I can supply and lay Sir Walter Buffalo’.  As I had prepurchased a supply of Sir Walter Buffalo from President Turf Supplies I had some Sir Walter Buffalo stored in my yard.”

27                  On 22 August 2001 President Turf Supplies, a licensed Sir Walter grower, issued an invoice to Premier Turf for the supply of 300m²  Sir Walter soft leaf buffalo.  There is no documentary evidence of Mr Garay having purchased Sir Walter in the period prior to his verbal quote on 18 August 2001, nor any explanation by Mr Garay as to how 300m² of Sir Walter would satisfy an order for 500m² of turf.  Mr Garay did say that he could not obtain the whole 500 m² from President Turf Supplies.

28                  On 22 August 2001 Mr Garay  and a number of employees of Premier Turf attended at Dr Vaughan’s home and laid approximately 300m² of soft leaf buffalo turf.  In Dr Vaughan’s affidavit of 5 September 2002 [pars 6, 7 and 8] he said that when the turf was being laid, he asked for and obtained confirmation from Mr Garay that it was Sir Walter buffalo that was being laid.  He said that he wanted a receipt confirming that : “I am getting Sir Walter as I have ordered”.  Mr Garay did not join issue with these assertions in his affidavits, but in oral evidence he denied that he was present at Dr Vaughan’s job.  I accept Dr Vaughan’s evidence in preference to Mr Garay’s oral evidence in this respect.

29                  Dr Vaughan claims [Aff par 9] to have told Mr Garay that he had concerns as to the quality of the work, and that he would not make payment until he received a receipt stating that he had received Sir Walter, and until a receipt from the turf supplier indicating that Premier Turf had purchased Sir Walter buffalo was produced for his inspection.  Mr Garay’s affidavit of 24 October 2002 contains a denial of par 9 of Dr Vaughan’s affidavit, but as there are two paragraphs numbered 9 in Dr Vaughan’s affidavit, it is unclear whether Mr Garay’s affidavit joins issue with Dr Vaughan’s claims in this respect.

30                  Payment was not made by Dr Vaughan on 22 August 2001.  On 23 August 2001 Mr Garay gave Dr Vaughan an invoice from Premier Turf which included “supply and lay soft leaf buffalo 500m (Sir Walter)”.  He also produced to Dr Vaughan a tax invoice from President Turf Supplies referred to in par [27] above.  I accept the evidence of Dr Vaughan in par 9 of his affidavit, as summarised in [29] above.  The documents produced by Mr Garay to Dr Vaughan on 23 August 2001 provide some support for Dr Vaughan’s account of that conversation.

31                  Dr Vaughan was not happy with the quantity or quality of turf which had been laid on his property.  On 24 August 2001 he contacted Mr Redman.  On 25 August 2001 Mr Redman inspected the grass which had been laid at Dr Vaughan’s home.  He formed the view that some strips of grass, between 6 and 8 in number, looked like Shademaster, with the balance being Sir Walter.  Dr Vaughan then paid Premier Turf for the 300m² of turf which had been laid.

32                  After 25 August 2001, Mr Redman had a conversation with Owen Gardner, an employee of Premier Turf.  He told Mr Redman that on the day that Dr Vaughan’s turf was laid, 300m² of Sir Walter obtained from President Turf Supplies was laid at a property situate at 6 Lakeview Road, Raymond Terrace.  That property was owned by Shane Boswood.

33                  Mr Redman returned to Dr Vaughan’s home the following week and inspected the lawn more closely.  He formed the opinion that all of the grass which had been laid was  Shademaster.  The grass which he initially thought was Sir Walter was Shademaster which had been sprayed with a green dye.

34                  Mr Garay did not dispute the proposition that Dr Vaughan was supplied with Shademaster.  He asserts that he had ordered Sir Walter for Dr Vaughan.  That assertion does not fit comfortably with his earlier affidavit evidence that he had prepurchased a supply of Sir Walter from President Turf Supplies, and he had some Sir Walter in his yard at the time he offered to supply and lay Sir Walter for Dr Vaughan.  Nor does it sit comfortably with Mr Garay’s general position that after May or June 2001 he did not himself purchase Sir Walter, but only laid Sir Walter for clients who had purchased it themselves.

35                  Mr Garay’s evidence is that Mr Gardner was in charge of both Dr Vaughan’s job and Mr Boswood’s job.  He was dismissed shortly after this incident.  Mr Garay “admits” that employees accidentally provided Dr Vaughan with Shademaster, rather than the Sir Walter which he had ordered for him.

36                  Mr Garay’s evidence in relation to Dr Vaughan was unsatisfactory and unconvincing.  I have already referred to the fact that he asserted for the first time in oral evidence that he was not present at Dr Vaughan’s job when the turf was laid.  I find that he was present.  Then there are the elements of his evidence which do not comfortably sit together, which I have referred to above.  Mr Garay prevaricated in his evidence as to whether Shademaster was laid on Dr Vaughan’s property.  First, he said he did not know, then he said it possibly could have been Shademaster, then he conceded it was most likely that what was laid at Dr Vaughan’s job was not Sir Walter, and finally he conceded it was dyed Shademaster.

37                  There is conflict between the evidence of Dr Vaughan and Mr Garay as to whether Mr Garay asked Dr Vaughan to ring President Turf and order another 300m² of Sir Walter.  Dr Vaughan denies that this occurred, Mr Garay asserts that it did, and that Dr Vaughan later told him that he telephoned President Turf, but was told they did not have any Sir Walter left.  I prefer the evidence of Dr Vaughan to that of Mr Garay having regard to my general assessment of Mr Garay as a witness.

38                  Mr Garay use of the name Sir Walter in relation to the Shademaster turf which he laid on Dr Vaughan’s property is in contravention of s 53(1)(c) of the PBRA.  There is also a clear case of contravention of s 52 of the TPA.  Premier Turf and/or Mr Garay represented that the turf laid on Dr Vaughan’s property was Sir Walter, when in fact it was Shademaster.

Evidence of Shane Boswood

39                  On 16 August 2001 Mr Garay called at Mr Boswood’s home and offered him a good deal on some turf, as he has three other jobs to do in the area on 23 August 2001.  Paragraphs 3, 4, 5 and 6 of Mr Boswood’s affidavit of 12 November 2002 are as follows:

“3.       After some further discussion Peter Garay said: ‘What sort of grass are you looking for?’  I said: ‘Sir Walter.  You know that good grass that doesn’t go brown in winter.  I’ve got a friend who has it.’

4.                  He said: ‘How about I measure up and give you a quote.’  I said: ‘Yeah OK why not.’

5.         Peter Garay then walked around the yard and came back and said: ‘You’ve got a fair bit of land here, you’ll need about 700m²’.  I said: ‘That’s funny because the block is about 890m² and the house is about 280m² and we don’t want turf in the large area around the side of the house.’

