Australian Solar Mesh Sales P/L v Tomlin Industries P/L

[1992] FCA 880

JUDGMENT No ,..6?.gg .... I .2&

IN THE FEDERAL COURT OF AUSTRALIA )

I No. NG 224 of 1990

1

GENERAL DIVISION 1

BETWEEN :  AUS-IAN SOLAR MESH

SALES PTY LIMITED

Applicant

AND :	TOKLIN INDUSTRIES PTY LIMITED and OTHERS
Firet Respondent
COLIN TERRY -AY and EIELEN MARGARET EARICWAY
Second

C O W :	WILCOX J
PLACE :	SYDNEY
DATE :	12 NOVBKBER 1992

EXTJWPORE REASONS FOR JUDGMENT

WILCOX J: This is a hearing on the quantum of damages following a decision which I gave on 24 July 1991 in a proceeding in which the applicant, Australian Solar Mesh Sales Pty Limited, sued Tomlin Industries Pty Limited, the first respondent, and Colin Terry Barkway and Helen Margaret Barkway, the second respondents.

infringement of the applicant's trademarks. Prior to the hearing of the matter, the case was expanded, as against the

The Application was filed in May 1990. It
originally dealt only with complaints of infringement of a
petty patent held in the name of the applicant and

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2.

second respondents, so as to allege a breach of s.42 of the Fair Tradina Act 1989 (NSW). The trade mark allegations were not pressed. In the judgment delivered on 24 July 1991 I held that the applicant's petty patent was invalid and I ordered that it be revoked. I dismissed the proceedings as against the first respondent. I rejected the complaint made by the applicant against the second respondents for infringement of the petty patent. In relation to the complaints of infringement of s.42 of the Fair Tradina Act, I found against the applicant on three of the four items which were

...p articularised. However, I held that the applicant had made

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, out a".,cpse in one respect:	62	"the second respondents had

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r- ., cont,inued- to use the name Australian Solar Mesh in connection

