Granitgard Pty Ltd ACN 007 427 590 v Termicide Pest Control Pty Ltd ACN 093 837 337 (No 5)
[2010] FCA 313
FEDERAL COURT OF AUSTRALIA
Granitgard Pty Ltd ACN 007 427 590 v Termicide Pest Control Pty Ltd ACN 093 837 337 (No 5) [2010] FCA 313
Citation: Granitgard Pty Ltd ACN 007 427 590 v Termicide Pest Control Pty Ltd ACN 093 837 337 (No 5) [2010] FCA 313 Parties: GRANITGARD PTY LTD ACN 007 427 590 v TERMICIDE PEST CONTROL PTY LTD ACN 093 837 337 File number: QUD 312 of 2007 Judge: LOGAN J Date of judgment: 31 March 2010 Catchwords: TRADE PRACTICES - Misleading or deceptive conduct - Passing on of information supplied by someone else - Whether company adopts statements of another through display on website - Where company neither expressly adopts nor expressly disclaims those statements - Held an objective assessment should be made of whether the company adopts such statements - Held in absence of own language, company cannot have been taken to have adopted the statements - Trade Practices Act 1974 (Cth), ss 51A, 52 and 53 Legislation: Trade Practices Act 1974 (Cth) ss 51A, 52, 53 Cases cited: H 1976 Nominees Pty Ltd v Galli (1979) 40 FLR 242 cited
Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109 cited
Granitgard Pty Ltd ACN 007 427 590 v Termicide Pest Control Pty Ltd ACN 093 837 337 [2008] FCA 55 cited
Granitgard Pty Ltd ACN 007 427 590 v Termicide Pest Control Pty Ltd ACN 093 837 337 [2008] FCA 865 cited
Granitgard Pty Ltd ACN 007 427 590 v Termicide Pest Control Pty Ltd ACN 093 837 337 (No 3) [2009] FCA 82 cited
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 considered
Yorke v Lucas (1985) 158 CLR 661 considered
Gardam v George Willis & Co Ltd (1988) 82 ALR 415 considered
Charben Haulege Pty Ltd v Environmental & Earth Sciences Pty Ltd [2004] FCA 403 considered
Caltex Australia Petroleum Pty Ltd v Charben Haulege Pty Ltd [2005] FCAFC 271 cited
McGrath v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230 considered
James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 citedMiller RV, Miller’s Annotated Trade Practices Act (31st ed, Thomson Reuters, 2010)
Dates of hearing: 20 - 24 October 2008
27 – 31 October 2008
24 - 26 November 2008
4 December 2008
16 - 20 March 2009Date of last submissions: 7 - 8 May 2009 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 274 Counsel for the Applicant: Mr JW Peden Solicitor for the Applicant: O'Neill Marengo Counsel for the Respondent: Mr A Franklin SC with Mr PA Looney Solicitor for the Respondent: Bennett & Philp
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 312 of 2007
BETWEEN: GRANITGARD PTY LTD ACN 007 427 590
ApplicantAND: TERMICIDE PEST CONTROL PTY LTD ACN 093 837 337
Respondent
JUDGE:
LOGAN J
DATE OF ORDER:
31 MARCH 2010
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
1.The application is dismissed.
2.Questions as to costs are reserved to 14 April 2010 at 2.15pm.
3.The Registrar is to return the exhibits to the party which tendered the same after the expiry of the appeal period or, in the event of the institution of an appeal, is to retain the same pending the hearing and determination of the appeal and then to return them as provided for under the Rules of Court or as otherwise directed by the Court or a judge.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 312 of 2007
BETWEEN: GRANITGARD PTY LTD ACN 007 427 590
ApplicantAND: TERMICIDE PEST CONTROL PTY LTD ACN 093 837 337
Respondent
JUDGE:
LOGAN J
DATE:
31 MARCH 2010
PLACE:
BRISBANE
REASONS FOR JUDGMENT
Over the years, many Australians have become all too familiar with the threat that termites can present to wooden materials in the built environment. In seeking to address this threat much ingenuity has been devoted to their control near buildings and to the prevention of their entry. One method which has come to be adopted in recent years in an endeavour to prevent the subterranean entry of termites into buildings is via the installation at the time of construction of a barrier system.
The parties to this proceeding are rivals and, I have no doubt, bitter rivals in the market for the supply and installation of such barrier systems in South East Queensland. The applicant, Granitgard Pty Ltd (Granitgard), supplies a barrier system which incorporates a crushed stone product. The respondent, Termicide Pty Ltd (Termicide) supplies a barrier system which incorporates a crushed glass product. Termicide’s crushed glass product is known as “Termiglass”. Termicide’s principal area of operation is in South East Queensland. Granitgard supplies its product in this area and also elsewhere in Australia.
Granitgard alleges (para 8, 2nd further amended statement of claim) that, for the purposes of promoting Termiglass, Termicide has represented and continues to represent, in trade or commerce, via its website, or, in the case of representation (f) below, via a sticker placed on a property’s meter box by the installer of the Termiglass, that the installation of Termiglass:
(a)forms “an impenetrable barrier” to termites;
(b)provides a barrier that is “too hard to chew, too heavy to move and too small to crawl through”;
(c)will satisfy the requirements of Australian Standard 3660.1-2000 ‘Termite Management – New building work’ (the “Australian Standard”);
(d)provides a suitable physical barrier against subterranean termite entry;
(e)“termiglass and the termiglass termite barrier system have been tested by the CSIRO and appraised as satisfying the Australian Standard 3660.1 – 2000 ‘Termite management – New building work’” [sic]; and
(f)has a life expectancy of 50 years.
I have italicised the word “installation” deliberately because, in Granitgard’s pleading, it serves to introduce, govern and give context to the allegations it makes in respect of Termiglass.
It was said that these representations relate to future matters for the purposes of s 51A of the Trade Practices Act 1974 (Cth) (Trade Practices Act).
A further allegation which came to be made by Granitgard was that “the system and procedure used in the manufacture of Termicide [sic] is incapable of consistently producing large commercial quantities of termiglass of consistent quality and size to comply with the requirements of the Australian Standard, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) Appraisal or to be consistent with the crushed glass tested by Ecospan Consulting Services” (para 10C, 2nd further amended statement of claim). The reference to “Termicide” where first appearing in this paragraph of the pleading is self evidently inadvertent with the intended reference being to its product, “Termiglass”.
Granitgard alleged that, in making each of these representations, Termicide had, contrary to s 52 of the Trade Practices Act, engaged in conduct that is misleading and deceptive or is likely to mislead or deceive the public, in particular, potential consumers or users of Termiglass. Granitgard then furnished the following particulars:
(a)Termiglass did not provide an effective barrier to termites. [By way of particulars, reliance was placed on scientific experiments performed on Termiglass in 2004 by Dr D Ewart and Dr J Holt in accordance with CSIRO protocols which were said to disclose that Termiglass provided no effective barrier to termites. These experiments were alleged to have been carried out on the same samples relied upon by the CSIRO in issuing an appraisal in December 2003 (the CSIRO Appraisal)];
(b)Termiglass that is installed by Termicide contains or is likely to contain crushed glass that ranges in size from <1.18 to 25 mm. Some of the product installed was said to contain paper and particles of rubber.
(c)The system used in the manufacture of Termiglass is incapable of consistently producing large commercial quantities of Termiglass that satisfies the requirements of the Australian Standard, a CSIRO Appraisal (or, it was also alleged, is consistent with the samples tested by Ecospan Consulting Services of crushed glass particles of between 1.7 to 2.4 mm in size upon which testing the CSIRO Appraisal was said to have been reliant).
(d)Termiglass does not satisfy or does not consistently satisfy the performance criteria requirements of the Australian Standard in that:
(i)it does not deter concealed entry to buildings by termites;
(ii)it is not termite resistant.
(iii)it is not graded and shaped so that a sufficient proportion of the particles are of a size that cannot be transported by foraging termite species occurring in the region;
(iv)is not able to be placed in a manner so that the voids between particles do not permit the penetration of foraging termite species occurring in the region.
Ecospan Consulting Services is a corporate consultancy controlled by Dr J. French. Dr French now works principally in academia but formerly worked for many years as a scientist with the CSIRO. I detail the nature and extent of his qualifications and experience later in these reasons for judgement. He is undoubtedly an expert on termites and on methods of preventing their entry to the built environment. So, too, at least in a relative sense, are Dr Ewart (who studied under Dr French) and Dr Holt. So, too also, for that matter, is a Dr Ahmed, from whom I also heard evidence, who has undertaken collaborative work with Dr French on many occasions. Another witness from whom I heard, Mr Meadows also has sound expertise on these subjects, based on a combination of tertiary study and field experience.
The above allegations were also said to constitute the making, contrary to “s 53(1)” [sic] of the Trade Practices Act, of false representations that Termiglass was of a particular standard, quality, grade, composition, style or model.
Alternatively, so far as its case under s 52 was concerned, Granitgard alleged that scientific experiments carried out by Dr Ewart and Dr Holt raised sufficient doubt about the effectiveness of Termiglass as a termite barrier that, by making the above representations without reference to such doubts, those representations were misleading or deceptive or were likely to mislead or deceive the public and, in particular, potential consumers or users of Termiglass.
A further allegation made by Granitgard was that Ecospan Consulting Services had not carried out any trial of the Termiglass system. It was said that, at the time when this testing was carried out, neither Termiglass nor the Termiglass system existed and that Ecospan Consulting Services had only carried out tests on crushed glass.
Termicide closely contested the breaches of the Trade Practices Act alleged against it. As to the allegation that it had represented on its website that Termiglass formed an “impenetrable barrier to termites” Termicide denied that it continued to make such a representation. It also alleged that, when such a representation did appear on its website, it was and would have been understood to be a marketing claim which was substantially true.
Insofar as the alleged representations related to future matters, Termicide alleged that it had and continued to have reasonable grounds for the making of those representations. It instanced in this regard the CSIRO Appraisal, a “revalidation” of that appraisal which was issued by the CSIRO in September 2008 with effect from January 2008 and with extended validity until 31 August 2009. It further alleged that Termiglass had been installed in more than 27,000 premises without a single known penetration.
Termicide also advanced a case that Granitgard ought not, as a matter of discretion, be granted any injunctive relief because of delay on the part of Granitgard in bringing its application and further or alternatively because particular allegations which Granitgard made with respect to the qualities of Termiglass were calculated to mislead the Court. As to delay, Termicide pointed to the launch of its Termiglass product in 2004:
(a)the fact that the CSIRO Appraisal in respect of the meeting of the Australian Standard by Termiglass had issued in December 2003;
(b)an alleged awareness by Granitgard in September 2004 of what it came to allege to be deficiencies in Termiglass as a termite barrier; and
(c)the fact that Granitgard had not instituted the present proceedings until September 2007.
It is necessary to make the following further observations about the pleadings. The only formally pleaded allegation of material fact sounding in an alleged contravention made against Termicide relates to the capability of the plant (para 10C, 2nd further amended statement of claim). On the pleadings, that allegation, in turn, relates to the alleged misleading or deceptive qualities of the alleged representations made by Termicide or to the separately alleged breach of s 53 of the Trade Practices Act. In the particulars of why it is alleged that the representations are misleading or deceptive further deficiencies are alleged in respect of Termiglass which do not necessarily have any connection with plant capability. Thus, for example, the particulars additionally detail:
(a1)Termiglass that is installed by Termicide contains or is likely to contain crushed glass that ranges in size from <1.18 to 25 mm. Some of the product installed contains paper and particles of rubber.
(b1)Termiglass does not consistently satisfy the requirements of the CSIRO Appraisal that the crushed glass be between 1.2 mm and 3 mm in size nor does it consistently match the samples of crushed glass tested by Ecospan Consulting Services with a particle size of between 1.7 mm and 2.4 mm.
These two particulars (along with particulars (a) and (b) under para 11 of the 2nd further amended statement of claim) are then repeated (para 13, 2nd further amended statement of claim) as particulars furnished by Granitgard in respect of its s 53 case.