5.                  He said: ‘For Sir Walter that will be about $6,500.00’.  I said: ‘That’s way outside my budget’.  He said: ‘How about $5,000?’  I said: ‘No that’s too much.’  He said: ‘I’ll throw in all of the grass around your boundary.  What is your budget?’  I said: ‘I really do not want to spend more than $3,000.00.’  He said: ‘I will do it for $3,000.00 and give you use of my bobcat for the day to dig your driveway and to move the big pile of dirt on your property but you must have the job done on 23 August 2001.’  I said: ‘Yep that’s fine.’  He said: ‘I will bring the top dressing tomorrow.’”

40                  The cost of Sir Walter was about $7.00 per m² at this time.  If Mr Garay was to supply and lay 700m²  of Sir Walter on Mr Boswood’s property, then the cost of the turf alone would be $4,900.  Mr Boswood knew that Sir Walter was a fairly expensive grass – “$7 a metre laid, something like that”.  Mr Boswood knew that Mr Garay could not make money out of the transaction, and that made him a bit suspicious.  He was not looking to purchase grass at the time of Mr Garay’s visit.  Mr Boswood attributes the drop in Mr Garay’s price from $6,500 to $3,000 to Mr Boswood’s reluctance at the time to purchase any grass.

41                  Mr Garay’s evidence is that he cannot make any money out of Sir Walter.  He normally endeavours to persuade people who ask for Sir Walter to change to Shademaster and nine times out of ten he can turn the customer around.  There is no evidence of any attempt on the part of Mr Garay to turn Mr Boswood around.  Mr Garay said that he was paying “$4.00 something” for Sir Walter when he could get it, and $3.10 for Shademaster.  Sir Walter was last purchased “two years ago”, ie in February 2000, whereas in other evidence Mr Garay said that it was not until June 2001 that he ceased selling Sir Walter, and advised clients to order it for themselves.  The evidence does not explain the divergent estimates of the price for Sir Walter.

42                  On 17 August 2001 Premier Turf unloaded the topsoil at Mr Boswood’s premises.  On 22 August 2001 a bobcat and driver came to the premises and undertook the earth moving work discussed with Mr Garay.  On the night of 22 August 2001 Mr Boswood received information that there was someone quoting in his area to supply Sir Walter, but supplying cheaper grass without a written quote.

43                  Paragraphs 11, 12, 13, 14 and 15 of Mr Boswood’s affidavit are as follows:

“11.     I then called Peter Garay on his mobile phone and said: ‘Peter are you definitely delivering Sir Walter to me tomorrow.’  He said: ‘Of course, why do you ask?’  I said: ‘I’ve just received a phone call from another turf supplier who said that there is a shonky supplier getting around substituting inferior grass.’  He said: ‘You can’t be too careful Shane-o!’  I said: ‘I’m worried because the price seems cheap.’  He said: “Shane-o I told you I’d look after you.’  I said: ‘You will be giving me a receipt for Sir Walter won’t you.’  He said: ‘I will show you a receipt where I have purchased Sir Walter.’  I said: ‘No I want a written receipt.’  He said: ‘Yeah that’s fine Shane-o.’

12.              About 10 minutes later I received a phone call from Peter Garay.  He said: ‘Did I give you a written quote for Sir Walter?’  I said; ‘Yes.’  He said: ‘Have you got it with you?’  I said; “You know very well Peter that you did not give me a written quote.  Why do you need the written quote?’  He said: ‘I am a bit confused.  I am not sure if I quoted you Shademaster or Sir Walter and your phone call threw me a bit.’  I said: ‘Are you going to deliver Sir Walter tomorrow or not?”  He said: ‘Yeah Shane I’ll look after you.”

13.              About 7.30 am on 23 August 2001 two Premier Turf Supplies trucks arrived with 6-7 men.  I approached the first truck and said: ‘Who’s in charge here?’  They said: ‘Not us the boss is in the other truck.’  I approached the other truck and asked who the foreman was.  Once I identified the foreman I said to him: ‘If you haven’t got Sir Walter on the truck don’t bother unloading it.’  He said: ‘There is no way that we could have quoted you $3,000.00 to lay 700m² of Sir Walter.’  At that stage he produced a receipt from a business I understood to be a Sydney supplier of Sir Walter.  He said: ‘Peter bought this and it cost him $1,500.00.’  I recall that the receipt showed 300m² of Sir Walter for a total price of $1,500.00.  I said; ‘Well I was quoted for Sir Walter.’  The foreman said: ‘We have two types of turf on the trucks, Shademaster and Sir Walter, I’ll show them to you.’  He then took a roll of each type of turf off the truck he rolled them out.  The foreman indicated one roll as Shademaster and the other as Sir Walter and I noted that the Shademaster roll looked much greener.

14.              The foreman said: ‘I can lay the 300m of Sir Walter and bring you the rest later or I can lay you all Shademaster or I can lay the 300m of Sir Walter and the rest Shademaster now.’  I decided to let them lay the 300m of Sir Walter and the rest in Shademaster that day as I have no confidence in them returning with the Sir Walter.

15.              The men then proceeded to lay the grass finishing by about the middle of the day by which time I had collected a cheque for $3,000.00 from the Newcastle Permanent Society Raymond Terrace branch.  I gave the foreman the cheque in return for a written receipt.”

44                  Mr Garay did not file an affidavit in reply to Mr Boswood’s affidavit, (which was filed late), nor did he give evidence in chief as to his dealings with Mr Boswood.

45                  In cross-examination Mr Boswood gave some confused evidence in relation to the 16 August 2001 conversation.  Ultimately he said that Mr Garay asked him what sort of grass he was looking for.  Mr Boswood said that he wanted the grass which does not go brown in winter, which one of his friends has.  Mr Garay said that is Sir Walter.  In other words, it was Mr Garay who introduced the name Sir Walter into the conversation, rather than Mr Boswood.

46                  Mr Boswood was cross-examined to suggest that he knew he was not getting Sir Walter and that he must have known this from the prices quoted by Mr Garay.  Mr Boswood denied this was so.  According to Mr Boswood, Mr Garay told him he had three other jobs to do in the area that day; that is why he could do such a good price.  Mr Boswood was also cross-examined to suggest that in the conversation of 22 August 2001 (Aff par 11) Mr Boswood said for the first time that he wanted Sir Walter, when Mr Garay told him that he was getting Shademaster, which is what Mr Garay quoted him for, and what he was paying for.  Mr Boswood denied this.