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' i .	. , with, their business of flyscreen enclosure manufacturers
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,displaying signs in that name when they were not entitled so
The finding that this claim was made out arises out of the fact that the franchise arrangement between the
December 1987. The circumstances in which that event occurred applicant and the second respondents came to an end in
were not a matter calling for decision at the earlier hearing or now. Each party blames the other for the breakdown of their relationship. I express no opinion about that matter. It is sufficient to say, for the purpose of this litigation, that the franchise agreement ceased to operate in December 1987.
It was established at the earlier hearing that, notwithstanding this cessation, the second respondents continued to trade under the name "Australian Solar Mesh" until May 1989. During that period, they used the product manufactured on behalf of the applicant. They were unable to obtain product direct from the applicant because Kenneth Ivory, the principal of the applicant, had determined that they should not be supplied following the termination of the franchise agreement. However, they did succeed in buying product from other franchisees of the applicant. In the result the material they supplied to their customers was the product properly called "Solar Mesh". The misleading conduct therefore did not extend to the passing off of some other product as Solar Mesh. They supplied what they claimed to supply. The misleading conduct was that, during this period of 17 months, they held themselves out as being associated with Australian Solar Mesh when in fact they were no longer so associated.
When I dealt with the matter on 24 July 1991, I this item of misleading conduct was made out. Mr and Mrs indicated that I came with reluctance to the conclusion that
Barkway no longer used the name "Solar Meshu and, indeed, had formally undertaken not to do so. I also said that it was difficult to see that their use of the name during the 17 months period resulted in damage to the applicant. I said that, to the extent that the Barkways made sales, this was to the applicant's advantage; the applicant received profits it would not have received if they had immediately switched to some other manufacturer or product or gone out of business altogether.
However, the applicant pressed the view that damage had been sustained. Unfortunately, I had earlier directed that issues of liability should be determined separately from issues of damage. That direction was made at a time when it seemed that the case was really a patent case; but the direction, of course, also applied to the claim of misleading conduct. It was therefore necessary, as the applicant claimed to be able to establish damage from the limited misleading conduct which I found, to provide it with an opportunity of establishing that damage.
The regret with which I took that course subsequently increased. A mass of affidavits was filed, the vast majority of which extended far beyond the limited basis on which I found for the applicant. I have rejected a considerable quantity of material. There is much other
material that I did not reject because there was no objection to it, but which seems to me to have little or no relevance to
the issues I have to determine. Unfortunately, there is a deal of ill-feeling between the parties. This has meant that no stone has been left unturned, on either side, even if there was nothing to be gained by turning it over.
In the end, the case comes down to a small number of issues. I have had the benefit of careful submissions by counsel on each side and have reached a clear view about the issues requiring determination. I propose to deal with them separately and directly. I do not propose to attempt a summary of the whole of the evidence. There would be no point in that.
The first and major item of damage claimed by the applicant is that, by reason of Mr and Mrs Barkway continuing to trade as "Solar Mesh" in Coffs Harbour between December 1987 and May 1989, it lost the opportunity of selling to some other person a Solar Mesh franchise for the area. The loss claimed under this heading is $50,000. The applicant says that interest should be added to this figure.
Evidence was adduced from a person who was a prospective franchisee, Stephen Gibson Chapman. Mr Chapman lives at Sawtell, which is near Coffs Harbour. He is a partner in a firm known as "Sawtell Aluminium and Glass". Before Mr and Mrs Barkway became the Australian Solar Mesh
perhaps more than one conversation, with Mr Chapman about the franchisees in Coffs Harbour, Mr Ivory had a conversation,
possibility of his becoming the Australian Solar Mesh franchisee in Coffs Harbour. In his affidavit Mr Chapman put this conversation as being "approximately 1987". But I think it was earlier than that. It was apparently before Mr and Mrs Barkway became the franchisee in December 1986. The date does not matter. Mr Chapman was attracted to the notion, but his wife was more cautious. As Mr Chapman described the situation, he and his wife procrastinated about the decision; it involved the outlay of a substantial sum of money and he was already busy in his own business. Accordingly, the opportunity passed him by. Mr and Mrs Barkway became the franchisees.
At some later time, after the termination of the franchise arrangement between the applicant and Mr and Mrs Barkway, apparently in 1988, Mr Ivory again approached Mr Chapman and asked him whether he was still interested in purchasing the franchise. Mr Chapman gave evidence in his affidavit that he was extremely interested in the purchase, particularly following the success of the Boambie Bay Resort Project. That project was a development involving some 80 units at Boambie Bay near Sawtell. Solar Mesh had been provided for the job. Apparently Mr Chapman carried out the
fitting work. In his affidavit, Mr Chapman went on to say:

"However, I was aware Terry Barkway was still

often saw his Solar Mesh mobile workshop. I	selling Solar Mesh through his franchise as I
was also aware that there had been some sort of breakdown in re1 a tions between Ken Ivory and
Terry Barkway. "

Mr Chapman said that the asking price, that is by Mr Ivory, was approximately $50,000. He believed that there would be a profit margin at this price, because he already had most of the gear he would need and because of the success of the product, particularly at the Boambie Bay Resort. He apparently discussed the matter with his wife, I gather on more than on occasion. He also discussed the matter with his solicitors.

In the event he did not proceed with the proposal. He said in his affidavit that he:

" . . . had t o d e c l i n e Ken Ivory's o f f e r and t o l d

him I would h a v e n o t h i n g t o d o w i t h the p r o d u c t

and the f r a n c h i s e u n t i l s u c h time a s the

d i s p u t e was r e s o l v e d . I was only i n t e r e s t e d i f

I c o u l d be the sole t r a d e r o f S o l a r M e s h i n

C o f f s Harbour and i f there was an A u s t r a l i a -

w ide n e t w o r k o f s u p p o r t for the p r o d u c t . I

e v e n t u a l l y d e c l i n e d K e n Ivory's o f f e r i n or

a b o u t December 1988."