That the allegation of material fact made against it related to plant capability was thrown into stark relief by the submissions made on behalf of Termicide with respect to the evidence concerning the Vision Glass plant. Those submissions may though have a wider resonance. Two earlier cases decided in this Court with respect to practice and procedure with respect to pleadings exemplify why that may be so.
Paragraph 11 of the 2nd further amended statement of claim is akin to para 17 of the statement of claim considered by Northrop J in H 1976 Nominees Pty Ltd v Galli (1979) 40 FLR 242 at 246-247. Like that paragraph, para 11 of the 2nd further amended statement of claim contains conclusions which are drawn from facts not pleaded in the statement of claim. The function of particulars is not to fill in gaps in a defective statement of claim. It has also been stated that respondents need not and should not plead to statements of material facts contained in particulars: Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109 at 115. Here though, as para 7 of its 2nd further amended defence reveals, Termicide has pleaded in detail to those particulars as if they were allegations of material facts. There may well be an element of resigned pragmatism in the adoption of that course as the exposing of the deficiency evident in Granitgard’s pleading on an interlocutory application may not have led to a striking out of its substantive application, as opposed to a grant of leave to replead subject to terms as to costs thrown away. Given the course adopted by Termicide, the reception of evidence at trial beyond the subject of capability both in relation to the manufacture of Termiglass and otherwise and the present stage of the proceedings, I do not consider that it is in the interests of justice to confine Granitgard just to a capability case. Instead, I propose to treat the particulars given under para 11 as if they were material allegations of fact and to determine the case accordingly.
Not all of Granitgard’s allegations formed part of its case as originally formulated (qv Granitgard Pty Ltd ACN 007 427 590 v Termicide Pest Control Pty Ltd ACN 093 837 337 [2008] FCA 55). Rather, Granitgard sought to amend its case shortly prior to the originally allocated, June 2008 trial dates. In an application brought on while I was on leave it persuaded another judge, in the circumstances, to grant it leave further to amend its statement of claim and to vacate those trial dates (qv Granitgard Pty Ltd ACN 007 427 590 v Termicide Pest Control Pty Ltd ACN 093 837 337 [2008] FCA 865 A yet further amendment of Termicide’s case was later made after a grant of leave by me in October 2008).
Thereafter, it proved impossible for the trial to be completed within the fresh period allocated for trial, a period fixed by me in reliance upon the estimates provided by the parties. Later again, after what was then said to be the evidence for the parties had, eventually, closed I was persuaded, on Granitgard’s application, that it should be granted leave to reopen its case (qv Granitgard Pty Ltd ACN 007 427 590 v Termicide Pest Control Pty Ltd ACN 093 837 337 (No 3) [2009] FCA 82).
There is a public interest in the reasonably expeditious hearing and determination of any case. There is another, no less important, public interest in the equitable allocation of limited judicial resources. Litigation can, of course, be attended with unpredictable qualities. Whether it be these or the particular way in which a party chooses to frame or to conduct its case, especially including cross-examination, that are contributing factors, when originally offered, trial dates are not taken up or an estimate upon the basis of which reallocated trial dates are fixed proves insufficient, it is not uncommon for a resultant, consequential, changed or additional demand for judicial resources arising from a particular case, to impact upon the legitimate expectations of other litigants for the hearing and determination of their own cases. That impact can be the consumption of times otherwise available for their trial and for related judgement writing and a reassessment of relative priorities. The present case has occasioned such an impact and, in turn, its disposition has been affected by the legitimate interests of other litigants. None of that means that the outcome of this case can in any way be influenced by notions of fault on the part of the parties or their legal advisers or any one of either of them. It has though meant that it has not proved possible to deliver judgement before now.
That Termiglass is a crushed glass product is common ground, although whether it is consistently produced within specification and free from contaminants is a controversial issue in the case. What is not controversial is that, as installed, Termiglass forms part of a system intended to present a barrier against subterranean termite entry.
There is no doubt that, in December 2003, the CSIRO, via one of its Divisions then known as “CSIRO Appraisals”, issued what is known as a “Technical Assessment” in respect of the “Termiglass Non Toxic Physical Barrier System”. Nor is there any doubt that it is this document to which Granitgard refers in its pleading as “the CSIRO Appraisal”. The formal titling of the CSIRO Appraisal is neither happenstance nor the result of inattention by the CSIRO to what it was asked to appraise. The CSIRO Appraisal related to a system of which Termiglass formed part.
Granitgard perceived forensic advantage, if not triumph, in promoting acceptance of a conclusion that Termicide’s system had not been tested. At a level of abstraction divorced from the pleadings and the evidence, product and system can be viewed as discrete notions. Termicide put forward, in answer, that the way Granitgard had framed its case was to focus on Termiglass itself, not the Termicide Barrier System of which Termiglass was the principal component part, and that Termicide had conducted its case accordingly.
On closer analysis, each of these submissions owes more to rhetoric than to the reality of how either party conducted its case or how the men of science and building industry experience who gave evidence came to conduct experiments with or otherwise to assess Termiglass (or what was later named Termiglass). This was done with knowledge of its application or intended application, as installed. On a fair reading of Granitgard’s pleading, the way in which the s 52 of the Trade Practices Act case is cast is that the representations alleged relate to the future, to Termiglass as it will be installed, which is necessarily as part of a barrier system. That this is what is intended by Granitgard is consistent with the acknowledgement in its pleading that the alleged representations relate to future matters and the associated reference to s 51A of the Trade Practices Act. It was that case which it sought to make and equally that case which Termicide sought to resist.
The pleaded case which Granitgard sought to make under “s 53(1)” [sic] of the Trade Practices Act explicitly referred to the same alleged representations as formed part of its s 52 case. Yet these, as noted, are explicitly conceded to relate to future matters. Read in context, these features mean that the reference in this part of Granitgard’s pleading to “Termiglass” must necessarily also be a reference to Termiglass as it will be installed. Again, that was the case which Termicide sought to resist.
I approach the determination of the case on this basis.
Subterranean termites, as the adjective suggests, typically gain entry to structures from the soil below. They do so either by excavating voids in the substrate or by just crawling through existing cavities. Conceptually, an appropriately placed barrier system which included particular matter might prevent subterranean entry if that system presented termites with particles which are too large to be transported by them in excavation endeavours and with voids between particles which are too small through which to crawl and which was not otherwise able to be breached. In effect, such a barrier would force termites into the open where, if they survive at all, their presence can be detected on inspection.
This concept was the subject of research particularly by Dr French but with the assistance of others within the Forestry and Forest Products Division of the CSIRO. The Australian origins of Granitgard’s termite barrier system may be traced that research, which Dr French conducted while employed as a senior scientist within that CSIRO Division and which was reported upon by him in 1989. He, in turn, drew upon earlier particle barrier research which had been conducted in Hawaii in respect of particle barrier resistance to the entry of termite species there. Given his central role in the origination and scientific verification of the efficacy of the barrier system it supplies, an ironic quality about the conduct of Granitgard’s case was that it sought to call into question the integrity of Dr French and the worth of his opinions.
Drawing upon this research, Granitgard’s barrier system was developed under licence via a cooperative research agreement between the CSIRO and E B Mawsons Pty Ltd (Mawsons). The latter’s subsidiary, Granitgard, discharged that company’s obligations under that research agreement. It will be necessary, later in these reasons for judgement to consider aspects of the implementation of this cooperative research agreement.
Termicide commenced business in 2000. Then as now its sole director was and is Mr Paul Jeynes. Mr Jeynes has worked in the pest management industry since 1996. He has a number of trade qualifications and licences in that industry, as well as related on the job and managerial experience. His trade experience in the pest management industry extends to having personally carried out many installations not just of the Termiglass and Granitgard barrier systems but also of other types of termite barriers including Alterm (an aluminium strip barrier), Term-Seal, Termimesh (a stainless steel woven mesh), Kordon (an impregnated membrane) and the Atlas Reticulation System (a chemical barrier). He has carried out many inspections of the efficacy of installed barrier systems. He has also carried out many remedial treatments, by various control methods of termite infestations.
Though he is no scientist, I am well satisfied that Mr Paul Jeynes has lengthy practical experience of ways in which to detect, prevent and remedy threats by termites to the built environment in South East Queensland. He is qualified to give opinions concerning the same. The weight to give his opinions must, of course, be tempered by Mr Jeynes’ lack of formal, tertiary scientific and engineering training. As will be seen, Mr Jeynes himself recognised a need for such scientific and engineering expertise when it came to the appraisal of his idea for an alternative barrier system to that of Granitgard. On the evidence, he is something of an innovator in relation to developing a range of termite management products, but an innovator who engages appropriately qualified experts as required.
Termicide specialises in the provision of termite barrier systems in new residential buildings. It also provides a number of other pest control services, including the provision of chemical treatments. For a number of years, Termicide installed the Granitgard barrier system for builders in South East Queensland, purchasing the requisite components of that system from Granitgard. In 2003 Granitgard changed its business model such that it dealt directly with builders, consigning Termicide to the role of its installation subcontractor. This role was not one acceptable to Mr Paul Jeynes. To this end and drawing upon his experience with the Granitgard barrier system he set out to develop an alternative barrier system which might then be used by Termicide. He came to select crushed, recycled glass as the candidate material for use within an alternative barrier system. As a candidate that material had the advantages of being cheap and readily accessible.
In relation to whether Mr Paul Jeynes’ idea might feasibly be translated into a viable termite barrier system Termicide came to take advice from Dr French and a Mr Schaffer.
By 2003 Mr Schaffer was in private practice having retired from the CSIRO after having spent a working lifetime employed by that organisation in the field of building materials and systems. For over a quarter of a century, until he retired in 2002, Mr Schaffer had been its technical manager responsible for the evaluation of innovative products in the construction industry. He is a tertiary qualified civil engineer. Mr Schaffer gave evidence in the proceeding. He was an impressive witness from whom I gained considerable assistance.
In 2003, after discussions with Mr Jeynes and inspection of the Vision Glass manufacturing plant, Mr Schaffer advised Mr Jeynes that he believed that his idea for the use of crushed glass as a termite barrier was viable. He also told him that, in order for the product appraisal process to proceed, he should commission some laboratory testing of the proposed crushed glass material so as to validate its performance as a termite barrier. Following this, Dr French’s consultancy came to be retained by Termicide.
Thereafter, Termicide came to seek from the CSIRO an appraisal in respect of a particle barrier system which comprised graded glass screenings which Mr Jeynes came to call Termiglass, together with termite strip shielding which came to be called “Termiglass Quikstrip Shielding” used in accordance with an Australian Standard AS 3660.1-2000 Termite Management Part 1: New Building Work (the 2000 Standard – There are other parts to this Standard, materially Pt 3. Where it is necessary to refer to other than Pt 1, I indicate this) and installed in accordance with Termicide’s Termiglass Installation Manual dated November 2003 by trained installers.
In December 2003 the CSIRO issued the CSIRO Appraisal. In that document the following opinion was expressed:
In the opinion of CSIRO Appraisals, Termiglass Termite Barrier System will satisfy the requirements of Australian Standard 3660.1-2000 ‘Terminate management – New building work’ as a suitable physical barrier against subterranean termite entry by use of a screenings system, in conjunction with Quikstrip strip shielding, under the following conditions:
General Conditions:
1.The glass material is manufactured under license to the Termiglass specifications. The glass material ranges in size between 1.2mm and 3mm, is of consistently sound quality and is shaped and graded to the Termiglass specifications.
Note:
The Termiglass Termite Barrier System has not been appraised for use North of the Tropic of Capricorn.
2.The Termiglass Termite Barrier System is installed by licensed installers trained and approved by Termicide Pty Ltd.
3.It is installed in accordance with the Termiglass instructions contained in the Termiglass Installation Manual, November 2003.