47                  Mr Garay said in cross-examination that Mr Boswood “was never ever getting Sir Walter” and there “was never a mention of Sir Walter even in conversation” and “I do not think Ms Boswood knew what he was getting himself”.  Mr Garay’s position on the first day of his cross-examination was that Sir Walter was never mentioned in his conversations with Mr Boswood.  On the second day, Mr Garay said that there was never any mention of Sir Walter being laid on Mr Boswood’s job until about 7 pm on 22 August 2001.

48                  I do not accept that Premier Turf would have laid 300m² of Sir Walter at Mr Boswood’s premises on 23 August 2001 if Mr Garay had originally quoted to supply Shademaster.  It is even more unlikely that Premier Turf would have laid the Sir Walter for a price applicable to Shademaster if Mr Boswood first asked for Sir Walter on 22 August 2001.

49                  I accept Mr Boswood’s evidence that in the conversation of 16 August 2001 he ordered 700m²  of Sir Walter which Mr Garay agreed to supply.  The quoted price tumbled from $6,500 to $3,000.  The probabilities are that Mr Garay intended to satisfy the order by supplying dyed Shademaster, just as he did with Dr Vaughan.  I am not satisfied that Mr Garay had the ability to obtain 700m² of Sir Walter at that time or that he intended to do so.  Mr Garay thus engaged in misleading and deceptive conduct in contravention of s 52 of the TPA in procuring Mr Boswood’s order.

50                  By 22 August 2001 Mr Boswood had obtained information which caused him to doubt whether what Mr Garay intended to supply was Sir Walter.  He sought and obtained reassurance from Mr Garay on this point, when Mr Garay must have known that all he had on hand was 300m² of Sir Walter which, on his evidence, he had purchased for Dr Vaughan.  In giving that reassurance, Mr Garay again contravened s 52 of the TPA.  Mr Garay does not dispute that on the evening of 22 August he confirmed that Sir Walter would be laid the next day.  He would not have done so if the subject matter of the discussions on 16 August 2001 was Shademaster.

Evidence of Dr Vaughan and Mr Boswood

51                  By 22 August 2001 Mr Garay had accepted orders from Dr Vaughan and Mr Boswood for the supply of 1,200m² of Sir Walter which Premier Turf was unable to fulfil.  Mr Garay's acceptance of those orders is inconsistent with his evidence that at least from June 2001 he ceased supplying Sir Walter to his clients.  On 23 August 2001 the invoice from President Turf in relation to the supply of 300m² of Sir Walter to Premier Turf was put to use twice.  It was used to persuade Mr Boswood to accept delivery of 300m² of Sir Walter, and it was used as “proof” to Dr Vaughan that the turf which had been laid at his home on the previous day was Sir Walter, in order to induce him to pay for it.

52                  The use of the invoice in this way provides a further reason for rejecting Mr Garay’s claim that his employees accidentally provided Dr Vaughan with Shademaster.  There was not enough Sir Walter available to meet the orders which Mr Garay had accepted, and the invoice from President Turf was produced by Mr Garay to Dr Vaughan to cover up the true facts.

Evidence of Lisa Maree Worrall

53                  On 25 July 2002 Mr Garay attended Ms Worrall’s home at Swansea at her request.  He recommended that Shademaster soft leaf buffalo be laid.  Ms Worrall said:

“I want the grass that stays lush green all year round and doesn’t get purple stalks.”

Mr Garay’s response was:

“No worries, by the time we leave you’ll have a bowling green.”

He quoted $2,500 for the job.

54                  A further conversation took place at about 5.15 pm on 25 July 2002.  In the course of that conversation Mr Garay told Ms Worrall that “Sir Walter won’t grow out there, you really need Shademaster”.  He offered to drop his price by $700 for cash.

55                  A third conversation took place at about 7.15 pm on 25 July 2002.  Ms Worrall’s account of this conversation, as given in her affidavit of 31 July 2002, includes the following:

“28.  ... we have decided that we definitely want Sir Walter because I have just had a look at a friends on my way home and that’s the grass we want.”

Mr Garay’s response was:

“29.  Not a problem, if you really want Sir Walter, although its dearer I will do it for the same price as the Shademaster ...”

Mr Garay accepted the first part of this conversation, but denied that the response attributed to him by Ms Worrall.

56                  On 27 July 2002 the respondent submitted a written quote to Ms Worrall:

“Lay 130 sq metres of Sir Walter Buffalo

Supply and spread 15 cubic metres of soil

Excavate old lawn and take away

TOTAL COST $1800.00 (incl. GST)”

57                  Ms Worrall is the stepmother of one of the respondent’s former employees, Shane Worrall, who gave evidence for the applicant in these proceedings.  In cross-examination it was put to Ms Worrall that “you were attempting to set his former employer up”, a proposition which Ms Worrall denied.

58                  No questions were asked in cross-examination of Ms Worrall about the conversation referred to in par [55] above.  In his cross-examination, Mr Garay said that he did not offer to supply Ms Worrall with Sir Walter; all that he offered was to lay it for her.  She would have to obtain the Sir Walter herself, and the cost of so doing would have to come out of the $1800.  There was no evidence that Mr Garay ever explained this to Ms Worrall.

59                  I do not accept Mr Garay’s evidence in this respect.  If all he was offering to do was to lay Sir Walter which Ms Worrall had obtained herself he would have explained this to her, and would not have issued her with an invoice for $1800.  I prefer Ms Worrall’s version of the conversation recorded in par [55] above to Mr Garay’s denial.  I find that on 25 July 2002 Mr Garay offered to supply Ms Worrall with 130m² of Sir Walter buffalo for $1800.  I reject the submission of Counsel for the respondent that Ms Worrall’s evidence is not credible.

60                  The offer did not proceed to fruition.  Nonetheless Ms Worrall’s evidence is significant for the light which it throws on Mr Garay’s credibility as a witness, and because it provides another illustration of Mr Garay offering to supply Sir Walter to potential customers in the face of his protestations that he ceased doing so in June 2001.

Evidence of Colin Hindle

61                  On Saturday 9 November 2002 Mr Hindle says that he rang Premier Turf and spoke to a person whom he believes to be Mr Garay.  He said that he was looking for a quote for supply of Sir Walter grass.  A conversation ensued in which Mr Garay [if it was Mr Garay to whom he was speaking] tried to talk him out of buying Sir Walter, as other grasses were better.  The conversation concluded:

“Hindle:          ‘No I really want Sir Walter.’

Garay:                        ‘OK.  I’ll get you Sir Walter.  I can get it for you next week.’

Hindle:            ‘Let’s just leave it at that.’”

62                  Mr Hindle recounted this conversation to Mr Redman.  He says that thereafter he spoke to Mr Garay again, that Mr Garay said that whilst he would be crazy to put down Sir Walter, Mr Garay could get it for him.

63                  On Monday 11 November 2002 Mr Hindle says that he received a telephone call from Mr Garay which included the following:

“You have asked for a quote on Sir Walter on Saturday.  We can’t provide Sir Walter, nor do we want to.  I can come around to provide you with another quote for a different grass.”

