Ductline Pty Ltd v Arcric Investments Pty Ltd
[1995] FCA 718
•4 SEPTEMBER 1995
CATCHWORDS
TRADE PRACTICES - Misleading and deceptive conduct - assessment of damages - damages for loss of business profits - damage to goodwill.
Trade Practices Act 1974 ss52, 82
DUCTLINE PTY LTD v ARCRIC INVESTMENTS PTY LTD
No VG 355 of 1990
FINN J
MELBOURNE
4 SEPTEMBER 1995
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) No. VG 355 of 1990 )
GENERAL DIVISION )
BETWEEN: DUCTLINE PTY LTD
Applicant
AND: ARCRIC INVESTMENTS PTY LTD
Respondent
COURT: FINN J
PLACE: MELBOURNE
DATE: 4 SEPTEMBER 1995
MINUTES OF ORDER
THE COURT ORDERS THAT:
The respondent pay to the applicant damages in the amount of $17,000.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) No. VG 355 of 1990
)
GENERAL DIVISION )
BETWEEN: DUCTLINE PTY LTD
Applicant
AND: ARCRIC INVESTMENTS PTY LTD
Respondent
COURT: FINN J
PLACE: MELBOURNE
DATE: 4 SEPTEMBER 1995
REASONS FOR JUDGMENT
This is not a satisfactory proceeding. On 30 November 1990 an Application and Statement of Claim were filed against the respondent alleging breaches of copyright, contraventions of the Trade Practices Act, 1974, Part V, and passing off. Orders were sought for injunctive relief, damages or an account of profits, and for the delivery up and destruction of various articles. The claims made will be detailed below to the extent that they are of relevance to the present proceedings. Briefly stated here, they related to the manner in which the respondent had manufactured, named and advertised an evaporative cooler pump, a misuse of the design and name of
the applicant's like pump providing the core of the allegations made.
The application came on for hearing on 11 November 1991. While seeking a determination of the various allegations, the parties had agreed that, if an assessment of damages was to be undertaken, this should take place at a later hearing. In the event, the judgment of the trial judge was limited to the determination of one matter. That was whether there had been a contravention of the Trade Practices Act, 1974, s52. The Orders of the Court of 20 December 1991, insofar as they are presently relevant, were as follows.
"THE COURT
1.declares that the respondent has, in the course of trade and commerce, engaged in conduct that is likely to mislead or deceive
2.reserves the applicant liberty to apply in respect of the assessment of damages, and generally, in case any question should arise as to the respondent carrying out its stated intention of desisting from the use of the name "Evap-pump""
The matter before me is that of the assessment of damages.
The respondent appealed to the Full Court of this Court against the trial Judge's judgment and orders. That appeal was dismissed. The Full Court's reasons for judgment dated 31 July 1992 concluded with the following observations.
"One matter which causes concern is the form of order made by the learned trial Judge. In most cases involving s52, a declaration that a person has engaged in conduct in contravention of the section will be unnecessary. In a case such as this, in which the assessment of damages was postponed, a declaration might be of some assistance to a judge dealing with the assessment of damages, who may not be the judge who tried the issue of whether there was conduct in contravention of s52. If a declaration is to be made, it should be made in terms specific to the conduct which is held to be in contravention of the section. In the present case, it seems unnecessary to allow the appeal just for the purpose of substituting a clearer form of declaration for the declaration which the learned trial Judge made. It may be that this Court would have a different view as to the precise description of the conduct that was likely to mislead or deceive from that held by the learned trial Judge. Given that the finding is one as to the likelihood of misleading or deception, and not one as to actual misleading or deception, it would not seem that Ductline would have a significant case for claiming damages in any event. It is therefore unlikely that the form of the declaration made will cause great difficulty."
These remarks have proved to be somewhat prophetic.
To appreciate the difficulties that have arisen in the present proceedings it is necessary first to provide some detail of the applicant's claim and of the trial Judge's reasons and findings.
The s52 Claim and the Reasons and Findings
Both the applicant and the respondent are manufacturers of evaporative cooler pumps which are used in evaporative air coolers. The pump itself consists of a housing containing a small electrical motor. This sits at the top of a three sided vertical support containing a shaft which is connected to an impeller set inside a moulded base from which a short pipe protrudes. The purpose of the device is to pump water as part of the evaporative cooling process.