4.Inspections are recommended, at least once a year, to check that no bridging or breaching of the barrier has taken place.
5.A durable notice in accordance with BCA requirements (Clause B1.4(i)(ii) Volume 1 and part 3.1.3.2 (b), volume 2 is attached to the building which states that the Termiglass barrier is installed.
Notes:
This notice should mention that the barrier should not be breached by tree roots, non-termite resistant material, or contaminated or disturbed by other means.
6.When used in conjunction with other termite barriers, all treatment is to comply with the requirements of AS3660.1-2000 ‘Termite management-New building work’.
7.There is no plant matter or building refuse where the Termiglass is to be placed.
Notes:
(i)As a guide the species mastotermes darwiniensis are believed to be located north of the Tropic of Capricorn.
(ii)At the time of the Appraisal testing is being undertaken of the effectiveness of the barrier systems against mastotermes darwiniensis. The results of this testing will be reviewed with the possibility of removing this restriction during the term of validity of this appraisal.
In the “Design Information” section of the document and under the heading “Durability” the opinion is expressed that:
In the opinion of CSIRO Appraisals, the life expectancy of the system would be not less than 60 years provided that the barrier is installed in accordance with the requirements of this appraisal and is not breached by tree roots, contaminated or disturbed by other means.
Under the heading “Inspections” at the conclusion of the document it is stated:
CSIRO Appraisals representative have inspected installations of the systems and found the level of performance satisfactory. As with the installation of all physical termite barriers, it was noted that a degree of care and skill, and attention to detail are necessary. Supervision would be needed to maintain the precision needed.
A later version of the CSIRO Appraisal, issued in June 2006, updated Building Code of Australia (BCA) references. Subject to this, that document repeated the opinion, quoted above, which had been expressed in respect of the satisfaction of the 2000 Standard. Each of these CSIRO documents, as tendered, evidences the opinions of the CSIRO expressed therein.
This later version of the appraisal withdrew the opinion expressed as to “Durability”. Instead, under that same heading, it was stated that “CSIRO Appraisals does not assess the durability of termite barriers.” Inferentially that statement was made because of a change in organisational policy. A change because it was prepared so to do in 2003 and there is nothing in the later version which states that its earlier view as to durability was wrong at that time. It was further stated in the later version that Termicide had made a declaration that the Termiglass Physical Barrier System had been “designed to achieve a service life of 50 years” As I have already mentioned, that the CSIRO Appraisal has more recently been “re-validated”.
Having received the original CSIRO Appraisal, Termicide began supplying and installing the Termiglass barrier system in South East Queensland in 2004. Since then Termicide has become the largest supplier of particle physical barrier systems in South East Queensland.
Prior to the commencement of these proceedings Termicide maintained and it continues to maintain a website, On the evidence to hand, the content and layout of that website has varied over time. In November 2007, under the heading “Termiglass” the following statement was made on the website (Ex PAJ 11):
Developed with the environment in mind, Termiglass is crushed glass that makes use of a recyclable product (glass). The glass is crushed to a specific shape and density that is too hard to chew, too heavy to move and too small to crawl through.
Used in conjunction with Termicide Strip Shielding, the Termiglass System forms a non-toxic physical barrier that eliminates the possibility of concealed entry by termites. Rated number one on environmental attributes the Termiglass System demonstrates significantly reduced environmental loads in comparison with other related termite barriers in Australia.
A link with the CSIRO Appraisals logo opened up the CSIRO Appraisal.
By 2008, in both April and September and, I infer, in between, given the symmetry of content (Exhibits to the affidavits of Ms O’Neill of Granitgard’s solicitors refer) the following statement was being made on that website under the heading “Termiglass; The Natural Solution”:
The Termiglass System is the natural solution to termite protection. The crushed glass forms an impenetrable barrier that rates #1 environmentally. It’s [sic] user friendly application and 60 yr durability is why Termiglass is the natural choice.
Immediately underneath this statement appeared a link which allowed the downloading in PDF form of the CSIRO Appraisal. In this period it was also possible to go directly on the website to a page which reproduced the content of the CSIRO Appraisal. Further, the statement made in November 2007, quoted above, was still being made.
Termicide clearly made each of these statements in trade or commerce. Indeed, it was not suggested otherwise by it. The statements made on the website in both 2007 and 2008 must be read as a whole, in context and objectively. Granitgard invited no less, given the way in which it cast its pleading. So read, I am satisfied that Termicide made the following representations:
(a)Between April and September 2008 that, as installed as part of the Termiglass barrier system, Termiglass “forms an impenetrable barrier” to termites. Termicide alleged that this statement was made only in an “early version” of its website but the evidence shows that it was still being made in April and September 2008. Subject to the necessary, “as installed” qualification arising from reading it in context, Termicide’s making of the representation alleged in paragraph 8(a) of the 2nd further amended statement of claim is proved.
(b)In November 2007 – that, as installed as part of the Termiglass barrier system, Termiglass provides a barrier that is “too hard to chew, too heavy to move and too small to crawl through”. As so read in context, the representation pleaded in paragraph 8(b) is admitted by Termicide to have been made..
The representations alleged in paragraphs 8(c) and 8(d) of the 2nd further amended statement of claim can conveniently be considered together but require more detailed scrutiny. The appearance in September 2008 on the website of statements in terms of these alleged representations is, prima facie, attested to by Ms O’Neill in her affidavit (filed 5 September 2008). With respect, this is not an accurate rendering of the then material part of Termicide’s website which she exhibits to her affidavit (nor, for that matter, could it be regarded as an accurate rendition of any earlier reproduction of the website in evidence). Materially, what appears there under the bold type heading “Technical Opinion” is:
In the opinion of CSIRO Appraisals, Termiglass Termite Barrier System will satisfy the requirements of Australian Standard 3660.1-2000 ‘Terminate management – New building work’ as a suitable physical barrier against subterranean termite entry by use of a screenings system, in conjunction with Quikstrip strip shielding … [Emphasis added]
This and what then follows on this quoted part of the website is a faithful rendition of the terms of the CSIRO Appraisal. By 2007 and 2008 the CSIRO had not withdrawn this opinion as to satisfaction of the 2000 Standard and suitability. Apart from updating BCA references in 2006, the CSIRO chose in 2008 to “revalidate” the opinion quoted, subject to like conditions.
Prima facie, what Termicide has done is to relay to the world at large, or at least to those inquisitive about its product and system, an opinion that the CSIRO chose to give, namely that the Termiglass Termite Barrier System will satisfy the 2000 Standard and was a suitable physical barrier. This impression as to the relaying of an opinion is reinforced by the bold type reference to “Technical Assessment 313” for which Termicide was nothing more than an applicant, that status also appearing in bold type.
In theory, it is not at all impossible in particular circumstances for an intermediary who, in trade or commerce, publishes to the world at large or at least to a section of the public an opinion furnished by a third party to be regarded as having adopted that opinion. If the opinion is misleading or deceptive (or likely to mislead or deceive) and that conduct of the intermediary causes a person loss or damage, such an intermediary can be liable to that person for damages under s 82 of the Trade Practices Act. Even in the absence of causing particular loss or damage injunctive relief under s 80 of that Act may be granted to restrain such conduct. That is so irrespective of the honesty or dishonesty of the intermediary.
The relevant principle is set out by Gleeson CJ, Hayne and Heydon JJ in the following passage from Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [38] – [39], adopting and enlarging upon what had earlier been stated by Mason ACJ, Deane, Wilson and Dawson JJ in Yorke v Lucas (1985) 158 CLR 661 at 666:
38.The relevant principles. In Yorke v Lucas, Mason ACJ, Wilson, Deane and Dawson JJ said that a corporation could contravene s 52 even though it acted honestly and reasonably:
‘That does not, however, mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive.’
39.In applying those principles, it is important that the agent's conduct be viewed as a whole. It is not right to characterise the problem as one of analysing the effect of its "conduct" divorced from "disclaimers" about that "conduct" and divorced from other circumstances which might qualify its character. Everything relevant the agent did up to the time when the purchasers contracted to buy the Rednal land must be taken into account. It is also important to remember that the relevant question must not be reduced to a crude inquiry: “Did the agent realise the purchasers were relying on the diagram?” To do that would be impermissibly to dilute the strict liability which s 52 imposes.
Granitgard did not plead its case in a way that expressly invited the making of a finding of fact that, in circumstances as particularised, Termicide ought to be regarded as having adopted as its own opinions expressed by the CSIRO as to satisfaction of the standard and suitability. It had more than one opportunity to amend its pleading. In its defence, Termicide admitted that its website linked to the CSIRO Appraisal and that the CSIRO had made the statements alleged in that document. It otherwise denied para 8(c) and para 8(d) of Granitgard’s 2nd further amended statement of claim. It added that the CSIRO had made these statements “after a detailed technical assessment by it of the Termiglass Termite Barrier System and not [by Termicide]”. In its reply to this defence Granitgard alleged that the maintaining by Termicide of the CSIRO opinion or a link to the same on its website constituted conduct that is misleading or deceptive by Termicide because that appraisal contains statements as alleged in the statement of claim which are misleading or deceptive (or likely to mislead or deceive).
Though the denial of the making of these representations and the allegation of their authorship by the CSIRO is explicit in Termicide’s pleading, it is equally the case that Termicide’s pleading did not expressly advance an absence of any adoption of those representations and the ramifications of this for Granitgard’s case.
Even taking into account its reply, Granitgard’s case, as pleaded, in respect of conduct constituted by a making by Termicide of the representations alleged in para 8(c) and para 8(d) of the 2nd further amended statement of claim does not rise above an allegation that the opinions of another have been passed on, i.e. continued to be maintained on the website. Nonetheless and in the absence of any particulars, Granitgard, in effect, invites the conclusion, on the balance of probabilities, that, objectively, the maintained presence on the website of the link to or the reproduction of the CSIRO Appraisal gives rise to a necessary inference that Termicide has adopted what is in that appraisal. Again in the absence of any particularity as to features which tell against a conclusion of adoption, Termicide’s denial must be taken to be advancing a position that no such inference can be drawn. That there was a controversy as to adoption might thus be regarded as an unarticulated premise in the case of each party as pleaded and conducted.
After Yorke v Lucas had been decided, in Gardam v George Willis & Co Ltd (1988) 82 ALR 415 at 427, a case in which a contravention of s 53 of the Trade Practices Act was alleged, French J (as his Honour then was) observed:
The innocent carriage of a false representation from one person to another in circumstances where the carrier is and is seen to be a mere conduit, does not involve him in making that representation. Nobody would expect that the postman who bears a misleading message in a postal article has any concern about its content or is in any sense adopting it. The same is true of the messenger boy or courier service. When, however, a representation is conveyed in circumstances in which the carrier would be regarded by the relevant section of the public as adopting it, then he makes that representation. It will be a question of fact in each case … .
These observations have proved influential in a number of later cases in respect of alleged contraventions by intermediaries both of s 52 and of s 53 of the Trade Practices (qv Miller RV, Miller’s Annotated Trade Practices Act (31st ed, Thomson Reuters, 2010) [1.52.80]). The last observation made by French J in the passage quoted sounds a cautionary note. Once the relevant principle as quoted above is identified, the precedent value of later authorities where its application has or has not led to a conclusion of fact as to adoption by a respondent of statements of opinion made by a third party has an inherently self-limiting quality. One must be cautious not to elevate outcomes in particular such cases to anything beyond that of exemplars of the relevant principle turning, one way or the other, on particular facts.
This cautionary note acknowledged, in one such exemplar, Charben Haulege Pty Ltd v Environmental & Earth Sciences Pty Ltd [2004] FCA 403, Wilcox J, in determining whether it should be concluded that one of the respondents, Caltex, should be taken to have made, by adoption, the representations contained in an allegedly misleading or deceptive environmental report authored by a third party which Caltex had passed on, regarded it as relevant to take into account factors which included that Caltex had commissioned the report concerned and the role, if any, which it had played in its preparation. His Honour’s ultimate conclusion was that, in the circumstances of that case, Caltex ought not to be regarded as having made the representations in the report. This particular conclusion of fact was not disturbed in a subsequent appeal: Caltex Australia Petroleum Pty Ltd v Charben Haulege Pty Ltd [2005] FCAFC 271. I propose to take these two factors into account.