Mr Chapman was cross-examined. It is fair to say that his oral evidence did not put his intentions as highly as they were stated in the affidavit. There is no doubt at all that Mr Chapman was interested in the franchise. However, it seems that his wife was much more cautious. I will not set out the whole of Mr Chapman's evidence. It is sufficient to

refer to this question and answer: 

"You t a l k e d i t over w i t h your w i f e ; no d e c i s i o n

was made and you were g o i n g t o h a v e a further

d i s c u s s i o n w i t h Mr Ivory?- - -That ' s correct."

It appears he never did have that discussion. Mr Chapman was asked whether he ever saw a franchise agreement. He said, "Noo . He was asked whether he would have been prepared to sign an agreement that required him to pay for one roll of mesh every month of the year, at the end of each month. He said that he would not. He was also asked what his reaction would be if he had been confronted with an agreement which required him to pay $250 a month to the franchisor for services additional to those provided by his capital investment. He said:

"I 'd have to s i t down and take those

assessments a l i t t l e bit more q u i c k l y than j u s t

answering you d i r e c t l y now. I do no t know.

These a r e th ings t h a t a r e now b e i n g presented

t o m e t h a t have never been presented t o me

before. " -

I interpolate that I think the word "quickly" is erroneous; probably "carefully" was what was said. Mr Chapman was then asked whether he would have purchased a franchise agreement that gave the franchisor the discretion to increase the value of the roll of mesh whenever it chose. He said that he would not.

The relevance of these questions is that the matters which were put to Mr Chapman were features of the standard franchise agreement then used by the applicant. It is true that Mr Ivory said that he would have been prepared to negotiate amendments to the standard agreement; but it is far from clear that he would have gone as far as would have been required to meet the objections of Mr Chapman.

I should say that, later on in the evidence, Mr

chapman summarised his position in this way:

"But even if Mr Barkway had not been around, you had made no decision to purchase this business. Your interest was limited to an interest?---My personal decision was that I was going to buy the business my personal decision.

My partner was the one that was holding the

things back in a prudent sense."

The reference to "partner" is, I think, a reference to Mr Chapman's wife. She was apparently also his business partner.

It is clear from this evidence that Mr Chapman was enthusiastic but that his wife was much less so. Mr Chapman did say that he would not have bought the franchise without seeing the franchise agreement, that he would not have bought it without looking at figures and that he would have consulted with other people who were already franchisees but in different districts.

In relation to looking at figures - if Mr Chapman had looked at the results achieved by Mr and Mrs Barkway, either during the period they were officially franchisees or in the subsequent period when they were acting as if they were franchisees, although they were not, he would have found that in most months they made losses. Their cumulative losses in this business came to over $100,000. If Mr Chapman had made inquiries of other franchisees, something might have depended on the persons whom he chose for information. I rejected evidence as to the experience of other franchisees because I felt that it was not relevant. They were not, in fact, approached by Mr Chapman. But I did admit a document which was tendered, and to which there was no objection, which summarises the various franchisees around Australia and indicates the date on which they purchased their last roll of Solar Mesh. In the period 1987, 1988 and 1989, many franchisees departed from their arrangements. The number of franchisees dropped from 15 in 1988 to 4 in 1989.

Having regard to the whole of the evidence given by Mr Chapman, I am far from convinced that he would have ended up buying this franchise. I think he is fundamentally a prudent person, as both counsel in their submissions suggested. His wife apparently is even more prudent. Any prudent person who carefully examined the situation, as it was in Coffs Harbour at that time, would not have paid $50,000 for a franchise.