The applicant began its operations in 1986. Initially both the motor and the other parts of the pumps it sold were supplied to it by two other companies. The motor continues to be provided by a German company. In 1987 the supplier of the remaining components of the pump (a company referred to as Bonaire Pyrax) discontinued the supply agreement and in fact from 1990 it has marketed its own evaporative cooler pumps. The applicant then produced its own design for a pump (the "Mark II Evapump") and manufacture of that pump commenced in August 1988.
The applicant's pumps have, from the inception of its business, been marketed under the name "Evapump". The trial Judge found that this name was pronounced with the emphasis on "ap", as in "evaporative". He further found that the applicant was a leader in its field and that its pump had become well and favourably known throughout Australia under its Evapump name.
The respondent for its part commenced business in 1982 as a manufacturer of domestic electrical exhaust fans. The bulk of its manufactured product by 1990 was electrical motors for use (inter alia) in evaporative cooler pumps. In 1990 the respondent determined to produce its own evaporative cooler pump using its own electric motor. From September 1990 until February 1991, it marketed a pump under the name "Evap-pump". It desisted from using that name in its advertising pamphlets (or fliers) from that month but it continued to use the name on a relatively small label on the pump itself and on its packaging until November of the same year when that practice was terminated.
The managing director of the respondent, Mr Richmond, conceded at the first hearing that, save for the modification that needed to be made to accommodate the use of the respondent's own motor, the model used in the design of the respondent's product was the applicant's. Mr Richmond further admitted that, as manufactured, the bottom half of the respondent's product was, with minor modifications, a direct copy of the applicant's pump.
It was accepted both at the initial hearing and before me that the potential purchasers of the products of both of the parties were (1) the manufacturers of evaporative coolers who bought in pumps for the purpose; (2) electrical and refrigeration wholesalers who supplied replacement pumps to firms and persons engaged in the service business of repairing and maintaining coolers; and (3) those firms and persons so engaged in the service business. It was not seriously disputed that there were at least 4 competitors (including the applicant and respondent) who sold to wholesalers.
For the purposes of the Trade Practices Act 1974, s52 claim, it was not alleged that the first two of the above three classes of purchaser (i.e. manufacturers or wholesalers) were likely to be misled or deceived by the conduct of the respondent. The applicant's case was limited to the third class of purchaser (i.e. those buying from wholesalers). It was submitted to the trial judge that "the similarity of get up and name of the two products was likely to mislead servicemen": Reasons for Judgment, 15.
Before indicating such findings as appear to have been made in relation to this, one additional matter relating to the marketing of the respondent's product needs to be outlined.
In September 1990 the promotion of the respondent's product commenced. It involved the use of an advertising flier which was headed (inter alia) with the word "evap-pump". Though 5000 of these were produced, evidence was given that less than 1000 were distributed.
In February 1991 a replacement flier was printed which aimed to remove all use of the term "evap-pump". As one reference in fact survived on one part of the back of the leaflet a third version was produced and used as from August 1992.
To the extent that the use of fliers could constitute offending conduct for s52 purposes it would seem that the trial judge considered that only the first of the three mentioned bore that character.
I have already noted that in the orders of the trial judge it was declared that the respondent had engaged in conduct which was likely to mislead and deceive. But as was noted in the judgment of the Full Court there has been no formal specification of the conduct said to give rise to the contravention. Counsel both for the applicant and for the respondent have drawn attention to the varying possibilities that may be said to emerge from the trial judge's reasons.
Both parties accept that the use made of the term "evap-pump" constituted contravening conduct. They diverge, though, on the significance to be attributed to the various means employed in the use of that term. The respondent has submitted that I should infer from the judgment that the relevant conduct was the use of the term in the first flier employed to market the respondent's pump. This flier was only distributed between September 1990 and February 1991. Though the term "evap-pump" appeared in small lettering on the pump itself, and on the packaging used in its sale, it was submitted that even if this should be accorded some significance for s52 purposes, this usage was relatively inconspicuous and was far less likely to have deceived persons in the relevant service businesses.
The applicant in contrast has asked me to infer that no differentiation should properly be made between the ways in which the term was used. Consumers were likely to be misled both by the fliers and by the packaging and naming. In addition it was submitted, consistent with the submission made at the first hearing, that the copying of the design of the applicant's pump (the bottom half of the respondent's pump being based on the applicant's) was contravening conduct if not alone, then in combination with the use of the term "evap-pump". I should note in relation to this latter submission that the respondent submitted at the first hearing that the mere copying of the applicant's unregistered design could not of itself contravene s52.
In the upshot, as I will indicate, the different inferences I have been asked to draw from the trial judge's reasons do not seem to produce greatly different consequences in the particular circumstance of this case and on the evidence before me.