Termicide neither expressly adopts nor expressly disclaims the CSIRO Appraisal on its website. Either as directly reproduced or as accessed by linkage it is immediately obvious to the reader that the CSIRO Appraisal was sought by Termicide but that the opinions expressed in it are those of the CSIRO. Obviously enough, its reproduction or linkage on Termicide’s website is no coincidence. After all, the opinions expressed in the CSIRO Appraisal are favourable in relation to the Termiglass Termite Barrier System. That is doubtless why Termicide has maintained the reproduction of its contents or the link to those contents. It has done this without any obligation arising by statute or contract so to do but the commercial interest and utility in that maintenance is obvious.
The evidence led in the case showed how the CSIRO Appraisal had evolved. Drafts were submitted to the CSIRO for its consideration by or on behalf of Termicide and revised after consultations. In the end though, it was not Termicide’s document. It was the CSIRO which took responsibility, with all of the caveats and explanations set out in the document, for the opinions expressed in the CSIRO Appraisal. That responsibility extended to the identification of those who authored the document in its original and later form. Both originally and as it came to be revised authorship of the CSIRO Appraisal was attributed to an officer (or officers) of the CSIRO, never to a Termicide officer.
Readers of the CSIRO Appraisal who have inquiries are, on the face of the document, invited to contact either the CSIRO or Termicide at separately identified telephone numbers. The CSIRO Appraisal also quotes Termicide’s description, which it ascribes to that company, of Termiglass as “too large and heavy for termites to carry, too hard for termites to chew and the spaces between the particles are too small for termites to crawl through”. Further, it is possible to discern an echo of the original durability opinion in Termicide’s own statement as to the durability of the Termiglass barrier system. Neither alone nor collectively though do these features convert the CSIRO Appraisal into one of shared authorship or even adoption by Termicide when the opinions in it are so obviously on its face expressed as the opinions of the CSIRO.
The website also apparently has a link to some sort of other report by another organisation, “Ecospecifier”. Elsewhere, the statement is made that the Termiglass system “rates #1 environmentally”. If such a rating had been awarded by “Ecospecifier”, the combination of that statement and a link to the relevant explanatory report would, objectively, in my opinion, tell in favour of that coincidence constituting an adoption by Termicide of the report which gave its system that rating. So far as satisfaction of the standard and suitability are concerned, no such statement features on its website in relation to the CSIRO Appraisal.
The encountering of links to documents or to other websites is part of everyday experience when using the internet. While whether Termicide can be said to have adopted the CSIRO Appraisal depends in the final analysis upon an objective assessment of the references to that document on its website, reflecting on some of the types of links one encounters is of assistance in highlighting why a bald allegation of maintenance is a necessary but far from sufficient alone pre-condition to a conclusion that the contents of a linked (or quoted) third party document have been adopted. For example, the publisher of an online collation of motor vehicles available for sale does not, without more, in my opinion, adopt the contents of road test reports prepared by an automobile club or some other third party reviewer of a particular vehicle if a webpage in respect of that vehicle contains a link to a site where that report can be read. Of course it might be said that an inference as to adoption is better able to be drawn if the publisher is not a collator but rather a manufacturer or a manufacturer and also a seller of the vehicles reviewed. Even then, that type of bare linkage does not, without more, constitute, in my opinion, an adoption of opinions expressed in such a review. The representation so made is just as consistent with “I have made statements; so has this reviewer; read those of the reviewer and make up your own mind” as it is with. “Rely on my statements because they are those of this independent reviewer” or “The qualities of my product are as related in the statements of this independent reviewer”. Only the latter two strike me as carrying with them the necessary inference of adoption of the reviewer’s statements. For example, if one touts one’s vehicle as “Wheels Car of the Year” and includes a link to the “Wheels” website where that review is formed the inference is open, in my opinion that one is adopting the “Wheels” review that led to “Car of the Year” status.
The continued reproduction of the CSIRO Appraisal and of the link to that document tells both in favour of the drawing of an inference of adoption and against that conclusion. To borrow from Gardam v George Willis & Co, I accept that Termicide is not just “a postman”. A postman has an occupational role that allows the inference readily to be drawn that he or she is disinterested in the mail being conveyed and the contents of that mail. Termicide is clearly not disinterested in that sense. Yet the reproduction of and the link to the CSIRO Appraisal are also consistent with an inference that what Termicide is doing is not adopting the CSIRO Appraisal but rather inviting the reader to read that document and then form his or her own opinion as to the worth of claims that Termicide does itself state on its website. The presence of the “CSIRO Appraisals” logo is also, in my opinion, a neutral factor. It certainly alerts the reader to the fact that this product and system has been appraised by the CSIRO but, objectively, does not, without more, carry with it the necessary implication that the publisher is adopting all or any particular one of the CSIRO’s opinions.
This is not to deny that a publisher aware of the favourable contents of such a report and of the standing of a body such as the CSIRO is inherently likely to be aware of a strong probability that a reader who cares to look will regard that report as corroborative of statements the publisher has separately made itself on the website about the product and system. There is though no express adoption and the likelihood of awareness just mentioned is not to be equated with a necessary implication flowing from an objective assessment of the website content, reading it as a whole and in context. In the absence of Termicide’s own language on its website either directly or indirectly suggesting an adoption, I am not persuaded that, by maintenance or reproduction alone, it has otherwise adopted as its own the representations alleged in para 8(c) and para 8(d) of the 2nd further amended statement of claim. Those representations are representations of the CSIRO, not Termicide. In short, in the face of the pleaded denial that Termicide has made these representations Granitgard has not made out this aspect its pleaded case.
Particularly because I accept that Termicide is not just “a postman” in the sense described above, and that the subject of whether there is adoption in the present circumstances is a subject on which it is well possible to see as alternative view, it is as well, notwithstanding my finding as to an absence of adoption, nonetheless to consider whether these pleaded representations arising from the opinions expressed in the CSIRO Appraisal are misleading or deceptive and also to consider the “reasonable grounds” defence in respect of them. That evidence concerning such issues will overlap with that relevant to issues relating to pleaded representations 8(a) and 8(b), which I accept were made by Termicide, reinforces the desirability of doing that.
As to the representation alleged in para 8(e) of the 2nd further amended statement of claim, this, too, is met with a denial.
Termicide does not state on its website that the CSIRO has tested Termiglass as installed in its barrier system. Nor does the CSIRO in the reproduced or linked CSIRO Appraisal make such a statement. The language which the CSIRO uses as to the tasks it has undertaken is “assessed”, “appraised” and “inspected”. Further, it is explicitly stated in the CSIRO Appraisal which documents and inspections were used in carrying out the CSIRO Appraisal. The only “test of the system” to which the CSIRO refers is a test stated to be being undertaken by Ecospan Consulting Services. That reference does not constitute a representation that Ecospan Consulting Services is undertaking this test on behalf of the CSIRO. Further, and no less significantly, what is stated in the CSIRO Appraisal under the heading “Test of the System” with reference to Ecospan consulting Services (and a date 3 November 2003) is that:
This is a trial of the Termiglass system for exposure to coptotermes acinaciformis and mastotermes darwiniensis. The trial has started and will be monitored during the term of the validity of this technical assessment.
This is patently not a representation that the system has been tested but rather that a trial is underway.
For reasons already given, I find that Termicide has not adopted the CSIRO Appraisal but, even if it is assumed, contrary to that finding, that it has, that adoption would not carry with it a representation of “testing” by the CSIRO. On that assumption and in the absence on its website of any use by Termicide itself in the adoption of the word “test” (or derivatives) the adopted stream could rise no higher than its source. That source does not represent that a “test” by the CSIRO has been conducted, only that a test, which is more particularly described as a system “trial”, by Ecospan Consulting Services, has commenced. This aspect of Granitgard’s case, as pleaded, necessarily fails.
I accept that the content of Termicide’s website carries with it a representation that Termiglass as installed in its barrier system has been “appraised” by the CSIRO.
As to the representation alleged in para 8(f) of the 2nd further amended statement of claim, the making of such a representation is admitted on the pleadings. Notwithstanding this, Granitgard did not in submissions point to evidence which it had led that Termiglass as installed would not have a life of at least 50 years. Nothing in Termicide’s evidence suggested that it would not. The opinion was expressed in the CSIRO Appraisal in its original form that “the system” of which Termiglass was a component part would have a life expectancy of not less than 60 years, providing it was not breached. As already noted later versions of the appraisal withdrew this statement. I have already concluded that this was not because that opinion was untrue but because of a change in the disposition of the CSIRO to continue to give an opinion as to durability.
Allegation 8(f) is poorly pleaded. The durability of Termiglass as installed as part of a barrier system is one thing, whether as so installed and even if durable it will be efficacious as a termite barrier for 50 years or more is another. That Termiglass as installed may last for 50 or even 60 years, as the only available evidence (the original CSIRO Appraisal) suggests, does not mean that it will be efficacious as a barrier against termites for even one year. Insofar as the allegation goes to durability Granitgard has not made out a case under either s 52 or s 53 of the Trade Practice Act. Insofar as the allegation goes to efficacy as installed in a barrier, that is best considered in conjunction with whether contraventions arising from the other alleged representations are made out.
What then of Termiglass as installed in the barrier system and of the representations made or which, contrary to the findings which I have made, I shall assume were made concerning it?
A threshold question is whether each witness truly did give evidence with respect to “Termiglass”?
It is easy enough to conclude what Termiglass is supposed to be. Termicide intends Termiglass to be the product described in the CSIRO Appraisal.
To elaborate, Termiglass is supposed, based on advice received from Dr French, to consist of graded glass screenings comprised of particles in size generally between 1.7 mm and 2.4 mm (the so called “medium” size), which is within the 1.2 mm and 3 mm range mentioned in the appraisal.
Termiglass is also supposed to have other qualities the nature of which is dictated by what the CSIRO Appraisal incorporates by reference. Thus, the appraisal draws upon the 2000 Standard, para 2.3.3, which adds three performance criteria for particles:
(a)termite resistant;
(b)graded and shaped so that a sufficient proportion of the glass particles are of a size that cannot be transported by foraging termite species occurring in the region;
(c)able to be placed in a manner so that the voids between the particles do not permit the penetration of foraging termite species occurring in the region.
Termiglass is also supposed to meet these criteria.
In the South East Queensland region, the “foraging termite species” which is principally regarded as of economic importance, i.e. by way of a threat to the built environment, is, on the whole of the evidence, coptotermes acinaciformis. It is one of those listed on an “informative” i.e. for guidance basis in Appendix B to the standard.
That is not to say that other species are not present and do not present a threat. Neither is it to say that, used in tests, some other species may not possibly offer an indication of the effectiveness of a particle barrier against coptotermes acinaciformis. Dr French, who accepted that coptotermes acinaciformis was a principal threat not just in South East Queensland but more widely in Australia, also offered views as to the utility for barrier testing of a species not listed in the Standard, coptotermes lacteus (of which more later). I am satisfied though that Mr Paul Jeynes, whose intention is to be assimilated with that of Termicide, intended in 2004 and thereafter that the product which he came to call Termiglass would, as installed in the barrier system, meet the requirements of the 2000 Standard and meet those requirements in respect of a threat presented by coptotermes acinaciformis. He formed that intention with the benefit of advice from Dr French which, in turn, took into account the threat presented by that species. That was an appropriate choice of species.
As to what is a “sufficient proportion”, as described in the Standard, of the glass particles, I am satisfied that, on and from the commencement of the supply of Termiglass by Termicide for barrier installation in 2004, the product of that name was supposed to have in the order of a 95% proportion in the product of the so-called “medium” particles (1.7-2.4 mm range). That proportion corresponded with the views given to Termicide by the scientific adviser upon whom it relied, Dr French. Termicide’s choice as to the intended composition of Termiglass was deliberate.