64                  Mr Hindle’s oral evidence was confused and confusing.  I think that he was endeavouring to say that he got a quote from one of Mr Garay’s boys on the Saturday and that he rang Mr Garay on the Monday (rather than Mr Garay calling him) to make sure that Mr Garay would not be delivering grass, as he had arranged to obtain the turf he wanted from the applicant.  In that conversation Mr Garay said that he could not supply Sir Walter.

65                  Mr Garay said that he could not recall talking to Mr Hindle in November 2002.  He denied telling Mr Hindle that he could get him Sir Walter.

66                  I am not prepared to place any weight on the evidence of Mr Hindle.  His evidence is too confusing and internally inconsistent.

Evidence of Shane Worrall

67                  In his affidavit dated 2 September 2002, Mr Worrall said that he worked for the first respondent from about December 2000 until December 2001 as a landscape gardener.

68                  Paragraphs 6 – 11 of Mr Worrall’s affidavit (which was read without objection) are as follows:

“6.       I recall that about once every two weeks I would go to a job where the Second Respondent told us before we went to the job that the customer had asked for Sir Walter grass but was being given another type of buffalo grass.  When this happened the Second Respondent would tell us that we were actually laying an area of buffalo other than Sir Walter but that we were to tell the customer that they were getting an area of Sir Walter.

7.                  Sometimes the area that we told the customer was being laid was more than the area of the grass that we laid.

8.                  Often when we were doing jobs where the customers were being told that they were getting Sir Walter but were getting other grass the Second Respondent would give us two pieces of paper, one which had been hand written by him, which showed the type of grass and the actual amount of grass to be delivered, the other being an invoice showing the area of grass to be notified to the customer.

9.                  When the Second Respondent asked me to give invoices to customers which showed a wrong area or to tell customers that they had more grass than had been laid I refused or told the customers the truth.

10.              When I refused to give wrong invoices to customers the Second Respondent gave the invoice to another employee on the same truck and had them speak to the customer about the grass.

11.              In December 2001 I resigned because I did not agree with the Second Respondent’s business practices, and because I was made to work very long hours and was often not paid for all of the hours worked.”

69                  Documentary records show that Mr Worrall’s first pay date was 1 November 2001, and that his last pay date was 19 April 2002.  He was paid weekly.  A letter of 13 February 2002 refers to a letter of termination dated 13 February 2002, and the offer of a position with the first respondent as a casual labourer.  Ms Garay said that Shane Worrall may have been paid in cash for a number of weeks prior to 1 November 2001.  In fact, his employment commenced on 9 October 2001, and concluded on 19 April 2002.  He was paid in cash for the period prior to 1 November 2001.  Mr Garay’s evidence as to payment being made in cash in the period prior to 1 November 2001 is consistent with Mr Worrall’s evidence in cross-examination to this effect.  It is inconsistent with Mr Garay’s evidence that it was impossible for Shane Worrall ever to have been paid in cash.

70                  In cross-examination Mr Worrall said:

-                     he sometimes let customers know that they were being ripped off, but so far as he knows none of them complained to Mr Garay; and

-                     at the yard, he heard Mr Garay telling people they will be receiving Sir Walter when they were not, but he could not be specific or name any of the customers.  It would happen once every couple of weeks.

71                  As a result of a conversation which Mr Worrall had with his stepmother towards the end of July 2002, Mr Worrall contacted Mr Redman and spoke generally to him about his employment with Premier Turf.  On 2 August 2002 he was paid $100.00 for working at Mr Redman’s farm from 7 am to 11 am.  Mr Redman sought information from Shane Worrall as to what Mr Garay had been telling people about Sir Walter, but Shane Worrall did not provide Mr Redman with the names or addresses of any persons that he claimed to have been the victims of a passing off.

72                  Although I have found that Mr Garay did misrepresent grass which he supplied to some customers as Sir Walter, I have difficulty in accepting Mr Worrall’s evidence.  The significance of Mr Worrall’s evidence is that, if accepted, it provides a foundation for a conclusion as to the number of occasions on which Premier Turf passed off other grass as Sir Walter.  But Mr Worrall was unable to provide the Court with even one specific illustration of the deceitful conduct on the part of Mr Garay which is described in general terms in Mr Worrall’s affidavit.  Nor did he provide Mr Redman with any specific instances, although Mr Garay’s business practices were the subject of discussion between them.  If par 6 of Mr Worrall’s affidavit stemmed from his actual observations, the probabilities are that he would have been able to provide some specific instances of deception which could have been checked.

73                  Another problem is that Mr Worrall elaborated on his claims in cross-examination.  In cross-examination he said that he overheard Mr Garay telling customers “at the yard” that they would be receiving Sir Walter when they were not.  This is not a matter referred to in the affidavit.  It is something which Mr Worrall claims to have overheard “on numerous occasions”, “more than once”, or “every couple of weeks”.  But again Mr Worrall was unable to be specific.  One aspect of Mr Garay’s evidence which I do accept is that about 20 per cent of orders were placed over the telephone and that 80 per cent came from doorknocking or word of mouth.  The “yard” was not a retail outlet, and Mr Worrall was not present when Mr Garay went doorknocking, nor was he privy to telephone orders.

74                  Other aspects of Mr Worrall’s evidence do not ring true.  It is unlikely that Mr Garay would equip Mr Worrall with “true” and “false” documentation.  There was no reason to do so.  It was Mr Garay’s practice to issue an invoice to the customer only if requested.  Nor am I persuaded that Mr Worrall behaved in the manner referred to in par 9 of his affidavit. This appears to be an attempt on his part to disassociate himself from dishonest practices on the part of Mr Garay, of which he did not approve.  But in cross-examination Mr Worrall said that he would “sometimes” let customers know they were being ripped off, and “on occasionshe would let them know they were not getting the grass they ordered, or that they were paying for more grass than was actually being laid.  Neither the original claim, nor its diluted version, has the ring of truth.  Mr Worrall’s claims as to his behaviour are entirely uncorroborated.

75                  Nor do I accept Mr Worrall’s claim as set forth in par 10 of his affidavit.  Mr Garay did not strike me as being the sort of person who would tolerate a refusal on the part of Mr Worrall to do as Mr Garay told him.

76                  What motive does Mr Worrall have to lie?  There is a contest between Mr Worrall and Mr Garay as to whether Mr Worrall was sacked, or whether he resigned.  It was put to him that he was sacked, and that his evidence was falsified in order to get revenge.  His response was: “I don’t think so.  I quit.”  Mr Redman provided some support for the notion that Mr Worrall was dismissed, but the source of his information in this respect appears to have been Mrs Worrall.  There is no love lost between Mr Worrall and Mr Garay, but I do not accept that Mr Worrall’s evidence is entirely fictional, invented for the purpose of gaining revenge.