Given the general consideration the trial judge gave to the likely effect of the use of the term "evap-pump", it is not open to me properly to infer from his reasons that he was drawing any distinction between the different ways in which the respondent made use of the term. I would note specifically the inference the trial judge drew in support of his conclusion from the evidence of the managing director of the respondent:
"not content with copying much of the design of the applicant's pump, he chose a name which was phonetically indistinguishable from it in the well founded belief that it was likely to produce the very result which the section proscribes, the misleading of consumers."
While I thus conclude that the contravening conduct involved the use in whatever way of the term "evap-pump", the only significance which, in my view, it is open for me to attribute to the copying of the applicant's design arises from the conjunction of the design so adopted by the respondent and the use of the offending term "evap-pump": see Parkdale Custom Built Furniture Pty Ltd v Paxa Pty Ltd (1982) 149 CLR 191 at 225-226. That conjunction might, as the applicant has submitted, contribute to the likelihood of consumers being misled by a product bearing a name which itself was likely to mislead and deceive. As the respondent's product and packaging ceased to bear the term "evap-pump" from November 1991 the effect of the copying in any event was spent thereafter.
Against this background it is now necessary to turn to the specific issues raised in the present hearing.
The Claim for Damages
The s82(1) damages claim was pursued under the shadows (1) of the declaration of the trial judge that the respondent's conduct was likely (as opposed to actually did) mislead and deceive; and (2) of the consequential observation of the Full Court (in dictum) that "it would not seem that Ductline would have a significant case for claiming damages in any event". Not altogether surprisingly the respondent has emphasised the incontrovertible propositions that "loss or damage is the gist of the statutory cause of action for which s82(1) provides": see Wardley Australia Limited v The State of Western Australia (1992) 175 CLR 514, at 525; and that absent proof of actual loss or damage, "the cause of action is incomplete": see JWL (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237 at 250. Against this background it has been submitted that neither the findings of the trial judge, nor the evidence adduced before me should lead to my being satisfied on the balance of probabilities that there was any actual loss suffered.
It is the case that there is not any direct evidence of any person actually being misled or deceived in a way which has resulted in actual loss to the applicant. This said, it is not only open to, but is appropriate for, me to infer on the balance of probabilities, that of the persons likely to be deceived by the contravening conduct some were so deceived with resultant loss in sales to the applicant: cf Draper v Trist [1939] 3 A11 ER 513. The evidence, to which I will later refer, both of some decrease in the applicant's sales in the period of the contravention and of the number of pumps sold by the respondent to wholesalers in that period lends support to that inference. Counsel for the respondent, while adhering to his no-loss submission conceded in argument that this was an available inference in the circumstances.
The applicant is, in my view, entitled at least to general damages for loss of business profits. As was indicated by Beaumont J in Prince Manufacturing Incorporated v Abac CorporationAustralia Pty Ltd (1984) 4 FCR 288 at 294 such damages in a case of the present variety are:
"damages which are not capable of precise proof and calculation but which could be expected to result in the normal course of things from a particular type of conduct. [They] may be awarded even though a claimant does not produce evidence of particular losses from particular transactions."
The quantification of those damages in the present circumstances is, however, another thing. It involves an uncomfortable degree of speculation and guess work: cf Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167 at 183.
The applicant gave two limbs to its claim for damages. The first was for the loss of profits on sales resulting from the contravening conduct for the 1991 financial year. The second was for loss of goodwill. The damages sought for the latter were put initially as the costs of re-establishing market share. However in final submissions to me they were recast as a reducing claim for loss of profits on sales over 3 years and an element for loss of business reputation resulting from the initial sale by the respondent of pumps which produced consumer complaint. Given that the damages now sought are, essentially, for loss of business profits it is unnecessary for me to deal separately with the two limbs of the applicant's claim.
The Available Evidence
This is slender. Looking first to the respondent, its conduct and its sales, evidence of the following has been adduced.
From September 1990 (when the contravening conduct commenced) to February 1991 (when the flier using the "evap-pump" heading was discontinued), the respondent sold 3992 pumps to wholesalers. By the end of November 1991 (shortly after the first hearing) that number had increased to 5196. There is no evidence of actual sales thereafter although it is apparent that the respondent has now established itself as an effective presence in the market for evaporative cooler pumps.
