Australian Mud Company Pty Ltd v Coretell Pty Ltd

Federal Court of Australia|2016-08-19|Before: Barker J

Date of last submissions after substantive hearing: 24 February 2015

Registry: Western Australia

Division: General Division

Sub-area: Patents and associated Statutes

Category: Catchwords

Number of paragraphs: 870

Counsel for the Applicants: Mr JM Hennessy SC

Solicitor for the Applicants: Gilbert + Tobin

Counsel for the Respondents: Mr BJ Hess QC with Dr LJ Duncan

Solicitor for the Respondents: Arns & Associates

BETWEEN: AUSTRALIAN MUD COMPANY PTY LTD (ACN 009 283 416) First Applicant

IMDEX LIMITED (ACN 008 947 813) Second Applicant

REFLEX INSTRUMENTS ASIA PACIFIC PTY LTD (ACN 124 204 191) Third Applicant

AND: CORETELL PTY LTD (ACN 119 188 493) First Respondent

MINCREST HOLDINGS PTY LTD (TRADING AS CAMTEQ INSTRUMENT SERVICES) (ACN 068 672 471) Second Respondent

JUDGE: BARKER J DATE OF ORDER: 19 AUGUST 2016

The first respondent, following consultation with the applicants, to file a proposed minute of orders giving effect to these reasons.
The Court will hear further from the parties, if necessary, on the question of the calculation of pre-judgment interest and costs.
The applicants' interlocutory application for summary judgment filed 11 December 2015 be dismissed with costs, such costs to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BARKER J: 1 This judgment deals with the question of what damages, if any, were sustained by Coretell Pty Ltd, the first respondent, as a result of unjustifiable threats made by the first applicant, Australian Mud Company Pty Ltd (AMC), to the respondents not to infringe its patent. 2 In Australian Mud Company Pty Ltd (ACN 009 283 416 and Others v Coretell Pty Ltd (ACN 119 188 493) and Another (2010) 88 IPR 270; [2010] FCA 1169, the Court dismissed the patent infringement proceedings instituted by the applicants and the cross-claim of the respondents for invalidity of the patent. In Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 2) [2010] FCA 1451, the Court: declared that the threats made by AMC by letters from its solicitors dated 14 November 2006, 5 December 2006 and 13 February 2007 to the second respondent (Mincrest Holdings Pty Ltd, sometimes referred to in passing as Camteq) and the respondents' solicitors and threatening the bringing of infringement proceedings against the respondents for infringement of Australian Innovation Patent No. 2006100113 were unjustifiable; and ordered that there be an enquiry into the amount payable by the applicants to the respondents by way of damages in respect of the cross-claim for unjustified threats. 3 The declaration and order were made pursuant to s 128(1)(a) and (c) of the Patents Act 1990 (Cth) which provides: (1) Where a person, by means of circulars, advertisements or otherwise, threatens a person with infringement proceedings, or other similar proceedings, a person aggrieved may apply to a prescribed court, or to another court having jurisdiction to hear and determine the application, for: (a) a declaration that the threats are unjustifiable; and (b) … (c) the recovery of any damages sustained by the applicant as a result of the threats. 4 The grant of this relief was not contested, in the sense that it was considered by the parties, at the time it was granted, and accepted by the Court, to be consequential upon the dismissal of the applicants' patent infringement proceedings. To an extent, as discussed below, the applicants now seek to avoid the terms of the declaration made, both by construing the declaration in a particular way, and by denying that Coretell was, or is, a "person aggrieved". 5 A subsequent appeal by the applicants against the dismissal of the infringement proceedings was dismissed. See Australian Mud Company Pty Ltd and Others v Coretell Pty Ltd and Another (2011) 93 IPR 188; [2011] FCAFC 121. The declaratory relief and damages enquiry order referred to above were not in issue on the appeal. 6 Coretell now submits that it, and it alone, is entitled to an award of damages in the amount of $3,290,386, together with interest thereon at such rate or basis as determined by the Court, and costs. Mincrest makes no claim for damages. 7 The applicants contend that Coretell's claim should be dismissed. A primary issue raised by the applicants is whether Coretell held any interest in the Camteq tool (also referred to as the Barker tool) the subject of the threat letters, at material times. If it did not, it cannot demonstrate that it sustained any damage. Coretell says, at material times, the intellectual property, or at least an equitable interest, in the tool had been assigned to it by Mincrest. The applicants contend no such assignment has been proved. 8 In pressing this contention, the applicants rely particularly on the findings of McKerracher J in Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 5) [2016] FCA 444, a related proceeding commenced in the New South Wales registry of the Court (NSW proceeding) in which judgment was delivered following the conduct of the damages enquiry, to the effect that the alleged assignment was not made. The Court heard interlocutory argument, following the completion of the damages enquiry, as to the implications in this proceeding of his Honour's finding in the related NSW proceeding. 9 The applicants further contend that only the third threat letter was directed to Coretell, the first two being directed to Mincrest, and so any damages assessment must be from that date. 10 The applicants contend, in any event, that the threat letters did not cause the loss Coretell now alleges it sustained and that, in reality, any alleged loss was the result of entirely different factors, factors rooted in the product being developed, its stage of development and its lack of merchantable quality at material times when the threats were made. 11 The applicants contend that Coretell's conduct following receipt of the threat letters is inconsistent with the assertion of its principal, Mr Nicky Kleyn, that supply and marketing of the Camteq tool ceased as a result of the letters. 12 The applicants say, in a related submission, that Coretell could not have ceased trading consequent on the threats as it had no business at the time the threat letters were sent: it was a dormant company. In this regard, they say the respondents have not provided any evidence of any cancelled orders for the Camteq tool resulting from the applicants' threats to commence proceedings. 13 They also say that Mr Ashley Gordon Barker's evidence, given on behalf of Coretell, was that the reason provided to him by Mr Kleyn for ceasing development and manufacture of the Camteq tool in late July 2007, was the commencement of the infringement proceedings. The applicants say this was consistent with Mr Kleyn's evidence that, after legal proceedings were commenced on 2 July 2007, he refused to supply customers with core orientation tools because of the legal proceedings - not because of the threat letters. 14 Finally, the applicants contend that the calculation of loss made by Mr Gregory Pollard Meredith, an expert accountant called by Coretell, was flawed and (as discussed below) cannot be relied upon for the purpose of assessing loss and damage in the enquiry in any event. 15 Coretell notes that, by their response to the damages enquiry, the applicants seek to put in issue whether actionable threats were made against Coretell. In this regard, it contends that the question whether Coretell is a "person aggrieved" for the purposes of the damages enquiry is res judicata in light of the declaration and order made, and cannot now be re-litigated. 16 It rejects the proposition that the first two threat letters were not also aimed at Coretell. 17 Coretell rejects most of the applicants' other propositions, particularly the claim that Coretell did not hold a relevant interest in the tool at material times. 18 Coretell says that the following key issues need to be determined: (1) Whether Coretell was "in business" at the dates of receipt of the threat letters, if the existence of such business is in fact or law necessary to the damages enquiry, and whether any such business ceased as a result of the threat letters. (2) Whether the Camteq tool was of merchantable quality at the dates of receipt of the threat letters. (3) Whether Mr Meredith's calculation of loss and damage is a reasonable estimate of loss suffered by Coretell. (4) Whether the opinion evidence of Mr A M Ross, an expert forensic accountant called by the applicants to express an opinion concerning damage, is admissible (which, it says, it is not). 19 In these circumstances, the following primary questions arise for determination: (1) Is Coretell a "person aggrieved" for the purposes of s 128(1) of the Patents Act? (2) Did Coretell hold a relevant interest in the Camteq tool at material times when the threat letters were received? (3) Was Coretell at material times operating a business? (4) Was the Camteq tool of merchantable quality at material times? (5) What damage has Coretell sustained in light of the Court's findings?

Evidence 20 In order to answer these questions a range of factual findings need to be made having regard to facts agreed by the parties and the testimony of witnesses called at the damages enquiry and the evidence led. Factual matters will be considered first and then each of the key questions will be answered. The evidence of the expert accounting witnesses Mr Meredith and Mr Ross will be considered separately later.

Agreed facts 21 The factual circumstances in which the damages enquiry is to be conducted are the subject of a statement of agreed facts made by the parties dated 26 November 2014, and received by the Court pursuant to s 191 of the Evidence Act 1995 (Cth). 22 The agreed facts are as follows: 1 This Statement of Agreed Facts (SOAF) is made jointly by the First Applicant (AMC), Second Applicant (Imdex), Third Applicant (Reflex) and First Respondent (Coretell), pursuant to section 191 of the Evidence Act 1995 (Cth). The Parties 2 Coretell was incorporated on 25 May 2006. 3 Coretell is and was at all material times an associated entity of Mincrest Holdings Pty Ltd (Mincrest) and Kleyn Investments Pty Ltd (Kleyn Investments) within the meaning of s.50AAA of the Corporations Act 2001 (Cth). 4 Coretell's business address is at the premises at 6 Davison Street, Maddington, Western Australia (the Maddington Warehouse). 5 Mincrest was incorporated on 17 March 1995. 6 Mincrest: (a) is and was at all material times an associated entity of Coretell and Kleyn Investments within the meaning of s.50AAA of the Corporations Act; (b) is the trustee of the Kleyn Family Trust ABN 39 593 588 385. 7 Kleyn Investments was incorporated on 29 March 2006. 8 Kleyn Investments: (a) is and was at all material times an associated entity of Coretell and Mincrest within the meaning of s.50AAA of the Corporations Act, (b) the owner of the business name Camteq International Services, registered on 23 November 2009; and (c) the trustee of the Kleyn Investment Trust ABN 71 981 731 047. 9 The business address for Kleyn Investments is the Maddington Warehouse. 10 Mr Nicky Kleyn (Mr Kleyn) is and was at all material times engaged in and responsible for directing the conduct, management, control and day to day operations of: (a) Coretell; (b) Mincrest; and (c) Kleyn Investments. The equipment 11 Core orientation tools indicate the orientation of core samples. 12 Survey instruments (cameras) determine geo-spatial properties of down-hole environments. 13 These pieces of equipment are complementary products; typically drilling rig operators require the supply of both before commencing drilling and mineral exploration activities. 14 The applicants' core orientation tool is the Ace Core Tool (ACT). Coretell equipment 15 There are two models of 'Coretell Equipment': (a) the core orientation tool (the First Tool) as described in the document entitled "Camteq- Orientation Tool quick user guide" (Camteq User Manual); and (b) the core orientation tool (the Second Tool), as described in the documents entitled "ORishot Tool - Quick user guide" and "ORishot multifunction Orientation Instrument" available at: http://www.coretell .com.au/ppp_oritool.htm (together, the ORishot User Manual), (together, the Coretell Equipment). 16 The Second Tool is comprised of probe Part Number CNPS100 and handset Part Number CNH 100. 17 Coretell updated, amongst other things, the Second Tool's handset design and wireless communication means in about May 2012. 18 Photographs of the First Tool are at Annexure A. 19 Photographs of the Second Tool are at Annexure B. Development of the Coretell Equipment 20 In late 2004, Mincrest engaged Mr Ashley Barker (Mr Barker) to develop and manufacture a core orientation tool, which would become the First Tool. 21 Between 5 September 2005 and November 2006, Mincrest: (a) manufactured or caused to be manufactured the First Tool; and (b) kept stock of the First Tool at Lot 4 Reservoir Road, Orange Grove, Western Australia (Orange Grove). 22 From about December 2005 until around December 2006 the First Tools were trialled without payment with potential customers by Mincrest. 23 On 31 October 2006, Mincrest supplied six First Tools to MTL Philippines. Mincrest invoiced MTL Philippines and was paid by MTL Philippines for these tools. 24 On 16 November 2006, Mincrest received the first unjustified threat in these proceedings, being a letter from Mallon & Co to Mincrest dated 14 November 2006 alleging infringement of AMC's patent. 25 On 22 November 2006 Arns & Associates replied to Mallon & Co on behalf of Coretell denying infringement of the patent and challenging its validity. 26 On around 5 December 2006, the Applicants made a further unjustified threat of patent infringement by a letter from Mallon & Co to Arns & Associates. 27 On 14 December 2006 Arns & Associates replied to Mallon & Co. 28 On 31 January 2007, two invoices issued on Mincrest letterhead to Silver City Drilling (NSW) Pty Ltd (Silver City) for the hire of four First Tools. Mincrest was paid by Silver City for these tools. 29 On 13 February 2007, the Applicants made a further unjustified threat of patent infringement by letter from Mallon & Co to Arns & Associates. 30 On 28 February 2007 and monthly until 1 July 2007, Coretell invoiced Silver City for the hire of kits of the First Tool. These invoices were paid by Silver City. 31 On 31 May 2007 and 1 July 2007, Coretell issued invoices in respect of the hire of kits of the First Tool to GOS Drilling (GOS). These invoices were paid by GOS. 32 On 2 July 2007, the Applicants commenced these proceedings. 33 By 31 July 2007, Mr Barker was instructed to cease manufacturing the First Tool. 34 Since January 2009, Coretell has: (a) made and thereafter supplied, hired and offered for supply and hire and kept for the purposes of supply and hire Second Tools to customers and distribution agents for use:- 1 in Australia; and 2 in countries outside Australia; (b) kept Second Tools at Orange Grove and, since September 2010, at the Maddington Warehouse; and (c) supplied Second Tools to customers and distribution agents in Australia and in countries outside Australia together with the ORishot User Manual and such Second Tools have been used in accordance with the ORishot User Manual. Previous Proceedings 35 The First Tool and the Second Tool were the subject of a claim of patent infringement of Innovation Patent 2006100113 by Imdex and the First and Second Applicants, which claim was unsuccessful: (a) at trial (WAD 132 of 2007; [2010] FCA 1169); and (b) on appeal (WAD 8 of 2011; [2011] FCAFC 121). 36 The First Tool and the Second Tool were subject of a claim of patent infringement in respect of Australian Innovation Patent No AU2010101356 entitled 'Core Sample Orientation' and Australian Innovation Patent No AU20111 01041 entitled 'Core Sample Orientation' in proceedings NSD 2082 of 2011. The claims of patent infringement were heard in a trial that concluded in July 2014 and in respect of which judgment is yet to be delivered. [insert photographs]

Evidence received at the hearing 23 The evidence of witnesses bearing on key factual issues is recounted in this section.