77                  The more difficult question is to determine what weight, if any, can be placed on Mr Worrall’s evidence in the light of the observations about that evidence which I have made above.  The errors Mr Worrall made as to the period of his employment, the improbability of his warning customers that they were being ripped off by Mr Garay, the improbability of Mr Garay tolerating such conduct on the part of Mr Worrall, Mr Worrall’s inability to provide even one concrete example of the conduct which he describes and the assertion for the first time in cross-examination as to conversations which he allegedly overheard in “the yard” lead to the conclusion that little, if any, weight can be placed on Mr Worrall’s evidence as to the frequency with which Mr Garay passed off other grass as Sir Walter.

Evidence of Mr Ayton, Mr Hawes and Mr Hocking

78                  These people are particularised in the Amended Statement of Claim as customers of the Premier Turf to whom misleading representations were made in relation to Sir Walter.  None of them was called to give evidence.  However, Mr Garay was cross-examined about his dealings with them.  The effect of that cross-examination is as noted hereunder.

79                  Mr Ayton had Shademaster laid in his backyard.  He claimed he had been delivered the wrong load of grass.  All he asked for was a soft leaf buffalo – no mention of Sir Walter.  He was refunded $700 and reimbursed a further amount.

80                  Mr Hawes also ordered a soft leaf buffalo.  He had certainly not ordered Sir Walter.  When Mr Garay got there Mr Hawes told him that the grass was supposed to be Sir Walter.  Mr Garay told Mr Hawes that he only ordered a soft leaf buffalo.  Mr Hawes wanted a refund for the difference in cost.  To keep the peace, Mr Garay gave him one.

81                  Mr Hocking had Shademaster laid on his property.  He said that he wanted the same grass as his neighbour, which was Shademaster.  He never ordered Sir Walter, so he was not getting Sir Walter.  Mr Garay replaced the grass at no extra charge.  Presumably the replacement grass was Sir Walter, although there is no direct evidence to this effect.

82                  In my assessment, Mr Garay would not refund money to a customer, or replace a customer’s grass, if Mr Garay believed that the customer’s complaint was without any foundation.  However, he might do so if he thought that there was room for a genuine misunderstanding, particularly in the absence of written quotes.  None of these people were given a written quote.  Mr Garay’s evidence was that it was crystal clear that none of these people had ordered Sir Walter, and the refund was given, or the grass replaced, purely for public relations reasons.  I am not persuaded that this is so, but I do not think that I would be justified in concluding that Mr Garay represented to these people that the grass with which they were being supplied was Sir Walter when the only foundation for that conclusion would be my lack of satisfaction with the explanation given by Mr Garay for the refund or replacement of the turf.  Disbelief does not amount to evidence of the opposite of what is disbelieved: Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81, 87.  It may be otherwise if the lie of a party - witness is found to operate as an admission by conduct: Chamberlain v The Queen (No 2) (1983-1984) 153 CLR 521, 564; Cross on Evidence, Sixth Australian Edition [17600].  That is not the case here.

Mr Paine

83                  In cross-examination Mr Garay asserted that Mr Paine had ordered Sir Walter, but that the wrong grass was laid.  Mr Garay telephoned Mr Paine and offered to replace the grass.  The evidence does not disclose what happened thereafter, except that Mr Garay contends that he was not paid for the job.

84                  This incident does not appear to lead anywhere.  A mistake was admittedly made, but I do not know whether any contravention/infringement was involved.  It depends upon what Mr Paine was told.  The evidence does not deal with this.

Injunctive relief

85                  The applicant has established that on three occasions customers who wanted to acquire Sir Walter were induced by Premier Turf to purchase other grass as a result of false representations that the other grass was Sir Walter.

86                  I do not accept Mr Garay’s claim that he ceased offering to supply potential customers with Sir Walter in June 2001.  Nor do I accept his claim that the only occasions where the wrong grass was supplied in response to an order for Sir Walter were as a result of innocent errors on the part of his staff.  Apart from other considerations, the two claims are inconsistent in relation to the period after June 2001.

87                  Accordingly, the applicant is entitled to final injunctive relief in the terms of the interlocutory injunction.  Neither party contended that the terms of that injunction were inappropriate.

Damages

88                  The applicant elected against an account of profit.  The applicant’s damages claim is for loss of business profits caused by a diversion of customers who wished to purchase Sir Walter to Premier Turf as a result of misrepresentations that the grass supplied by Premier Turf was Sir Walter.  There is no claim for loss of reputation or goodwill.  The starting point for the assessment of this damages claim is thus the quantification of the volume of turf sold by Premier Turf to its customers on the basis that such turf was Sir Walter, when it was not.

89                  If it be assumed that but for the misrepresentations which I have found were made to Mr Robinson, Dr Vaughan and Mr Boswood, they would have acquired their turf from the applicant, then (subject to questions of supply and demand) the applicant lost the opportunity to make sales of 1,550m² of Sir Walter.  The profit which the applicant derived from direct sales to a customer was $3.80m² for the period to October 2001, and $5.00m² thereafter.  As these three sales occurred in the period prior to October 2001, any loss which the applicant sustained by the misleading and deceptive conduct in relation to Mr Robinson, Dr Vaughan and Mr Boswood would not exceed $5,890.00.  If it be assumed that the sales would have been made by one of the applicant’s licensees, then the applicant’s loss would not exceed $0.25m² or $387.50.

90                  The particulars to par 11 of the further Amended Statement of Claim assert that the applicant is aware of about 75 occasions when the first respondent misconducted itself in the manner alleged, but, except as noted above, these people were not called to give evidence, or their absence explained.

91                  The applicant contends that the loss which it has suffered is far greater than $5,890.00, as the instances of misleading and deceptive conduct which have been established are mere examples of many other similar occurrences.  The applicant contends that the ascertainment of the precise number of instances of infringing/misleading conduct is now impossible because of the inadequacy of Premier Turf’s records, the inadequacy of its discovery and because the relevant officers of Premier Turf choose not to divulge that information.  Whilst “it will be a difficult task for the Court to decide how many Sir Walter sales the applicant has lost by reason of the infringing conduct” (applicant’s opening outline), the Court must do the best it can.

92                  In particular, the applicant complains of the failure to discover quotes given by Premier Turf for the supply of turf to its customers, or invoices given by Premier Turf  to its customers in relation to the sale of turf.

Discovery

93                  On 9 July 2002 Allsop J ordered that discovery be given of the following documents:

–          documents relating to the acquisition, sale or laying of soft leaf buffalo turf by the respondents.