The respondent's pump was from the outset, and remains, significantly lower in price than the applicant's pump. The latter were found by the trial judge to have cost $45 if sold in bulk while single purchases cost approximately $70 per unit. In contrast the bulk purchase price of the respondent's pump was around $25 while the single unit price was $39.60. The managing director of the respondent gave evidence before me that its strategy was to produce the cheapest product on the market; that it was able to do this because it had its own and cheaper motor; and that its pump then and now was cheaper by $10-$20 than its competitors generally, and was about half the price of the applicant's pump.
There is a significant market in replacement of pumps. The trial judge found that when the respondent first began to sell its pump, several hundred were returned by dissatisfied customers. It is not suggested, however, that the initial cause of dissatisfaction has not been eliminated nor that the respondent's product has not since been one of appropriate quality.
As noted earlier in these reasons, of the 5000 fliers produced in September 1990 which used the term "evap-pump" prominently, only 1000 approximately were distributed, the remaining 4000 being destroyed by the respondent after both complaint by the applicant and legal advice to it. The managing director of the respondent has sworn that the 1000 fliers actually used were distributed as follows:
(a)approximately 200 went to the manufacturers of evaporative coolers;
(b)approximately 300 were distributed directly to refrigeration wholesalers, about 30 wholesalers receiving about 10 fliers each; and
(c)approximately 500 were sent to 5 interstate agents, each receiving 100 copies.
It is a matter of speculation as to number of fliers falling within categories (b) and (c) which came to the attention of purchasers from wholesalers. Such purchasers as has been noted, were the only group found to be likely to be deceived by the respondent's use of the "evap-pump" name.
From November 1991 the respondent ceased to use the term "evap-pump" on the pump or its packaging, it having previously discontinued the use of the term as the name under which its product was marketed in its promotional fliers in February of that year.
The sales made by the respondent to wholesalers constituted only about one half of its sales, the remainder going directly to manufacturers of evaporative coolers.
The applicant's case was premised upon the inference from the trial judge's reasons for judgment that the applicant had suffered actual loss. The evidence it adduced before me was that of experts who provided a variety of means for calculating that loss. For reasons which I will indicate that evidence has been of no particular assistance in the assessment of damages in this case.
The matters drawn from the trial judge's reasons which were relied upon to indicate that actual loss could properly be inferred was -
(a)in relation to the reputation associated with the applicant's product - the finding that dissatisfied customers had returned several hundred of the respondent's pumps; and
(b)in relation to loss of business profits - an alleged drop in the applicant's sales in the period up to the first hearing.
Insofar as loss of profits before the first hearing is concerned, expert evidence was adduced which calculated on a variety of bases the loss said to have been suffered by the applicant as a result of the contravention. It was the view of the expert relied upon, Mr Crofts, that the most accurate method for determining loss up to the hearing would be to ascertain the profit the applicant would have made had it produced and sold the same number of pumps that the respondent sold to the wholesalers. It was this basis for assessing loss that ultimately stood at the forefront of this part of the applicant's case. The profit per unit was calculated as $9.47. As noted above the respondent provided evidence at the hearing before me that it had up to November 1991 sold 5196 pumps to wholesalers. As I will indicate below the critical assumption being made here is that every purchase from a wholesaler was infected by the respondent's contravening conduct.
Insofar as general loss of goodwill was concerned expert evidence was given as to the projected cost of re-establishing market share which had been lost since 1990. The share lost by August 1995 was assumed to be about 62 per cent. I would note in passing that this decrease seems to have been a continuing one in that in April 1994 it was said to have been over 50 per cent. The projected cost of the communications program to re-establish market share was estimated at $217,960. Because the applicant's turnover for sales of its pump in 1990-1991 to all customers (not merely to wholesalers) was about $900,000, neither the expert witness who prepared the estimate nor counsel for the applicant was prepared to accept that such expenditure would be a reasonable one for the applicant to incur. No alternative figure for advertising was proposed in evidence as being appropriate in this case.
The following break down of the applicant's sales record was reproduced in the trial judge's reasons.
" Qty Evapumps sold % increase
15/9/86 to 30/6/87 8,454 NA
1/7/87 to 30/6/88 15,081 78.38%
1/7/88 to 30/6/89 15,948 5.75%
1/7/89 to 30/6/90 20,934 23.8 %
1/7/90 to 30/6/91 20,978 0.2 %
1/7/91 to 6/11/91 7,358 NA "
I was invited to infer, largely from the last figure given for pumps sold (7,358), that a "massive" drop in sales has occurred and that this should be attributed to the respondent's conduct. While it clearly is the case that the applicant has by the time of this hearing lost a large amount of its market share, the figure mentioned above cannot support the particular inference I have been asked to draw. The material relied upon by the applicant's expert witness was that:
"The 'typical' season for the sale of evaporative pump units is between August to February of each year. Sales of units do occur between March and July each year but these sales cannot be predicted with any certainty and aberrations may exist between years."