It is very important neither to make too much nor too little of 95% as a “sufficient proportion”. Having regard to Dr French’s evidence, both oral and by affidavit, which I accept and prefer in this regard, 95% represents a pragmatic value judgement based on observation, experimentation and experience, originally derived from the research and discussions that led to the commercialisation of the graded stone particle barrier that came to be called “Granitgard”. It is not a rigid figure in the sense that a barrier comprised of a slightly lesser percentage of medium particles will certainly fail, as opposed to a figure selected, on the basis just described, as a matter of risk assessment which also takes into account practical manufacturing tolerances. In his affidavit evidence Dr French stated that, “I do not believe that a small quantity of larger or small size particles is likely to cause the barrier to fail” [3rd affidavit, [153] (d)]. In his oral evidence he also allowed that a range of no more than 3% to 5% of other than medium particles might be regarded as optimal. I consider further the subject of “sufficient proportion” in the Standard when discussing below the results of various tests of Termiglass.
A concern about “shape” was a recurring theme in Granitgard’s case. I have set out above what the Standard has to say about “shape”. All that the Standard requires is that the particles be graded and shaped so that a sufficient proportion of them are of a particular size. That size, in turn, is governed by designated performance criteria. Grading and “shaping” as mentioned in the Standard relate to a requirement for a method of production of glass particles and then to the performance of those particles in a termite barrier. The Standard does not, as Granitgard’s submissions seemed to assume, require that the glass particles be of any one or more given shapes, only that the production process yield glass of a particular size in a sufficient proportion with particular properties.
Mr Schaffer opined, by analogy with his experience with Granitgard’s product and barrier system, that the particles in a particle barrier system ought to be “roughly cubical in shape … In particular his evidence was that they should not be flaky”. He elaborated on the latter concern by reference to his experience with Granitgard’s product. He noted that this was comprised of crushed granite which he described as a mineral made up of quartz, feldspars and mica. Mica does not usually meet the requirements for a granular barrier because it has a strong cleavage plane and will flake along the plane when broken and thus have a “flaky” shape and its hardness below that required. From this sprang, in relation to Granitgard’s product, a requirement that crushed granite particles for barrier use comprise not more than 3% mica and, in conjunction with the prospect of variable raw material quality arising from different quarry sources, a need for stringent quality control. Mr Schaffer drew on this knowledge when reflecting in advance on the feasibility of a glass particle barrier and, in particular, considered that glass, being a manufactured product, would be more homogenous than crushed granite and be subject to less variation.
A particular concern then about shape is that the particles not be “flaky” A product with too many flaky particles will probably not meet the performance criteria in the stand for a termite barrier system whereas if the conclusion is open that a particle barrier system will consistently meet the performance criteria, the shape of its particles will necessarily be satisfactory, even if not uniform and, inferentially, even if those particles are not all roughly cubical “shape”, considered in isolation from the likelihood of consistent, efficacious performance of a barrier system, is therefore apt to prove a distraction.
So much then for what Termiglass is supposed to be.
Granitgard made the point, which accords with the evidence, that such was the closely controlled distribution of Termiglass that, prior to trial, the availability of samples to it for analysis and experimentation to see whether Termiglass was what it was supposed to be was “problematic”. Lest it be thought otherwise, I do not discern anything sinister on the part of Termicide in that close control.
In the course of the pre-trial stage of the proceedings I made orders providing for the provision, from the factory where it was produced by a company known as Vision Glass, of samples of what Termicide supplied to the market for barrier installation as “Termiglass”. In this fashion, Granitgard secured some samples of what on any view was the product which Termicide called Termiglass (although not all thus obtained proved to be Termiglass – see below).
Both before and after the institution of proceedings Granitgard also obtained by various means and from various sources what might aptly be described as, to adapt and adopt Granitgard’s term, “problematic Termiglass”. The worth of the evidence concerning the analysis and experimentation with respect to these problematic Termiglass samples is inherently related to how problematic it is that such materials were indeed Termiglass as supplied to the market and installed by Termicide in its particle barrier system. It is necessary therefore to reach conclusions on that subject on the balance of probabilities. I should add that, with respect to some of these samples, Termicide had invited the reaching of such conclusions peremptorily in the context of its summary judgement application but the subject truly was one for trial.
In its written submissions Termicide offered a comprehensive analysis of the various “problematic Termiglass” samples which featured in Granitgard’s evidence. This analysis was directed to their provenance and the likelihood that any of these were Termiglass at all or at least uncontaminated Termiglass. Termicide termed these the “unofficial samples”. I propose to adopt the headings which Termicide gave in its submission in addressing this issue.
Bain Sample
The title of this sample is derived from a bag of crushed glass supplied to Dr Ewart in 2004 by a Mr Eric Bain, an employee of what I infer was the marketing affiliate of Granitgard. Mr Bain provided Dr Ewart with what he said was “Termiglass” as obtained from a job site on the Gold Coast by a Mr Stan Butts. Mr Butts was known to Dr Ewart as an employee of that same marketing affiliate, responsible for the selling of Granitgard’s products and dealing with installers. Termicide’s submission was that there was no evidence of how this sample had been obtained or whether it had likely been contaminated with other material in the course of obtaining it. I agree. I should add that there was no evidence that, even before obtaining it, it had not been contaminated on the building site. I am not satisfied that this sample was Termiglass as produced for Termicide for use in its barrier system. The evidence concerning the experiments with it is therefore not reliable.
French samples
I accept that Dr Ewart received from Dr French in 2004 some “leftover” glass particle materials from those with which Dr French had been supplied by Termicide for his original experimentation in 2003 and 2004. Although he checked his notebooks so as to refresh his memory, Dr French could not recall sending any leftover glass particles to Dr Ewart at this time. Dr Holt did though come to test some glass particles at Dr Ewart’s request. Though Dr Ewart’s scepticism as to the efficacy of Termiglass was evident to my observation in both the content and demeanour in his oral evidence. He did not strike me as a man who would falsely attribute the source of those materials. The then significance of the leftover materials differed as between Dr French and Dr Ewart. To Dr French they were just that, leftover materials of no ongoing utility. To Dr Ewart they were materials of interest for further study. I did not in these circumstances see any necessary inconsistency between Dr French’s absence of recollection of the dispatch of these materials to Dr Ewart and the latter’s evidence as to the receipt of them from him.
In his experimentation Dr French did not only test particles in the medium range. He tested and rejected from that supplied other size ranges of glass particles. Further, it is evident from the evidence of Dr French and Mr Paul Jeynes that there was initially a mix up by Termicide in the material it supplied to Dr French. While on behalf of Ecospan Consulting Services Dr French came to give Mr Jeynes on behalf of Termicide particular advice as to the efficacy of medium range particles which, in turn, provided inspiration for the marketing of the product that became known as Termiglass as part of a barrier system, I am not satisfied on the balance of probabilities that the “box containing two bagged samples” which Dr Ewart received from Dr French in 2004 comprised only glass particles of the kind that later came to be called Termiglass.
That conclusion has a consequential effect in relation to some of the evidence of Dr Holt. Dr Holt stated that, in 2004, he received from Dr Ewart a sample of glass particles which was in a bag labelled “GYP dust”. Yet Dr Ewart had received two bags. As Termicide submitted, the possibility exists that the two bags which Dr Ewart had received were combined. In any event, the ultimate provenance of the product in the bags is such that it is not proved to be one and the same as the product which came to be called Termiglass. I do not therefore regard the results obtained by Dr Holt in 2004 in relation to this material as being reliable as to the properties of Termiglass.
In reaching this conclusion and, for that matter, the conclusion in respect of the “Bain sample” I do into call into question the integrity as scientists of either Dr Ewart or Dr Holt. It is just that, in respect of these particular samples, their opinions do not relate to what was or came to be called Termiglass.
Sapsford samples
Mr Sapsford is a director of Granitgard. In this sense, he was not a disinterested witness, but neither was Mr Paul Jeynes.
In or about March 2008, i.e. after the commencement of these proceedings, Mr Sapsford, on behalf of Granitgard, retained Dr Holt to undertake tests of some samples of crushed glass. Dr Holt’s evidence is that he received five bags of material from Mr Sapsford, of which he used three for testing. The three bags so used were, on his evidence, sealed. He opened these bags, extracted a sample for testing and photographed the same. One of these samples, marked TGXG comprises predominantly green glass (Exhibit 11). Of the other witnesses (Messrs Sapsford, Walker and Pearce) who had an association with what was said to have been sent to Townsville for Dr Holt, each stated that the sealed bags which were sent contained clear glass. These witnesses also stated that the only source green glass was an unsealed bag.
The glass in the bag TGXG was one of the samples of glass which Mr Kelly of Cardno Bowler’s Townsville office came to test on request from Dr Holt in 2008. I have no doubt as to the integrity of the test procedure which Mr Kelly undertook. He reported and I accept that 32% of this sample fell within the range of 1.7-2.36 mm. Two other samples sent up by Mr Sapsford at this time came to be labelled TGY and TGX. These, too, were tested by Mr Kelly and were found to have between 32% and 40% of particles in the medium range, i.e. 1.7-2.4 mm.
Samples which undoubtedly did come from the Vision Glass factory and which I am satisfied were what Termicide markets as Termiglass for installation in its barrier system were later reliably tested by Mr Angus of Golders & Associates. These had a size range mostly falling within 1.7-2.4 mm. That result is much more consistent with the range of results which Mr Kelly came to obtain in respect of tests on other samples of glass which he also came to perform for Dr Holt in 2008 than with the results for samples TGXG, TGX and TGY. As to the latter samples, taken together, the colour and size result in respect of TGXG and the discrepancy as to which bags containing what coloured glass were sealed and unsealed leaves me unpersuaded that Dr Holt and hence Mr Kelly were dealing with samples which truly represented the product marketed as Termiglass. To so conclude is not to question Mr Sapsford’s integrity for he had no direct knowledge as to whether any of the bags did indeed contain what Termicide marketed as Termiglass, only hearsay knowledge.
Salvado Drive sample
Messrs Walker and Angus attested to the provenance of these samples. They were obtained by cutting into face bricks and then extracting what was said to be Termiglass from the cavity thus accessed. Each of these gentlemen, frankly I thought, conceded that the process of extraction from this site carried with it a likelihood of contamination. That concession accorded with my impression as to such likelihood as a matter of probability. Mr Angus also admitted that these samples had not been analysed for the presence of contaminants. For these reasons, I do not regard any results obtained from the testing of these samples as offering a reliable indication of the properties of the product known as Termiglass.
Upper Coomera sample
According to the evidence of Messrs Walker and Hunt this sample came from overspill on the edge of brickwork on a building site at Upper Coomera. Each of these gentlemen conceded in cross examination that the sample carried with it a likelihood of contamination. I thought that these concessions were frankly given and inherently likely, as a matter of probability, to be true of a building site. I therefore do not regard results of the testing of this sample as offering a reliable indication of the properties of the product marketed as Termiglass.
Gargal Court samples
As the evidence of Messrs Walker and Angus described, these samples were obtained by similar means to the Salvado court sample. In respect of these samples also, Mr Walker frankly conceded the likelihood of contamination. Again, that accords with my own impression of such likelihood as a matter of probability. Mr Angus admitted that the material had not been tested for the presence of contaminants. Again, I do not regard tests in respect of samples from this source as offering a reliable indication of the properties of the product marketed as Termiglass.
Skip bin sample
Mr Walker obtained what he said was a “half opened plastic bag of Termiglass” from a skip bin adjacent to a building site. Just to record that provenance is to raise at the very least an interrogative note as to whether this sample could be regarded as uncontaminated, assuming that it was indeed truly of the product marketed as Termiglass. Mr Walker transferred some of the contents of the half opened bag into another plastic bag, marking each with a reference to its source. In cross examination, Mr Walker could not exclude the possibility that what had been taken by him from the skip bin was leftover material from a clean up. I agree that is at least a possibility. Its very presence in an open bag, discarded in a skip on a building site, inherently carries with it strong the possibility of contamination. All in all, I am not satisfied, as a matter of probability, that the material from this source was uncontaminated Termiglass.