94                  On 20 August 2002 the respondents filed a list of documents available on discovery.  The list consisted of five invoice books for work performed between:

–          15 September 2000 and 9 February 2001;

–          27 October 2000 and 22 May 2002;

–          25 January 2001 and 23 May 2000 (sic);

–          July 2001 and June 2002; and

–          September 2001 and 15 July 2002.

95                  The matter came before Allsop J on 21 August 2002, when the sufficiency of the discovery was the subject of discussion.  Allsop J was advised that the respondents had receipts for all purchases of grass for both Shademaster and Sir Walter which would be made available.  Invoice books “are available dating from 2000 to about July 2002”, although some invoice books have been stolen.  Allsop J directed that a proper affidavit of discovery be filed.

96                  On 23 August 2002 a further list of documents available for discovery was prepared.  Seven invoice books were discovered for work between:

–          20 July 2000 and 19 March 2001;

–          15 September 2000 and 9 February 2001;

–          27 October 2000 and 22 May 2002;

–          25 January 2001 and 23 May 2000 (sic);

–          14 March 2001 and 17 July 2001;

–          July 2001 and June 2002; and

–          September 2001 and 15 July 2002.

In addition, some invoices from nominated turf suppliers for turf acquired by the respondents were discovered.

97                  Schedule 2 to the list consisted of documents which were once in the respondent’s possession, but which the respondents do not now have.  Schedule 2 comprised:

“1        invoice books for dates between 2000 and 2002.  The dates and invoice numbers are unknown to the respondents; and

2          invoices from turf suppliers for turf acquired by the respondents between 1999 and 2002 from Award Turf, Courtney Turf, Miller Turf Supplies, Windsor Turf, President Turf, AA Clarke and ABC Turf.”

98                  According to schedules prepared by the applicant (the accuracy of which has not been challenged by the respondent in any relevant respect), 321 invoices have been made available on discovery for the period January 2000 to August 2002 (“the Period”).  Bank records show the deposit of 3167 cheques into Premier Turf’s bank account in that period.  On the assumption (which Mr Garay did not accept) that each invoice is met by no more than one cheque, only about 10 per cent of the invoices have been made available.  Ms Garay accepted that figure in her affidavit of 30 January 2003 (par 8) and gave it as her belief that the remaining invoice books had been stolen by Owen Gardner, a former employee.  The basis for that belief was a statement made to her by her husband in early 2000 to that effect.

99                  Very often a customer was not issued with an invoice.  An invoice only issued if the customer asked for one.  The invoice books were kept in the trucks.  In the first half of 2002 there were three trucks delivering turf (on Mr Garay’s evidence).  The invoice books simply accumulated in the trucks.  The invoices which were tendered in evidence some times referred to Shademaster as the turf supplied, but more often they simply referred to soft leaf buffalo, or buffalo, rather than to any particular variety.  Apart from the invoices given to Dr Vaughan and Mr Boswood, none of the invoices produced on discovery refer to Sir Walter.

100               Owen Gardner was dismissed in November 2001.  When Mr Gardner left, Mr Garay says that he suspected that he had taken the missing documents, but Mr Gardner denied this.  The police were not informed.  Mr Gardner did not have access to Premier Turf’s records after his dismissal.  It is apparent that many invoices in relation to the period after Mr Gardner’s dismissal have not been produced.  For example, according to the applicant’s schedule, no invoices were produced for April 2002.

101               According to Mr Garay, Premier Turf was the victim of break-ins in 2000 and 2001 when invoice books went missing.  Money was stolen in 2002, but not record books.  It was not put to Mr Redman that he was responsible for invoice books going missing, and Mr Garay conceded he had no grounds for accusing Shane Worrall of stealing invoice books.

102               In the applicant’s submission, the Court should infer that Mr Garay deliberately withheld the invoice books from production contrary to the Court’s order.  It should be presumed that those invoices would have contained evidence unfavourable to the respondents: Jones v Dunkel (1959) 101 CLR 298.  The Court should infer that the unproduced invoices would evidence many instances of infringement/misrepresentation.  Mr Garay’s explanation for the failure to produce the “missing books” is said to be incredible.

103               In Allen v Tobias (1957-1958) 98 CLR 367 at 375, the High Court endorsed the following statement of principle on the part of Sir Arthur Channell, delivering the opinion of the Privy Council in The Ophelia:

“If any one by a deliberate act destroys a document which, according to what its contents may have been, would have told strongly either for him or against him, the strongest possible presumption arises that if it had been produced it would have told against him; and even if the document is destroyed by his own act, but under circumstances in which the intention to destroy evidence may fairly be considered rebutted, still he has to suffer.  He is in the position that he is without the corroboration which might have been expected in his case.”

104               Premier Turf improved the quality of its recording systems from July 2002.  Prior to that date records were not properly kept either in relation to grass purchased from turf suppliers, or in relation to grass which Premier Turf laid for its customers.  Invoices were only issued if the customer required an invoice, and no care was taken to preserve such invoice books as did exist.  They were simply allowed to accumulate in the trucks.  It would be unsurprising if some were missing.

105               Premier Turf’s affidavit of discovery admits that there were once invoice books for dates between 2000 and 2002 which are no longer in its possession.  It is unclear how many invoice books are missing.  Mr Garay accepted that “there are a few books missing”, but he claims not to know how many.  He claims to have noted that a couple of the books were missing when Owen Gardner was dismissed, but “it wasn’t until we were forced to show them that we realised that all of them were gone”.  That last statement cannot be right, because seven invoice books were in fact produced.

106               Melinda Garay was primarily responsible for maintaining Premier Turf’s records, and there has been no attack on her integrity.  Ms Garay had a couple of invoice books in her bottom drawer.  As to the other invoice books produced on discovery – “Peter would have gotten them from down at our yard”.  In Ms Garay’s understanding there was a compartment behind the seats in the trucks and invoice books were normally put behind there.  Mr Garay controlled the invoice books kept in the trucks.

107               It is unclear why Mr Gardner would have any interest in removing invoice books on his departure in November 2001, unless, perhaps, he perceived that they contained material which might be used to embarrass Mr Garay.  It is unclear whether the trucks were broken into in 2000 and 2001 (as distinct from the premises in “the yard”).  It is still less clear why a thief would have any interest in the invoice books.  Mr Garay does not suggest that he has any knowledge of anyone subsequently attempting to use the invoice books to the detriment of Mr Garay or of Premier Turf.