Mr Kleyn's evidence 24 By his evidence in chief, Mr Kleyn, called by Coretell, explained how his business developed from that of a watchmaker into the Camteq business. He initially received work from Ace Drilling Supplies to fix a timing device in an industrial camera used in the mining industry for down-hole surveys. From about May 1993, he began working exclusively on Ace Drilling work. On the advice of his accountant he acquired Mincrest, which was registered and commenced business in March 1995. He and his wife each hold one share in that company and he is the sole director and person primarily responsible for managing its affairs. From the outset, Mincrest traded as "Camteq Instrument Services". Before that, Mr Kleyn had personally used that business name. 25 In late 1996, Ace Drilling ceased its relationship with Mincrest. Mr Kleyn then said he resolved through Mincrest to develop what he considered to be an improved version of the Ace Drilling camera, based on his belief that the survey camera he had been repairing was a relatively unsophisticated mechanical device and the technology was in the public domain. Mincrest then rather quickly developed its own camera, which it offered to clients for hire and sale, and by the end of 1996, had approximately 10 functioning units and soon all were on hire to clients. At that point Mincrest traded from Mr Kleyn's home in Orange Grove. 26 Mr Kleyn said that by late 1997, Mincrest had 20 units out in the market on regular hire and in March 1998, Mincrest commenced operating under the business name "Camteq Instruments". Often the business was referred to as "Camteq". 27 By late 1998, Mr Kleyn said he had approximately 50 units, most of which were on hire. Business was steady and Mincrest was making a profit. In November 1998, he employed its first employee, Mr Ian Bennett. 28 Mr Kleyn said that in about late 2000, there was greater demand for electronic, as opposed to mechanical, cameras, and he decided that Mincrest should develop its own electronic camera. It engaged an electronics company called Globaltech Corporation Pty Ltd to develop an electronic probe to perform the same function as the camera. 29 Then, from January 2003, Mincrest purchased from Downhole Surveys (Australia) Pty Ltd, agents for Reflex Instruments Asia Pacific Pty Ltd, around 30 Flex-it camera probes. He said there was a growing demand for electronic cameras and Reflex was the company that supplied the best product. Mincrest hired out to its customers the cameras supplied by Reflex and this was known to and authorised by Reflex. 30 Mr Kleyn said that in or around early 2004, he had a discussion with the representatives of Globaltech in relation to producing an orientation device, being a device similar to the probe but minus the inclusion of a magnetometer. He then began receiving enquiries from customers about when Mincrest would be making available for hire an electronic orientation device. One of these enquiries was from Mr Harry Koushappi, the manager of the drilling division of Barminco Limited at Kalgoorlie. 31 Later in 2004, Mincrest ceased its relationship with Globaltech after Mr Kleyn heard it was embarking on its own programme to develop similar devices. 32 At that point, Mr Kleyn said, he needed to retain a different developer to assist in the design and manufacture of the orientation tool and that was when he met Mr Barker, who he understood was a physics graduate at Curtin University in Perth who had an interest in the technology required for down-hole probes and orientation devices. (The Court should note here that Mr Barker is not related to or known to the Court). 33 Mr Kleyn and Mr Barker then discussed a project and came to an agreement, whereby Mr Barker (through his company Hightech Laboratories) would prepare a working prototype electronics board, but without casing, which Mr Kleyn intended that Mr Steve Walton and he would design and Mr Walton, who had been engaged as another employee of Mincrest in early 2004, would machine - at least for the prototypes. At that point in dealing with Mr Barker, Mr Kleyn did not immediately prepare a purchase order for the prototype. 34 Mr Kleyn recalled that by early 2005, Mr Barker showed him a circuit board and explained to him its capabilities and connected it to a monitor which showed the operation of the tool with a graphic on a screen, coinciding with the movement of the tool. He said he identified some immediate difficulties with the prototype and it was apparent to him that there was still a lot of work to do before "we would have a viable orientation tool". Nonetheless he took confidence from the work that Mr Barker had done. Indeed, he requested him to continue with his work and thereafter remained in touch with him, as they discussed improvements on the design and function of the tool. 35 Mr Kleyn said that at one of these meetings, someone proposed a separate handset from the down-hole component of the tool and Mr Barker agreed to explore the viability of a separate handset and later told him it was viable and the design of the tool thereafter changed so that the operation of the tool was controlled by a separate handset. 36 Mr Kleyn said that about 13 January 2005, Hightech provided a quotation for the design and production of the circuit board for the tool, which he accepted and caused Mincrest to issue a purchase order of that date. Then in March 2005, Camteq received a quotation from Hightech for the handset design. He said the work undertaken by Hightech did not include the manufacture of the external steel casing for the probe, which work was undertaken by a machining shop in Perth in early 2005. 37 Mr Kleyn said that while there were some issues with the first batch of casings produced because the steel had not been hardened correctly for the intended use, the tools produced using the initial batch of casings were "adequate" for the trials conducted, but not for extended use and the issue was resolved by the next batch of housings manufactured. 38 He said the plastic fitting which housed the electronics and fitted inside the steel housing was machined by Mr Walton at Mincrest's premises in Orange Grove. 39 Mr Kleyn said that from 2003, he was receiving regular enquiries from customers about electronic survey cameras and at that time Mincrest was supplying the mechanical camera but only had limited Flex-it stock for hire, given that it cost Mincrest $30,000 per tool purchased. 40 So, when he engaged Mr Barker in 2005, he had Mr Barker work simultaneously on both a digital survey camera and the orientation tool. 41 Mr Kleyn said Mr Barker commenced working from the Orange Grove premises in or around August 2005, and the arrangement was that although Mr Barker would work from those premises, he would remain a contractor and invoice Mr Kleyn for his work on a regular basis. Mr Barker apparently wished to be free to take on other work. 42 Mr Kleyn said Mr Barker's time was predominately spent in the development of the camera but he worked on the orientation tool as and when time permitted. By late 2005, Mr Barker produced the first working prototype of the orientation tool. The two part orientation tool was a significant improvement, Mr Kleyn said, over the products of competitors. 43 Mr Kleyn said he believed "that we had a good, viable functioning product. I concluded that it had reached a stage where the tool could be demonstrated to, and trialled by, prospective customers". 44 In late 2005, he spoke to Mr Eric Tonkin at Boart Longyear, which managed a gold mining operation at Leinster in Western Australia. He says Mr Tonkin offered to "road-test the tool for me and provide feedback". This was then done for an extended period without charge. He received an email later from Mr Tonkin dated 16 December 2005, reporting that the tool had been used by the drilling crews and there were no problems with it. 45 It appears Mr Barker also dealt directly with Mr Tonkin in relation to the tool and emails passed between the two of them on 5 March 2006. 46 In an email of 15 March 2006, it appeared an issue had emerged concerning the batteries in the tool, which Mr Kleyn said he and Mr Barker concluded was caused by vibration resulting in the batteries' wires breaking loose. Mr Barker proposed a solution to this, as a result of which modifications were made and it ceased to be a problem. 47 Mr Kleyn said that in May 2006, Mr Tonkin reported to Mr Barker another issue with accuracy of the data rendered by the tool and, on further investigation, he and Mr Barker concluded the problem was not with the tool itself but rather in the operation of the tool by the drillers by not following the correct sequence of steps required to achieve the correct readings. He was surprised to find such an elementary mistake was being made but, as a result, he and Mr Barker reviewed the instruction sheet and emphasised the importance of the survey being taken before the sample was snapped off from the surrounding rock, and not afterwards. 48 Mr Kleyn said in his evidence in chief that he was confident by May 2006 that the orientation tool was ready for commercialisation and he decided to market it through a new company with the intent of making an entirely separate business operation. He said that his intention was that as the new tool gained acceptance in the industry the new company and business would be sold. So he proceeded to incorporate Coretell on 25 May 2006. He was and is the sole director and shareholder of Coretell and there is only one issued share in the company. As with Mincrest, the company initially traded from his home premises in Orange Grove, although at the time of this enquiry it traded from premises in Maddington. 49 Mr Kleyn said the promotion and marketing of the tool was "understated". He made clients aware of it mainly by word of mouth. Most of his customers were interested in the camera but he took the opportunity when speaking with them to tell them about the orientation tool. He began, he said, by having such discussions with customers in early 2005, when he only had the prototype, but by the time the tool was "ready for market in May 2006", Coretell had established customer demand for its tool. 50 In June 2006, he said he supplied two prototype tools to Mr Dwayne Reynolds of Drillshop Pty Ltd, which was an agency that sold mining equipment on a commission basis and had successfully arranged hires of Mincrest products in the past. He said he asked Mr Reynolds to also market and promote the orientation tool. 51 In his evidence in chief, Mr Kleyn said that, on the basis of his discussions with Mr Reynolds, he was aware that Drillshop subsequently demonstrated the tool to prospective customers and was informed that Ausdrill Northwest Pty Ltd and Barminco wanted to conduct their own trials and asked for three tools to be supplied for that purpose, which Mr Kleyn agreed to. 52 Mr Kleyn understood that the tools were trialled at least at two rigs and he received feedback via Mr Reynolds. He did attend on site, however, personally to view a trial during a visit to Kalgoorlie in around August or September 2006 and, on that occasion, there was a minor issue with the synchronisation between the handset and the down-hole component for one of the tools. Mr Kleyn said it was "not a serious issue" and they merely continued the trial with a different unit that Mincrest made available. Mr Barker later agreed to investigate what the issue was and Mr Kleyn said the problem "was not reported to me again". 53 Mr Kleyn said that in about October 2006, a Mr Paul Manda of Boart Longyear telephoned him and said he wanted to trial another one of the orientation tools at a mining site and Mr Kleyn agreed to supply a tool for that purpose. The tool was returned a few weeks after being supplied and recorded as having as a "flat battery". Mr Kleyn personally inspected the tool and it was apparent to him that the tool had been opened. 54 He telephoned Mr George Smith at Boart Longyear and asked him whether he knew anything about where the tool had been and who had used it and was told, in substance, that it had been delivered to Imdex Limited (one of the applicants) for inspection. 55 Mr Kleyn also indicated that Mincrest had, in some instances, been having difficulty in getting opportunities to demonstrate the tool to potential customers and a number of representatives had declined his offers to demonstrate the tool. 56 Mr Kleyn stated in his evidence in chief that "prior to the transfer of the orientation tool business to Coretell", Mincrest had agreed, in about October 2006, to supply six orientation tools (three kits) to Mr Peter Draper of EastWest Drilling, who had mining interests in the Philippines. He said he was not entirely sure whether he discussed with Mr Draper his purchase personally or through the company. The tools were charged at around $10,000 per tool, being a total of around $60,000. He said the payment was receipted by Mincrest and used by Mincrest to off-set its costs in having paid for the development and production of the tools and that is why they were recorded as a sale by Mincrest of those tools - even though the orientation tool business had been transferred to Coretell. 57 Mr Kleyn said that Mr Draper directed that the invoices for the tools be made out to MTL Philippines. 58 Mr Kleyn said that in early November 2006, he informed Mr Barker that he had separated the activities of Mincrest and Coretell and requested that in future Mr Barker direct his Hightech invoices for work in relation to the camera to Mincrest, and any work on the orientation tool to Coretell. 59 Mr Kleyn said that, on occasion, Mr Barker later issued some of his invoices to Mincrest, which should have gone to Coretell, and when these errors were detected, the invoices were paid by Coretell and entered into the accounts of Coretell. 60 Mr Kleyn said Coretell started "actively trading" on 14 November 2006, and its transactions were entered into the general ledgers of the company as at that date. He said the first transaction is recorded as occurring on 14 November 2006. 61 He said Coretell opened a bank account with the National Australia Bank (NAB) on 20 November 2006, and the first transaction is recorded as occurring on 26 November 2006. 62 Mr Kleyn said that it was on or around 16 November 2006 (that is, two days after he said Coretell started actively trading) that he received the letter from Mallon & Co, the then lawyers for AMC, alleging patent infringement and seeking the undertakings mentioned above. 63 He said he then consulted his lawyers, Arns & Associates, and refers to the correspondence already set out above that passed between Mallon & Co and Arns & Associates. 64 Mr Kleyn said that in the period from the receipt of the initial letter from Mallon & Co, Coretell discontinued all further marketing and general supply of the Coretell orientation tool, with one exception, because of an existing commitment to an important customer - Silver City Drilling (NSW) Pty Ltd. 65 He said he told other customers that he could no longer supply them, including Barminco, and he told Mincrest employees to inform all customers who inquired about it, that Mincrest could not supply the tool until further notice. 66 He said he made one exception in the case of Silver City, because Mincrest's sales manager, Mr John Penrose, had made a firm commitment in October 2006, before the Mallon & Co first threat letter. 67 Mr Kleyn said that although the first invoice for hire to Silver City was processed through Mincrest, this was an administrative error and it should have been through Coretell. He said the error occurred because his wife, who manages the accounts, was on holidays at the time and once she returned to the office, Coretell began invoicing Silver City in around February 2007. 68 Mr Kleyn said Coretell agreed to supply up to six more kits to Silver City after the initial supply of three kits. But he then instructed Mr Penrose to inform Silver City that Coretell would no longer supply further kits after that. He said they gave an excuse that there were technical problems with the tools, but that excuse was not in fact true. 69 Mr Kleyn said that in around July 2007, he ceased the further hire of the orientation tools to Silver City and used the pretext that there was a problem with the batteries and the calibration of the tool, when in fact there were no such problems. He said he was worried about the threats of litigation by AMC. 70 He then learned in July 2007, that Silver City had on-supplied one of the tools to another company and that arrangement was later terminated. 71 Mr Kleyn said, as Mr Barker was not involved in the marketing and did not have regular contact with the customers, he did not recall giving Mr Barker any particular direction in regards to whether to continue manufacturing the orientation tool in November 2006, but at that point, he was primarily working on the camera. 72 In about May 2007, Mr Kleyn said he told Mr Barker that he had withdrawn the orientation tool in late 2006 because of the threats and, in order to keep Mr Barker fully occupied in the event that the camera work was not sufficient, he requested him to continue manufacturing the components of the orientation tools and assemble the completed tools. He said he did this "because of the assurances I had given to Mr Barker that there would be sufficient work to continue to retain him. The second reason was that when the infringement proceedings ended, Coretell would have in stock sufficient working tools to supply the market". 73 Thus, Mr Barker continued to produce tools until about July 2007, when he ceased work on the orientation tools. At that point, Coretell had approximately 25 kits in stock, and in each kit there were two tools with a handset. 74 Mr Kleyn said that after the infringement proceedings were commenced in July 2007 by the applicants, he advised customers that Coretell was being sued by Imdex and, until the legal action was resolved, Coretell could not supply any orientation tools and it did not do so. Mr Kleyn stated that thereafter "[m]y business was dependent upon revenue received from the hire of cameras through Mincrest". 75 In that regard, Boart Longyear was a major customer for the hire of the camera and it was also told that Coretell could not supply the orientation tool because of the infringement proceedings. 76 Mr Kleyn said that in the three months after the infringement proceedings were commenced, orders from Boart Longyear for the cameras "dropped markedly" and when he made enquiries of Boart Longyear, he was told that it had moved all of their business, including the hire of cameras, to Imdex. 77 Mr Kleyn said the loss of business from Boart Longyear resulted in significant cashflow problems for Mincrest. 78 At this time, Mr Barker was no longer working for "my business", as Mr Kleyn put it, having stopped working from the premises from late 2006, and he ceased manufacturing the orientation tool around July 2007, and ceased invoicing either Mincrest or Coretell altogether by late 2007. Mr Kleyn said he did not have financial capacity to pay Mr Barker for his services, and that is the reason for him leaving. 79 However, Mr Kleyn said that when he decided to re-enter the market later, he contacted Mr Barker, who at that time was also assisting him in the legal proceedings with AMC. He asked if Mr Barker would resume work on the manufacture of the orientation tool and the camera probe, but he declined, responding in an email dated 8 August 2008, expressing confusion about why Mr Kleyn would continue to manufacture an orientation tool when the company was being sued. He spoke with Mr Barker by telephone and met with him in an effort to persuade him to at least resume production of the orientation tools but he refused and was not willing to assist because of his concerns about being implicated in the infringement proceedings. 80 Mr Kleyn said he then contacted a company in Melbourne called Procept Pty Ltd, with which he had had some initial discussions in mid-2007 regarding a new camera probe but did not retain them at that point but eventually met with them in February 2008. He was told by their representatives they would not use the designs produced to that point by Hightech (Mr Barker) because of intellectual property difficulties and would only use workings and software that Procept had wholly designed. 81 Later, he also asked Procept about manufacturing the orientation tool in addition to the camera, after Mr Barker said he did not want to be involved. Procept agreed, but again said they would start that design brief afresh. 82 In October 2008, he came to an agreement with Procept with a view to the prototype tools being manufactured by December 2008. 83 He said Procept manufactured electronics for a prototype orientation tool quickly and, by Christmas 2008, had produced an electronic board that he was able to fit into a casing. It took Procept approximately two months to produce this which on testing proved to work very well. 84 He then, in January 2009, instructed his solicitors to inform AMC's solicitors that Coretell was going back into the market to supply an orientation tool. 85 After that, Coretell commenced trialling the core orientation tools with a number of customers organised by Mr Reynolds and did not charge for the trialling. 86 Mr Kleyn said that in around early 2009, Procept commenced manufacturing of the electronic orientation tools but did not, at that time, have a trading history and did not have the funds itself to fund the production of the orientation tool and accordingly borrowed the funds from Mincrest, the loans of which were recorded. 87 He said Coretell assembled the tools itself at its business premises. 88 By April 2009, he said, Coretell had 20 kits available for supply to customers and there was an immediate demand for the tools. Mr Kleyn said he used the business contacts he had in camera hire to promote the core orientation tool and sale records show 10 tools on hire in April 2009, 15 in May 2009 and 20 in June 2009. He said the customers were Australian mining entities and a number of overseas companies in South East Asia, Europe, South America and Africa. 89 Mr Kleyn said he was also told in early April 2009 by a person from Boart Longyear, that AMC had told Boart Longyear that Coretell's tool was "illegal and I can't hire it". 90 At that point, correspondence flew between solicitors for Coretell and solicitors for AMC. 91 Mr Kleyn also gave evidence concerning management of Coretell and the involvement of his wife and daughter in the company. 92 He also confirmed that as at July 2007, Coretell had 25 kits of orientation tools in stock in addition to the six or more kits returned from Silver City when that hire ceased that month. 93 He also said that as at November 2006, the cost of producing a tool was not significant as Mr Barker was charging about $500 per tool circuit board (being $1000 for a complete kit, including handset), which was cheaper per kit than when Procept was engaged by Coretell for that work. 94 The assembly lines were the same for the initial Hightech version of the equipment as the later Procept version and assembling the circuit boards into the housing only took a few minutes, permitting assembly of 20 tools within three hours. 95 Coretell was able to obtain funding for its operations if necessary from Mincrest as trust distributions or loans. Mincrest was continuing to operate a profitable business on survey cameras throughout the period. 96 He believed Coretell, if necessary, could have made use of the 30 days' credit period arrangement. 97 Mr Kleyn said the anticipated better news from hire of the orientation tools was substantial given the capital cost of manufacture and in his experience from running both the survey camera business and, from 2009, the successful core orientation business. He believed that the business would have, within a matter of one to two months, been wholly self-funding and profitable, which would ensure that it had sufficient ongoing manufacturing capacity to meet demand, as it does today. 98 Mr Kleyn also said that from July 2007 to early 2009, Coretell was able to obtain substantial funding for defending the infringement proceedings and to him that indicates that Coretell had the capacity to source funds to cover the initial cost of manufacture, assembly and distribution of the orientation tool, which costs would have been a "mere fraction" of the costs of the litigation, particularly as the manufacture, assembly and distribution quickly becomes self-funding. 99 Mr Kleyn also addressed the four email threads between himself and Mr Barker about the orientation tools and cameras. 100 As to the first, an email thread from 20 to 22 December 2006, Mr Kleyn said that he was annoyed with Mr Barker as he had gone on holiday to Indonesia during a period Mr Kleyn thought was important to continue manufacture of the camera and also gear up for the first provision of hires to Silver City in early 2007. There was also an argument about fees as Mr Kleyn was concerned about Mr Barker's absence in what Mr Kleyn saw as a critical period in the lull between the 2006 mining activities and the 2007 mining activities. 101 As to a reference to "4 of the units are not working", Mr Kleyn said that referred to the four demonstration units that had been sent to Magnet Drilling, for which there was no charge and with which there were battery problems on three units and the fourth was physically damaged. He recalled reviewing the fourth unit and considering it had been mishandled or dropped as a lens was broken. He believed the battery problems were similar to the early 2006 battery movement issues which had otherwise largely been resolved. He recalled the problem "did not occur in all units provided to Magnet Drilling", and that battery housing improvements continue to this day to reduce failure rates of tools in the field. 102 As to a statement that "more units are being returned from Silver City not working", he said this referred to demonstration kits provided to Silver City at that time. He believed that only one kit ended up being returned, not two. He recalled the only problem was a battery movement issue or physical breakages of the tools in handling. He recalled an occasional tool being returned by Silver City but it was not a common occurrence. 103 As to the reference in the email to a possibility of refunding Mr Draper's approximately $60,000 due to a lack of tools available, Mr Kleyn said he was exaggerating this issue to put pressure on Mr Barker and he did not refund, and nor was he asked to refund, the money paid to him by MTL Philippines. 104 As to a statement that "I can't charge rent until you fix these problems", Mr Kleyn said he was concerned Mr Barker was not available for the work and there was a possibility that in his absence Mr Kleyn would not be able to sufficiently gear up for commercial hires (once the dispute with the applicants had been resolved). Accordingly, he was putting pressure on Mr Barker to return his attention to that work. 105 The second of the email threads was from 3 July 2007. Mr Kleyn said at that time they were discussing improving the handset so it was less prone to damage when handled by the drillers. He had decided it would be useful for future models to have a stronger handset. When he referred to having "lots of faulty [orientation tools] for return", he said he was referring to tools that had been returned in the trial period in about December 2006, such as the Magnet Drilling ones and the Silver City ones. This was not unusual, Silver City had at one stage about 15 kits. He would send out a replacement tool when a tool was having problems. 106 As to another email thread of 30 July 2007, where he is stating "as we still have problems with the Ori device we still can't charge any hire", Mr Kleyn said he was in this sentence referring to making the handset more robust and did not consider the handset was a major issue but they wanted to improve it. He did not believe he should be charged for a redesign by Mr Barker at that stage. He said that as Coretell was not earning income, then he was concerned about incurring further costs, particularly if the tool handset had not been improved as they had hoped. 107 As to the fourth thread from 21 to 24 January 2008, Mr Kleyn said prior to that email, he had been discussing Coretell ceasing the hire with Silver City, which had occurred in July 2007. Mr Barker had asked about the return of the tools including the one referred to as broken. He informed Mr Barker that the broken tool was a mechanical break and the others had been returned and were still working. Mr Kleyn said he referred to planning to send some tools overseas but he never did so as he was concerned this would be considered infringing conduct. 108 Mr Kleyn corrected some aspects of initial evidence in chief, in the following respects. 109 He confirmed that Mr Graeme Maurice Lightfoot stopped working for Mincrest in November 2005 and so references to him being involved in any trialling was an error after that date and either he, Mr Barker, or Mr Reynolds performed demonstrations in that later period. 110 Mr Kleyn also said that Mr Des Forde at Boart Longyear was one company representative who declined his offer to demonstrate the tool, although he did eventually perform a demonstration at their offices in Wangara. 111 Also a company representative from Kluck Drilling said it had an existing relationship with Imdex and did not want a demonstration. 112 Also on a number of other occasions, such as at Barminco and Boart Longyear, company representatives initially declined a demonstration, but one was nonetheless performed by Mr Reynolds at a different site. 113 Mr Kleyn also emphasised the work done in the design of the Camteq mechanical survey camera and the improvements made to it. 114 He also discussed making available some Eastman cameras that Camteq had purchased. 115 He also mentioned supplying Maxibore tools to customers, a tool which costs about $100,000 per tool. 116 He also expanded on his evidence about the use of the Flex-it camera probes, the Globaltech electronic survey camera and the "Barker electronic survey camera". 117 Finally, in relation to this technology, Mr Kleyn further discussed the Procept camera and the Procept orientation tool. 118 For the record, the Court notes that it upheld objections by the applicants to the following paragraphs or portions of Mr Kleyn's first affidavit that went into evidence as exhibit 2A: [61] excluded; [115] admitted, but not as to the truth of what was said. As to Mr Kleyn's second affidavit, exhibit 3, [12]-[50] excluded; [55(b)] admitted on a limited basis of what the witness said was said, but not as to the truth of the matters referred to; [101] second sentence to the same effect. 119 Mr Kleyn was cross-examined. 120 Mr Kleyn accepted that when Mincrest first hired cameras out, the firms that were hiring equipment were keen to utilise new and improved technology, so long as it was fit for the purpose they required. Mr Kleyn accepted that he understood that these firms operated in a market where the costs of exploration were high and that those for whom they worked, typically mine site operators, expected exploration activities to be conducted competently and efficiently. 121 Mr Kleyn accepted that the ProShot camera proved to be a significant success at a later point, as developed by Procept. 122 Mr Kleyn also accepted that when he retained Procept to design a core orientation tool in October 2008, he was keen to replicate the success of the ProShot that had been designed by Procept. 123 He also agreed that he was certain that the second tool, the Procept tool (also referred to as the ORIshot tool), as distinct from the Camteq or Barker tool, would be ready for commercial release by March 2009. 124 Mr Kleyn indicated that the tool was demonstrated in the January, when the first prototypes were provided and tested. 125 In relation to the Procept tool, Mr Kleyn rejected a proposition that his company needed 200 kits in order to start trading. He said, by reference to an earlier email to Procept, that a reference to delivery of 200 kits was related to Procept's requirements to know what he would take if manufactured. But he did not need that number to start trading. 126 He said it was incorrect that he raised with them and identified the number of units he required to commercially release the tool, and settled on the figure of 200 units. 127 When pressed about earlier discussions between him and Procept about 350 units being available, Mr Kleyn considered it was an economic decision on how many should be made to make it economically viable for Procept to manufacture a board. He accepted, however, that he would still require enough units to meet demand upon commercial release. His point was a narrower one, that he did not need 200 units before entering the market. 128 Mr Kleyn's evidence in cross-examination at this point was cautious, not readily agreeing with any propositions put to him. 129 Going back to the initial "Barker tool" which became the "Camteq tool" for the purposes of description, when asked whether it was critical to the success of a new piece of equipment that it be "tested and trialled" to ensure it was fit for purpose, Mr Kleyn suggested it was not critical but advisable to test it beforehand. He added to that by saying he did not accept the word "critical" because that suggested that if it did not work, that would be the finish of it. 130 He accepted, however, in further questioning, that testing and trialling of such a product in real world conditions is attempted, apart from anything else, to encourage some demand upon commercial release. While Mr Kleyn responded by saying that "you could do it that way, yes", that indeed appears to be exactly what he planned at relevant times. 131 As to the Boart Longyear trial in 2006, he accepted that the first part of the trialling was testing with them. He said that later in that year, Coretell did more trialling, more to see if people accepted the handset and the tool in its entirety. 132 When his evidence concerning that tool being ready for market in May 2006 was raised, Mr Kleyn immediately insisted that it was ready to go to market, stating: We weren't releasing it, at that stage, but it was ready to go to market, yes. 133 When asked whether he meant by that, that it was "ready for trialling off-site", he agreed. 134 When challenged as to whether or not it was ready for commercial release, he added that it was "ready for commercial release in November, but I wanted to gauge to make sure that people would accept the fact there was a handset with ours". He said he was not sure that it was going to be accepted or not. 135 He rejected the concept that he did not even have a tool at that point and was still developing it. He insisted that "we have a tool". 136 Mr Kleyn was then taken to evidence that he gave in the NSW proceeding. His attention was drawn to a letter of demand in November 2006, and that, on the transcript, he had indicated that "Coretell" was being set up to operate the core orientation tool. He did not have a core orientation tool at that stage. "We were still developing it". 137 When again challenged that it was not ready for commercial release as of November 2006, Mr Kleyn responded that in June 2006-2007 "we were getting the results back from Boart Longyear". He said they were testing the tool at the beginning of 2006. "So we had a tool, they were testing it". 138 Mr Kleyn further insisted that "they were testing it, an orientation tool. It was a complete orientation tool". He also agreed that it was not released for commercial release at that stage, but that they had an orientation tool "because they were using it". 139 When further pressed, he said it was ready to go to market and they gave it to Silver City in late 2006 and Silver City paid hire in 2007. He insisted it was definitely ready in November 2006, regardless of the evidence given in the NSW proceeding. Of that evidence, he said it was "incorrect". 140 Mr Kleyn was then cross-examined about supplying two tools for testing and evaluation by Mr Reynolds of Drillshop. He thought it was about the same time as he provided tools to Boart Longyear. 141 He was taken to the pleadings, which contained an admission that Coretell developed and manufactured the tool and supplied demonstration units of the tool to various parties for testing and evaluation in the field in various states, but ceasing on or about 25 May 2006. He then a little later in his evidence thought that either he got these dates wrong or Coretell gave Drillshop the two tools in 2005. He withdrew the tools. But he then said that he did not recall giving Mr Reynolds any tools in 2005. 142 The evidence in further cross-examination makes it clear that Mr Kleyn considered that the tools were provided to Mr Reynolds in June 2006. He agreed that he asked Mr Reynolds to market and promote the orientation tool. He also agreed that Drillshop subsequently demonstrated the tools to prospective customers. 143 In passing, as to any suggestions that tools were going out in 2005, having regard to the cross-examination of Mr Kleyn, I reject that that occurred. 144 Ultimately, it was put to Mr Kleyn that it was a fact that despite extensive trialling at Boart Longyear's Leinster mine throughout 2006, the tools were ultimately rejected by site geologists and sent back in May 2006. Mr Kleyn accepted they were sent back then, but "weren't rejected though, totally". He recalled "lots of problems on that site". 145 When emails from Mr Tonkin from Leinster were put to him, he accepted that the email suggested there were "accuracy issues" with the tool. He accepted they "had a few problems with the Ori-tool" - that is to say the Camteq or Barker tool. 146 Mr Kleyn also accepted as correct that he appreciated it was going to take him a while to regain the confidence of some people, in these circumstances. 147 Mr Kleyn accepted that through Mr Reynolds he also arranged trials of the tool between April and December 2006. Mr Kleyn thought he only had two tools or two kits. One tool he agreed was returned by BHP Billiton to Mr Reynolds. 148 Mr Kleyn suggested that he tried them out and "we didn't have an accuracy issue". He accepted the proposition that it was only the people who were running the sites who were having the accuracy issues. He considered that there was an issue with the way drillers were breaking off the bottom and doing surveys at the wrong time, a common problem because it was a new tool. He ascribed the perception difficulties with what Mr John Emerson of BHP was saying. 149 He rejected the concept that Boart Longyear were trialling the tool, insisting that it was "testing". 150 In relation to the question of sales to MTL Philippines, counsel for the applicants noted that in [62] of his first affidavit, Mr Kleyn had said that "prior to the transfer of the orientation tool business to Coretell, Mincrest had agreed in or around September or October 2006 to supply six orientation tools to Peter Draper", Mr Draper being with that company. 151 Mr Kleyn said that as far as he was concerned, the transfer happened in May 2006 to Coretell, but Coretell never had an income, Mincrest was paying its bills. He said he never transferred it "clearly like I should've done". He said that in hindsight he should have transferred it properly in May, but because Mincrest was paying the bills he did not. 152 When pressed that he "didn't transfer it properly" and accepted that he did not transfer it, Mr Kleyn responded that it was transferred "so far as I was concerned" but there was no legal reason for him to do it in writing. He insisted that Coretell owned the core orientation tool but Mincrest was doing the dealing because Coretell had no income at that stage. 153 He insisted that the completion of the transfer was after he had supplied the tools to Mr Draper. 154 When pressed as to what he meant by "the completion", he said that he opened the bank accounts in November and then Mincrest never dealt again on the core orientation tools. 155 As to the payment by MTL Philippines, he said that the money went to Mincrest and he opened the accounts in the name of Coretell so that further transactions could be done through the Coretell account. 156 Mr Kleyn plainly appreciated the apparent inconsistency between him insisting that Mincrest had transferred the ownership in the core orientation tool to Coretell before the dealings with MTL Philippines, and the documents that suggested Mincrest was, at material times, the owner of the tool and the payment by MTL Philippines went into Mincrest's account. 157 As on other instances, Mr Kleyn's response was that, in hindsight, if he had known he was going to be in the Federal Court dealing with this question eight years after the event, he would have done the transfer "properly with lawyers on the day that Coretell was incorporated". He acknowledged that he did not do that and hence "it wasn't completed until November". 158 This evidence was challenged by counsel for the applicants in cross-examination, who took Mr Kleyn to the actual words used in [62], on the fifth to the last line, where he stated: The tools were charged at around $10,000 per tool, being a total of around $60,000. And the payment was receipted by Mincrest. And was used by Mincrest to offset its costs in having paid for the development and production. These were recorded as a sale by Mincrest of those tools. 159 Counsel suggested to Mr Kleyn that he was being very careful with his wording, so as to not mention whether as part of the deal he was identifying, he actually supplied any tools. 160 Counsel said that he was being very careful not to assert that any tools were supplied to EastWest as part of the deal identified. Mr Kleyn categorically refuted that and said he supplied the tools to MTL Philippines via Mr Draper in about October 2006, but definitely before November 2006. 161 He accepted, however, that, as disclosed in an email of 22 December 2006 to Mr Barker, the tools stopped working after a short time and that he "may have to refund Draper's $60,000 because I have no tools to give and he is in town". 162 As to this email, Mr Kleyn suggested that he was having a dispute with Mr Barker at that time "over him not working hard enough to get the tools finished" and so, he "exaggerated" issues with Mr Barker to get him to do more work on the tools. He said the tools had been supplied to MTL Philippines at that stage. 163 The question of MTL Philippines is, to say the least, confusing, because of the respondents' pleading. Counsel put it to Mr Kleyn that the defence at [5.2] expressly pleaded that neither Mincrest nor Coretell had supplied any tools in response to the MTL Philippines order, but Mr Kleyn insisted that the tools were definitely supplied in October 2006. 164 Mr Kleyn was also cross-examined by reference to a further set of particulars in which the respondents said that in October 2006, Mincrest received an order for the supply of six tools of $60,000, but was unable to overcome "technical difficulties in the calibration of the tools" and did not supply them. 165 Mr Kleyn insisted that the tools were supplied to the client. 166 When pressed about this Mr Kleyn said he had always maintained that he supplied the tools and "I don't know where this has come from. I'm sorry". 167 Counsel then put it to Mr Kleyn that he had not supplied the tools and the reason for that was, they were not fit for purpose. Again, this proposition was denied by Mr Kleyn. 168 Mr Kleyn refuted a suggestion that it had been a characteristic of his in the proceeding to have a tendency, well after discovery had taken place and at a time when he was wishing to file some affidavit evidence, to all of a sudden say that he had discovered further material and then put it on when he thought it was advantageous to him. Specifically it was put to him that he had come across a copy of an old MTL Philippines invoice and sought to take advantage of it. 169 Mr Kleyn, following cross-examination, denied the proposition in effect that he had seized upon the MTL Philippines transaction both to fix an alleged date for transfer of the core orientation tool from Mincrest to Coretell, and to show that there was at material times a business in that core orientation device. 170 When counsel further challenged Mr Kleyn that, as at November 2006 when the first threat letter was received, the core orientation tool was still in development, he insisted that the tool was ready to be commercialised and that "we had sold three kits to MTL Philippines and were getting ready to supply Silver City", which he did not want to supply but did supply because they had promised those tools to Silver City. 171 He insisted that "we had tools in the marketplace at that time. We had tools that we'd sent to MTL Philippines and we had tools getting ready for Silver City in late 2006, prior to this letter". 172 Mr Kleyn was then cross-examined about the transfer of the tool claim. He was taken to evidence in the NSW proceeding. 173 He confirmed that his evidence was that the transfer "finished by mid-November. It was started when Coretell was incorporated. Coretell, that's why it was called Coretell, because it was doing the core orientation equipment". When challenged as to exactly what was said in [27] of the affidavit he filed in the NSW proceeding, which stated that "in mid-November 2006 all proprietary right which Mincrest had in the orientation tool were assigned to Coretell. There was no written document recording the assignment." Mr Kleyn said that he was explaining it. He said he was not good at paperwork. He did not do it very well. And he did not expect to be in the Federal Court for eight years. 174 He insisted that Coretell was incorporated for the core orientation tool and that is where the name came from. Again, he explained that he should have completed the transfer all at once and transferred money into Coretell at the time, but it took six months to transfer it across because Coretell never had an income. 175 When again challenged that there was no tool in May 2006, he insisted that there was. When challenged that there was certainly no business in 2006, he conceded that there were "no rentals as such". He added that there was a business in November 2006. There was Coretell and there was Mincrest. He said Mincrest was probably making about $300,000 per month at that stage from trading activities. 176 As of November 2006, Mr Kleyn insisted there was a core orientation device to be transferred, that it was ready for hire and it was going to Silver City, and that three kits had already been sold to MTL Philippines. "So therefore yes, there was a business". 177 In cross-examination, counsel also took Mr Kleyn to an affidavit made by Mr Barker in which he said that in or around late 2006, Mr Kleyn met with him and said that "he was restructuring his business and wanted to transfer that part of the business engaged in the development and sale of the ORIshot to a new business entity". Mr Barker also made reference to "now the tools are ready". 178 Mr Kleyn said he did not agree that in or around late 2006 he told Mr Barker he wanted to transfer part of the business and the orientation tool to a new business entity. He said he asked him to invoice Coretell in the future for core orientation work. He considered that Mr Barker had interpreted what he said. "He's a university person. He can do big words and all that sort of stuff. I can't". 179 When put to him that Mr Barker was not interpreting what was said but saying what he was told, Mr Kleyn denied there was any restructuring; he just got Coretell to do the core orientation devices. 180 Mr Kleyn also denied that he used words to the effect, in speaking with Mr Barker, that it would be a good idea to quarantine the ORIshot business away from the general Camteq business in case allegations of patent infringement were made in respect to the ORIshot tool. Mr Kleyn said: "that would be his interpretation, again, not mine". He denied that he had said that to Mr Barker. 181 Mr Kleyn insisted, so far as the transfer was concerned, that he "started doing it" when Coretell was incorporated but "I didn't finish it because Coretell had no income. We finished it in November, when we finally got the tools finished and we had a client base that were going to take the tools". 182 Even on the case put, counsel put it to Mr Kleyn, the "completion" was motivated by a desire to quarantine liability for any actions undertaken in respect of the tool to Coretell. He said that was "totally incorrect". He also said it was totally incorrect that that was what he had told Mr Barker. 183 Senior counsel for the applicants also took Mr Kleyn to the chronology of events filed by Coretell, noting that it asserted that intellectual property was transferred to Coretell in May 2006. Mr Kleyn said that was his belief. Counsel then reminded Mr Kleyn that in the NSW proceeding he had made an affidavit stating that there was a transfer in mid-November 2006. He responded by saying that it was his belief that it was "all transferred" as soon as he incorporated Coretell. He added: "It came to be that it wasn't or I couldn't claim it as being until I opened the bank accounts and Mincrest had nothing more to do with the core orientation device". 184 Counsel also took Mr Kleyn to Coretell's amended statement of claimed loss and damage and how it asserted that, after May 2006, all dealings were carried on by Coretell. That was the initial position. And then, as amended, it alleged in the alternative that this was only from November 2006. To explain the change of position, Mr Kleyn stated that "I should have done it better in May". 185 Then Mr Kleyn was cross-examined concerning his statement at [66] of his first affidavit that "Coretell started actively trading on 14 November 2006". He confirmed that by that he meant the cheque account was opened. 186 Counsel then identified, by reference to Mr Kleyn's affidavit in the NSW proceeding, that on or around 19 November 2006, he received a letter from the solicitors for the applicants effectively accusing Mincrest of infringing patents. Mr Kleyn said that while the letter was dated 16 November 2006, it was received on 18 November 2006. Counsel took Mr Kleyn to the transcript of his evidence in the NSW proceeding, noting that the bank account was set up four days later on 20 November 2006. Mr Kleyn confirmed that that was the bank account that he now wished to place emphasis on as to when completion of the transfer occurred. He stated that it was a coincidence that the letter of demand was issued on 16 November 2006 and Coretell established its bank account on 20 November 2006. He repeated his earlier evidence that Coretell had been incorporated in May 2006 to operate the core orientation device business. 187 Senior counsel noted that in his evidence in the NSW proceeding on this point, Mr Kleyn had stated: "Well, it hadn't started to trade, I suppose, because there wasn't an orientation tool at that stage". Counsel then identified that counsel in the NSW proceeding said to Mr Kleyn: "You began ostensibly trading through Coretell after you had received the letter of demand … didn't you?". He noted Mr Kleyn's answer was: "After we were advised that they thought we were infringing, that is correct". Counsel in that proceeding then asked: "That was no coincidence, was it?". Mr Kleyn responded: "Well, it wasn't a coincidence. The fact was, there was no money coming into Coretell because we didn't have core orientation devices yet". Mr Kleyn clarified his evidence to mean that they did not have core orientation devices for hire. He said they were being trialled, they were being tested by people. 188 Senior counsel put a series of facts to Mr Kleyn that included him consulting his solicitor on 21 November 2006. He noted the letter of response and put it to Mr Kleyn that what was sought to be put front and centre in the response was the suggestion that it was Coretell and not Mincrest who was involved with the core orientation tool. Mr Kleyn responded "Because it was". 189 Again, Mr Kleyn, in further questioning, said that he should have done everything in May 2006 and in hindsight appreciated that. He added: "I didn't. That's where we stand at the moment". 190 Elsewhere, Mr Kleyn insisted that Coretell owned the orientation equipment from May 2006 onwards as far he was concerned. 191 Senior counsel cross-examined Mr Kleyn concerning the general ledger entry of 14 November 2006, with the ultimate intent of suggesting that an entry concerning payment of Mr Barker for and on behalf of Coretell did not occur until 11 January 2007, whilst the general ledger suggested an earlier entry. It was put to Mr Kleyn that on 8 May 2007, he made the entry for 14 November 2006, six months after receiving the letter of demand. Mr Kleyn denied this. 192 Mr Kleyn was further cross-examined concerning dealings between him and Mr Barker from about March 2007, concerning the development of a multi-shot version of the orientation tool and an email of 7 March 2007 from Mr Barker to him with the subject heading "Camteq-Coretell IP". Mr Kleyn explained that he thought that if they had a multi-shot orientation tool, he would get a patent on it. 193 Subsequently, he said he dealt with Mr Adrian Crouch of Procept and identified an email dated 10 July 2007 in this regard, in which he noted that "It may be prudent to produce the first 200 kits using the technology we already have". Mr Kleyn said he was not, at that point, proposing that Procept manufacture the tool as it was at that point, but that he was telling Procept that he would get Mr Barker to make the first 200 tools. Mr Kleyn clarified that he was wanting Mr Barker to finish the camera at that stage and he was trying to put pressure on him to do so before he started the orientation tool. 194 Mr Kleyn also explained that as of May 2006, Coretell operated from his residential premises and it was not until September 2010 that he moved to the Maddington warehouse. 195 Mr Kleyn further explained that Silver City was the only entity supplied on a commercial basis, in late 2006. And that was because he had made a commitment to supply tools to Silver City. He denied this was a commitment made by Mincrest and said it was on behalf of Coretell. He explained that Mincrest invoiced the first two tools supplied because Coretell's accounts had not been set up at that point. He said that Mincrest, and Mr Penrose, who worked for it, did work for Coretell. He insisted Coretell took the order from Silver City and Mincrest invoiced the first cameras because he was not able to invoice it from Coretell. 196 So far as the tools supplied to Silver City were concerned, Mr Kleyn denied that they experienced many problems. When faced with documentation of 22 December 2006, that Silver City was having to send back kits that were not working, Mr Kleyn said that in 2006, they were "demo kits" that were sent. He added: "Demonstration kits on a commercial supply". He accepted that as of December 2006, they needed to be upgraded. 197 As to the fact that Mincrest on its website, maintained promotion of the tools into 2007, Mr Kleyn said that was "accidental". 198 When challenged as to the fact that no further orders by way of any of that sort of promotion had occurred, Mr Kleyn said that they did not receive the orders because "we decided not to supply those orders". 199 When Mr Kleyn was challenged as to what enquiries he had received, he could not produce any documents but said they were telephone enquiries. 200 Mr Kleyn confirmed that regardless of the lack of success in promoting interest in the tool, Mr Barker continued to manufacture and develop it at least until July 2007. Or even a little bit after that. He accepted that he did not give him any directions to stop manufacturing. 201 Mr Kleyn said it was totally incorrect that from January to July 2007, he had Mr Barker producing modest numbers of tools for the purposes of continuing the development phase for trialling and replacing tools being trialled in the field in the expectation that he might encourage some demand for the tools from prospective customers. 202 Mr Kleyn would not accept that an email from Mr Barker that said that "after more than two and a half years and a lot of money we are still only testing products, although I do think we are getting close" was a reference to the orientation tools and said it was only a reference to the camera. 203 Senior counsel then noted that the statement of claim in the proceeding was served on or about July 2007 and that soon after that, Mr Kleyn and his solicitor attended on a Mr Plummer, a patent attorney, on about 26 July 2007. And that soon after that, he arranged to meet with Procept to discuss further developments of the orientation tool and the ProShot camera. Mr Kleyn said that was incorrect. In response to the question that he did this because he was convinced that an electronic orientation tool would be commercially successful, he stated that he was convinced a tool would be commercially viable. He insisted, however, that in July 2007 he already had one that was commercially viable. 204 He insisted he was being paid by Silver City for exactly that tool. 205 In response to the question that in July 2007 he felt that he needed to get it professionally developed by Procept, he said that was "totally absurd and totally incorrect". 206 Mr Kleyn said it was incorrect that going to Procept in July 2007, was in the context of having been sued earlier in the month by AMC. 207 Mr Kleyn was then challenged as to his dealings with Mr Barker in late July 2007. References in an email by Mr Kleyn that "we still have problems with the Ori device, we still can't charge any hire" was put to Mr Kleyn. He denied that by 30 July 2007, he wanted one or other of the ProShot camera or the orientation tool to be commercially released. He said he was actually being sarcastic and said that if he could get rid of his legal problems then he would be happy. He was referring to the camera probes to get the handsets sorted out so that he could buy another two Flex-it cameras. He said it was totally incorrect that the words "we still have problems with the Ori device" meant that he still had technical problems with it in July 2007. Again, Mr Kleyn reverted back to the fact that the tool was on hire to Silver City and "they were very happy". 208 Faced with further documentation of 30 July 2007, being an email to Mr Barker, Mr Kleyn denied that there was any calibration error on the tool, despite a reference made by Mr Barker: "Whether the attachment is the old dodgy calibration or is that the new ones, which are better?". 209 In the event, Mr Kleyn was taken to the further email by him which instructed Mr Barker: "However, please leave the Ori-tool for now and finish the camera". Mr Kleyn said that did not say to "stop the development work on the orientation tool". He added: "It says please stop the - leave the Ori-tool for now. That's not development work. When we do - when we make equipment, we are always upgrading equipment". Mr Kleyn denied there was any calibration. 210 Mr Kleyn agreed that he then took up discussions with Mr Barker again after a hiatus of about six months, with a view to proceeding "with the new version of the Ori-tool as soon as the new probe is complete". The new probe was a reference to the camera probe. He denied, however, that he was trying to get Mr Barker back into harness "in terms of development work". He said he was trying to get Mr Barker "to start manufacturing the Ori-Shot tool again". 211 Mr Kleyn also explained, in cross-examination, that in an email of 8 August 2008, he was trying to convince Mr Barker to "continue manufacturing" notwithstanding the litigation between the parties, and that Mr Kleyn would indemnify him about any litigation. 212 Mr Kleyn then accepted that about that same time, he was again dealing with Procept. Mr Kleyn rejected the proposition that, even after the commencement of this proceeding, he was determined to commit to Coretell to continuing to try and bring the tool to market, saying: "The tool had been in the market. I withdrew the tool because of the threats". He denied that he wished to keep developing the earlier tool that Mr Barker had been working on. Again, he insisted that the tool had been out in the marketplace to Silver City. He insisted it was working very well. 213 As to the Procept tool which was developed thereafter, Mr Kleyn denied that it was different in material respects from the Barker tool. He said they were both orientation tools. He said it was like a Ford and a Holden. They are cars but they are still both different, but they are still both cars. He said these were both orientation tools. They do the same job in exactly the same way. 214 When counsel suggested to him that it was a bit like the difference "between a Skoda and a Bentley", Mr Kleyn said "Yes, could be". 215 A question was then raised in cross-examination as to the extent to which the Procept tool was relevantly different from the Barker tool. 216 In re-examination, Mr Kleyn identified a purchase order from Boart Longyear to Camteq for the hire of an electronic orientation device with HQ barrel and extension from 23 October 2006. 217 Mr Kleyn also confirmed the existence, at material times, of an exclusive agreement between Mincrest and Boart Longyear, which he said was worth about $100,000 a month to Mincrest. 218 Concerning email correspondence with Mr Barrett, Mr Kleyn observed that while the author of the email, Mr Barrett, liked using the orientation tool they were testing or trialling, "they were told to get them offsite by BHP". 219 Mr Kleyn said that as far as he was aware, the drill did go to Cliffs, another drill site, and he believed it was there for quite some time. He thought that it came back to Camteq or Coretell in about December 2006, "at our request". 220 Mr Kleyn also explained that Mincrest developed a special tool for Boart Longyear, in relation to the earlier identified purchase order, which was a 3.68 size HQ drill rod. It was a special, or one-off, order. 221 Mr Kleyn said that there was a mechanical failure but the tools worked fine and it was the threads that actually snapped. They were so thin that when they were attached to the core they actually snapped tightening them up. They needed to have extreme care but they were over cut when they were manufactured. He explained that the threads were not part of the orientation device. The orientation device goes inside that thread. 222 In relation to MTL Philippines, Mr Kleyn, in re-examination, identified an invoice dated 31 October 2006 for an amount of approximately $60,000. 223 He then identified the payment in the same amount ($59,992 to be exact) on a bank statement of 11 December 2006, which he said was payment on that invoice. 224 He said there was never any request for a refund or a repayment. 225 In relation to the entry on the general ledger of 14 November 2006, concerning the payment of Mr Barker, Mr Kleyn was asked a series of questions in re-examination and thought that his bookkeeper had made the record. He explained that his bookkeeper did all the GST work. 226 In re-examination about the Boart Longyear drilling activities at the Leinster mine throughout 2006, Mr Kleyn considered that the drillers were not educated on how to use electronic core orientation devices and that helped to explain why there were problems on that site. He said they used to snap the core off before they did the survey, which was the wrong way to do it for electronic devices. This was the "inaccuracy" that people were talking about. He said that to this day they had never found a tool that was inaccurate as such that it will give you an error. The tool always finds "top dead centre". If it finds top dead centre at the bottom, it will find top dead centre at the top.