It was suggested by counsel on behalf of the applicant that I should not confine this aspect of the case to Mr Chapman; that I should look at a hypothetical, reasonable person who might have come along; I should take the view that, absent the Barkways, somebody else would have purchased this franchise. I have considerable difficulty in accepting that argument. The first matter which I note is that, although Mr Ivory took the view that the franchise was at an end in December 1987 and although he knew that the Barkways were continuing to operate in the Coffs Harbour district under the name "Solar Mesh" until May 1989, he took no action to preclude them from doing so. He did complain to Edmond H. O'Brien Pty Limited, the publisher of the Yellow Pages, about their advertisement in the Yellow Pages and he did seek to persuade the local newspaper to publish some advertisements, which were highly defamatory of Mr and Mrs Barkway, and which the newspaper refused to publish. But he took no direct action. As I have indicated, it was not until mid 1990 that this proceeding was commenced. Even at that time Mr Ivory made no complaint about the- misleading conduct of Mr and Mrs Barkway. It seems to me that, if Mr Ivory had really believed that he could sell this franchise for a figure of $50,000 or thereabouts and that the only impediment to his achieving that result was the continuing activity of Mr and Mrs Barkway, he would have taken action to restrain them from continuing to trade under the name "Solar Mesh". As it seems to me, they would have had no defence to that claim.

The other aspect of the matter which is worthy of note is that, although Mr and Mrs Barkway ceased to use the name "Solar Mesh" in May 1989, Mr Ivory did not subsequently procure a franchisee for the Coffs Harbour area. It is said that the explanation of this is that Mr and Mrs Barkway were on the spot and that, at least for some time after May 1989, they were offering a product just as good as Solar Mesh. Certainly, in the market place it could be regarded as a reasonable substitute for "Solar Mesh". It is markedly cheaper. This may be true but it is not a matter about which the applicant can complain. Provided that they did not use the name "Solar Mesh", Mr and Mrs Barkway were entitled to compete; and compete vigorously by offering a similar product at a lower price.

Counsel says that the Barkways' ability to be there and to compete, using this new product, may have been improved by the fact that they were on the stage, as it were, during the 17 month period. That may be so. But Mr and Mrs Barkway have lived in Coffs Harbour for a considerable period. If they had ceased to trade in Solar Mesh in December 1987, I think they would have cast around for another product of a similar nature. Whether it would have been the product which they started to offer in May 1989, and which was a product put out by Tomlin Industries under the designation F308 which they sold as "Magic Mesh", I do not know; but I do not think that they would have left Coffs Harbour if they had decided not to