Springfield sample
Mr Walker obtained this sample also. It came from a building site at Springfield. He asked one of the builders on site for any “leftover glass material”. In response he received what he stated was a “half used bag of Termiglass”. Mr Walker could not exclude the possibility that what he was given was leftover material that had been cleaned up. As with the other samples, Granitgard is certainly not obliged to prove to demonstration that they comprised uncontaminated Termiglass. Quite what was the provenance of the contents of the bag he was given was beyond Mr Walker’s knowledge. What is clear is that this sample was not one removed from the factory but rather from a building site with all of the very real potential for contamination of an unwanted, open bag that may entail, even assuming that its contents were not cleaned up leftover material. I consider as a matter of inference in the circumstances that it was inherently likely that the bag was contaminated (assuming that it was Termiglass). That inference might, as a matter of probability otherwise arising, perhaps have been rebutted if the builder concerned had been called. That person was not called. I do not regard tests of this sample as offering a reliable indication of the properties of the product marketed as Termiglass.
In Granitgard’s case, this then leaves the samples obtained from the Vision Glass factory.
Vision Glass Samples
Granitgard obtained material from the factory on two occasions in June 2008. The first such occasion was in the course of an inspection of the factory by Ms O’Neill and Mr Hunt.
Mr Hunt describes himself as an “Extractive Industry Consultant”. Though not formally qualified in civil engineering (he commenced tertiary study in that field but has never completed a degree), Mr Hunt has very lengthy and responsible experience in the management of crushing plants for a variety of civil engineering applications. He was well qualified by that experience to express opinions in relation to the performance and quality control systems at the Vision Glass plant. He impressed me as a dispassionate observer. Unfortunately, that does not mean that what he and Ms O’Neill obtained from the Vision Glass plant was the product which that plant was producing for Termicide as Termiglass.
In the course of their inspection Ms O’Neill and Mr Hunt obtained from vision glass three sandwich bags of glass particles. Of these, two were marked “MUR Export Product” and “QME Other Use” respectively. I am not satisfied that the bags so marked were indeed the Termiglass product produced by Vision Glass for Termicide. The other bag which they obtained was indeed the product known as Termiglass.
Mr Hunt later returned alone to the Vision Glass factory. He made a request that the production manager provide him with a bag of Termiglass. This request was complied with. I am satisfied that this bag did contain the product known as Termiglass.
Mr Hunt delivered each of these four (alleged) samples of Termiglass to Golders where they were analysed by Mr Angus. The resultant report from Golders discloses that, of these, the two which did indeed comprise Termiglass contained the following percentage of glass particles within the range 1.7 - 2.36 mm:
(a)sandwich bag sample – 94%;
(b)later sample obtained from production manager – 95%.
After the analysis had been completed Mr Walker directed a Mr Pearce to collect all of the sample material, i.e. all four bags from Golders and send them on to Dr Ewart for testing. Dr Ewart’s evidence is that he received for testing a sample marked “Vision Glass bag sample”. Of that retrieved from Golders, which included sample material which was not Termiglass, exactly what went to Dr Ewart was not established by the evidence led by Granitgard. Given the presence of material that was not Termiglass that absence of precision is significant.
Once again, Granitgard is not obliged to prove to demonstration that the material sent to Dr Ewart on this occasion was Termiglass. Subject perhaps to one consideration arising from the test which Dr Ewart made of the material he received, it is no more probable that this material was Termiglass than it was a combination of Termiglass and the other non-Termiglass material or was not even comprised of any Termiglass material at all. The amount of the material which Dr Ewart received was not, in his opinion, sufficient for him to undertake a full schedule of tests. He tested one replicate at a depth of 25 mm. It was not penetrated to a depth of more than 20 mm by the termites in the test jar. Having regard to other observations concerning the performance either of material of a kind that came to be called Termiglass (the 95% medium range particles upon which Dr French originally reported) or satisfactorily proved to be Termiglass, Dr Ewart’s observation as to the performance of this sample is consistent with a conclusion that what he received was indeed a portion of that part of what Ms O’Neill and Mr Hunt or, as the case may be, Mr Hunt alone received which actually was Termiglass. There is though an element of speculation in adopting that consistency as a determinant of what is otherwise a matter of alternatives no one more probable than the other. It may just be that a known combination or known non-Termiglass sample would also have yielded such a result if either had been measured. In the end, I am not satisfied on the balance of probabilities that, on this occasion, Dr Ewart reported on Termiglass.
As it happens, the absence of any penetration of the 50 mm Termiglass replicates does, based on Dr French’s statement, confirm a conclusion that, as installed in Termicide’s barrier system in South East Queensland, Termiglass offers an effective barrier against penetration by subterranean termites.
I note, further, that the use of strip shielding in a particle barrier is not confined to the 2000 Standard. It was referred to also in the 1995 Standard. The 1995 Standard allowed graded particle barriers (and the only such particle then in use in Australia was Granitgard’s product) to be used in the cavity of a masonry wall. Neither in the 1995 Standard nor in the 2000 Standard is there a reservation as to the efficacy of a graded particle barrier at the specified depth when used in conjunction with strip shielding. Mr Meadows was a member of the committee which approved the 2000 Standard. I cannot conceive that a committee of which a man of his knowledge and experience was a member would omit a reservation arising from strip shielding in a standard expressly directed to the subject of termite particle barriers, particularly given the length of time that Granitgard’s product, which also incorporates strip shielding, had by then been on the market. To me that absence of reservation, especially in the 2000 Standard, offers further confirmation that strip shields do not present a “Trojan Horse” for termite barriers comprised of medium particles in sufficient proportion placed to a depth specified in those standards or that testing at a 75 mm compacted (or 80 mm equivalent uncompacted) depth is inappropriate. Inferentially, I consider that the same observation may be made with respect to the CSIRO Technical Assessments for both Granitgard’s and Termicide’s particle barrier systems.
Another issue upon which differing scientific views were expressed was whether any of the results to date in the field suggesting an inability on the part of termites found in South East Queensland to penetrate Termiglass at a 75 mm compacted depth (or uncompacted equivalent) might be attributable to then longstanding drought conditions in the region. Dr Ewart considered that this may be a factor. He stated:
It is quite possible that the long standing drought in the area (South East Queensland) and subsequent temporary reduction of termite activity has meant that little of the [Termiglass] is being tested by termites, rather than the Termiglass withstanding repeated termite attacks.
Dr French did not dispute the existence of drought conditions. However, he had a quite contrary view as to whether this meant that there had been a reduction in testing of Termicide’s barrier systems by the local termite population. The possibility of such a reduction was contrary to the observations as to termite activity in the region that he had made during the drought period. He related that he attended frequently to inspect buildings experiencing termite attack. On these attendances he had not observed any reduction in termite activity. This accorded with the results of anecdotal discussions which he had frequently with those involved in the pest management industry in the region. As it happened, it was also in accord with the evidence of Mr Meadows, whom I found an impressive, independent, expert witness, whose experience was that the drought in South East Queensland had not reduced termite activity to any significant degree.
Dr French also supported his view by reference to statements which he and Dr Ewart had made on the subject in a paper they presented in 1986 when Dr Ewart was a doctoral student under his supervision. The paper was entitled, Temperature studies on two mounds of coptotermes lacteus (Isoptera), and presented by them at the 17th Annual Meeting of the IRG at Avignon, France. In that paper (at page 5) they stated:
Another controlling factor is the humidity of mound atmosphere of N. exitiosus was high, 95-98 per cent. Assuming a similar condition pertains for C.lacteus, the internal structure of the mound allows the termite to control, and utilize, excess moisture (due to their own and the mound microorganisms’s respiration). This may be realized when the mound is repaired, or extended. Even in the driest periods over the last two years in the Boola Boola State Forest, moist soil material has been promptly used to plaster new or repaired areas. Rather than the termites bringing all their water from below ground … we suggest that the construction of the many short dead-end tunnels found in the irregular inner sponge-like zone serve to ‘trap’ excess moisture from within the mound. Further, when the walls are breached, particularly well above ground level, workers are able to quickly obtain moisture which is required in the repair process. Also, this would need far less expenditure of energy than if moisture had to be carried up from below”.
Given his direct observation and depth of knowledge and experience, the latter highlighted in the paper quoted, I prefer Dr French’s view, according as it does with that of Mr Meadows. Evidence as to an absence of penetration of Termicide’s barrier system since the commencement of its supply to the market in 2004 is not to be discounted because of a possibility of reduced testing as a result of drought conditions which subsisted in the South East Queensland region in the 2004 to 2008 period.
Dr Ewart also conducted some laboratory jar tests of his own. Those results described in his report of 25 September 2008 need not be considered in light of the conclusions which I have reached as to the provenance of the crushed glass which was tested.
The tests reported on in Dr Ewart’s report of 26 August 2008 do require consideration on the assumption that these tests did indeed involve the testing of Termiglass. Dr Ahmed, rather than Dr French, observed these tests. Dr French commented about test methodology in light of the description in Dr Ewart’s report and Dr Ahmed’s observations as relayed to him.
Dr Ewart conducted tests at 25 mm and 50 mm depths (subject to limitations he described in his report), guided by the Granitgard Protocol. He faced the difficulty, which he openly disclosed in his report, of an insufficiency of coptotermes acinaciformis termites. This limited the number of replicate test jars and controls he could establish. In contrast to Dr Holt, Dr Ewart did establish a control jar at each depth. Dr French’s observation, based on established principles relating to laboratory bioassays, was that a separate control for each set of replicates. For like reasons, Dr French was concerned that the tests had not been duplicated using termites from the different colonies. This, he stated, was essential in a laboratory bioassay as there may be variations between termites taken from different colonies. These were the observations of a very experienced professional in this branch of science. While I do not gainsay their validity, my impression was that Dr Ewart was doing the best he could within the limitations he faced.
Of greater concern to me is the addition by Dr Ewart of water to the test jars in the course of the test period. The appropriateness of this was explored at some length in both affidavit and oral evidence.
Dr Ewart had noted of his test jars that the tunnelling responses of the termites were in the first few days generally less than he would have expected. He detected little evidence of tunnelling. The conclusion which he drew from this was that the dry replicate glass had attracted moisture from the termite mound material underlying it and thus that a relative lack of available moisture might be preventing normal tunnelling behaviour. He therefore added water at the rate of 2.5 mm to each 25 mm test jar and 5.0 mm to each 50 mm test jar. So as to prevent disturbance of the replicate material in each test jar he added the water by pouring it over the bait wood block at the top of each test jar rather than directly onto the replicate material. Thereafter there was a change of behaviour. By the end of the test period all of the 25 mm test jar replicate barriers had been penetrated; so too, in one way or another, had been half the 50 mm replicates. Another jar filled with what Dr Ewart described as “the Vision Glass bag sample” had not been penetrated.
The principal conclusion which Dr Ewart drew from these tests was that the product which he had tested did not meet the performance requirements of the 2000 Standard.
That Dr Ewart had added water to the test jars represented to Dr French a “critical failure” of those tests. His opinion was that an appropriately designed and installed test did not require any change to the test conditions. To him, adding water represented a significant change to those conditions. It was a change which was likely significantly to affect the outcome of the tests.
Dr French enlarged upon the reason for this likelihood by reference to some recent research with which he had assisted, described in an article in the Journal of Microbiology: Kurtboke, DI, and French, JRJ (2007) “Use of phage battery to investigate the actinofloral layers of termite gut microflora”, Journal of Applied Microbiology 103 (3): 722-734. He stated that, “Microbial activity is now considered to be a cue or indicator for subterranean termites identifying a potential food source”. It was Dr French’s belief that the water percolating through the barrier material down to the matrix in the test jars was likely to carry microbial traces from the bait blocks. In turn, this was quite likely to cause the termites to attempt to penetrate through the material. He also considered that it was possible that the water might change the properties of the barrier material by, for instance, causing some of the particles to stick or aggregate. He acknowledged that he had never tested for this.