Mr Barker's evidence 227 Mr Barker, who now describes himself as an electronic instrument designer, was called by Coretell. (As noted in my earlier, liability judgment, this witness is not related to me.) 228 He explained that he completed a Bachelor of Science degree at Curtin University of Technology in Perth in 2004, but for the main part was self-taught in the fields of electronics and computer science, learning by experimentation and general reading in the area. He commenced but did not complete an honours degree in physics at Curtin. 229 In October 2004, instead, he started up a business under the name Hightech, designing and developing electronic devices for clients. 230 In May 2007, he started up a second business offering services to the mining industry in radiation safety and training, and incorporated a company called Radiation Professionals Pty Ltd for that purpose, which business he sold in January 2011. 231 It was not until October 2008, however, that he incorporated Hightech. 232 More recently since August 2011, he has provided consultancy services through another company in relation to research and development in the medical industry. He is also involved in servicing medical ultrasound transducers. 233 Mr Barker confirmed he was introduced to Mincrest in late 2004 while he was working as a machinist at the Curtin University workshop, and learned about both the down-hole cameras and a desire by Camteq to develop a more modern version of an orientation tool. He was reliant on Mr Walton from Camteq describing to him the purpose and function of the orientation tool, something that plainly he was not previously acquainted with. 234 Mr Walton told him that the Camteq camera had been successful but its primary function was not core orientation and there was a need for a new piece of equipment in that regard. 235 Mr Barker first met Mr Kleyn in late 2004 in Orange Grove, a meeting also attended by Mr Walton and Mr Lightfoot. The meeting discussed the design of a new core orientation tool for Camteq. Mr Barker learned about some other existing core orientation tools and the Camteq camera. 236 Mr Barker said he was given the design brief by Mr Kleyn to make an electronic core orientation tool. This brief was purely verbal and based on his discussions with Mr Kleyn, Mr Walton and Mr Lightfoot. He said he was told by Mr Kleyn to make a circuit board and liaise with Mr Walton about the mechanical housing for the tool. 237 When he set about research, Mr Barker said, to his mind, the Camteq camera was a slow and cumbersome process and he thought it could be vastly improved by the use of the electronic components. 238 So far as the core orientation tool was concerned, Mr Barker said that on 13 January 2005, he issued Camteq a quotation for his design of the equipment and in February 2005 commenced invoicing Camteq for his work. Those invoices were issued by Hightech to Camteq in the period February 2005 to November 2006. 239 Mr Barker explained how he developed an initial prototype circuit board and software for the intended core orientation tool by around March 2005, and described the circuit board and discussed these with Mr Kleyn at his premises. 240 They identified a number of primary problems with the prototype design including the resilience of the microswitch and the possibility of "false" activations when the core had not actually triggered the microswitch. 241 Mr Barker said that at a meeting at which these problems were discussed in March 2005, he proposed an alternate design utilising a handpiece that would be entirely separate from the down-hole portion of the tool. (This ultimately came about.) 242 He explained why the two component design appealed to him. 243 Mr Barker explained various design challenges and how, in preparing the handset design, battery life and space were paramount factors. 244 Mr Barker said that after the meeting with Mr Kleyn in March 2005, Mr Kleyn asked him to commence manufacture of prototypes of the two part core orientation tool and later that month he provided a quotation to Mr Kleyn for the handset design. 245 Mr Barker said that from March 2005 to November 2005, he had regular meetings, once a week, with Mr Kleyn, Mr Walton and Mr Lightfoot at which they discussed options for improving the design and operation of the tool. At that stage, Mr Barker said he was also performing work for other clients. 246 Mr Barker said numerous tests were undertaken in Bindoon and at Orange Grove and shock testing was also undertaken. 247 He also recalled meeting Mr Tonkin of Boart Longyear and recalled that Mr Tonkin told him early in 2005, that he considered the core orientation tool an improvement over existing designs he had seen and that he was positive about it. 248 Mr Barker said that in around late 2005, he improved the design by replacing a button on the face of the down-hole unit, used to power on the unit, with a light sensor that was activated by the operator placing their hand over the sensor and removing it. 249 He said Mr Kleyn asked him to commence manufacture of 50 circuit boards in or around May 2005 and he provided his quotation on 10 May 2005 to Mr Kleyn. This work is referred to as an "inclinometer". 250 From around August 2005, Mr Barker said he was spending the majority of his time on Camteq work and again working out of their offices in Orange Grove and was invoicing Camteq approximately $1,000 per week for his work. He suggested Mr Kleyn pay him a retainer. 251 Mr Barker issued his first invoice specifically for camera work on or around 12 November 2005. 252 Mr Barker said that in around late 2005, he and Mr Kleyn met with two or three drillers at Camteq's premises. He recalled meeting Mr Tonkin again. He understood that the entities associated with these people were already hiring other items of equipment from Camteq, and he and Mr Kleyn demonstrated the two part core orientation tool to the drillers. He recalled Mr Tonkin saying that he liked the design and it seemed it would work. He recalled it was suggested they trial the tool at Leinster. Mr Kleyn said in substance that he would appreciate the opportunity. 253 This happened and Mr Barker said he was in contact with Mr Tonkin about the tests on a number of occasions. 254 In January 2006, Mr Tonkin wrote to him about a problem he was having with one of the tools not powering up. This was a problem on the handset. He said he corrected the problem. A similar problem occurred with several prototype handsets but in the next version the problem did not occur. 255 In early March 2006, Mr Barker recalled receiving a tool from the Leinster mine site and being instructed by Mr Tonkin that the tool was failing to power up. He examined the tool and it appeared it had a flat battery. He also discovered the leads from the battery to the circuit board had broken and concluded that the leads were breaking because of fast impulse movements of the tool and the inertia of the battery pack. He found a solution to that problem which was to more securely mount the batteries in the plastic casing which would prevent them from moving independently from the housing of the down-hole unit. 256 He also recalled that in about March 2006, other tools were presenting with faulty batteries for a slightly different reason. He found the batteries had been slightly crushed and concluded that the forces involved had been higher than expected and had compressed the batteries into one another. 257 These battery problems were reported to Camteq over the course of two to three months and he recalled they were referred to Mr Walton and did not recall being made aware of the problems after that period. 258 Mr Barker also attended at Leinster around 29 March 2006 to advise on the practical operation of the tools, and was there for about two or three days. He met with Mr Tonkin. Tools with problems were identified. Powering up was the problem. He found that a lead from the battery had broken. He returned to Perth with that tool to look into the issue further. It was a broken wire at the board rather than the battery end and the wire used was thin and brittle. It was replaced with a softer, more flexible wire. 259 Mr Barker said that this problem was remedied in all tools returned. 260 He recalled that in mid-May 2006, one of the tools would not turn off because of a software glitch and that was immediately resolved by a slight change to the code. 261 Mr Barker said he could not recall any other significant problems being identified during the testing phase with Leinster, however he recalled some minor issues came up occasionally, namely: (1) some temperature drift problems when readings were varying due to temperature, which were solved quickly by incorporating a temperature calibration into the software; and (2) on some occasions, there was a timing difference between the handset and the down-hole unit, which was resolved by replacing the capacitors with correct capacitors. 262 Mr Barker said Mr Kleyn told him that he wanted to derive revenue from the hire or sale of the tools as soon as possible, with the result that the testing of the tool prior to sending out each tool to Leinster was on occasion not as extensive or as thorough as he, Mr Barker, would have liked. 263 Mr Barker also said that he did on occasion improve the operating software for tools when they were returned for servicing or new tools were being assembled. He said these were "incremental improvements". 264 Mr Barker said that in around May 2006, Mr Tonkin contacted him and said his company no longer wished to be involved in the testing of the tools at the Leinster site. 265 In about April 2006, Mr Barker said he provided Mr Kleyn with a copy of drawings he had received from SDS Corporation of a grease cap assembly. He thought that company may have been involved with Mr Reynolds. 266 He also recalled flying to Argyle Diamond Mine on two occasions during the testing phase of the tool, one of those trips being in May 2006, when he gave a demonstration to eight to 10 drillers. 267 Mr Barker said that all of the major design problems with the orientation tool had been resolved by around mid-2006, and from a technical viewpoint, he considered the tool was ready for introduction to the market at that time, but that he had to manufacture sufficient quantities to meet the expected market demand. He added that he continued to make incremental improvements to the software and the circuit board. 268 From February to April 2006, Mr Barker said he ordered parts for the orientation tools in bulk and commenced preparation for the first batch of tools to go into commercial production. 269 He said he was also invoicing at the time for work on the Camteq ProShot camera. 270 He recalled, however, that from around April or May 2006 he slowed on production of the orientation tool and focussed primarily on the development of the ProShot. Mr Barker said Mr Kleyn instructed him to focus his efforts in that way but could not now recall whether he received a specific reason for this. 271 Mr Barker said that accordingly by late 2006, he did not consider the assembly of the tools required a high level of skill and he engaged a company to assemble the circuit boards for the orientation tool. He said it took approximately 10 minutes to put the circuit board into the housing, install the software and calibrate. He considered, assuming a conservative working time of six hours a day, he was able to produce 36 tools per day or a 180 tools per week if only working on business days. If Camteq had requested more tools than 180 per week, he believes he would have been able to fulfil that request, either alone or by taking on staff. 272 He said he also ensured that Camteq had sufficient stores of parts to build new tools as required and he charged $1,000 per whole kit, being two down-hole units and one handset, to Camteq and later Coretell. 273 As at November 2006, Mr Barker recalled that an assembled tool's lifespan was intended to be slightly more than 12 months. 274 He said he was aware from his discussions with Mr Kleyn during the period from around mid-2006 to November 2006, that he was at the time having a selection of customers trialling the orientation tool and he understood they were generally going well. Mr Barker himself could not recall any major design flaws or accuracy errors being referred to him at that time. 275 Mr Barker also said that in around late 2006, Mr Kleyn met with him and said that he was restructuring his business and wanted to transfer that part of the business dealing with the orientation tool to a new business entity. He recalled Mr Kleyn said words to the effect that it would be a good idea to quarantine the orientation tool business away from the general Camteq business in case allegations of patent infringement were made in respect of the orientation tool. This is something Mr Kleyn said was incorrect. 276 Mr Barker said in or around November 2006, Mr Kleyn told him to invoice further work and materials in relation to the orientation tool to Coretell and not to Camteq. 277 He recalled then invoicing the next batch of orientation tools directly to Camteq, which was a mistake on his part, noting that it was sometimes difficult to decide which company to invoice as the orientation tools and cameras shared some similar parts. 278 He said he first invoiced Coretell directly on or around 29 January 2007, but noted that invoices 153 (9 March 2007) and 150 (1 April 2007) were both to Camteq, and said they should have been to Coretell. 279 Mr Barker recalled that in around mid-November 2006, Mr Kleyn came into his office and told him that Imdex was claiming that their patent had been breached. He said Mr Kleyn said words to the effect that he had decided to cease hiring the orientation tool and focus primarily on the ProShot until he had taken legal advice. Mr Barker could not specifically recall, however, whether Coretell withdrew the tool from the sites where it was being used or hired at the time. He was not involved in that aspect of the business. He was told, however, to just focus on the camera for now. 280 Mr Barker said that he ceased working out of Orange Grove in January 2007 and began working from his own home and worked primarily on the ProShot. He slowed down but did not cease production on the orientation tools. He referred to invoices 134, 146, 148 and 153 between January and March 2007 for the tools. 281 Mr Barker said he completed the development of a reliable ProShot in or around February 2007. 282 He, however, also recalled making some technical incremental improvements to the ProShot and the orientation tool in around March 2007. 283 He said in April 2007, he decided to manufacture a small run of about 50 orientation tools and discussed that with Mr Kleyn at the time. He, Mr Kleyn, said he wanted to have sufficient stock on hand once the patent dispute was resolved. Mr Barker referred to a quote he received in that regard from Pace Assembly Pty Ltd on 18 April 2007. He then worked on the batch of the orientation tools as well as cameras during April and May 2007. 284 After the infringement proceedings were commenced, his last invoice to Coretell for production of orientation tools was on 30 July 2007. 285 Mr Kleyn then emailed him on 21 January 2008 requesting he resume work on the orientation tool. They met but he decided not to be involved as he may be targeted by Imdex in the litigation. 286 Then he was contacted by Mr Kleyn by email on 30 July 2008 to see if he was interested in pursuing work on the camera and the orientation tool. A further email was received about 8 August 2008. Mr Barker said he recalled that he declined to be further involved. 287 Mr Barker became aware that Mr Kleyn then approached Procept to produce tools. 288 Mr Barker considered that the Procept version of the tool did not have any particular advantage over the version he designed and manufactured for Coretell and that, if not for the threats of litigation, either tool could have been manufactured in sufficient quantities to meet customer demand for both tools, which would have had a similarly good reception in the market. 289 Mr Barker was also asked in examination-in-chief to look at court book part E, p 3555, which he did. He considered what was there written expressed a misunderstanding of what he had earlier said concerning the three degrees of accuracy. Having explained how the tool is used, he said that "the tool itself is very, very accurate. You will achieve .1, .2 degrees accuracy on that particular measurement, but when the operator is expected to rotate that core barrel around and then take a marking, if you made it .2 of a degree, the operator would never be able to achieve aligning that core barrel and core to that level of accuracy". Mr Barker explained that for that reason "we put a tolerance in there, which we set at + or - three degrees". So there is a six degree window. Ultimately, he said the maximum error one could achieve would be three degrees, not five to 10 degrees. 290 In cross-examination, senior counsel for the applicants sought in a number of ways to downgrade Mr Barker's knowledge and experience that underpinned his evidence about the tool. He did not complete post-graduate work in physics but worked as a technician in the physics department at Curtin University in 2004. In that period he was introduced to Mr Kleyn. He was then asked to develop the electronic core tool for Mincrest. 291 Mr Barker explained how he was engaged to work on the tool under a handshake agreement. 292 Nonetheless, Mr Barker disagreed with the proposition that he was inexperienced at material times, although agreed that he was inexperienced in matters of commerce. 293 He also explained that he would, with the experience he has now acquired, continue to make a handshake agreement "if it was a project like this", which he explained was a project where a clear understanding of exactly what was required was not possible at the time of conception of the project. In this case he explained that the switch they were going to use to activate the unit when the core came up the barrel was something they could not have foreseen as not working. It made a huge difference to the design requirements in the board. 294 Mr Barker also disagreed with the proposition that in 2005 he did not have the experience to equip him with preparing technical documentation for the sort of project he was in fact engaged in. He said that when he prepared his honours thesis (which was not completed) he designed a circuit board that had a compass and accelerometer for some underwater robotics. He considered he was very knowledgeable on that. 295 Mr Barker confirmed that from about August 2005, he effectively began working in-house for Mr Kleyn and was paid a weekly retainer by him. 296 Mr Barker was further cross-examined about the microswitch change in the design of the orientation tool. He explained that problems became apparent not because of his boards, but in the housing, and so he embarked upon a new design in about March 2005. 297 He explained that by late 2005, he needed to start trialling the tool that he had developed. He confirmed that he would have liked some more internal testing, prior to on-site trialling with customers. But he confirmed that he understood Mr Kleyn was eager to derive revenue as soon as possible from the tools and wanted to press ahead with trialling with prospective customers. He explained that Mr Kleyn said he had a friendly who could identify potential problems. That apparently was Boart Longyear at the Leinster site. Testing was then conducted in early 2006. 298 He confirmed there were battery problems. There were problems with units failing to turn on. 299 He accepted that because of the frequency of problems being experienced by Boart Longyear, he was required to travel to Leinster. This was in about late March 2006. 300 He also acknowledged that there were problems revealed in the trialling at Leinster that included water ingress into the handset. 301 He also agreed that in May 2006, one of the tools would not turn off because there was a software glitch and he sought to resolve this by a slight change to the code. 302 There were also temperature drift issues and timing differences between the handset and the down-hole probe. 303 Mr Barker thought, nonetheless, that by mid-2006 the name "ORIshot tool" had been assigned to the tool. When pressed as to whether Procept had used that name and that no name had ever been attached to the orientation tool by mid-2006, Mr Barker was a little more uncertain but added that he was "reasonably certain" he had referred to it at meetings as the ORIshot at that time. 304 Mr Barker was not dealing with customers so was unable to give evidence about how many Mr Kleyn was dealing with at this point. 305 He was aware of other companies trialling the tool, however. 306 Mr Barker agreed that Mr Kleyn made him aware of any frustrations that he had that he was not able to hire the tool. 307 Mr Barker was aware of Mr Reynolds at Drillshop assisting. 308 As to some feedback, for example from Mr Reynolds, Mr Barker said that in 2006 he was aware of feedback and he believed a lot of people were misusing the tool and not following the instruction sheet. He also considered that at one of the sites they were significantly behind with processing their cores. 309 Mr Barker was challenged concerning his statement that by late 2006, he had manufactured sufficient quantities of the orientation tool to enable Mincrest to start putting the tool into the market. It was put to him whether he appreciated that the relevant consideration was not so much the number of tools, but whether they were sufficiently fit for the purpose to be commercially released. He said that he did. He rejected the proposition, however, that as of late 2006, the tools were not ready for commercial release. 310 Mr Barker was then asked whether it was more accurate to describe the position in late 2006 as one in which he and Mr Kleyn were continuing to put tools out for trialling with potential customers, with a view to encouraging them ultimately to hire the equipment. He answered "yes". In response to a question whether he was still trialling them and obtaining feedback that they were inaccurate or unreliable, he responded that feedback did come but he believed the reason for that was the delayed core processing. 311 When pressed as to whether the tool simply was not commercially feasible in late 2006 to mass produce the tool and introduce them on a commercial basis to the market until problems were solved, he responded that he felt that the problems had been resolved at that time, despite the late feedback which he said "had a bit of a lag on it". 312 He said the late cores was a big thing but also that people seemed to be misunderstanding when you should press the actual take measurement button. It did not seem confusing to him but there did seem to be some confusion in the field. 313 So far as manufacturing sufficient quantities of the tool for market in late 2006, Mr Barker accepted that at that point he was operating from Mr Kleyn's premises and that to produce significant numbers he would require the services of a third party to populate boards and those sorts of tasks. 314 He agreed, however, that in April 2007, he began making some tentative inquiries of a company by way of third party assistance. This, however, was not the first time that company had been used. In June 2007, he confirmed a quote from Pace was for the production of 50 units. 315 In passing, it should be noted that Mr Barker had no real awareness of an order from MTL Philippines. 316 Mr Barker was taken to an email from Mr Kleyn to him dated 22 December 2006, which included a reference to "I'm reluctant to pay any other invoices before (a) we sort out what we are paying for; (b) we have Ori-tool in the field that we can charge for". 317 Mr Barker noted that this did not refer to any accuracy issues but about charging rent. He said there were many parts to the tool, from the way it was presented to the market, the instruction sheet, the housing. He simply made the circuit boards and he believed the circuit boards were ready. He considered the tool did very well. He considered there were problems with operators doing some silly things, not pressing the right buttons at the right times. 318 But he confirmed that he understood Mr Kleyn was frustrated at this point in time because he was not able to earn money from the tool. 319 When counsel put it to Mr Barker: "Well, I suggest to you that's a fundamental indication that it would not be at a standard at that point that it was fit for purpose for commercial release, because money could not be earnt for it for whatever reason?", Mr Barker responded "Okay". 320 Counsel pressed him - "Do you accept that?" to which Mr Barker replied: "I accept what you are saying. But my feeling at the time was that it was ready. So - okay". 321 Counsel asked what was ready, your circuit board? This time Mr Barker replied: "No, I believe that the tool was commercially ready. I do". 322 He indicated when challenged, that he was not being defensive because he had worked on the design and development of the tool. He said he thought he was trying to defend the truth, even if he did appear to be somewhat defensive, particularly in his evidence the day before. 323 Mr Barker had shown to him the email to him from Mr Kleyn on 22 December 2006, which, amongst other things, stated that Mr Kleyn believed "both products are very close to completion". Mr Barker said that he was in Indonesia at the time and he considered Mr Kleyn's motivation in sending this email was to get to come back. "He wanted me there working on things at Camteq over the Christmas break." Mr Barker thought that Mr Kleyn may have been exaggerating issues to motivate him. 324 Mr Barker accepted in cross-examination, however, that he was also disappointed, in that payment had been withheld for the work that he had done to that point. 325 Mr Barker was also taken to correspondence which indicated that four of the units were not working and more units were being "returned from Silver City not working". Senior counsel put it to Mr Barker that Mr Kleyn was saying in the correspondence that Mr Barker should not be paid until the units were working. Mr Barker recalled returning from Indonesia and discovering that the problems were "simple, silly problems". 326 Mr Barker was also taken to correspondence in which Mr Kleyn said "If the tools don't work, how can I rent them?". Mr Barker said he did understand that Mr Kleyn was expressing frustration at his inability to commercialise the tool because there were reliability issues with it. 327 Mr Barker's consideration of what was then happening - which makes sense from his point of view - was that Mr Kleyn was trying to pressure him into getting back to work. 328 Mr Barker also accepted, in cross-examination, that a March 2007 email indicated that he understood Mr Kleyn was still keen to get the orientation tool commercially released as of that date. He also accepted that it was right that the email exchange showed that he was wanting Mr Kleyn to understand that the documentation concerning intellectual property might divert Mr Barker's attention from the development and production of the camera and the orientation tool. 329 Mr Barker suggested, however, that Mr Kleyn had given him a directive to slow down on the orientation tool development and manufacture, and continue at full pace on the camera, as fast as he could. He said that by March 2007, there was not a lot of orientation tool development going on. 330 Mr Barker was also taken to an email of 3 July 2007, in which the question of faulty orientation tools was discussed, together with the question of payment to Mr Barker. In particular, Mr Kleyn stated: After more than two and a half years and a lot of money, we are still only testing products, although I do think we are getting close. 331 Mr Barker, despite initially responding that the email did not actually say that the orientation tools were not ready for commercial release, when pressed, accepted that indeed the email "does read that way". He added that he did believe the orientation tool was ready earlier than that. 332 Mr Barker also added that about that time he heard there was potentially a problem with infringement of the patent and he was very concerned at that point and did not want to get involved in litigation. He said he was also buying a house at that point and would "have loved to commercially release them". 333 Mr Barker could not recall whether it was in July 2007 that he became aware that Mr Kleyn was approaching Procept with a view to development and production of the orientation tool. 334 Mr Barker also indicated that he went to some meetings with Mr Kleyn to his lawyers in late November 2006 at least. He said that after that he continued to do very small amounts, that is continued to make small batches of tools up until July 2007. 335 In relation to the question of Coretell and the tool and his primary evidence, in cross-examination Mr Barker said that basically there was some talk of legal proceedings and so: he decided to quarantine it there, and also he said it would be advantageous if the tool were to go out and be very successful, he could sell off that company with that tool, as a - as a commercial running entity, and he said that would be beneficial to his business model. He considered that the discussion was in late 2006. He believed it was probably about the time Mr Kleyn asked him to start invoicing Coretell, rather than Camteq, for any work he undertook on the tool. 336 So far as the development of the tool was concerned, Mr Barker ultimately accepted that while he "believed in the tool", Mr Kleyn was extremely frustrated in July 2007 because he wanted to, but was unable to, release the tool on a commercial scale because of the reliability issues. 337 Mr Barker was also of the view that he was not sure that in July 2007 he knew Mr Kleyn had already begun talking to Procept about the tool. 338 Mr Barker agreed that in November 2007, in respect of the ProShot camera, and then in January 2008 in respect of the orientation tool, Mr Kleyn sought to re-engage him. But he did not wish to be drawn back in. 339 At that point, Mr Barker said that he did understand, having regard to correspondence he then had from Mr Kleyn, that Mr Kleyn considered there was further development of the tool required before it was commercially released and earning some higher income. 340 Finally, Mr Barker was cross-examined about invoice 107 for the amount of $3,850. Records indicated that payment by Mincrest to Hightech (Mr Barker) on 11 January 2007, but the invoice appeared to be dated 29 January 2007. Mr Barker said that was his fault. He "would say" that what has happened is that there was the original invoice on 14 November 2006, which should have been "wiped out" and a new number assigned, but instead the invoice was modified later. It should have been to and paid by Coretell. He added that Coretell had obviously not paid the invoice until January, because "they've had some concerns with those other tools". Then when it was paid he amended the invoice to match what they paid and changed the date to later in January. 341 When pressed that there could not have been an invoice dated 14 November 2006, Mr Barker said it was only in the course of cross-examination that he had become aware there were two invoices numbered 107. To that extent he was seeking to reconstruct his evidence. 342 In re-examination, Mr Barker dealt with a number of problems that had been experienced in 2006 with the tool. As to the problem at Leinster, he confirmed that he did not believe that they were doing things correctly. 343 He repeated his evidence that, as of 2006, he considered there only minor or silly problems that were easily fixed with the tool. "Nothing fundamental." 344 He considered Mr Kleyn had something of a "hissy fit" when Mr Barker went to Indonesia on holidays at Christmas.