108               Mr Garay’s explanation that the missing invoice books were stolen by Mr Gardner and/or by an anonymous thief(s) as a result of one or more break-ins in 2000 and 2001 is convenient but unconvincing and uncorroborated.  It is particularly unconvincing in relation to the period from and after January 2002.  According to the applicant’s schedule, only nine invoices were produced on discovery for the period January-May 2002 (5 months).  A further nine invoices were produced for June 2002.  It is not unreasonable to assume that in the period January to May 2002 at least three trucks were each doing two jobs a day, five days a week.  If an invoice was generated for each job then about 600 invoices could be expected to have been generated in the five month period.  It seems unlikely that only 1.5 per cent of these jobs generated an invoice.  This assessment derives some support from the invoices issued in July 2002.  Exhibit 2 contains about 100 invoices which are either dated in July 2002, or which are undated, but included within a group of invoices which bear that date.

109               I am prepared to accept that there were many jobs undertaken in the Period for which no invoices were issued.  I would also have been prepared to accept that the system by which the invoice books were kept in the trucks was such that it is not unlikely that (an) invoice book(s) might be mislaid, particularly if not in current use.  However, Mr Garay does not seek to explain the missing invoice books on that basis.  His explanation is that the books were stolen.  I do not believe that any of the invoice books were stolen, and Mr Garay’s attempt to explain the non-production of invoices on this spurious ground suggests that he has or may have something to hide.  He told a false story in this respect because the truth might be harmful to him or at least that was his perception: Steinberg v Commissioner of Taxation (1975-1976) 134 CLR 640, 694.

110               I am satisfied that Mr Garay has deliberately failed to produce some invoice books in relation to the Period. The respondents submit that this is not a case of wilful failure to produce, rather “for whatever reason” the invoice books are “just not in [the respondent’s] possession”.  An obvious problem with this submission is that the respondents advanced a reason for their inability to produce the books, but it is a reason which I do not accept.  Whilst it is true that some invoice books have been produced in relation to the Period, that does not alter the fact that an explanation has been advanced for non-production of others of the books, which explanation I find to be unconvincing.

111               I am not able to make any finding on the evidence as to the number of invoice books which have not been produced.

The volume of turf passed off as Sir Walter

112               The applicant provided calculations conducted on three different bases of the volume of turf passed off as Sir Walter as reflected in a document styled Applicant’s Amended Statement of Particulars of Damage and in a document styled Applicant’s Outline of Submissions.  These documents are with the papers, and except to the extent necessary to explain my conclusions, I do not endeavour to summarise them.  I use the term “passed off” in these reasons as a shorthand expression to describe sales in contravention of the applicant’s PBR, or in contravention of s 52 of the TPA.

Dyed Grass calculation

113               The first basis is described in these documents as the Dyed Grass calculation.  Dyed Shademaster was provided to Dr Vaughan in the winter time in lieu of the promised Sir Walter.  It is in the winter months that the colour of non-Sir Walter varieties of grass differs from the colour of Sir Walter.  It is not uncommon in the industry for grass to be dyed to improve its appearance particularly in winter.  Non-Sir Walter varieties which have been dyed can have the general appearance of Sir Walter.  The applicant contends that the supply of dyed Shademaster provides an insight into the minimum frequency of the sales of infringing product.

114               Premier Turf purchased 9,295m² of dyed turf in the six winter months of 2000, 2001 and 2002.  The applicant contends that it should be assumed that all of this turf was acquired to be passed off as Sir Walter, and that a similar amount of non-Sir Walter was passed off in the non-frigid months without the need for dyeing.

115               On these assumptions 1,549 m² of grass was passed off as Sir Walter in each month, or 49,473 m² for the Period.

116               I am not satisfied that the assumptions on which this calculation has been constructed accord with the facts.  There is no evidentiary foundation for a conclusion that all dyed grass purchased in the winter months was acquired for passing off as Sir Walter.  Premier Turf is not the only merchant which sells dyed grass in winter. Others do, and the applicant has done so, and in circumstances which have no connection with Sir Walter.  Nor is there any basis in fact for the assumption that in other months equivalent quantities of non-dyed grass was passed off as Sir Walter.

Percentage of total sales calculation

117               Assume that throughout the Period Premier Turf had three teams working each day, five days per week, attending to two jobs each day.  On these assumptions (which are not unreasonable) 60 jobs were attended to per fortnight.  Another possible calculation throws up an estimate of 46 jobs per fortnight.

118               Shane Worrall’s evidence is that once a fortnight he passed off non-Sir Walter turf as Sir Walter.  It should be assumed that the other teams would have passed off grass as Sir Walter with the same frequency.  Hence 1/20 (if there are 60 jobs per fortnight) or alternatively 1/15 (if there are 46 jobs per fortnight) of the jobs involved passing off.

119               430,845m² of grass of all types was supplied to Premier Turf in the Period, and an equivalent quantity should be assumed to have been sold by it.  If it is assumed that each job is of the same average size then it can be concluded that a total of 28,723m² (430,845m² ÷ 15) was supplied by reason of passing off or 21,524m² (430,845m² ÷ 20) if the 1/20 ratio is adopted.

120               This calculation is dependant on my accepting the evidence of Shane Worrall as to the frequency with which non-Sir Walter grass was substituted for Sir Walter.  I do not accept that evidence for reasons earlier given, hence I do not accept these estimates of the volume of infringing grass sold which flow from this calculation.

All missing invoices infringe

121               The estimate of 46 jobs per fortnight translates into 3205 jobs for the Period.  On the basis that 430,845m² of turf is spread over 3,205 jobs, the average job requires 134m² of turf.  This is likely to be an underestimate.  Available invoices suggest that the average is more like 200m² - 300m²).

122               Only 321 invoices have been produced, leaving an estimated 2,884 invoices missing (3205-321).  If it be assumed that each of these invoices relates to 134m² of grass passed off as Sir Walter, then 386,456m² of grass was passed off as Sir Walter in the Period.  If it be assumed that each invoice related to 200m² of grass then the figure becomes 576,000m².

123               In my view, this calculation bears little, if any, relationship to reality.  Not every job involved the laying of grass, and not all jobs involving the laying of grass related to soft leaf buffalo.  For the whole of the Period it is known that the first respondent purchased at least a total of 320,099m² of buffalo grass, although this may be an understatement.  It does, however, suggest that estimates that 386,456m² or 576,000m² of turf was passed off as Sir Walter in the Period bear no relationship to reality.

124               I am unable to make any estimate as to the volume of grass passed off by Premier Turf in the Period as Sir Walter on the basis of any of the suggested methods of calculation or estimation advanced by the applicant.

Overview

125               Mr Garay estimated that he speaks to about 200 people per week as part of his doorknocking exercise, and that about 10 per cent of those people might mention Sir Walter.  His evidence is that he endeavours to persuade people who ask for Sir Walter to change to Shademaster, and nine times out of ten he can turn the customer around.  Melinda Garay gave some evidence about phone enquiries on the weekends.  She had about three enquiries for Sir Walter over the last two years (par 7).