Dr French also discerned recognition by Dr Ewart in the Granitgard Protocol that the likely effect of adding water would be to alter the effect of the tests. Dr French referred to page 7 of the Granitgard Protocol where it is stated that adding water will operate to transfer “some of the timber odour to the candidate barrier”. Dr French considered that this statement recorded an observation which largely corresponded with his opinion, based on the research described, that the water would carry microbial traces from the timber bait block.
Dr French’s further view was that, if water were added then there should have been retention of some of the test jars which were not watered so as to monitor that effect. In this fashion the retained unwatered test jars would become an additional control. This struck me as an inherently sensible and prudent measure to counsel. It was but another indicator of the depth of Dr French’s knowledge and experience.
Dr French also questioned, by reference to Dr Ewart’s laboratory notes and his own experience whether those notes really disclosed little initial activity by the termites. He instanced jar 2d (the 50mm control), which was noted by Dr Ewart to have been penetrated through by 18 July (24 hours) and Jar 4b (the 25mm control) which was noted to have been penetrated through by 21 July (4 days). Dr French considered that it appeared from the laboratory notes that there had been tunnelling activity before water was added. Dr French related that it was his experience over very many laboratory bioassays that if termites are capable of penetrating the material being tested they do so quite quickly, usually within 48 – 72 hours. He also referred to a paper co-authored by Dr Ewart in which this same phenomenon was recorded, Techniques for field assessment of particulate termite barriers, a paper presented at the May 2000 meeting of the IRG. That paper includes (at page 4) a statement that barriers tend to fail quickly, if at all. Dr Ewart’s laboratory notes show that there was some tunnelling during the first week but that none of the barrier samples were penetrated.
To Dr French, that penetration was only achieved after water was added. suggested that this was caused by or is connected to the addition of water. This observation was supported by the research to which Dr French referred and is consistent with what to me also, on reading the Granitgard Protocol; seems to be recognition by Dr Ewart of the same phenomenon when water is added. Based on Dr French’s evidence, which on this also struck me as the more authoritative, the outcomes of the August 2008 tests do not provide any basis for an apprehension as to the efficacy of Termiglass as installed in Termicide’s barrier system.
I should add that I did not detect anything sinister in Dr Ewart’s addition of water. It is to be remembered that his views as to the lack of efficacy of glass particles for installation in a termite barrier system which would comply with the 2000 Standard had initially been formed in 2004 on the basis of samples that probably did not correspond with the composition of Termiglass as it came to be supplied by Termicide. Assuming that what he was testing in August 2008 was a sample of Termiglass as so supplied, it may be that what he was observing was not some aberrant termite behaviour caused by a barrier drawing moisture from the mound material in the jars but rather a replicate barrier which truly was resistant to penetration, giving that such penetrations usually occur quite quickly. Based on Dr French’s evidence and Dr Ewart’s own notes, Dr Ewart seems to me to have done nothing more than to draw an incorrect conclusion with regard to what his initial observation disclosed and then compounded that error by adopting an inappropriate response, especially in light of his absence of retention of a further control.
I turn then to evidence in relation to whether particular properties exemplified a failure of a Termicide barrier system to prevent the subterranean entry of termites.
Of these, the Lagoona Court property was the subject of the most extensive evidence. That installed at the residence there was a Termicide barrier system was not controversial. Nor was it controversial that that the residence had been severely infested by termites. Granitgard’s case was that this infestation disclosed that the barrier system was not effective to prevent subterranean termite entry. Another aspect of its case was that this infestation (and those it sought to evidence with respect to other properties) rendered unreliable the evidence otherwise apparent from Termicide’s records of many thousands of installations without subsequent breaching by termites.
A convenient starting point in relation to Lagoona Court is May 2005. It was then that Mr Roff inspected the property. He identified that there had been multiple instances of “bridging” by termites.
In the building and pest management industries, “bridging” is a technical term. It refers to “a spanning of a termite barrier or inspection zone, to provide subterranean termites with passage over or around that barrier or inspection zone” (Definition, para 1.7.1 2000 Standard). It is to be contrasted with another technical term, “breaching”, which is, “The making of a hole or gap in a termite barrier so that termites are provides with passage through that barrier” (Definition, para 1.7.2 2000 Standard).
Given Mr Roff’s length of service in the pest management industry, especially in conducting inspectors, I am quite sure that he knew the difference between “bridging” and “breaching”. He did not strike me as a man who would falsely describe what he saw on an inspection.
Litigation ensued in relation to the termite infestation at Lagoona Court. Both the builder and Termicide were sued by the owner. In that context, Messrs Walsh and Walters (each a relevantly qualified man) of Sherry’s Pest Control came to inspect Lagoona Court on behalf of its owner. The owner had sought their expert opinion. They inspected the property on 7 July 2006. Their conclusion was that termites had entered the property through some lagging left around a pipe that went through the Termicide’s barrier system (which incorporated Termiglass). The presence of lagging in the barrier system was an installation error. It should have been removed at the time the barrier was installed. Messrs Walsh and Walters also found a potential entry point to the property which involved termites mudding up to and under the strip shielding. They could not find evidence of where this led. Photos were taken at the time of this inspection. Messrs Walsh and Walters did not accept that these photographs showed termites penetrating through the Termiglass or that this had, in fact, occurred.
The observations made by Messrs Walsh and Walters are significant. Neither of them had any association with either Granitgard or Termicide. Their evidence offers a reliable, independent assessment of the state of affairs at the Lagoona court property.
Later in 2006, on 27 October, Mr Gabriel inspected the property. Mr Gabriel has appropriate pest management qualifications and experience. He does not have any detailed knowledge and experience in relation to the installation of Termicide’s barrier system. That work is undertaken in Termicide’s pre-construction department in which Mr Gabriel did not work. Mr Gabriel knows the difference between “bridging” and “breaching”. At the time of this inspection Mr Gabriel was then working for Termicide as manager of its post-construction department. He noticed “someone had removed approximately 4 to 6 bricks from the external wall, exposing the inside wall cavity. I discovered that termites had breached through the glass barrier. Whilst there was also termite bridging at some other areas around the house, the majority of the damage occurred from the breach.” On closer study of a photograph exhibited to his affidavit, it is apparent that the breach to which he refers is where the pipe passes through the Termiglass in the barrier system. In this regard, his evidence is consistent with the observations made by Messrs Walsh and Walters.
About six months later, Mr Gabriel again attended at the Lagoona Court property. On this occasion he was accompanied by Mr McFarland, his then subordinate in the post-construction department. According to Mr Gabriel the purpose of this attendance was to remove all the glass and mudding and clean up some of the brickwork.
Mr McFarland has since assumed Mr Gabriel’s former position following Mr Gabriel’s departure from Termicide’s employment. Mr McFarland, too, has appropriate pest management industry qualifications. I am satisfied that he, too, understands the difference between “bridging” and “breaching”.
In the course of cross-examination about his observations, Mr Gabriel accepted that termites gained entrance to the property through the lagging around the pipe. He also stated though that they had penetrated through the glass itself. He claimed to have noticed this when he cut out “… the bottom brick that goes around the actual pipe coming through…” and when he removed “… the brick and the strip shielding surrounding that pipe…” He was challenged about the accuracy of the statement in his affidavit that “…termites had breached through the glass barrier…” on the basis that it wasn’t possible to see termites breaching the glass barrier by looking at the mudding on top of the barrier. His response to this was that he “… moved all the Termiglass and I could see all the mudding through it and I physically got my hands in and had a look…” This was a novel explanation, one which had not hitherto featured in Mr Gabriel’s evidence.
Mr McFarland made his own observations of the interior space once the brick had been removed. Unlike Mr Gabriel, he did not see any evidence of termite mudding through the Termiglass in the barrier.
The weight of the evidence, especially taking into account that of Messrs Walsh and Walters, is against penetration by Termites of the Termiglass itself, as opposed to penetration being facilitated via the lagging left around the pipe. I note that the 2000 Standard (para 7.4.2) when referring to penetrations by pipes of a graded stone particle barrier requires that the pipe be surrounded by the particles.
My conclusion is that the reason why the barrier at Lagoona Court was breached was because of an installation error, particularly by leaving lagging around a pipe, not because the Termiglass in the barrier was penetrated. Termites also gained entry to the property by “bridging” at various locations. The latter though was an indication of a barrier which had to this extent worked by forcing termites into what is known as an “inspection zone” where their presence could be readily detected and treated. Evidence of post inspection surface chemical treatments is not an indication of a breach of a barrier but nothing more than standard practice in the pest management industry when the presence of termites is detected. Such treatments are not effective to neutralise such of those termites as are subterranean.
Granitgard also led evidence from Mr Gabriel and from his father-in-law, Mr Baverstock in relation to other properties where it was said there had been a breach of a Termicide barrier system. It transpired that a number of the properties identified by Mr Gabriel as being properties in which Termicide barrier system had been breached were, in fact, properties where there was a Granitgard barrier. That did not inspire me with confidence as to the accuracy of Mr Gabriel’s recollection when unassisted by contemporaneous records.
In respect of the other properties he identified as having had breaches, which did in fact have a Termicide barrier system, Mr Gabriel could offer no precision in relation to that asserted breach. He conceded that there were a number of possible inferences, apart from just a breach through the Termiglass which could be drawn if termites were present but there was no evidence of “bridging”. These were that:
(a)there could have been an installation error;
(b)the barrier could have been damaged during building construction;
(c)the inspection zone could have been compromised (for example by landscaping allowing termites to get in without revealing themselves);
(d)the barrier could have been compromised by subsequent trade work (such as plumbers and electricians penetrating the barrier with pipes);
(e)the slab could have a defect (which was the probable cause in relation to one of the properties).
Mr Wallace gave what I thought was helpful and accurate evidence, based on experience, as to the occurrence of such matters and the threat of termite entry thereby created. In this regard, Mr Wallace corroborated like evidence which Mr Paul Jeynes gave on the basis of his own experience. Having regard to their evidence, to the performance of Termiglass or what became known by that name as tested and Mr Schaffer’s and Mr Meadows’ evidence about the system, the inference which I have mentioned strikes me as an inherently more likely explanations than that given by Mr Gabriel.
The existence of breaching at such of the properties Mr Gabriel cited as did have a Termicide barrier system was not supported by the contents of those files. Mr Gabriel’s explanation for this was that Termicide had a policy, dictated by Mr Paul Jeynes, of always terming what was truly in a technical sense “breaching” as “bridging”. The existence of a policy of “covering up” breaches of Termicide’s barrier system was denied by those Termicide employees who had worked at Termicide while Mr Gabriel was employed by the company – Mr Annis (McGrath), Mr Dixon, Mr McFarland and Mr Williamson. Mr Paul Jeynes also denied the existence of any such policy.
Termicide had what was described as a “no quibbles” policy in respect of its system warranty in relation to any complaints made as to the presence of termites at a property in which one of its barrier systems was installed. This involved giving property owners the benefit of the doubt. Mr Paul Jeynes explained in evidence the business benefits, in terms of the repute of Termicide and its barrier system and earnings, of doing this both in relation to owners and bucklers with whom Termicide dealt. He also stated that the cost of having such a policy and undertaking remedial works relative to the earnings at stake was not great. I am also satisfied, based on Mr Paul Jeynes’ evidence, that this policy was not confined just to Termicide’s own barrier system but was applied to other systems which it installed as well.