Mr Reynolds' evidence 345 Mr Reynolds, at material times, was the managing director of Drillshop and was called by Coretell. 346 He was involved in arranging trials or conducting demonstrations for Gilbert Drilling at Argyle Diamond Mine and St Barbara Limited/Barminco at Marvel Loch Gold Mine. 347 He is also a director of Seismic Drilling Services. 348 He said Drillshop and Seismic had ongoing relationships with members of the Imdex group of companies, as well as companies of which Mr Kleyn was a director and, from time-to-time, on-hired Coretell core orientation tools and Camteq survey cameras, though this was not a major part of their business. 349 Mr Reynolds said that in around 2006, he spoke with Mr Kleyn about Drillshop becoming a re-seller of the Camteq camera tools, and Mr Kleyn told him that he had developed an electronic core orientation tool and suggested it might be useful if he could use his contacts to trial it at mine sites. He wanted feedback from customers to see if there were any problems and to show it around to potential customers to gauge market interest. 350 Mr Reynolds said he was keen to assist Mr Kleyn with testing and trialling as he saw the Camteq camera as a valuable opportunity and that this business opportunity would be enhanced if Mr Kleyn's companies were also able to supply a core orientation tool. 351 He saw his role as assisting and gathering feedback and information for the supplier in determining how the tool was operating in the field. 352 He understood Mr Kleyn was directly in contact with some of the customers. 353 He recalled contacting drilling contractors in 2006 to arrange testing of Mr Kleyn's core orientation tool. 354 He recalled the main issues were battery issues, in that the tools would not power up because of a flat or damaged battery or loose wires to the battery. He could not recall whether these problems were widespread. 355 He did not believe any problems experienced were other than standard "bugs" faced in the later stages of development before a product was finally released to the market. 356 He recalled Mr Koushappi and recalled he gave a demonstration of Mr Kleyn's core orientation tool to Barminco in 2006. 357 He recalled that he gave a demonstration at Barminco's offices in Kalgoorlie. He recalled Mr Koushappi briefly met with him before the demonstration. 358 He also recalled a trial at Marvel Loch in 2006 before Barminco. 359 He did not recall any request for the tools in early 2007 and his instructions from Mr Kleyn by that time were that the tool was not available to be hired out. 360 Mr Reynolds said that in around 2006, Drillshop supplied drill bits to Gilbert Drilling but he did not go to the Gilbert Drilling site to demonstrate the equipment. 361 From his unaided memory, he recalled a trial in 2006 with Layne Drilling at Mount Newman and also recalled being told that there were issues with the accuracy of the tool during the trial. 362 He did not have any recollection of providing core orientation tools to Ausdrill and Mount Magnet Drilling in 2006. 363 He recalled that Mr Kleyn in late 2006 told him that Mr Kleyn would no longer be asking Mr Reynolds to distribute the core orientation tools because of a dispute over a patent. 364 Drillshop commenced hiring to customers core orientation tools supplied by Coretell in early 2009. 365 In cross-examination, Mr Reynolds explained that the business of Drillshop was to provide assistance with trialling both tools and products. He agreed this enabled prospective customers to see how a tool, for example, performed, and also whether it was going to be viable for commercial release. 366 He confirmed that the tools provided by Mr Kleyn had not been run in the field so the idea was to run the tool in the field and then, if it went well, to encourage people to hire the tool. 367 As to demonstrating the tool at Barminco, he said he did a demonstration but could not remember other trials. He acknowledged that this was some six years before he was asked to make an affidavit recalling these events on behalf of Coretell. He did not recall arranging a trial with Gilbert Drilling but did remember getting some feedback from Layne Drilling. He had no recollection of trialling with Mount Magnet Drilling. 368 As to documents that he referred to in his affidavit, he was unable to recall them but assumed that he must have had some involvement in the trial of the tool the subject of those documents. He did, however, recall that at some point, Mr Kleyn told him that he could no longer distribute tools for Coretell. This was because Imdex had considered Mr Kleyn or Camteq was infringing their patent. 369 He placed the time that happened at the time he ceased hiring or trying to hire out the tools. 370 Concerning whether Mincrest supplied tools to an agent, Mr Reynolds was asked whether he recalled that it was two kits he was provided with. He did not recall that. 371 He said he did not recall receiving the two tools and did not recall going to two separate clients although that does not mean it did not happen. He said he just did not remember. 372 As to further reference in Mr Kleyn's evidence that the "agent" was advised by the clients that the tests they had conducted on the tools rendered "inaccurate and unreliable data", Mr Reynolds answered that the only memory he had of that is BHP with Layne Drilling and there being an issue about accuracy of the data. 373 Generally, Mr Reynolds' memory was not extensive. He remembered doing a demonstration but did not go to the site of the trials. 374 Nor did he have any discussions that he could remember with geologists from Barminco after their trials. He said it was "a long time ago". 375 He said he had never processed a Barminco order for a tool so he would not have received an order. 376 In the course of cross-examination, he confirmed that accuracy of the equipment was important to clients. 377 He confirmed that he did not receive a purchase order from Gilbert Drilling for the tool. 378 He thought that he did attend on-site for the Layne Drilling trial. He confirmed that the records showed that Layne Drilling informed him there were issues with the accuracy of the tools, and this was from about July/August 2006. He confirmed that Layne Drilling did not place an order for the tool. 379 He agreed with the proposition that mine site operators and drilling service providers expect a sufficiently resilient, reliable and functional tool during a hire period. 380 In all of those circumstances, Mr Reynolds was challenged as to his statement that he believed that in 2006 the core orientation tool could have been sold or hired to customers successfully. He said the reason he made that statement was that in 2006, from what he saw of the tool, he felt it could be. He was expecting there would be some sort of issue when it was run in the field because everything he had been involved with "has had those same developmental issues" - he felt it was sellable - that is he could hire it out. 381 He accepted, however, he was not shown the tool in the field and he observed it in an "office environment", and he accepted the proposition that he thought "at a conceptual level" it seemed that it should be an appropriate tool. 382 He accepted that in reality that he had "zero success" with customers in trying to hire it out during 2006. He added: "Yes, that's right, because of these issues that they had." 383 In further cross-examination, he agreed that the statement made, at [21] of his affidavit, represented his thoughts in 2006 "at the time" he agreed to place it for trial. 384 In relation to the Procept tool released in 2009, Mr Reynolds remembered the hand piece being different, larger. But, in essence, he said, it seemed to do the same thing, that was to orientate the core electronically. He was able to hire them at that point and since. He said he would not say in significant numbers, but they were "going out". 385 He agreed that there $20,000 worth of orders in the first nine months that he had access to the Procept tool, compared to the $0 for the first tool in 2006. 386 As to his statement regarding the similarity of the two tools, he said that his observations had nothing to do with electronics, just their "user friendliness". 387 In re-examination, Mr Reynolds was asked about what he could actually recall from eight years ago. He recalled the BHP Newman trial. He also remembered there were issues with battery. 388 When asked, and allowed by the Court to answer, whether there was anything that happened during the rest of 2006 to change his view that the Camteq tool could succeed, Mr Reynolds said that he thought the tool could have been successful if they had continued their trial and error process of having it out in the field. He said that he would not have continued to deal with it if he did not think that the tool could not eventually be sold or hired, and he supposed that it could. "So I never really sort of lost faith in the tool, it's just that, you know, it had a lot of issues."