continue under the name "Solar Mesh" after the termination of	the franchise agreement.
There is also a claim for loss of sales in the 17 month period. This was, in the applicant's submission, tied in with the proposition that some other franchisee would have been installed during that period if Mr and Mrs Barkway had not been using the name "Solar Mesh". As I have rejected that proposition, I think this aspect does not arise; but I have to say that, even if it was right to assume that some other franchisee would have come along, I am not convinced that the franchisee would have sold more rolls of mesh than Mr and Mrs Barkway sold. Their evidence is that they sold 13 rolls and this seems to be accepted by the applicant. Counsel for the applicant made a calculation which assumes an alternative franchisee being installed by July 1988 and selling at the rate of 29 rolls over 11 months, which is the rate the applicants say the Barkways achieved in their period of 13 months as franchisees. There is an issue about that matter but I do not think it looms very large. Having done that calculation, it is said that 24.5 rolls would have been sold. However, this involves the assumption that an alternative franchisee would have been invested by July 1988. I think that can only be described as fanciful. Then it is said that, if Mr Chapman had purchased, he would have commenced about September and he would have sold 17.85 rolls. Again the calculation is based on the assumed 29 rolls. I think that this figure is somewhat high. It has to be remembered that 13
rolls were in fact sold. They were procured from other franchisees and I see no reason to doubt that the applicant
derived a profit on those sales. This is not a case where there was a supply problem. The evidence given at the earlier hearing showed that Tomlin, who was the supplier at that stage, produced mesh as required by Mr Ivory.
The next item of claim is for the expenses attendant on trips to Coffs Harbour by Mr Ivory during the 17 month period. Mr Ivory resided at Brisbane. He has set out details of motor vehicle running costs, motel costs etc. I do not question the quantum of the claims, but I am not satisfied that he incurred costs because of the misleading conduct of Mr and Mrs Barkway. Four matters were referred to by Mr Ivory in his affidavit as occasioning visits. The first was his attempt to persuade the "Advocate" newspaper to publish his defamatory advertisements. I do not think that the costs of this attempt should be laid at the door of the respondents. The second is a trip to Coffs Harbour, perhaps more than one trip, during which he spoke to Edward H. O'Brien in respect to the Yellow Pages advertisement. I do not know why it was necessary to make a special trip for this purpose; I am sure that Edward H. O'Brien would have been contactable in Brisbane. Indeed, Mr Ivory did contact that company by telephone and letter. It may be that it was convenient for him to call in to see somebody in the Coffs Harbour office of the company whilst he was there. But it would be quite disproportionate to allow him the cost of a special trip.
The next item relates to a Mrs Faye Hodge. Mrs Hodge had some work done by Mr Barkway. The date when this occurred is uncertain. In her affidavit she put it as being October 1988. But the only document involving Mrs Hodge which is in evidence, a receipt for $12 for an adjustment made "two or three weeks" after the work was done, is dated 10 January
1990. Accordingly, it is extremely doubtful that the work was
done by Mr Barkway whilst he was trading as "Solar Mesh". In any event, it appears that Mr Ivory ran into Mrs Hodge when he went to the office of his then solicitors, Messrs Fishburn, Watson and 0'Brien; apparently Mrs Hodge worked for the solicitors. She noticed his Solar Mesh logo and commented on it in a disparaging way. This perhaps suggests that she associated Solar Mesh with the door in respect of which she was not happy. But it is clear that Mr Ivory did not make a special trip to Coffs Harbour to see Mrs Hodge.
The other item of journey to Coffs Harbour concerned a substantial project in which Mr Ivory was engaged because of the supply of Solar Mes-h direct from Brisbane to the job. This was a project undertaken by the Department of Housing and Construction, the work being done by A V Jennings Constructions. Mr Ivory was in contact with Mr Peter Carrington, mechanical engineer, and Mr Jamieson, architect. I have no doubt that Mr Ivory did make trips to Coffs Harbour in respect of this project. But those trips had nothing to do with the misleading conduct of the respondents. They were a