The season, in other words, was by no means complete when the above figure was taken. Given this, and given the evidence provided by the respondent of its sales to wholesalers (i.e. 1204) for a roughly comparable period (April-November), while I can infer that some drop in sales had probably occurred - and the admittedly qualified projections of the experts seem consistent with this - I am unable on the state of the evidence before me to attribute this as of course to the respondent.
I have not been provided with any evidence of the sales figures of the applicant for the period since the first hearing. Such indirect evidence as I have of loss of market share comes from the assumptions the applicant appears to have
asked its own experts to make. These suggest a very substantial loss (about 60%). I have not been directed to any evidence which indicates in any way how, if at all, pumps are displayed by, and how sales are affected by, wholesalers.
Findings
In this largely unhelpful state of evidence, I am called upon to engage in what in any event is an exercise involving a degree of speculation and guesswork. I have previously indicated that I am prepared to find, on the bases of the trial judge's order and of the evidence of sales of both parties prior to the first hearing, that the applicant has suffered some loss or damage by the respondent's conduct. The extent of that loss is altogether another matter.
My general conclusions on the evidence available to me are that -
(1)in order to facilitate its entry into a market in which the applicant was an established and reputable manufacturer, the respondent sought to appropriate to itself such advantage as may be derived from the use of a name, alone or in combination with a copied design, which was an imitation of that of the applicant - in other words the applicant's pump name and get up were being used as a "springboard" to market entry;
(2)the advantage, as found by the trial judge, related only to that class of purchasers who bought from wholesalers and then there was only a likelihood of members of that class being misled or deceived;
(3)the respondent, despite early problems with its product, has established itself as a significant force in the market, vending a quality product at a price which the applicant is in no way able to match;
(4)the likely effect of the respondent's contravening conduct was -
(a)during the initial period in which it sold a product producing customer dissatisfaction - to inflict some level of damage (though not particularly significant as I will indicate below) on the applicant's business reputation; and
(b)in the period up to the first hearing and for a relatively short period thereafter - to secure some level of sales for itself in consequence of that conduct;
(5)the effect of the contravening conduct on the applicant's reputation and sales was short-lived, such loss of market share as it is now experiencing, to the extent that this is referable at all to the respondent, being the product of the respondent's providing a product at a price and quality which satisfies market requirements;
(6)the conclusion in (5) is reinforced by the level of sales the respondent has, from the outset, been able to make to manufacturers who, as the trial judge found, were not likely to be deceived by the respondent's conduct.
I have already indicated that I am prepared to conclude that the appropriate inference to be drawn from the trial judge's reasons for judgment is that the respondent's contravening conduct was the use of the term "evap-pump" either alone (as in its marketing flier) or in conjunction with the product and its packaging. Of the two usages, it probably is the case that the fliers have the greater capacity or potential to mislead and in this I agree with the submissions of the respondent. Given the relatively small number of such fliers which seem to have found their way into the hands of wholesalers (the figure most favourable to the applicant, though itself improbable, would be 800), given that up to the first hearing the respondent effected over 5000 sales to wholesalers, and given that not all purchasers whose attention was drawn in any event to a flier would necessarily be deceived by it, it would be inappropriate to conclude that the fliers were a presence, let alone a deceiving presence in all or, for that matter, in the greater number of sales effected by wholesalers. The second usage (i.e. that involving the get up) was found to have the capacity to mislead. I am prepared in consequence to conclude that it had operative effect in some sales. But for the reasons to which I next turn I do not consider that its effect was likely to have been a pervasive one.
Damages
It is important in cases of this variety, where loss of business profits and damage to goodwill are claimed, to ensure that double compensation is not awarded: see S M Waddams, The Law of Damages, 358. That recognised, this is an appropriate case in which damages should be awarded (i) in respect of loss of business profits resulting from the contravening conduct; and (ii) for such damage to the applicant's goodwill as resulted from the respondent's initial vending of a product of a quality which produced customer dissatisfaction: Flamingo Park Pty Ltd v Dolly Dolly Creation Pty Ltd (1986) 65 ALR 500, cf Star Micronics Pty Ltd v Five Star Computers Pty Ltd (1991) 22 IPR 473.