Mr Kenny's evidence 389 Mr Zane Kenny, accountant, was called by Coretell. 390 At material times, he was a director of the accounting firm Brealey Quill Kenny. 391 He said in May 2006, prior to 25 May 2006, he met with Mr Kleyn at his offices in Canning Vale and was instructed by Mr Kleyn that he wanted to set up a new entity as he had developed a core orientation tool and wanted this business to be operated through a separate entity. 392 He said Mr Kleyn explained that this was because he wanted to be able to sell his two businesses separately and also said that he wanted to have succession planning in that he may want his two sons to be able to take over separate entities when he retired or passed away. 393 Mr Kenny gave him advice. 394 Following that, his firm incorporated Coretell on 25 May 2006. 395 He noted that Coretell's ledgers record a payment to Hightech of $3,500 on 14 November 2006 and a corresponding accrual of the Camteq loan account (as in money Coretell owes Camteq) of $3,850. He said that trading transaction would not have resulted in any movement in a business bank account as Camteq had paid the amount on Coretell's behalf and Coretell owed Camteq for those funds. 396 In cross-examination, Mr Kenny was taken to the financial affairs of companies within the Kleyn group. He was also taken to evidence that he gave in the NSW proceeding. 397 Questions covered included management fees charged or not charged by Mincrest to Coretell. 398 Mr Kenny was also asked about the incorporation of Coretell. Mr Kenny said he discussed with Mr Kleyn the impact of having a separate company focusing on the core orientation tool. The reasons for that were succession planning, tax minimisation and the potential sale of business. Mr Kenny confirmed that he was not advising Mr Kleyn in order to achieve a valid assignment. 399 He was further questioned about the relationship between the companies. 400 Mr Kenny was unable to express any view about the manufacturing capacity of Coretell in 2006-2007, compared with 2009. 401 As to the 14 November 2006 entry in the Coretell ledger, Mr Kenny, in effect, made a reference to this first record of trading based on the materials given to him. It was an entry made by reference to the loan account. He said the ledger read basically as a purchase as the debit and the credit was basically a loan from a Kleyn related group. He did not look for any supporting documentation beyond that. He said that because he did not think it was paid on 14 November 2006, that is why it was mentioned as a loan. He noted on the FAST account there was a narration in lower case stipulating it was paid on a date after November and it said by Mincrest. He has become aware of that more recently. When it was suggested to him that the money accrued to the loan account on 11 January 2007, because that was the day that payment was made by Mincrest on Coretell's behalf, Mr Kenny replied that technically on 14 November 2006 if they incurred an invoice in Coretell's accounts, if you have a purchase and a corresponding creditor, as in owing money to someone. If they believed that invoice belonged to them, then subsequently if somebody else pays the invoice, that creditor is at zero and the person paying the money basically becomes the lender.

Mr Maher's evidence 402 Mr Aaron Cope Maher was called by Coretell and his affidavit went into evidence. He was a co-founder of Procept in Melbourne in 2006. 403 Mr Maher's qualifications and experience were not in doubt. Procept was in the business of providing services to clients in the design and management of the manufacture of electronics. 404 Mr Maher was called principally to give evidence about similarities and differences between the core orientation tool designed by Mr Barker/Camteq and that designed by Procept; and whether the Barker/Camteq tool was ready for market by late 2006. 405 Mr Maher said that his review of the earlier tool was limited. 406 Mr Maher said he first spoke with Mr Kleyn in around July 2007 in Melbourne. Mr Kleyn wanted Procept to design and develop the electronics, software and handset for an electronic magnetic camera tool (survey camera) for mining surveying of drill holes in the mining and minerals industry. He told Mr Maher that he had an existing survey camera. Mr Kleyn said that while he had been working with Mr Barker, he no longer was. 407 While he could not exactly recall, Mr Maher said that if he had been asked to manufacture a product designed by someone else, for example, Mr Barker, he would have said no. 408 He also considered it was difficult and generally not commercially feasible to reverse engineer a product. 409 Then in around October 2008, he met with Mr Kleyn about developing a core orientation tool. 410 He said Mr Kleyn said words to the effect that he had previously developed such a tool through a company called Coretell and that he wanted Procept to develop the electronics and handset for Coretell. 411 Mr Maher believed he was aware of the existing Coretell tool from his first meeting with Mr Kleyn, but the October 2008 meeting was the first time there was a detailed discussion about the requirements for a tool of that type. He recalled, however, that Procept had previously put to Mr Kleyn an initial proposal to design electronics for a core orientation tool in around February 2008, but Mr Kleyn had not approved this while the camera electronics were still in a design phase. 412 Mr Maher recalled that Mr Kleyn had a prototype circuit board with him at the meeting in October 2008 and showed it to Mr Maher. Mr Kleyn demonstrated the tool's operation. He explained the high level functionality of a core orientation tool to Mr Maher and told him what he wanted the tool to achieve. 413 Mr Maher did not recall Mr Kleyn mentioning any problems with the existing circuit board. 414 Mr Maher said he did not need to inspect the circuit board because Procept did not reverse engineer products. 415 Mr Maher said that one of the major differences of the tools designed on Mr Kleyn's instructions, including the survey camera and the core orientation tool, compared to the equipment he had designed for other customers, was that the tools' designs, on Mr Kleyn's instructions, were a joint research and development effort between Procept and Mr Kleyn's companies. Thus, the development of the tools was a joint effort. 416 Mr Maher said Procept completed the design and managed the production of prototype units of the electronics and handset for the core orientation tool by around mid-December 2008. 417 He said he became aware of these legal proceedings and other legal proceedings between Coretell and Imdex some time after completing the camera and orientation tool designs. 418 In cross-examination, Mr Maher confirmed his qualifications in electronics and electrical engineering and that Procept had extensive commercial experience in product design and manufacture, identifying a number of areas in which he and the company worked. 419 He confirmed that the various people who were engaged with the survey camera - the ProShot camera - were all engineers. Mr Maher confirmed that he had seen the Barker/Camteq tool but said he would not call it a "review". He considered it was fair to say that he did not make a study of it but it was shown to him for the purpose of understanding the gist of the tool. There was no need to pull it apart. 420 He confirmed that Procept's initial work was on the ProShot camera. 421 While Mr Maher could confirm that he understood Mincrest owned the ProShot camera, he said he was not able to comment on whether Coretell owned the Barker tool. 422 Nor could he recall why in July 2007, both Mincrest and Coretell were entering into a non-disclosure agreement with Procept. 423 In response to a question whether Procept was highlighting particular efficiencies in a project, namely that it could bill all the work that it had undertaken with the ProShot as part of a program for developing the orientation tool, Mr Maher said yes, there would be some efficiencies between both products. 424 Senior counsel then took Mr Maher to documentary materials from late October 2008, concerning the Procept orientation tool. 425 Mr Maher could not recall whether Mr Kleyn had said there were problems with the Barker camera or the Barker tool. He could not recall whether he had been told that Mr Barker had tested for a considerable amount of time the Barker tool. 426 Mr Maher made it clear that he could not make comments about the Barker tool and the technologies that were used in that product as they declined to engage in reverse engineering. 427 Mr Maher was taken to an earlier email from 10 July 2008, in which Mr Kleyn had made reference to it being "prudent to produce the first 200 kits using the technology we already have and revisit your proposal at a later date". When asked whether he understood that Mr Kleyn was proposing that Procept actually seek to manufacture the existing tool that he had, that is to say the Barker tool, Mr Maher said no, that he read that as saying that Mr Kleyn would manufacture the tool he already had and that Procept would not do it. 428 Mr Maher was then taken to the specifications for the Procept tool. He was also taken to a document described as "Comparison of operating instructions and user interface". Mr Maher was asked to assume that someone had performed the exercise of comparing the Procept tool and the Barker tool operating instructions and user interface. Mr Maher said: that it was not part of the process of design of the Procept tool to test the battery each time a survey was taken; the Procept tool provided the user the ability to check on the handset the battery level; the Procept tool design involved the operator simply pressing "new survey" as a function and selecting the required tool, compared with the Barker tool involving switching on the handset and a light activation switch on the down-hole probe; and "while he could not comment on the Barker tool, the Procept tool has a process to incorporate its own operating software and using different interfaces for the user - that is, it had its own software, embedded software, in the handset and the Barker tool would've had different operating software". 429 Mr Maher also acknowledged that while he suggested in his affidavit that he was going to deal with the similarities and differences between the two tools, he had not actually done that. 430 In order to do that, he said he would have to do a product review of the Barker tool, which would involve having access to the tool or the design documentation, source code, and then going through a review process and documenting it. 431 He agreed that ideally would involve determining the relevant metrics and assessing each tool against those metrics by way of testing. He agreed that one way to achieve this would be to look at the results and see whether they suggested similarities or differences and, in effect, working out how extensive the similarities were and how extensive the differences were. 432 He added that reviewing the tools would enable him to come up with some sort of matrix, looking at the performance, functionality and other aspects of each tool and then ranking them against each other. 433 In relation to the question whether the Barker tool was ready for market by late 2006, something also not addressed in his primary affidavit, Mr Maher said that if you were going to determine whether it was ready for market, you would first look at what constitutes ready for market because there are various forms of ready for market. He explained that over the last 10 years a lot of design companies have moved away from what is called the waterfall base model, whereby you have a set of requirements, and you then go through a number of stages which may take many months. Once you have completed all that and the testing complies with the requirements, then you would release that to market. 434 He added that more and more today, companies are moving towards an agile process of development, whereby you develop the requirements but then release the product into the marketplace so, where as you used to just release it once, you now design a product, it might take you two years, then you release it. An agile approach allows you to release into the market maybe within six, nine months and then do continuous updates so that product, while it is in the marketplace, responds to feedback from customers. 435 Mr Maher explained that when developing the Procept tool he undertook "alpha testing". That is, at that time, they broke the product or released the product into multiple stages which resulted in the release of an alpha prototype, a demo prototype and so on and so forth and those prototypes marked a testing phase. The testing would be done against the alpha and you would see whether it complied with the requirements set, but today that is less the case than it was back then. He said the alpha prototype generally was not for commercial use. One reason would be that bugs needed to be ironed out before it was released into the market. 436 Mr Maher confirmed that one aspect of what one seeks to achieve in design and development is that any release, whether it is a soft release or a waterfall release, is one where you have got a product that is fit for purpose and one is confident that it is not going to suffer any issues of significance. One does not want any critical or major issues, although inevitably there are going to be some minor or trivial issues that need resolving over time. 437 Mr Maher confirmed that in circumstances where a developer may not have a level of sophistication or resources that involves the developer having sophisticated testing facilities, it is common to trial off-site, in real world conditions. 438 Indeed, Mr Maher said that with products of the sort in question, with rugged instrumentation, one really does need to go through a field trial phase. 439 He was unaware, however, that the Barker tool underwent such a trial process. Indeed, he was not aware that it went through any such process or was trialled or tested on various drill sites. 440 Returning to the question of the Barker tool being ready for market and the process that Mr Maher would expect would be undertaken, he ultimately suggested that he would take the tool and test it for performance because the core orientation is about angles and he would check firstly, that it actually achieved that functionality. Secondly, he would check the performance of that functionality and see how accurate it was. Thirdly, he would rank ease of use, usability and those factors. 441 In re-examination, the question of various forms of development was discussed, including waterfall testing. Mr Maher said that one of the basic fundamentals of being agile is really about the concept of "failing fast". With the waterfall model, he explained, as you go through the stages, you develop to some specification but you never test it in the marketplace. You never test with your customer. You never test in the real world per se. With agile, what it allows you to do is get to a certain maturity point where you can release the product into the marketplace and essentially see how it goes, getting feedback. 442 As to the differences between the waterfall model and agile development, and the different circumstances in which they might be used, Mr Maher considered that agile development would comprehend core orientation technology. But, he added, that even with a waterfall model, one really does need field testing with "safe customers". But you would not officially release it commercially. 443 Mr Maher, in further cross-examination, confirmed that with the waterfall product there would not be release to the wider market per se. With agile development, there is commercial release to end users. 444 He accepted, however, that in both models, it is field testing with safe customers, it is before you go mass market, but you do that with agile or you do that with waterfall, it does not matter what model you use. It is a phase before you hit the button to mass produce. 445 Mr Maher further explained the different circumstances in which one form of assessment and testing would apply depending on the product. 446 It is clear enough that the evidence of Mr Maher was, in the end, of limited relevance to matters in issue. He was able to confirm that he was first spoken to by Mr Kleyn in July 2007, but only in respect of the survey camera, although he became aware then, or not so long later, that Mr Kleyn also had a core orientation tool. But he knew little or nothing of Mr Barker and the background to that tool and whether or not it had ever been tested or the like. 447 It was not until October 2008, that Mr Kleyn came back to Procept to develop formally the Procept orientation tool. However, there was activity earlier that year in February 2008. It is just that the formal arrangements between Coretell and Procept did not get to be completed until later. 448 On the face of it, Mr Kleyn was either or both not content with the readiness of the Barker/Camteq tool for commercial release (whether the waterfall or the agile processes, described by Mr Maher, were undertaken) or he was wishing to ensure that the tool developed by Procept would be free of the intellectual property complaints alleged by the applicants against the Barker/Camteq tool that were, at that point, the subject of litigation. The Court would tend to take the view that it was probably both. The question of readiness for market of the Barker/Camteq tool is discussed further below. In other respects, Mr Maher's evidence does not really go to the comparison between the Camteq tool and the Procept tool, save to identify a range of things that would be done to measure the similarities and differences.