Termicide has what I regard as a barrier system effective to prevent penetration by subterranean termites if correctly installed and if Termiglass quality is maintained. Even if correctly installed, Termicide does not control the sites at which it installs its system. Other tradesmen also work there. Further, Termicide has no control over subsequent works which an owner might undertake which might unwittingly provide a means of entry for termites. It is not at all difficult to see, in light of the evidence of Mr Wallace and Mr Paul Jeynes, how termite infestation might occur at a property where there is a Termicide barrier system even in the absence of a failure of that system. Neither is it difficult to see how sometimes it may be difficult to pinpoint exactly how entry has occurred or that sometimes there might be multifactorial possibilities. That Termicide would come to have a policy of the kind described in such circumstances and for the reasons given by Mr Jeynes made perfectly good sense to me when reflecting on the whole of the evidence. The existence of such a policy does not amount to an admission that its barrier system or its component, Termiglass do not have the qualities claimed for them by Termicide on its website.
By virtue of his role as head of Termicide’s post-construction department Mr Gabriel was responsible for addressing complaints concerning the barrier system. He undertook many of the requisite inspections himself. Accepting as I do that Termicide had a “no quibbles” policy; it seems likely on the evidence that, in the implementation of that policy, cases which were not a breach of the barrier system were treated as if they were. Having regard to an unfortunate breakdown in relations between Mr Gabriel and Mr Paul Jeynes, which I shall shortly relate, the impression with which I was left was that Mr Gabriel had come to elevate in his mind what was a feature of the “no quibbles” policy to the status of a separate policy. I put matters that way because I do not think that Mr Gabriel deliberately gave false evidence, only that, in matters touching on this case, he is not a reliable historian. I accept the evidence of the witnesses called by Termicide (to which I have referred) that there was no policy of terming what were truly breaches as “bridging”.
Mr Gabriel ceased to be employed by Termicide in mid-December 2008. He ceased that employment of his own volition. While he did inform Mr Paul Jeynes of this by telephone while Mr Jeynes was overseas, Mr Gabriel did not do this prospectively, i.e. he did not give a week’s notice (he seems to have been paid weekly). Mr Gabriel had decided to cease employment so as to pursue tertiary studies and then an alternative career.
Mr Paul Jeynes and Mr Gabriel were for most of Mr Gabriel’s time in Termicide’s employment on good terms. In the past Mr Jeynes had caused companies he controlled to afford Mr Gabriel some generous financial accommodation in times of need. He had also caused Termicide to give two employees in the post-contraction department “severance packages” of some $2,000.00 over and above entitlements when they resigned because of ill health. Mr Gabriel, as manager of that department, was aware of the payment by Termicide of those packages. That knowledge, I am satisfied, led to an expectation on Mr Gabriel’s part that he, too, would receive more than his entitlements on ceasing employment.
I have no doubt that in the December 2008/January 2009 period Mr Gabriel and Mr Jeynes discussed the question of a “severance package” on several occasions by telephone while Mr Jeynes was overseas. I am satisfied that, at one stage, Mr Jeynes did propose making a payment of $4,000.00 to Mr Gabriel but that, in the end, he decided to deal with the question when he returned from his leave and told Mr Gabriel this. I am also satisfied that Mr Gabriel was in need of funds at the time. Each of them was also well aware at the time of the existence of the present litigation. At that stage, the evidentiary cases of the parties had closed and closing submissions were to be made in February 2009.
Mr Paul Jeynes returned to Australia in early January 2009. A meeting came to be held in Mr Jeynes’ office on 9 January 2009. Present were Mr Jeynes, Mr Gabriel and Mr Baverstock. Recollections as to what was said then differ. That is unsurprising as the meeting ended in acrimony as between Mr Gabriel and Mr Jeynes. The most accurate account of what transpired at the meeting is that given by Ms Hyman, a bookkeeper who manages Termicide’s accounts section. She made a contemporaneous note of what was said at the meeting and was able to refresh her memory from this. Mr Jeynes, who read the note, accepted that it was accurate. Taking into account my observation of her when she gave oral evidence, I thought that Ms Hyman’s evidence as a whole was reliable.
In the course of that meeting, an exchange to the following effect occurred: Mr Jeynes asked Mr Gabriel what his intentions were if he did not pay him. Mr Gabriel stated that he would have to make other arrangements. Mr Jeynes inquired as to what he meant by that and whether he was going to Granitgard? To this Mr Gabriel replied that he had a family to support and bills to pay and that he would do what he had to do. Mr Jeynes asked him why the payment was important and how was $4,000.00 going to help him? In reply Mr Gabriel made reference to being enrolled at university that year and that the money would help him pay for it. There followed an exchange as to whether particular money was owing in respect of an air conditioner installed at Mr Gabriel’s home and, in turn, whether various commissions were owed to Mr Gabriel. That subject was not resolved at the meeting. I accept Ms Hyman’s account that the meting was concluded by Mr Gabriel’s walking out and stating at the door, “I’m just going to have to make other arrangements.”
One sequel to the meeting and another indication of the acrimony that attended it was that Mr Baverstock resigned from his employment with Termicide later that month. That the acrimony extended to relations as between Mr Baverstock and Mr Paul Jeynes was very evident, I thought, when Mr Baverstock made reference, quite gratuitously, in the course of his cross examination to his perception of Mr Jeynes’ past behaviour generally.
I observed Mr Jeynes closely on each occasion when he gave evidence. My strong impression was that the court case was occasioning him considerable personal stress and that he was making a conscious effort to keep his temper in check. Having regard to the note of the exchange on 9 January 2009 and to the various oral accounts of it, I doubt whether he was then exercising the same restraint. Equally, I am sure that Mr Gabriel had come to feel that he had an entitlement to a “severance payment” even in the absence of any formal contractual entitlement (none was suggested). It cannot have been a pleasant meeting. I was left with the impression that the acrimony and his sense of grievance had affected the reliability of Mr Gabriel’s memory. As will be evident from earlier paragraphs of these reasons for judgement, I do not accept his evidence where it differs from that of those called on behalf of Termicide.
For these reasons, my conclusion is that Granitgard has failed to prove, on the balance of probabilities that:
(a)Termiglass as installed in the Termicide barrier system does not provide an effective barrier to termites;
(b)Termiglass as installed either contains or is likely to contain particles that range in size from <1.18 to 2.5 mm in such a proportion that would mean that Termiglass did not contain a sufficient proportion of medium particles. [I put this conclusion that way because, on the evidence, it is possible that some few particles of the sizes alleged may be present, having regard to the production process, but not in a proportion that would render the barrier penetrable by subterranean termites found in South East Queensland. The same applies in relation to the possible, occasional presence of small paper or rubber particles.]
(c)The system used by Vision Glass for the production of Termiglass for Termicide for installation is not capable of consistently producing large commercial quantities of Termiglass that satisfies the requirements of the 2000 Standard and of the CSIRO Appraisal.
(d)Termiglass does not consistently satisfy the performance requirements of the 2000 Standard and more particularly that Termiglass:
(i)does not deter concealed entry of termites to buildings
(ii)is not termite resistant;
(iii)is not graded and shaped so that a sufficient proportion of the particles are of a size that cannot be transported by foraging termite species found in the South East Queensland region;
(iv)is not able to be placed in such a manner that voids between particles do not permit the penetration of foraging termite species found in the South East Queensland region;
(e)scientific experiments carried out by Dr Ewart and by Dr Holt raise doubts about the effectiveness of Termiglass as installed in Termicide’s barrier system sufficient that the making of representations as alleged misleading or deceptive or likely to mislead or deceive the public or that section of the public comprising consumers or potential consumers of Termiglass and that barrier system. (To the contrary, their experiments raise no such doubts).
Notwithstanding this conclusion it is appropriate to consider whether in any event Termicide had reasonable grounds for making any of the alleged representations. This requires consideration of s 51A of the Trade Practices Act.
In McGrath v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230 at [44], Allsop J (as his Honour then was), with whom Emmett J agreed, observed of that section:
Under s 51A(1) of the Trade Practices Act, a representation is to be taken to be misleading if it is a representation with respect to any future matter and the maker of the representation does not have reasonable grounds for making the representation. Under s 51A(2), the maker of the representation with respect to any future matter is to be deemed not to have had reasonable grounds for making the representation unless it adduces evidence to the contrary. However, if evidence is adduced by a representor to the effect that the representor had reasonable grounds for making the representation, the deeming provision will not operate. Where the representor adduces such evidence, it is then a matter for the court to determine, on the balance of probabilities in the ordinary way, whether or not the representor had reasonable grounds for making the representation. [Emphasis added]
See, also, his Honour’s further observations at [191] and [192], which follow an elaborate consideration of earlier authority. Whatever controversy in the past attended the meaning and effect of s 51A, I consider that I am obliged to take the operation of the section to be as stated by Allsop J, with the agreement of Emmett J in McGrath v Australian Naturalcare Products.
The submission was made on behalf of Termicide that s 53 of the Trade Practices Act “does not encompass misleading or deceptive conduct by making future representations”. I took the latter to mean “representations as to the future”. I do not accept this submission. As Toohey J, then a member of this Court, remarked in James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 at 372, “a statement relating to the future may contain an implied statement as to present or past fact”. The various alleged representations concern Termiglass as installed, Assuming that they were made at all, these alleged representations do carry with them, in my opinion, an implied statement as to a present quality of Termiglass even though they relate to how, in the future, as installed, it will function.
The contravening quality of the alleged representations is not that they are said to be misleading but rather that they are said to be false. The reference in the pleading (para 14, 2nd further amended statement of claim), is to “s 53(1)” but, having regard to the type of contravention alleged (para 13, 2nd further amended statement of claim), this is plainly intended to be a reference to s 53(a). Unlike some of the other paragraphs in s 53, s 53(a) does not specify “misleading” as an alternative to “false”. To require, subject to specified qualifications that a representation is to be taken to be misleading is not to require that a representation be taken to be false. It is for this reason, not that put forward by Termicide, that s 51A has no role to play in relation to its particular alleged contravention of s 53.
Termicide has adduced evidence, set out above, as the advice which it had, which included the CSIRO Appraisal, prior to supplying to the market its barrier system incorporating Termiglass to the market in 2004 and prior to the making of statements on its website concerning the same. Termicide had the benefit of initial advice from Mr Schaffer and then, on his referral, Dr French who worked in collaboration with Dr Ahmed. Each of these gentlemen was (and remains) reputable and well qualified to furnish advice about the proposed barrier system. Dr French might be described as the father, in Australia, of particle barrier systems. That his consultancy was retained is a measure of the knowledge and experience possessed by Mr Schaffer as well as the prudence displayed by Mr Paul Jeynes (and also, it seems, his father, Mr David Jeynes). The advice which Dr French gave was favourable in relation to the likely performance of medium crushed glass particles in a barrier system. The CSIRO Appraisal indicated that the proposed system would comply with the 2000 Standard. In reliance on the advice and appraisal, Termicide caused this system and those particles (which it termed Termiglass) to be supplied. The performance of the barrier system in the building applications once supplied was not such as to warrant any questioning of the accuracy of the CSIRO Appraisal or the other advice which Termicide had initially received. The Termiglass as produced, supplied and installed did, as I have found, exhibit the performance characteristics specified in the 2000 Standard. Termicide again took expert advice in relation to the “revalidation” of the CSIRO Appraisal, which was, in turn, issued. It has relied on this.
Against this evidentiary background, the deeming effect of s 51A does not operate. Moreover, I am also satisfied on that evidence, that, even assuming that it did make each of the representations alleged, Termicide had reasonable grounds for so doing.
Granitgard has failed to make good any of the causes of action pleaded against Termicide. In these circumstances, it is unnecessary to consider in detail Termicide’s submission that, in the event that a contravention was proved, relief should be refused to Granitgard on discretionary grounds. I shall merely record that, given the number of installations, Termicide’s continuance of supply in the market and that consumer protection is an object of the Trade Practices Act, I should not have been inclined to refuse injunctive relief.
The application should be dismissed.
I certify that the preceding two hundred and seventy-four (274) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. Associate:
Dated: 31 March 2010
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