result of the fact that he was selling Solar Mesh directly to somebody in Coffs Harbour.
The next item claimed is under the heading "General Damages". Two of the four items, in my opinion, really repeat what has been earlier said, although suggesting a continuing operation of the damage. As I have rejected the basis of the claims, the continuing claims also fail. The other items are, firstly, loss of reputation - and this comes down to the incident involving Mrs Hodge - and the fact that Mr and Mrs Barkway continued to maintain an advertisement in the 1988 and 1989 editions of the Yellow Pages of the Coffs Harbour phone book under the name "Australian Solar Mesh". The 1989 edition was apparently replaced in April or May 1990.
In relation to the incident involving Mrs Hodge, my mind has fluctuated during the course of the case. On the one hand, it does appear that Mrs Hodge associated Mr Barkway with the name "Solar Mesh". She initiated the discussion with Mr Ivory when he came into the office where she worked and complained to him. Th-e complaint did not relate to the quality of the material which had been supplied, but rather to the way the door had been fitted. Mr Ivory went to her house and inspected it. He found that what had been fitted was not Solar Mesh, or indeed the substitute material being marketed by Mr Barkway after he ceased to trade as "Solar Meshu, but a fly screen. It seems fairly plain that her experience with Mr Barkway caused a degree of hostility by Mrs Hodge towards the
name "Solar Mesh". If I was able to feel satisfied that the contact which Mr Barkway had with Mrs Hodge took place during
the period when he was not entitled to use the name "Solar Mesh", I think that damages would be recoverable in respect of this item. But I cannot be so satisfied. Mrs Hodge came to Cof fs Harbour in April 1987. She was therefore a resident in the district for some eight months during the time when Mr and Mrs Barkway were quite legitimately using the name "Solar Mesh". Mrs Hodge was not cross-examined, so one cannot know. But it is by no means certain that her association of the name "Solar Mesh" with Mr Barkway occurred after he ceased to be entitled to use the name. The only real information I have is the receipt, the only document which relates to the Hodge incident. From that document it seems that the work was done after Mr Barkway ceased to use the name "Solar Mesh". Consequently, the fact that she associated him with Solar Mesh suggests that she knew him from some earlier point of time, possibly from the time when he was entitled to use the name "Solar Mesh", possibly when he was not entitled; one simply does not know one way or the other. In the circumstances it is not possible to find on the balance of probabilities that there was damage to the reputation of Solar Mesh as a result of activities when Mr and Mrs Barkway were not entitled to use that name.
The other aspect of the matter concerns the advertising in the Yellow Pages. This is a difficult matter because, in the nature of things, it is impossible for the
evidence contains a photocopy of entries in the Yellow Pages. applicant to know what damage was occasioned by it. The
It shows that there is a two line entry under the name "Australian Solar Mesh" which gives the phone number of Mr and Mrs Barkway. There is a much larger entry under the name "Solar Meshu which gives a 008 number. This was the Brisbane office of the applicant. It can be argued that the latter advertisement is much more prominent, that any body who looked at those pages would be likely to telephone Brisbane; and thus the benefit of any available work would go to the applicant and not to Mr and Mrs Barkway. On the other hand, the advertisement for Mr and Mrs Barkway comes first alphabetically. It gives a local address and phone number. I think it is probable that a person who lived in the Coffs Harbour district, confronted with that choice, would ring the local number. He or she would expect to get quicker service, and probably would prefer to deal with the local person. So it is possible that business was lost to the applicant because of the continued use of the name "Australian Solar Mesh" in the Yellow Pages for 1988 and 1989.