Mr Tonkin's evidence 449 Mr Tonkin was called by the applicants. His evidence was contained in two affidavits. Prior to October 2010 he had, at material times, worked for Boart Longyear as site supervisor at BHP's Leinster mine site and did so for two and a half years, finishing November 2006. 450 During that time he oversaw the use of the respondents' electronic core orientation tool. 451 He confirmed he made a visit to Mr Kleyn's Orange Grove property in late 2005 relating to the survey camera that Boart Longyear was using at the time. He said that was the first time he visited the property. He was introduced to Mr Kleyn by Mr Lightfoot, having known Mr Lightfoot since childhood. 452 Mr Kleyn showed him an electronic orientation tool and informed him it had not been released onto the market and it was in the testing phase and asked whether he would be willing to run the Camteq tool on one of Boart Longyear's drilling rigs. 453 Mr Tonkin said that, to the best of his recollection, he said words to the effect of "I'll run it past my superiors and let you know". 454 He thereby disagreed with what Mr Kleyn said, to the effect that Mr Tonkin suggested to Mr Kleyn that Mr Tonkin could test the tool. He said Mr Kleyn offered him the tool for testing, not the other way around. He said he lacked the authority to make that sort of decision for Boart Longyear. 455 However, he was interested in trialling the tool once it was offered because it appeared to be simple to use and, on the face of it, could reduce drilling downtime. 456 He said he approached his supervisors and obtained approval for a trial. He recalled in late 2005, three to four kits were delivered to the Leinster mine site. 457 He did not agree with the suggestion by Mr Kleyn that there were no problems with it. He said the drillers only used the tools to create an initial operating plan. 458 He said that whenever he had a problem, he discussed that with Mr Kleyn and, when he was unavailable, Mr Tonkin would speak to Mr Barker. Mr Tonkin said this would involve frequent calls, sometimes several times a week. He referred to a particular email of late January 2006, in which he described how the tool would not power up. 459 Mr Tonkin said that in around March 2006, BHP organised the hiring of Mr Kleyn's tools by direct negotiations with Mr Tonkin, and he then oversaw the commercial use of the tools at the Leinster mine site from March 2006. 460 He described how the tools were to be used across the five drilling rigs at Leinster. He ran a number of workshops with drill crews, but was not always present when they were used. When they were used, he observed several deficiencies, including that they would not power up due to battery issues. They produced inconsistent readings and would have power but would not activate. 461 He said he made contact with Camteq whenever he had a problem. 462 He said so far as the power issues were concerned, he was not aware at the time that these were caused by problems with the batteries. He recalled that during testing and hire, they regularly became inoperable and had to be replaced, for example, in early March, he telephoned Camteq requesting replacement tools due to power issues on 15, 17 and 21 March 2006. 463 He said such was the frequency of the problems and length of time involved in getting replacement tools, Mr Barker was required to travel to Leinster in late March 2006 to resolve the issues. Following that, the tools continued to lock up or fail to activate. 464 He said that as they were unable to fix the tools on site, faulty Camteq tools had to be couriered back to Perth to be fixed. He said there were times in April 2006 when they had no working Camteq tool kits on site. 465 He recalled that when they did not have enough working Camteq tools, they would have to ask the client (BHP) which rig to prioritise for electronic coring. 466 He denied that the problems with accuracy were caused by operator error. 467 He also said that the operators snapping the core sample was not what was occurring. 468 He denied that the operators were the cause of the problems. 469 He said that the tools were producing inconsistent readings and this was reflected in the inconsistent orientation readings the tools were providing between core runs. 470 The BHP geologists informed him there was a discrepancy. He ran a comparison between the Camteq tool and the orientation tools they were otherwise using and were not able to match up the marks made by the two methods. 471 Mr Barker, he said, came once, and Mr Kleyn also visited in May 2006, and after that, BHP requested that all Camteq tools be removed from the Leinster mine site. 472 Mr Tonkin also rejected any suggestion that he was consulted on a frequent basis about the design features of the tool or that he was an appropriate person to provide such advice and had no involvement in the design process. He provided feedback. 473 He did not accept that he ever made the statement that Mr Barker attributed to him, that the Camteq tool was "an improvement over existing designs". 474 He said that, despite any initial positive reaction to the tool upon first seeing it, by the time the tools were removed at BHP's request, he did not consider the tool to be an advancement without further development and trial. 475 Mr Tonkin dealt with a number of emails from the first half of 2006 explaining particular issues and problems that arose. 476 In the result, he said he did not agree that Mr Barker would not have known why the tools were returned to Camteq. 477 In cross-examination, Mr Tonkin explained that at Leinster, five drill rigs were on site at the time he was there, all underground. 478 He, as others, agreed that exploration drilling is expensive and time is not to be wasted. He also agreed that you would not want to be working with unusable orientation tools. 479 He said that "many" Camteq tools came on site for trialling. They probably had two kits to start off with. That is two kits of four units and two handsets. 480 He explained that there were training sessions to get everyone to understand what the tool's functions were. 481 He was taken to the question of unreliability with consistently inaccurate readings. 482 He accepted that one difficulty was with the wiring disconnecting from the battery pack. He agreed the problem was rectified. 483 Another problem was the membrane button, which was later replaced. 484 He said the main problem though, was that they were not getting the orientation to the geologists' satisfaction. 485 He said the operators were not the cause of the problem. He had the responsibility of supervising them. He accepted though that he did not go underground and hold the drillers' hands. He relied on the training they had been given. 486 He said the geologists were also on site. 487 Mr Tonkin said he was sure that what subsequently happened around 31 May 2006 was that they brought all the tools to the surface, packed them up, took them to the dispatch box and sent them back to Camteq. 488 When taken to an email that he had written, he was asked whether he had, in effect, reported that what had been reported to him was about the pencil orientation not matching up with the tool orientation. He said, in effect, that was not so, and he had been down to the core shed many times to match up and explain the process. 489 He agreed that if the core is broken off by the driller, and then an orientation is taken, there will be a problem with the orientation matching up. But he insisted that was not how the drillers were trained to use it. He said they were trained to use it the correct way, which was the way given to them on a laminated sheet. That was used as the training guideline. He insisted they followed the instructions. He said that when he was on the drill site, the drillers were doing the core orientation in the correct fashion. 490 When it was suggested that the tools had in fact remained on site for another couple of months, he could not recall that, but accepted most probably that is what happened. 491 When asked whether the tools remained on site until 26 July 2006, Mr Tonkin said that they could have been stored in the office, he could not recall, but they would not have been used if the client had told him not to use them. 492 When asked about difficulties with geologists, he accepted that he had written that he had asked for feedback about how the tools were working and was not getting it. 493 He was then asked questions about his request for a special size of core orientation tool housing, known as the HQ3.68 diameter tool. He confirmed that he was asking for an adaption when a bigger core size was required. When asked if this was an indication that Boart Longyear was still interested in dealing with the Camteq tool, he said that it was an indication that he had spoken with the client. They were doing a drill hole run against where they were putting a decline in. They wanted to know the foliation of the ground, which meant they needed orientations to be able to see which way the ground was laying while they were driving a new decline of Cliffs. He confirmed it was an important job. 494 When asked whether the chosen tool for this job was the Camteq tool, Mr Tonkin said that was correct, "because the guys have been all trained in it, they were aware of its use". He said "you don't go changing tools when people are trained with it". He agreed that the HQ3.68 diameter tool was really a special one-off order. 495 He was cross-examined about an email Mr Barrett sent to Mr Kleyn dated 8 November 2006, about which Mr Tonkin said he had no recollection because he was not there and had nothing to do with that. 496 Mr Tonkin was also challenged about his physical capacity to personally supervise the drilling runs at all times, something that he accepted as not possible. He also accepted that it was not possible for him to have supervised the use or misuse of the tools at all times, or to have oversight of the drillers using the tools. 497 He accepted the tool was a new tool in the sense that the drillers were having to get used to both the handset and the down-hole unit as distinct from the spear orientation method. 498 He also confirmed there had been Ace Drilling tools on site prior to the Camteq tool arriving. 499 When challenged as to him not being in a position to say whether in fact the drillers were following instructions, Mr Tonkin did not accept that saying: "but they never knew when I was going to turn up, so they were always following instructions". 500 Mr Tonkin was also cross-examined about backlogged cores. When asked whether there could be drilled core in the core farm that had not been oriented, he agreed and said that he guaranteed there was drill core in the core farm that had not been orientated using the latest modifications. But he said he had never had feedback to say the orientations electronic matching were anywhere close at that time. 501 When pressed about some further correspondence from around 26 July 2006, where Mr Tonkin had said to Mr Kleyn "please don't get the idea that I'm shoving it offsite completely wrong", he made the point that he was always interested in anything that would completely remove spear orientation because it was time consuming. That was why he was interested in the electronic orientation device. He confirmed that they were doing a test for it. 502 Senior counsel in cross-examination took Mr Tonkin through a chain of emails that included abbreviated comments about the relative roles and attributes of geologists and drillers and their approaches to life that may be considered to have had some bearing on the approach taken by the drillers, and the geologists, to the trialling of the Camteq tool. 503 Mr Tonkin's evidence, generally speaking, was that of a person very familiar with the job of drillers. He had the job of supervising them. He understood work requirements and the difficult conditions they worked under. That he expressed the view that drillers perhaps did not test new drilling equipment to the greatest extent possible, did not, in my judgement, affect the evidence he gave concerning the various difficulties that were encountered with the Camteq tool at material times at Leinster. 504 What came through Mr Tonkin's evidence is that he favoured the new type of tool that Camteq were trialling with them over the earlier spear equipment like the Ace Drilling tool. He was keen to see if it could succeed. There were, however, problems. 505 At the same time, it is clear that the tool was used and continued to be used over a period of time and it cannot be concluded that it was a defective tool, although it did experience a range of problems.

Mr Koushappi's evidence 506 Mr Koushappi, at material times, was employed by Barminco as general manager of their diamond drilling division. He held that position for 14 years until 2008 and all in all has worked in the mineral exploration industry for around 49 years. He was called by the applicants. 507 With Barminco he was responsible for liaising with mine site operators regarding their production rate, drilling personnel and equipment requirements. In response to Mr Kleyn's evidence, he said he did not recall ever having attended a demonstration of any electronic core orientation tool by Drillshop and Mr Reynolds. He said had there been a demonstration, then he would have been present at it. 508 The only trial that he recalled of any orientation tool from Camteq, was at St Barbara's Marvel Loch site. He was not present at the trial, however, but learned that it revealed the Camteq tool was not reliable and Barminco did not subsequently place an order for it. 509 As to Mr Kleyn's statement that in early 2007, he informed Mr Koushappi that he was not able to supply Barminco with three "Ori toolkits", he said he did not recall ever making this request given the problems encountered at Marvel Loch. 510 He said that Barminco's practice was to issue a purchase order for the required supply and he had not seen any such purchase order. 511 In cross-examination, he said Barminco were operating about 40 rigs right around Australia. 512 He was challenged about not recalling having ever attended a demonstration of the tool by Drillshop. He said he was contacted by Mr Williams. 513 As to Mr Reynolds' evidence of a trial at which Mr Koushappi was present, when pressed, he said that, if it had happened, he was "pretty sure" that he would have remembered something like that and he could not remember it ever happening. He again added that he was fairly sure that if he had been there, he would have remembered it. He was leaving the possibility open that someone else at Barminco was at the demonstration, not him. 514 Mr Koushappi was also shown a summary of tools that apparently went to the Barminco site from 12 June 2006. From those documents he was prepared to accept that the tools were sent to Marvel Loch, either directly or to Kalgoorlie and then onto Marvel Loch. He also accepted there was a "turnover of tools" with the last tools being returned on 15 August 2006. 515 He accepted, on the basis of the documents, that the trialling occurred for a period of at least two months. He accepted drilling is an expensive business. 516 As to whether or not one would not bring on to site a useless tool, he said that you do not know if they are useless until you trial them. 517 He also agreed you would not want to waste time with a useless tool. 518 Counsel then put to him that it was plain that over a period from 12 June 2006 to 5 August 2006, Barminco and Camteq were trialling the tools. He answered that the tools could have been on site, but each hole you drill is different because the client actually requests whether they want the holes orientated or not, so there may have been a period where they did not have to actually orientate the holes. 519 He accepted that for a period of about two months, Barminco was happy to trial the tool. Mr Koushappi said "that was the general idea, yes". 520 Mr Koushappi was also challenged about his evidence that he did not recall ever making a request in early 2007 of Mr Kleyn to hire all three orientation tool kits. The reason, he said, was that if he had requested them, they would have been on the Barminco supply order system. He added that he might have said to Mr Kleyn over the phone, because they often rang up and joked with each other over different things, and he might have said that he wanted half a dozen of them. He did not know. But he could not recall ordering three orientation tools off Mr Kleyn. 521 He did not accept a proposition that Mr Kleyn may have told him he was not in a position to supply them. 522 He said he could not recall the conversation suggested with Mr Kleyn in early 2007, concerning the hire of three orientation tool kits. 523 When asked whether it was possible that it occurred, he made it clear that he would have known about it if it did. 524 On the basis of that evidence, I should note immediately that I accept the thrust of Mr Koushappi's fundamental position, namely, that the conversation did not occur.

Mr Herbert's evidence 525 Mr Rhett Herbert, at material times in 2006, was the area supervisor for Barminco and his responsibilities included staff training and managing drilling rigs in the Kalgoorlie area. He left Barminco in November 2008. He was called by the applicants. 526 He recalled that he was involved in trialling by Barminco of the Camteq tool at the Sons of Gwalia Marvel Loch gold mine site to evaluate its accuracy and performance. He said the trials were carried out under his supervision. 527 He said he made sure the drilling crew was able to use the tool in the correct manner and they ran the tool for several days. 528 He said one of the assessments involved comparing its accuracy to the accuracy of another core orientation tool that Barminco had already been using, the Ace Drilling tool. 529 He said the comparative trials revealed that the Camteq tool was inaccurate and the level of inaccuracy was beyond what he would have expected from any operator error. 530 At the conclusion of the trial, he was instructed to discontinue the Camteq tool. The kit was returned to Camteq at the conclusion of the trial. 531 In cross-examination, Mr Herbert, when asked whether coring is an expensive operation in which one does not want to waste time, was reluctant to answer on the basis that he was involved only with the invoicing, so he could only presume. He agreed, however, that the company would not persist with a useless tool that was not delivering the goods. 532 He confirmed knowing Mr Kleyn and receiving two down-hole units, plus one handset. 533 He was challenged as to his statement that the level of inaccuracy was beyond what he would have expected from any operator error. 534 When pressed as to the actual dates and times of the year when the tools were trialled, he could not be precise. He was also pressed as to how many rigs Barminco was operating in 2006, and suggested it could have been anywhere up to 28 plus drill rigs. 535 In relation to his estimation of a two week trial period, a table was put to him suggesting that tools went backwards and forwards for a period of about two months, between 12 June and 15 August 2006. He did not accept that. He said that he only saw one kit. He accepted, however, that the records seemed to state that the tools went out on 12 June, 3 July and 5 July 2006 variously to Kalgoorlie and Marvel Loch. 536 He was also questioned about his statement that he made sure the drilling crew was able to use the tool in the correct manner. He said he met Mr Reynolds on site and he went through it, before he demonstrated it to personnel on site. He explained it involved initiating the tool and downloading the orientation result. 537 He said he personally supervised underground drilling operations. He was pressed for details about the procedures involved. 538 He accepted that drilling crews change. He could not recall exactly how many drilling rigs were on site at the time. He thought there were about eight in the Kalgoorlie area. 539 When challenged as to whether the tools were on site for a considerably longer period than two weeks, he suggested that to the best of his ability "it was", which the Court understands to mean just the two weeks. 540 When challenged as to whether the tools were working "broadly satisfactorily", he said no they were not. 541 Mr Herbert was taken through the procedures by which the drilling occurred and the difficulties apparently discovered with the tools. 542 Mr Herbert's evidence was given many years after the event in relation to activities with which he had been familiar for a number of years as well. Generally speaking, however, his opinion that there were problems with the tools trialled was not seriously diminished and I accept his evidence in this regard.