126               I accept Mr Garay’s evidence that he endeavours to talk potential customers who raise the possibility of acquiring Sir Walter into purchasing Shademaster, or some other variety of grass and that he has a fair measure of success in talking potential customers around.  Nevertheless, as the evidence in this case demonstrates, there are some customers who persist in wanting Sir Walter, and notwithstanding Mr Garay’s evidence, I am satisfied that if they do persist, Mr Garay will offer to supply them with Sir Walter.

127               It is probable that at least on some occasions Mr Garay would attempt to supply customers whose orders for Sir Walter he accepted with the genuine product.  The only invoices of sales of Sir Walter to Premier Turf by licensees which have been tendered in evidence are the following:

Date                            Quantity                      Licensee

29.1.2001                    160 m²                         Millers Turf Supplies

11.8.2001                    150 m²                         President Turf Supplies

22.8.2001                    300 m²                         President Turf Supplies

                                                610 m²

But there was some hearsay evidence from Mr Redman that 3,325m² of Sir Walter was supplied by licensed growers to Premier Turf in the six months prior to 29 September 2001.

128               If Mr Garay accepted an order to supply Sir Walter, but was unable to obtain Sir Walter, I am satisfied that he would attempt to supply a substitute grass, and conceal from his customer the fact that he was doing so.  The problem is to work out how often that occurred, given the paucity of the applicant’s evidence, and the deficiencies in Premier Turf’s record keeping systems and the disappearance of its invoice books without satisfactory explanation.

129               The applicants call in aid the following observations of Handley JA in Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46, at 59:

“The defendants, having improved common property without lawful authority, and attempted to effect a fraud on the minority, are wrongdoers, and their failure to keep and produce proper accounts of their actual expenditure on the common property has made it difficult to assess the compensation due to the plaintiff: compare Armory v Delamirie (1722) 1 Stra 505; 93 ER 664.  In my judgment the Court should assess the compensation in a robust manner, relying on the presumption against wrongdoers, the onus of proof, and resolving doubtful questions against the party ‘whose actions have made an accurate determination so problematic’: see LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1990) 24 NSWLR 499 at 508.”

See also Chen v Karandonis [2002] NSWCA 412 at [59] et seq.

130               In Armory v Delamirie, when the plaintiff was unable to prove the value of a jewel wrongly detained by the defendant, it was held that the Court would “presume the strongest against him, and make the value of the best jewels the measure of [the] damages”.

131               Nonetheless there must be some basis in the evidence for making an assessment of the loss.  A judge is not entitled simply to make a guess.  That is particularly so where the problem is not one of quantifying the loss from proven instances of passing off, but in working out how many other instances of passing off are likely to have occurred.  I accept that it is likely that there were others, but the applicant has not called specific evidence to this effect, and I have no materials which enable me to make an informed estimate, even giving full effect to the principles enunciated in Houghton (supra).  Even if the missing invoice books had been produced, they may not have provided any real guidance on this question, given that invoices are often not issued, and even when issued, often do not describe the variety of soft leaf buffalo which is the subject of the order.

132               On the evidence, I am unable to determine the quantity of grass sold by the respondent during the period in the pretence that it was Sir Walter over and above the proven instances to which I have already referred.

Supply and demand

133               Even if the quantity of grass passed off by Premier Turf in the Period could be established, it does not necessarily follow that the applicant has suffered loss.  The applicant only suffers loss if sales which the applicant otherwise could and would have made were diverted to Premier Turf such that they were lost to the applicant.

134               Mr Redman’s evidence is that throughout the Period, demand for Sir Walter exceeded the quantity of Sir Walter which the applicant and its licensees had available for supply.  If the applicant had been able to supply Sir Walter to Premier Turf’s customers, then to that extent it would have been unable to supply others whom it in fact supplied.

135               The following cross-examination of Mr Redman took place on this issue:

“…

It is the case that you refused to sell him grass, you refused to deal with him? --- No, I stopped dealing with him over another matter and then I didn’t have enough Sir Walter turf to supply any other extra customers because it has been in short supply for the last five years and I would rather keep my turf for my individual customers instead of wholesale.

So are you saying that you are not able to keep up with the supply for Sir Walter and has that been the case every year? --- Yes.

…

You were saying that demand exceeds supply.  How many sales or how many square metres of grass or sales of Sir Walter would you have to knock back? --- For example, the Christmas before last, at the end of December 2001 my office staff would probably knock back 1000 metres a day in the peak  period before Christmas.

Are you able to give an estimate of how much over a year the 2000/2001 year would have been knocked back, the sales you would have had to have knocked back for Sir Walter? --- Probably 25,000.

What about the 2001/2002 year? --- Yes, I stopped wholesaling to other interstate Sir Walter growers because my stocks were running short to supply my own local market.  One farm in Queensland which they had pre-ordered, we stopped supplying him with about 10,000 metres shorter there and I was supplying the South Coast by about 15,000 metres and we ceased sending to Adelaide which were currently taking about 2000 metres a week.  Probably another 10,000 metres there.

So over the 2001/2002 year, I’m not asking for a fixed figure.  Are you able to give a rough estimate in terms of square metres of sales that you would have knocked back for Sir Walter, either by wholesale or retail? --- Yeah, five acres, 200,000 metres.

Now the 2002 year to present have you had to knock back any sales of Sir Walter? --- Are you talking financial years, are you?

Well, you talk in calendar years, do you? --- I don’t say that was – yeah.

Right, well, this year, 2003, have you had to knock back any sales? --- Not this month, no, or last month, sorry.

Do you know whether your licensees are in the same position, demand exceed supply? --- It has been, demand has been exceeding supply, yes.

That would have to be the case, if you can’t supply them, then they would have a problem, would you agree? --- Yes.”

136               One can criticise this cross-examination in terms of its technique, but in my view, it does establish that in the Period, demand for Sir Walter exceeded available supply, hence the applicant has not suffered any loss in consequence of Premier Turf passing off other grass as Sir Walter.

Conclusion

137               No basis for relief against Melinda Garay has been established.  Until the institution of these proceedings she had no knowledge of the matters of which the applicant complains.

138               I order that the first and second respondents be restrained by themselves, their servants or agents from:

(a)        representing to anyone that the respondents are authorised to sell the Sir Walter variety of grass; and

(b)        representing to anyone that any other grass turf sold by the respondents is the Sir Walter variety of grass.

139               The claim for an award of damages in consequence of the respondents above is dismissed.

140               I will hear argument on the question of costs.

I certify that the preceding one hundred and forty (140) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.

Associate:

Dated:              25 March 2003

Counsel for the Applicant:	Mr R Marshall
Solicitor for the Applicant:	McDonald Johnson Lawyers
Counsel for the Respondent:	Mr Wormington
Solicitor for the Respondent:	Brett Wiggins & Associates
Date of Hearing:	3, 4, 6 February 2003
Date of Judgment:	25 March 2003