I would note again that as to the first of these the applicant in its final submissions converted its claim for post-first hearing loss of goodwill into a claim for loss of business profits for a relatively short period after which it was accepted that the effect of the contravening conduct was spent.
It is convenient to look first at the claimed loss of business profits up to the time of the first hearing. The applicant's expert evidence was based on the clearly untenable assumption - cf Draper v Trist [1939] 3 All ER 513 at 520-521 - that all pumps sold by the respondent to wholesalers (i.e. 5196) constituted, on their resale, lost sales to the applicant. In submission, however, the applicant retreated to the position that I should select a percentage of those resales which could realistically be said to have been produced by purchasers having been mislead or deceived.
Counsel for the respondent, in contrast, initially advanced the equally untenable proposition that no loss at all was occasioned by the respondent's conduct. In submissions, however, it was proposed that if loss in fact was suffered it was of no great significance and its infliction should be said to have ceased when the offensive fliers were discontinued in February 1991.
The loss of business profits up to the first hearing is, in my view, the most substantial of the possible losses suffered by the applicant in consequence of the respondent's conduct. Nonetheless, in common with the general view of the Full Court in the earlier appeal, I do not consider that there is even here a significant case for substantial damages. Of the 5000 or so pumps sold by the respondent to wholesalers, I do not consider that a significant proportion of the resales of these could properly be connected to the respondent's contravening product. It is, in my view probable (a) that some proportion of purchasers from the wholesalers were well aware that they were acquiring a product not manufactured by the applicant; (b) that some proportion were unaware at all of the respondent's contravening conduct; and (c) that quite some proportion were in any event indifferent to the identity of the manufacturer of the pump purchased given its price relative to other pumps on the market.
While it may be the case that some who purchased because of the low cost of the pump did so because they felt reassured as to its likely quality because they were deceived into attributing its manufacture to the applicant, I do not consider that this class of purchaser amongst those motivated by price considerations, is likely to have been a large one. It is in my view noteworthy that manufacturers of evaporative coolers, a class of purchaser found not likely to be deceived by the respondent's conduct, acquired roughly half of the pumps sold by the respondents in this period. There seems some support in this for the view that, because of relative price, the market was voting with its feet.
A figure of about 20 per cent of the respondent's sales up to the time of hearing would in my view be a very generous estimate of the sales lost by the applicant by reason of the respondent's contravening conduct.
The loss of business profits suffered in consequence of that conduct cannot be said to have ceased entirely as at the time of the first hearing. While use of a get up involving the term "evap-pump" stopped at that time, I cannot assume that the effect of such of the misleading fliers as remained in the hands of wholesalers was entirely spent. Some necessarily small sum needs to be awarded to accommodate this. I say necessarily small because it seems the case that, with the passage of time, the separate character of the respondent's product was in the process of being established and that its combination of appropriate quality (the initial problems having been corrected) and of price advantage provided the reasons for the preference given it by purchasers.
I accept the evidence that applicant's likely profit per unit sold during the pre-first hearing period was in the order of $9.47. I hold that the relevant sales lost because of the contravening conduct were about one fifth of the respondent's sales of 5196 for the period and that some sum should be awarded to account for losses for some relatively short period thereafter. I would add, though, that the likelihood of purchasers being deceived in that latter period should be taken to be a sharply decreasing likelihood. I would in the result award damages to the applicant for loss of business
profits for both before and after the first hearing in the total sum of $13,000.
The remaining head of loss claimed, that of damage to reputation because of the respondent's sales (in the initial period) of a pump producing customer dissatisfaction, can be dealt with shortly. I am prepared to hold that the dissatisfaction noted was likely to have been experienced by some at least of those purchasers who were deceived by the respondent's conduct and that this could, on the balance of probabilities, have resulted in their unwillingness in the future to acquire the applicant's products. Given my previous conclusion, the number of persons likely to fall within this class would be small. Furthermore I am prepared to hold that the initial level of dissatisfaction expressed may itself have had some more general, though temporary, effect on the applicant's reputation. The appropriate sum to be awarded in the circumstances to compensate for the loss of reputation is $4000.
In aggregate then I would order that the respondent pay to the applicant damages in the amount of $17,000.
I certify that this and the preceding 24 pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.
Associate
Dated: 4 September 1995
Counsel for the applicant : Mr C Harrison
Solicitors for the applicant : Woodhams O'Keefe and Co
Counsel for the respondent : Dr J Bleechmore
Solicitors for the respondent : Waters O'Brien
Date of hearing : 3 August 1995
Date of judgment : 4 September 1995
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