Mr Brown's evidence 543 Mr Kelvin Laurence Brown is the global products manager of Reflex, the third applicant, and he has held this position for over 18 years. He was called by the applicants. 544 Mr Brown gave his evidence on the basis that he had read an affidavit by Mr Kleyn made 11 September 2013 and one by Mr Barker made 10 September 2013, and had also reviewed and commented on the contents of repair reports for the respondents' core orientation tools returned between January and May 2007 in an affidavit made by him and filed in Court, dated 24 September 2014. 545 Mr Brown gave evidence of his qualifications and experience, including over 20 years' experience in exploration and drilling. In 2011, he received the Australian Mining Award for Outstanding Contribution to Mining and Miner of the Year, the AMEX, for his role as the lead driller and instrumentation consultant in the rescue of the Chilean miners trapped underground in the San Jose copper mine in August 2010. He was previously employed as a senior driller by DrillCorp Western Deep Hole Drilling from January 1995 until about February 2001 and worked on core drilling programmes throughout Western Australia and was responsible for overseeing and managing all drill crews using core orientation instruments on the rig. Then, on February 2003, he was employed by Mosslake Drilling as its drilling manager and was responsible for overseeing and managing core drilling operations on their rigs. That included hiring and returning equipment used on rigs. He estimated that he had carried out or overseen in excess of over 90,000 metres of core drilling and core sample orientation operations. 546 In early 2004, he joined Imdex working for its business division, Ace Drilling, as its technical sales representative. It was the exclusive distributor for down-hole cameras and survey navigation tools in Australia in the Asian region for Reflex. 547 In January 2005, he became regional manager for Ace Drilling and held that role until 2007 and, in the course of doing so, visited mine sites and introduced and explained Ace Drilling's electronic core orientation tool, known as the Ace Drilling tool, and reported feedback from drilling crews to the business. 548 He explained that Imdex acquired Reflex in early 2006 and merged its Ace Drilling business with it, following which the Ace Drilling name was no longer used. 549 He commenced his current role as global product manager for Reflex in 2007 and, in addition to visiting sites and sales, he was responsible for the "life cycle management" of Reflex's rental fleet and the development and implementation of training programmes. 550 Mr Brown in his evidence in chief, by affidavit, sought to give evidence about core sample orientation, the electronic core orientation tools, the respondents' first generation electronic orientation tool, reported problems at the Boart Longyear site, reported problems at the Barminco site, letters of demand at the commencement of the proceedings, his view of there being no observed cessation of activity, the respondents' second generation electronic core tool, the light activation feature, electrical components, power issues, and review of repair reports for Camteq tools. 551 While there is objection made on behalf of Coretell to the reception of this evidence, I am satisfied that, by virtue of his qualifications, training and experience, Mr Brown is entitled to give opinion evidence about these various matters and in particular by reference to materials that have been put in evidence, including the evidence of Mr Kleyn, Mr Barker and others. 552 It goes without saying that the ultimate probative value of this evidence is to be assessed by the Court, and the fact that Mr Brown is employed by Reflex, the third applicant, must steadfastly be borne in mind in assessing the probative value of his evidence. But of itself, the fact that he is currently employed and has been for some eight years or more in the applicant group does not, in my opinion, of itself disqualify him from giving opinion evidence. 553 I should also add that while Coretell effectively sought to impugn his impartiality, I do not consider that Mr Brown simply became an advocate for the applicants and his evidence should be considered relevant. 554 It is not necessary here to recount Mr Brown's evidence about the technique of core sample orientation. It has been sufficiently adverted to above. 555 Nor is it particularly necessary to recount the evidence he gave about the different electronic core orientation tools at material times. Mr Brown said he first became aware of the Camteq tool in March 2006 and, in or about 30 May 2006, was informed that Gilbert Drilling, Argyle Diamond Mine geologists and Boart Longyear at Leinster, had experienced problems with it, including "questions over its accuracy". 556 He said that about 21 June 2006, he visited the Leinster mine site and also received some feedback on the Camteq tool, to the effect that they had trouble getting the tool to work. 557 Then on about 2 August 2006, he received a telephone call reporting on problems at the Barminco site with the Camteq tool. 558 Mr Brown briefly referred to the threat letters. He further noted that in early 2007, the Camteq tool appeared to be advertised as "now available" on the Camteq website. 559 He then became aware that Mr Kleyn had re-entered the market with a second generation or Procept tool in January 2009. 560 In 2006, Mr Brown inspected the Camteq tool. He gave evidence about how it was to be used and expressed his opinion there were some problems with the light activation feature. 561 He also gave evidence about the electrical components he observed in the Procept tool in approximately 2009 and how it was bespoke. He said that, by contrast, the Camteq tool he inspected in November 2006 incorporated two boards, had loose wiring connecting it to the battery and appeared to him to incorporate features which had been soldered in a private workshop rather than by a professional printing factory. The Procept tool did not suffer these design flaws which could potentially render a tool inoperable. 562 Mr Brown also compared and contrasted the Camteq tool and the Procept tool in respect of the power issues. He identified the Camteq tool problems in that regard, and considered that they had been obviated such that the technical specifications said the total operating time for the handset and probe was up to two years depending on use. 563 Mr Brown also reviewed the repair reports from Hightech from January to May 2007; he formed the view that the tools that had been repaired there failed after less than two or three days in the field. 564 He further said that he understood that Coretell had at most 50 units available in early 2007, and this meant that during a relatively short period of time, 22 of the 50 tools (that is 44% of them) were returned for repair or upgrade, with 13 (that is 26%) experiencing what appeared to be critical errors that would have prevented the tool from being used altogether. 565 On that basis, he did not believe the Camteq tool was commercially viable at the time legal letters of demand were sent by Imdex or at any time before the legal proceedings were commenced on 2 July 2007. 566 In further evidence by affidavit, Mr Brown addressed matters arising out of Mr Kleyn's second affidavit made 31 October 2014 and Mr Barker's affidavit made 31 October 2014, which, amongst other things, dealt with additional trialling of the Camteq tool, including emails between Boart Longyear and Camteq in 2005 and 2006. 567 Mr Brown produced a supply and return record for each customer, which he produced as annexure KLB9. 568 Mr Brown expressed his opinion that it was unusual in his experience for a core orientation tool to be returned to the supplier during the course of the drilling program, unless there was a specific problem with the tool. 569 He also addressed the difference between the Camteq tool and the Procept tool and commented on Mr Barker's report at annexure AGB57 of Mr Barker's second affidavit. 570 In the result, Mr Brown said it was clear to him that the Camteq tool incorporated a different operating procedure, operating commands, components and user-interface from the Procept tool and did not accept Mr Barker's conclusion that the tools were "remarkably similar in design". 571 I do not accept the objection made on behalf of Coretell that Mr Brown's evidence constituted speculation or was irrelevant. In my view, while the question of its ultimate probative value may be debated, Mr Brown's training and experience is such that he is able to examine relevant repair and return records and pass an opinion, from his experience in the field, as to how usual or unusual returns for particular reasons might be. 572 The Court would say at this point, however, that, to an extent, Mr Brown was plainly contending for a particular outcome that supports the position of his employer, the third applicant in the proceedings, and to this extent, the Court remains cautious in readily accepting Mr Brown's conclusions. 573 In cross-examination, Mr Brown was asked about the extent to which the applicants were "watching" the activities of Mr Kleyn and the Camteq products in use in the mining industry, including the camera and later the orientation tool. As of 2 August 2006, a "red flag" was attached to the orientation tool. Mr Brown explained in cross-examination that this was to draw people's attention to this development and the potential competition. 574 Mr Brown was further taken to some materials that suggested that the Camteq tool was cheaper by about $600 a month. He was also taken to a document concerning the St Barbara Marvel Loch/Barminco mine, which stated that the length of the Camteq tool was similar to the Ace Drilling tool, with the same barrel extension being used to run the Ace Drilling tool as well. It stated that "the geos are impressed with the dip function of Camteq". 575 Mr Brown indicated that he had attended some of the sites where the Camteq tool was being used. He confirmed that he had the view that the Camteq tools were not on site for very long at either Leinster or Barminco. 576 In that regard, counsel sought to challenge the tables and the opinions based on them prepared by Mr Brown. 577 Mr Brown accepted that what the table showed was that there was a considerable length of time that tools were with customers such as Ausdrill, Barminco, Gilbert Drilling, and Boart Longyear. 578 Mr Brown also accepted that the trial of the products could have been to see whether the tool was working, and whether the customer liked the tool. In other words, just to test to see some sort of market response, particularly with the handset. He accepted that as a possibility. 579 He also accepted as making sense the proposition that the trial could have been, in any event, a short period because it was only for a short trial and the tool was returned at the end of the time. He also accepted that if there was a short trial or it was expected to be a short time, that might have nothing to do with the tool malfunction. 580 Mr Brown also accepted that another reason that the tool could have come back was that it was damaged, however that may have occurred. He also accepted that his table did not take into account the different reasons why the tool may have been returned. He said that his earlier affidavits contained emails which suggested reasons for the returns. 581 Mr Brown also accepted that tools returned because of a Camteq request for a return or for further modifications were not present in the table. 582 He also accepted that the table did not include requests for return because of operator error. 583 Mr Brown was then cross-examined about driller behaviour and operator or operating errors. He agreed that different drillers might have different operating techniques. 584 He also accepted that if tools are not reading orientation correctly, one possible cause of error is that the reading is taken too soon, that is too soon after the cessation of drilling. 585 He also accepted as possible that inaccuracies could derive from the core being broken before the orientation is taken. 586 Mr Brown was further asked about an inspection of the Camteq tool and the Procept tool, and indicated that while he had seen them, he had not done a formal comparison of the two tools, one against the other. 587 He was further asked about what in his evidence he called the comparative differences between the two. For example, the circuit boards were different, something he noticed. He also referred to the loose wiring of the Barker tool that he saw in November 2006. He said the Ace Drilling tool did not have unsecured wires because they had heat shrunk the wiring on the body. 588 Mr Brown also spoke about the issue of a light switch between one and the other. 589 He further separately addressed the question of tolerance and accuracy. He considered the Procept tool was superior to the Camteq tool. 590 Senior counsel put it to Mr Brown that he advanced no evidence of any defect reports relating to the Camteq tool having any issues after August 2006 in relation to matters such as the circuit board, loose wires, lack of conformal coating, the light switch or its tolerance. His general answer indicated that he thought quite possibly his earlier affidavits had drawn conclusions on that basis. Mr Brown agreed, however, with the proposition that they were different products by design. He said they achieved the end goal. He accepted the Procept tool was a down-hole unit. He agreed it had a separate handset. He accepted that it had a handset in which the electronics were placed. He accepted that the Camteq tool had a design so that the handset would communicate with the down-hole unit and that the handset communicates with the down-hole unit before the tool goes into the hole. And also communicates with the down-hole unit after it is retrieved from the hole. And that was also the case with the Procept tool. He confirmed they both worked with accelerometers. He also accepted they both derived rotational orientation. 591 When asked whether the tools exhibited any differences with the external housing for the down-hole unit, he said not of any significance. 592 Mr Brown was then asked, if the circuit board were an issue, that it would have been fixable by dipping it in the conformal coating. He was not able to answer that, only to make an assumption. 593 Mr Brown agreed fixing loose wires would be an easy thing to achieve. 594 As to the light switch, he thought it would not be a feature he would want to have in an instrument in the drilling industry. He was unable though to comment meaningfully on the use of a membrane switch in the Camteq tool. 595 In relation to circuit boards - of which senior counsel produced three for the purposes of questions - Mr Brown ultimately said that impact always breaks everything but vibration is the enemy. That is what the epoxy is for. The coating is a way of managing vibration. If water ingress is the issue, you would apply some other form of coating. 596 Mr Brown was handed the third of these boards, said to be from the down-hole Procept tool. He did not agree that it was protected from shock. He did not consider it was protected from impact. He noted it had a perspex window on it. He considered that was more for protection from water ingress, not impact. 597 Senior counsel then turned to the question of drilling core. 598 He accepted in relation to a statement about a five to 10 degree error range, that it should be a possible maximum error of six degrees and that is what Mr Barker had been talking about in his report, that is the handset indicating that the core is at top dead centre plus or minus three degrees. Mr Brown was then taken through the example of NQ core. He appeared to accept that plus or minus three degrees, or plus or minus 1.25mm, would be good enough. Speaking as a driller, Mr Brown said he would be happy with that, but his customer might be a bit more concerned than him, "but as a driller, wouldn't see the reason to split hairs". 599 Mr Brown was then cross-examined about the take up of digital core orientation. By reference to evidence given in the NSW proceeding, he said that not until approximately 2009, did it gain overall acceptance within the industry. 600 It was put to Mr Brown that with the Ace Drilling tool, business was very "brisk" earlier than 2009. Mr Brown said he was not saying that but in response to the question whether it was a good product for the company, he answered "Overall. Absolutely". But denied that was the case from the start up, from the get go. He disagreed with that. 601 He was taken to the divisional highlights of Imdex's 2005 annual report, which suggested that Ace Drilling was benefiting from "strong increases in the resources sector and the introduction of the new electronic core orientation tool, lifting revenue by 23% and EBIT by 63% in financial year 05". 602 When taken to other information, he accepted that what was contained in these reports was "at odds" with what he had said at [37] of his affidavit. Mr Brown then said that what gets reported in annual reports "is always very upbeat". 603 He also put qualifications on other statements made in the annual report for 2006. 604 He, however, did not think he was in a position to comment on what the position was at November 2006 and whether Imdex was earning significant revenue from the Ace Drilling tool then. He said the business as a whole seemed to be going well, the commentary sounded really good and he did not argue that the business was doing well. He said that shareholders reading the report would certainly draw that conclusion. 605 The question of the threat letters in late 2006 was then raised with Mr Brown. He inspected one of the allegedly offending tools in November 2006, and he identified features which he thought were similar to the applicants' tool. 606 Mr Brown agreed that revenue was being generated by Ace Drilling in relation to its core tool in 2006 and onwards, but could not say what percentage of the revenue was core tool versus any other tool or products made at that time. It was his understanding it was something that was growing. 607 He accepted, however, that other than the Camteq tool, there was not a competitor electronic core orientation tool. 608 In re-examination, in relation to Mr Brown's table, concerning "kits going on our sites", he explained how he had looked at materials that Mr Kleyn had supplied. 609 He also explained that he did not deal with Silver City information because it did not appear in the 2006 folder that Mr Kleyn had produced. 610 Similarly, he did not consider the MTL Philippines materials because it was not in the 2006 folder supplied by Mr Kleyn. 611 Finally, he confirmed he had not seen in the Kleyn 2006 folder any defect reports after August 2006, and thereby, by implication, had not identified any defect reports after that date in his table, for that reason.

Mr Lightfoot's evidence 612 Mr Lightfoot is the project manager of Ausdrill and was called by the applicants. His evidence was not contested at the hearing and is as follows: 1 I am employed as the Project Manager of Ausdrill Northwest. I have worked with the Ausdrill Group since 2007. 2 For the purpose of making this affidavit, Chris Williams of Gilbert+ Tobin has provided me with the Affidavits of Mr Barker sworn 10 September 2013 (Mr Barker's Affidavit) and Mr Nicky Kleyn sworn on 11 September 2013 (Mr Kleyn's Affidavit). I respond to those affidavits to the extent that they refer to matters that involved me. 3 Unless otherwise indicated the contents of my affidavit are based on my knowledge. Background and Experience 4 I have been involved in the Exploration Drilling industry for approximately 40 years. My experience in the sector includes working on drill rigs for approximately 10 years and then working in Sales and Marketing of drilling products for approximately 20 years. 5 I was previously employed for approximately 12 months ending in late 2005 as a Marketing and Sales Manager by a company operated by Nick Kleyn, known as "Camteq". When I joined Camteq, the company's principal source of business was Mr Kleyn's fleet of photomechanical survey cameras. I was responsible for organising sales of that equipment for the company. 6 Upon leaving Camteq in late 2005, I took up a position with Anderson Drilling Pty Ltd's Ballmark business. Ballmark sold a mechanical core orientation tool and my role was to market the product for hire in Australia and Africa. 7 In January 2007, I left Ballmark to join Ausdrill Ltd as Site Manager. I subsequently took up my current position as Project Manager for Ausdrill Northwest. Response to Mr Barker's Affidavit 8 In response to paragraphs 27 to 38 of Mr Barker's Affidavit. I recall that when I first met Mr Barker I was aware that Australian Mud Company (AMC) had recently released an electronic core orientation tool onto the market, which I knew to be the Ace Core Tool (ACT). I was also aware of an electronic survey tool that had been released in Canada or North America at around that time. These tools operated in a different manner to the mechanical core orientation methods that I was familiar with at this time. 9 During one of my conversations in approximately early 2005 with Mr Kleyn regarding Camteq's development of a core orientation tool (Camteq Tool), I asked Mr Kleyn whether he was concerned about whether Imdex held patent rights in the field of electronic core orientation. I recall a conversation to the following effect: I said: 'Aren't you concerned that the tool might be covered by a patent?' Mr Kleyn said: 'No, the tool we are developing will not interfere with their patent' 10 During all my time at Camteq, Mr Kleyn never said in my presence anything about his concern about potential litigation, involving AMC's patent or otherwise. 11 In response to paragraphs 51 to 61 of Mr Barker's Affidavit, while I recall production of a prototype in early 2005, the Camteq Tool was not ready for commercial release by the time I left the company. During my time at Camteq I did not request customers to submit orders for the tool and, to my knowledge, the Camteq Tool had never been used in the field. The Camteq Tool was still very much in development phase by the time I left Camteq in late 2005. Response to Mr Kleyn's Affidavit 12 I refer to paragraph 18 of Mr Kleyn Affidavit. At that time, Camteq was a small family run company that operated from Mr Kleyn's residential premises located in 10 Reservoir Road, Orange Grove, Perth. It comprised a house on a block of land with a workshop separate from the house. 13 At paragraph 105 of Mr Kleyn's Affidavit, I understand that Mr Kleyn suggests that I was involved in organising trialling and commercial sales of the second version of the Camteq Tool in late 2009. This is not correct. I have never seen the second version Camteq Tool. After leaving Camteq in late 2005, I had no further role in marketing Camteq products.

Some findings arising from this evidence 613 Coretell submits that, aside from Mr Brown, the applicants' lay witnesses approached their evidence in an honest and credible manner. 614 It says Mr Brown was partisan and gave evidence beyond his capability, qualifications or expertise and, to that extent, his evidence should be treated with caution. I have dealt with those submissions above and have, in substance, rejected them. 615 Coretell says that its lay witnesses, Mr Kleyn, Mr Barker, Mr Maher and Mr Reynolds, gave their evidence honestly and credibly. It says that while Mr Kleyn became terse with the cross-examiner in the witness box, that should not detract from his integrity or his honesty and it is understandable that he found himself in an emotional position, having been engaged in seven years of litigation by the applicants. I will return to Mr Kleyn's evidence below when dealing with primary factual questions, but largely I accept these observations about his evidence made on behalf of Coretell. 616 Coretell says that Mr Tonkin's negative written evidence about the "unworkability" of the Camteq tool as used at Leinster should be treated with caution. In his cross-examination, it is contended, Mr Tonkin "gradually modified" his statement that the tools had not been in use after May 2006, as he sought to explain emails put to him which set out continued use of the tools after May 2006. Nonetheless, he initially maintained they could have been stored at the office and he did not recall, but they would not have been used if the client had told him not to use them. 617 Coretell points out that he nonetheless accepted in cross-examination that the tools remained on site until July 2006 rather than May 2006, and recalled that a driller dropped a spanner onto a hand pad at that time. 618 Coretell says that "[a]fter changing his evidence as to the extent of time the tools were on site" Mr Tonkin also agreed in cross-examination that in October 2006, Boart Longyear ordered a special size of core orientation tool housing to be manufactured by Coretell and sent to the Leinster site to enable use of the tool on an important project for a client identified as BHP, which apparently had earlier asked for the tools to be removed from the site on Mr Tonkin's evidence. That order was on commercial terms. 619 Coretell says the contemporaneous records indicate that Boart Longyear's request to remove the tools from the Leinster mine site in about July 2006 may have been due to operational reasons rather than technical issues with the tools, as an email from Mr Tonkin to Mr Kleyn dated 26 July 2006 advised of the removal and referred to "geo's here having no leadership", the hand pad being damaged by an offsider and the fact that Mr Tonkin could get no feedback on the operation of the tool. 620 Coretell also suggests that further issues in early November 2006 may have been due to business connections rather than technical issues, Mr Kleyn noting that one of the managers at BHP was a friend of the general manager of AMC and Ace Drilling, and Ace Drilling was telling BHP that the Coretell tool was wrong. 621 In any event, Coretell submits that even if Boart Longyear or BHP were of the view that there were technical problems, the opinion may have been based on an erroneous factual foundation, suggesting that Mr Tonkin was not in a position to directly supervise day-to-day use of the tools and was not responsible for direct supervision of the drilling runs. 622 Thus, Coretell submits, the Court cannot rule out that some or all of the problems, as set out in Mr Tonkin's evidence, were due to driller error. 623 Coretell submits that this position was independently corroborated by Mr Brown, who agreed that in exploration mining there were different shifts and different crews on the same rig and the same tools at different times, and that some drillers would operate them differently to others. 624 In the result, despite the attempts on behalf of Coretell to minimise or explain away Mr Tonkin's evidence, in my view, Mr Tonkin was a direct witness who had not in any respects tailored his evidence. Any suggestion or implication that the reason the Camteq tool was sent back to Coretell was not due to technical failure but due to business reasons, or that Mr Tonkin had inadvertently or incorrectly formed the view that there were technical problems with the Camteq tool when it was really a driller's problem in using the tool, were answered by Mr Tonkin in cross-examination. He refused to accept an explanation that ongoing accuracy issues were caused by drillers using the tools incorrectly. He explained they were used in the harshest conditions in accordance with the instructions and extensive training provided. I accept a submission made by the applicants that from this evidence there is no reason to assume the drillers would have consistently used the tools incorrectly. Nor is there any basis to Coretell's contention that the inaccurate results were simply the result of a backlog of core samples or tools without latest modifications. As Mr Tonkin explained, and I accept, the backlog in core samples in May 2006 was no longer than three or four days. 625 Thus, I accept and find that by the end of July 2006, Mr Tonkin had determined that the problems with the Camteq tool had not been fully rectified and the geologists were no longer interested in providing feedback because it was not operational after significant trialling. In the event, this evidence was not seriously undermined in cross-examination. 626 As to the later supply of the special size of the core orientation housing tool in October 2006, Mr Tonkin said that these tools also failed and that BHP requested their removal in late October 2006. That evidence, as submitted, is consistent with the documentary record. 627 As to Mr Herbert's evidence, Coretell submits that it appeared rather confused and it appeared he had a poor recollection. It is submitted that he needed to protect his reputation as a supervisor by insisting that his drillers must have been following instructions. It is submitted his evidence is unreliable. It is also submitted there were a number of problems in the manner in which the testing was done at the Marvel Loch site. 628 Coretell says that Mr Herbert initially said the tools were at Marvel Loch over several days and then changed his evidence to say they were on site, whether they were being used or not used, for two weeks. He denied the tools were on site for as long as Coretell's business records indicated. In fact, the records suggested they were at Marvel Loch from 12 June to 15 August 2006, about two months. 629 Coretell says that Mr Herbert did not seem properly familiar with the Camteq tool. He agreed that the pressing of the take measurement button too early would lead to an error but was not aware that taking the orientation after breaking off could also lead to an error, as was accepted by others. 630 It is said his view was that the only way this could lead to incorrect data was if the sample was lifted and then placed back down. He was the only witness to deny that taking the orientation after breaking off could lead to an error. It is submitted that it is possible he passed on such erroneous instructions to drillers that he supervised. 631 Coretell submits that training in the tool at Marvel Loch appeared to be rudimentary. It says that Mr Herbert's evidence about the extent of his personal supervision was unsatisfactory and he confirmed that he did not personally supervise the drilling operations all of the time. The assertion that he personally supervised 100 hours of drilling in a two week period, it is submitted, should be treated cautiously. 632 The applicants say that Mr Herbert, when he gave evidence, only said that he saw one kit and for that reason he denied that the length of time the tools were on site was as long as the business records indicate. 633 For my part, while it should be accepted the kits were there for the length of time that the records indicate, that evidence does not undermine the burden of what Mr Herbert had to say. Nor does it mean that Mr Herbert was an unreliable witness. 634 The burden of Mr Herbert's evidence, that the trial of the tools resulted in the tools being found to be unsatisfactory, in my judgement reflects his true evidence which I accept to be true, despite the attempts to undermine it in cross-examination. 635 As to the clash of evidence between Mr Koushappi and Mr Reynolds as to whether Mr Koushappi was at a demonstration Mr Reynolds said he gave to Barminco in Kalgoorlie in mid-2006, Coretell says Mr Koushappi could not remember the demonstration but agreed that he could not rule out that it occurred. 636 It says he was also not in a position to dispute that the tools had been on site from 12 June to 15 August 2006, and he agreed that the records indicated that Barminco was content to keep working with Mr Kleyn on the trialling of the tool throughout that period. 637 Coretell says that Mr Koushappi agreed it was possible he had made an enquiry of Mr Kleyn in early 2007 for core orientation tools and that the generation of any formal order based on that conversation would have depended on the price offered by Reflex and Camteq on their tools. Mr Koushappi confirmed Camteq was in the running, and the placing of an order would have depended on the price of the unit. 638 Coretell says Mr Koushappi's evidence was confirmatory that, following the Marvel Loch trial, he did not have major concerns about the merchantable quality of the tools and would have made an order if Camteq had been competitive on price. 639 The applicants submit the transcript references show that Mr Koushappi gave evidence that he could not remember the demonstration and that there is no evidence to show that he agreed that he could not rule out that it had occurred. 640 As to inquiring of Mr Kleyn about core orientation tools in early 2007, the applicants point out that Mr Koushappi simply agreed that "anything's possible", evidence of low probative value. 641 I broadly accept the submissions made on behalf of the applicants. The reality is, in my judgement, that Mr Koushappi had no memory at all of a demonstration conducted by Mr Reynolds. It may have happened but he thought he would have remembered it if it did. 642 Regardless, Mr Koushappi's evidence concerning the unsatisfactory trialling of the Camteq equipment is not undermined. 643 There is no evidence to reliably support a finding that Mr Koushappi was comparing other products with those of Camteq in early 2007. 644 Coretell also addresses the evidence of the email exchange between Mr Kleyn and Mr Barker in December 2006 and into 2007. 645 Coretell submits that while Mr Barker sensibly accepted that Mr Kleyn had been keen to have the tools out on hire, the evidence is clear that Coretell could not do so because of the threats. 646 Coretell notes that Mr Barker was extensively cross-examined and re-examined on the email thread commencing 22 December 2006, and maintained that the tools were ready for market. He pointed out that the problems referred to in the email exchange were "simple, silly problems" that were easily resolved. He expanded upon that in re-examination. Mr Kleyn said he exaggerated issues in the email of 22 December to get Mr Barker back to work. 647 Mr Barker, Coretell says, was extensively cross-examined on an 8 March 2007 email thread and it was suggested to him that a reference to "manufacturing/production must be given priority at all times" was actually a reference to a need to continue developing a flawed core orientation tool, which Mr Barker rejected. 648 Coretell notes that Mr Barker was also cross-examined on a 3 July 2007 email thread in which Mr Kleyn expressed agitation in a delay in the orientation tool being on hire and Mr Barker maintained his view that "I do believe the tool was ready earlier - the Ori-tool was ready earlier than that". Coretell says Mr Barker was further cross-examined about the low level of production of the Camteq tool at that time, and rejected that the low level of production in 2007 was due to problems with reliability of the equipment, and said that his "time was primarily focussed on the camera by that stage so we weren't mass producing tools". 649 Coretell notes Mr Barker was briefly cross-examined on an entry in a 30 July 2007 email which referred to a handset locking up. Although not asked for an explanation, an explanation was given in re-examination and it related to a proposed upgrade to the handset rather than some fault in it. 650 The applicants, in relation to Coretell's submission that Mr Barker stated that the problems that were "simple, silly problems" that were easily resolved but had seemed important to Mr Kleyn as he was a person readily agitated and did not have technical expertise, submit that the transcript reference shows that Mr Barker does not give any such evidence regarding Mr Kleyn's personality. That last point is accurately made and I proceed on that understanding. 651 Generally speaking I consider that Mr Barker gave honest and reliable evidence and was not at any great pains to colour his evidence. However, while from his point of view he confidently considered that he had produced a product that was ready for market - accepting there remained issues to be resolved - a serious question remains whether his perceptions mean the Court should arrive at this same conclusion on all the evidence. This question and the question whether his evidence should result in a finding that there were no merchantable quality issues with the Camteq tool at material times is considered further below. In the result, taking into account the evidence concerning trialling of the tool in the field, canvassed above, Mr Barker's evidence and Mr Kleyn's evidence - all pointing to more work requiring to be done on the tool - I do not accept that the tool was, in fact, ready for market towards the end of 2006 when the first threat letter was received.