-

However, it is extremely difficult to quantify the loss. Indeed, it is impossible to be sure that there was any loss at all. Mr Barkway said that, as far as he could see, very little business came to them through the Yellow Pages. I accept the sincerity of what he said but a person sometimes does not know the source of work. No attempt has been made, on behalf of the applicant, to suggest a major loss from this

cause. I find it impossible to nominate a figure and ascribe	any convincing reason for its selection. My feeling is that
there may have been a small loss. Accordingly I propose to allow the sum of $1,000 in respect of this item. I will add interest to that figure of $330. Accordingly there will be judgment for the applicant against the second respondents in the sum of $1,330.
There is one other matter to be dealt with. On 11 May 1990, on the application of the applicant, Foster J made an order restraining the respondents from taking any action which would infringe inter alia the letters patent then registered in the name of the applicant. The practical effect of this order was to restrain the first respondent, Tomlin Industries, from continuing to supply to the second respondents the product called F308. Tomlin Industries had been supplying F308 to the second respondents since May 1989, that is for about 12 months.
The interlocutory injunction was dissolved on 31 August 1990, but whilst it operated it was impossible for the second respondents to obtain F308. The evidence is that, apart from some material which they had on hand when the injunction was granted, they were without stock during that period.
During the course of this hearing, counsel for the second respondents sought leave to put before the Court an
the damages sustained by them as a result of the interlocutory application for an order for the payment by the applicants of
injunction. When that injunction was granted, the applicant gave the usual undertaking as to damages. The matter was raised late; but there was general agreement that it was desirable that all outstanding issues between the parties be disposed of during this hearing. There was a sufficient opportunity for counsel for the applicant to consider the evidence on this issue and he made no objection to my dealing with it.
There is some dispute about how the damages are to be calculated. An affidavit sworn by Mrs Barkway, who was the bookkeeper for the second respondents, sets out the total sales in each of the months from December 1986 to June 1990, together with the result of that month in terms of profit or loss. The affidavit then does a calculation showing the average weekly sales of F308 in the period of about 12 months from the commencement of supply directly by Tomlin Industries until the date of the injunction. This figure is $966.92. From that amount is deducted one half, being estimated expenses. That seems to be a reasonable allowance; one cannot be precise. The calculation then deducts one half of the average weekly sales made whilst the injunction was in place. If one deducts these two figures - which are respectively, $483.46 and $119.34; a total of $602.80 - the weekly loss is $364.12. For a period of 16 weeks, this yields a total loss of $5825.92; on top of which interest of $1917.76 is claimed,
making a grand total of $7743.68.
Counsel for the applicant put an alternative way of looking at the matter; by going to the cash book kept by Mrs Barkway and looking at the average profit and loss in various months. This has a logical attraction but, unfortunately, is not a reliable way of judging the effect on the business. The fact is that, for substantial periods, the business was operating at a loss and funds were injected from various sources; such as loans from friends, social security payments and the like. Mrs Barkway showed these all as income of the business; but of course they were not. During the relevant period of 16 weeks over $2,500 was injected by way of loans from friends and social security payments. It would be quite misleading to have regard to the exercise done on behalf of the applicant.
It seems to me that the only fair way is to follow the calculation which has been tendered on behalf of Mr and Mrs Barkway. I concede that it is not precise, but I think it
gives a fair reflection of the total situation. The
calculation of interest was made up to 10 November 1992. There will be some delay before it is paid. I think the appropriate course is for me to order a sum to be paid within seven days and to round out the amount to $7,500. Accordingly, I propose to order that, within seven days from today, the applicant pay to the second respondents the sum of $7,500 by way of damages for the loss sustained by them
on 11 May 1990. pursuant to the interlocutory application granted by the court [Counsel addressed on costs]
I have heard what counsel has to say on the matter of costs. As a general approach, having regard to the outcome of the present hearing, there ought to be no order as to costs. But this should be subject to some exceptions. In ~ u l y last year I reserved the costs of the proceedings to that date in relation to Mt and Mrs Barkway. It is obviously fair that they have the costs of their successful defence of the patent case. Secondly, when I dealt with a motion for security for costs, in which Mr and Mrs Barkway were successful, I said that those costs ought to be respondents' costs in the principal proceedings; again I think it is only just that they should have those costs. They have succeeded, in all except one very minor aspect, in resisting the claim. Thirdly, counsel for the second respondents points out that an enormous amount of material was supplied on behalf of the applicant to the solicitors for the second respondents, which material was not relied upon at the hearing. A claim was originally made for hundreds of millions of dollars; despite the fact that I made clear, in July last year, that I thought any damages would be very small indeed. The applicant displayed a complete lack of moderation and common sense in the amount of evidentiary material it inflicted upon the second respondents' solicitors. This material all had to be
evaluated. I agree that it would be unfair for the second respondents not to have the costs of their solicitors doing
that. In addition, I think the second respondents should have the costs of considering and replying to material which was tendered in evidence by the applicant but rejected by me.
Accordingly, although I take the view that in respect of the hearing generally there ought to be no order for costs, I propose to order that the applicant pay to the second respondents:

(a)	all costs incurred by them in respect of the proceeding up to and including 24 July 1991;
(b)	their costs in respect of the application for security for costs heard on 8 July 1992; and
(c)	all costs incurred by them in considering and/or responding to affidavits and other evidentiary material served upon them in

connection with the hearing as to damages and which was not in fact admitted into evidence against them.

I certify that this and the preceding twenty-two (22)
pages are a true copy of the Reasons for Judgment

of the Honourable Justice Wilcox.

Associate: dh(& Dated: 12 ~bvember 1992

Counsel for the Applicant:	P Lohrisch
Solicitors for the Applicant:	John M  OrConnor &

Company

Counsel for the Respondent:	M Gilmour
Solicitors for the Respondent:	Murray Backhouse Turner
Dates of hearing:	9, 10 and 12 November