Is Coretell a "person aggrieved"? 652 This question is the subject of a range of submissions made by the parties, raising the following issues: whether Mincrest had assigned the Camteq tool to Coretell at material times; to whom the threat letters were actually addressed at particular dates; and the significance of the declaration and order made on 22 December 2010. 653 As noted above, following my first, liability judgment in this proceeding, letters sent on behalf of AMC dated 14 November 2006, 5 December 2006 and 13 February 2007 were declared unjustifiable threats of patent infringement and an enquiry into damages was ordered. The precise terms of the declaration and order have been set out above. The applicants say the first threat actually addressed to Coretell was the third, 2007 letter, the earlier two being to Mincrest. 654 In response, Coretell says that in or around May 2006, and certainly by 22 November 2006, Mincrest had assigned its proprietary interest (or at least an equitable interest) in the Camteq tool to Coretell and that, as a result, each of the threat letters, whether addressed to Coretell directly or not, are actionable by Coretell, or Coretell is a "person aggrieved" who is otherwise entitled to claim the loss and damage suffered by the respondents. 655 Coretell submits that there can be no doubt that each letter threatened patent infringement proceedings based on the patent in question and each letter asserted that the core sample orientation tool - defined in the correspondence as the Camteq tool - was an infringement of the patent. Similarly, each letter demanded undertakings concerning the tool consequent on the asserted infringement. 656 Coretell contends that, as a matter of law, it is not to the point that the initial threat letter and demand was addressed to Mincrest, and relief for unjustified threats under s 128 of the Patents Act has never been confined to the specific addressee of a threat. See Johnson v Edge (1892) 2 Ch 1; John Summers & Sons Ltd v Cold Metal Process Co (1948) 65 RPC 75. 657 Coretell says the threat of patent infringement was against the Camteq tool, as made plain by the threat letter dated 14 November 2006. 658 Coretell also says that, in fact, the applicants' solicitors had the wrong addressee. As at 14 November 2006, the proprietary interest in the Camteq tool was believed, and stated by both Mincrest and Coretell, to have passed from Mincrest to Coretell. That position, it is said, was stated unambiguously to the applicants' then solicitors, Mallon & Co, by Arns & Associates, then solicitors for the respondents, in letters dated 22 November 2006 and 14 December 2006. Coretell says that, relevantly, however, both letters expressly made clear that Coretell understood that the threat or threats being made against the tool were threats against Coretell and its asserted proprietary interest in the tool. 659 Coretell says this position also accords with the unjustified threat letter of 13 February 2007, in which Mallon & Co responded to Arns & Associates' letter of 14 December 2006 and stated: "Our client repeats its demands that Mincrest and Coretell provide the following undertakings" (emphasis added in submission). Thus, Coretell contends, the applicants accepted that their demands were also being made to Coretell. 660 Further, Coretell contends that the making of the above declaration and order put beyond dispute its entitlement, as a person aggrieved, to prove its loss and damage and the question is res judicata. In essence, it contends the relief granted establishes Coretell's interest to claim damages and the Court should not look behind the declaration and order made. 661 In response to these submissions, the applicants submit: (1) That the res judicata plea is not part of Coretell's pleaded case. (2) In any event, the Court has not made any finding preventing the applicants from contending, as a threshold question, that Coretell is not a "person aggrieved" in respect of the letters sent to Mincrest. Rather the Court has determined and declared that AMC's threats to commence legal proceedings were unjustifiable. A "person aggrieved" for the purpose of s 128 of the Patents Act includes persons who have been threatened directly, those threatened by clear implication and those whose commercial interests stand to be damaged as a result of the threats. In the present case, the initial threats were directed to Mincrest (not Coretell), there is no clear implication (unlike the final threat) that the applicants also intended to commence proceedings against Coretell and it is unclear how Coretell's commercial interests stood to be damaged as a result of proceedings threatened to be brought against Mincrest. Accordingly, the threats period only commenced on 13 February 2007 when threats to commence proceedings were first issued to Coretell. (3) The real issue is whether Coretell is entitled to claim loss and damage based upon the controversial contention of Mr Kleyn that he assigned the "tool business" from Mincrest to Coretell. If there was no assignment, (there was no written assignment and Coretell now impermissibly travels outside its pleaded case and alleges there was an equitable assignment) then any loss (which is denied) was to be claimed by Mincrest not Coretell. Mr Meredith's evidence, discussed below, is predicated on the assumption that Coretell is the owner of the Camteq tool. In the related NSW proceeding, the applicants note, the issue of a valid assignment was determined by McKerracher J against Coretell's current claim. 662 The Court accepts that, one way or the other, the question whether there was an assignment of property, or indeed any interest, in the Camteq tool from Mincrest to Coretell at material times, is relevant to the damages enquiry and may be pressed by the applicants. This issue may be said, however, to be more directly relevant to the question whether Coretell has itself sustained any damage, and less so to the question whether Coretell is a "person aggrieved". 663 I say that because s 128(1) of the Patents Act, set out above, empowers this Court, on the application of a "person aggrieved" - that is to say, a person who has been threatened with infringement proceedings - to make a declaration that the threats are unjustifiable and to deal with the recovery of "any damages sustained by the applicant as a result of the threats". 664 In circumstances where the respondents alleged unjustified threats by the applicants and sought a relevant declaration and an order for a damages enquiry, and the Court, following the dismissal of the applicants' infringement proceedings, granted the relief in the circumstances set out above, the view should be adopted that it is now too late for the applicants to contend that Coretell is not a "person aggrieved". The declaration has been made that it is, and must stand. 665 Further, while a long debate may be had about how the declaration should be construed and whether or not both Coretell and Mincrest are the beneficiaries of it in respect of all three threat letters identified, in my view the correct construction is that both are to be taken as entitled to claim damages as a consequence of the three threat letters. 666 In any event, I accept the submission made by Coretell that it did not become a person aggrieved simply at the date of the third threat letter, namely 13 February 2007, as contended by the applicants, but did so at the time of receipt by Mincrest of each of the earlier threat letters, for the reasons it contends. In the circumstances, each should be construed as directed to whichever entity was infringing the patent in the manner alleged. The tool stood accused, along with any of the entities claiming an interest in it. 667 It remains necessary for Coretell, however, which is the only respondent now claiming that it sustained damages as a result of the unjustifiable threats, to establish that it did indeed sustain loss and damage. In the course of that enquiry, it is open to the applicants to contend that Coretell did not have an interest in the Camteq tool at material times. The declaratory relief granted does not foreclose on that question; it is not res judicata.

Had the Camteq tool been assigned to Coretell at material times? 668 Coretell submits that, leaving aside the issue of res judicata (which I have just rejected), the evidentiary position is clear that Mr Kleyn, as director of Mincrest, conceived of, designed or caused to be designed, made or caused to be made, and trialled thereafter a new type of electronic core orientation tool. This activity all occurred in 2005 and into 2006. Coretell says that, by May 2006, Mincrest, with Mr Kleyn as its director, was sufficiently satisfied with the progress of the tool development, that Mr Kleyn caused Coretell to be incorporated with the sole intention of Coretell thereafter operating the core orientation tool business. It further says that Mr Kleyn's intention was to transfer the business to Coretell at that time and maintain such business separate from the survey camera business also run by Mincrest. 669 Coretell accepts that there is no document to record any transfer of any "proprietary interest" in the "fledging" core orientation tool business from Mincrest to Coretell at that date (May 2006) or at any time thereafter, but contends that is not to the point. It says writing is not necessary to effect a valid and enforceable assignment and transfer of equitable interests in part or in whole, as here. 670 Properly considered, it says, the proprietary interest of Mincrest in the fledging core orientation tool to that date could be no more than an interest in the physical assets of the core orientation tools by then made and spare parts to that date. Such interests could also include the equitable interests in the confidential information and "know-how" associated with the design, development, making and trialling of the tools to that date and in the business opportunity concerned with the making of the tool and the selling, hiring, advertising and promoting of it. Coretell says that all of that "proprietary interest" could be effectively assigned and transferred by intention of the director of Mincrest as assignor/transferor and the intention of the director of Coretell, as assignee/transferee, through Mincrest and to Coretell by its concurrent director (Mr Kleyn), and no writing was necessary to effect a valid assignment/transfer. 671 Coretell argues that given that much of the "proprietary interest" identified above already was placed in the public domain by the acts of Mincrest, it may be that the residual proprietary interest for assignment/transfer to Coretell was the "asset" founding the business opportunity to commercially exploit the, by then, developed tool to that stage or as it was developed thereafter including with multiple triallists at various mine sites. It is plain, it says, that no writing would be necessary to evidence, or effect, any assignment or transfer of such an "asset". Furthermore, no consideration would be necessary because such an assignment or transfer could be achieved by gift or statement of intention. 672 Coretell acknowledges there was no business activity concerned with commercialisation by sale or hire of the core orientation tool until about October 2006, when Mincrest received the amount of about $60,000, by direction of Mr Kleyn, being the sale proceeds received from MTL Philippines. It claims Mincrest received that amount as reimbursement for its development costs to that date. That is, Mincrest had been paid out its expenses to that date. In October 2006, it says Mincrest also had made a firm commitment to Silver City to supply orientation tools to that company. 673 In November 2006 and thereafter, Coretell says, it and Mr Kleyn took more objectively evidenced steps in furtherance of Coretell as the operating business for the new core orientation tool. These steps included: instructions to Mr Barker to separately invoice Mincrest and Coretell for separate work activities on cameras (Mincrest) and on core tools (Coretell); meeting with bank officials and opening a Coretell bank account; preparation of accounting packages (Quickbooks) and other documents; and from November 2006 and thereafter, Coretell was the entity carrying on business in the core orientation tool. 674 Coretell, in summary, contends no writing is necessary to effect a valid equitable assignment and transfer of the above equitable interests, whether in whole or in part, and that it is irrelevant whether the assignment and transfer was complete or left some aspects with Mincrest in the period May 2006 to about November 2006. It is sufficient, it argues, for the assignment and transfer to have effected the movement of the equitable interests in part to Coretell to confer standing in Coretell as a person aggrieved by the threats to claim damages. 675 Coretell says, in fact, all of the proprietary interests went over to Coretell by the declared intention and actions of Mr Kleyn as common director of each of Mincrest and Coretell. In that regard, it says the Court should give particular note and attention to the letters from Arns & Associates respectively dated 22 November 2006 and 14 December 2006, which were written with the full knowledge and consent of each of Mincrest and of Coretell and on their instructions. There were no protests from Mincrest about the matters contained in those letters and particularly about the statement that the proprietary interest in the core orientation tool, the subject of the letters, was held by Coretell. Mincrest would be entirely estopped from asserting anything to the contrary. Of course, it never has because the true position was correctly stated by the letters. 676 Consequently, Coretell contends there is no basis for the Court to find that the declared intention and actions of Mr Kleyn as the director of each of Mincrest and Coretell to have Coretell as the entity relevant to the business of the core orientation tool, were not effective so as to deny, as at the date of the threats, that Coretell had a proprietary interest in the core orientation tool business and so as to deny that Coretell rightly was aggrieved by the threats. 677 In essence, the applicants contend that, when one has regard to the sequence of events, there had been no transfer of any interest in the Camteq tool to Coretell at material times when the first threat letter was received and that, in effect, Mr Kleyn took steps to "quarantine liability" by attempting to use Coretell, rather than Mincrest, to maintain the pace of development and trialling from the point of the threat letters onwards. 678 In that regard, the applicants contend for the following narrative and inferences to be drawn from it: On 14 November 2006, AMC's solicitors sent the first letter of demand to Mincrest, alleging infringement of the patent and seeking undertakings. Mincrest said it received that threat on or around 16 November 2006. The applicants note that, as at 16 November 2006, Mincrest had six Camteq tools in the field for testing and there were no hires or purchase orders on foot. They say Coretell was, at that time, a dormant company. The reaction of Mr Kleyn to the threat letter was to "quarantine liability" by attempting to utilise Coretell, rather than Mincrest, to maintain the pace of development and trialling. Mr Kleyn's first action in response to that letter was to visit his bank and open a new account in the name of Coretell on 20 November 2006 - that is the Monday after receipt of the first threat letter. The applicants contend this was plainly with the intention of commencing trading by Coretell at that point. On 21 November 2006 (the Tuesday), Mr Kleyn visited his solicitor to obtain legal advice and instructed him to respond to AMC's demand, on behalf of Coretell instead of Mincrest. Mr Kleyn's response to the initial demand was to instruct his solicitors to deny infringement and emphasise that the responsible party for the Camteq tool was Coretell not Mincrest. The letter of 22 November 2006 responding to the threats is the best contemporaneous evidence available to the Court of the respondents' reaction to the threats. The applicants contend that, tellingly, it contained no undertakings nor made any offer to keep accounts, consistent with neither Mincrest nor Coretell being in a position to make sales from the Camteq tool. While Mr Kleyn's position before McKerracher J in the NSW proceeding was that the assignment of an interest in the Camteq tool by Mincrest in favour of Coretell took place in November 2006, he has now altered his position to suggest that the assignment partially took place in May 2006 by virtue of having incorporated Coretell and was otherwise completed in November 2006. He, the applicants submit, conceded in cross-examination that the assignment was not performed "properly" in May and was not "completed" until November 2006. 679 The applicants also allege falsification of the Coretell ledger entry of 14 November 2006, a matter touched on above. I have found above, however, that on the balance of probabilities, the evidence of Mr Barker should be accepted and accordingly the allegation of falsification made on behalf of the applicants should not be accepted. 680 When it comes to the question of the assignment, the applicants in particular rely on the findings and reasons for judgment of McKerracher J in the NSW proceeding. By their interlocutory application filed 11 December 2015, they seek the following orders: 1 Judgment be given against the First Respondent in relation to its claimed loss and damage, and its Amended Statement of Claimed Loss and Damage dated 22 November 2013 be dismissed (together, the Damages Case), pursuant to s 31A of the Federal Court of Australia Act 1978 (Cth) and r 26.01 of the Federal Court Rules 2011 (Cth). 2 Further to Order 1, the First and Second Respondents, and their sole shareholder and director, Nicky Kleyn, pay the Applicants' costs of and incidental to the Damages Case, including on an indemnity basis from 15 June 2012. 3 This proceeding otherwise be dismissed. 4 Alternatively to Orders 1 to 3, the parties file and serve any supplementary submissions in relation to the findings in Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 4) [2015] FCA 1372 2016 which they wish to rely upon in the Damages Case, limited to 5 pages in length, on or before [ ]. 5 (In the event that the Respondents in Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 4) [2015] FCA 1372 2016 file a Notice of Appeal on or before 21 March 2016) Alternatively to Orders 1 or 4, the Damages Case be stayed pending determination by the Full Court of that appeal. 6 The Respondents pay the Applicants' costs of and incidental to this interlocutory application. 7 Such further or other orders as the Court thinks fit. 681 The applicants say their primary position is that the evidence adduced in that proceeding and McKerracher J's reasons for judgment in Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 4) [2015] FCA 1372 reasonably exclude the possibility that facts essential to the success of Coretell's claim for damages in this proceeding can be established. 682 Alternatively, the applicants contend that, in view of the relevance of McKerracher J's findings to the matters presently before the Court, the parties be able to file supplementary submissions in relation to those findings or the damages case be stayed pending determination by the Full Court of the appeal against that decision. 683 The applicants say McKerracher J's findings are relevant to the question of whether this proceeding should now be summarily dismissed or otherwise in relation to the determination of matters in issue in this proceeding, including that: Coretell did not own the core orientation tool because Mincrest did not transfer its tool and business to Coretell, and that the respondents' case in that regard was a "fabrication" and the like. Coretell did not solely operate the business that exploited the core orientation tool. Coretell only began to trade after the threat letter was sent to Mincrest on 14 November 2006. Mr Kleyn, Mincrest and Coretell were jointly involved in the exploitation of the core orientation tool. Basic operational expenses associated with the respondents' core tool business were borne by other companies owned and operated by Mr Kleyn. 684 In my view, none of these orders sought in the applicants' interlocutory application should be made. The Court is apprised of this matter and evidence has been led in it. The case has not been conducted on the basis that the assignment issue should be resolved on the basis of what was decided by his Honour in the NSW proceeding. While the applicants have, in a number of respects, sought to conduct the damages assessment on that basis, in relation to the assignment issue, I reject that it is appropriate. Each judge, in separate proceedings, is obliged to hear and determine the matter before them on the evidence adduced. The potential for inconsistent verdicts has always been obvious, and an unfortunate circumstance, but it does not mean that one judicial decision-maker must, in effect, abdicate his decision-making responsibilities on the evidence presented to him, to the other decision-maker. 685 I accept, however, that there is evidence from the NSW proceeding that has been led in this proceeding and that Mr Kleyn has been relevantly cross-examined on it, especially concerning the question of the assignment. That evidence and cross-examination has been set out above. 686 Thus, the question is what the evidence in this proceeding said about the question of assignment of even an equitable interest in the Camteq tool. In my view, if Coretell can demonstrate, on the balance of probabilities, that it held some such limited interest in the tool at material times when the threat letters were received, then it is entitled to pursue its claim for damages. 687 It must be said that following the threat letters, or at least soon after the first of the threat letters, there can be little doubt that Coretell was quite active, as submitted by Coretell, in pursuing the business formally in its name. The question is whether all of that was late invention that was only prompted by the first threat letter. 688 The applicants say that, as to the question of ceasing to trade in response to the threat, Mr Kleyn gave contrary evidence in the final hearing in the NSW proceeding and testified that Coretell (only) commenced trading following receipt of the threat letter. They say that this fact is fatal to Coretell's damages claim; and that rather than cause it to stop trading, the threat actually caused it to trade, as part of Mr Kleyn's design to avoid the financial consequences of litigation liability. 689 The applicants further contend that even when Coretell began to trade, it did not act alone and was not a sole operator of the business. They say this is contrary to the way in which Coretell claims damages as a sole operator and that it is noteworthy that Coretell's damages claim has not been framed or proved by reference to how the alleged loss might be apportioned between the "joint tortfeasors". 690 The applicants note that Coretell also claims that the assignment provided it with a "commercial opportunity" to trade, but submit, having regard to the findings in the NSW proceeding, that there was no effective transfer of the core orientation tool. 691 In that regard, the submissions effectively made by the applicants, based on the findings in the NSW proceeding, are that: (1) Mr Kleyn deliberately set out to produce a tool which embraced or copied the features of the tool designed in accordance with the patents in suit. (2) Having achieved that objective, he subsequently became aware of a real risk of exposure to damages for patent infringement. (3) He then set about attempting to organise his corporate affairs through the respondent companies, of which he was the sole directing mind and will, so as to shelter and protect assets within the corporate structures. To this end he purported to assign and transfer assets from the primary infringing company to another company. This assignment or transfer was entirely fictitious and never occurred. His subsequent attempts to isolate and segregate the activities of the respective corporations to at least create the impression that only the corporation with no assets was involved with infringement, had failed. 692 As I have said, I accept the submission that the findings in the NSW proceeding cannot be relied upon for present purposes to dictate the answer to the assignment question in this proceeding. The question is whether the evidence before me should lead to similar findings or not. 693 While Coretell further argues questions of res judicata and estoppel with respect to the declaration and order made in this proceeding on 22 December 2010, and says that the question of assignment cannot now be raised, I have dealt with that above and have ruled that question may be agitated. 694 While Coretell relies on the pleadings of the applicants from the liability trial to suggest that the question of Coretell having a relevant interest was tacitly or expressly admitted, in my view, as with a similar plea made by the applicants against the respondents in respect of the Camteq tool at material times being in a state of development and not being ready for market, I do not consider that the earlier pleadings are either unambiguous on the issue of assignment, nor do I consider that they enable the resolution of the issue of themselves. 695 Coretell submits that it is plain, on the evidence, that there must have been a transfer of the business, or business opportunity, as a "proprietary interest" involving an acquisition and exploitation by Coretell of the core orientation tool as a business or business opportunity from Mincrest, which had developed the tool, to Coretell. 696 So far as the findings of McKerracher J are concerned, Coretell submits that, if there was no such transfer and acquisition, Coretell could never have been in the business relevant to exploitation of the tool to enable the infringement findings made by the Court in the NSW proceeding. It says that it was there determined by the Court that Coretell was an infringer and the infringement findings against Coretell date back at least to the date of Coretell's incorporation in accordance with the applicants' pleadings in that proceeding. 697 I would understand, from submissions made on the summary judgment interlocutory application, that this question, which senior counsel for Coretell described as a "logical impasse", is a ground of appeal in that proceeding. 698 While Coretell recognises that there is a paucity of documentation in relation to assignment, it respectfully observes that in response to the first threat letter, dated 14 November 2006, there was a letter written on behalf of Coretell and Mincrest by their solicitors which asserted that the proprietary interest in the core orientation tool was held by Coretell and not Mincrest. Again, Coretell submits that the letter would create an estoppel by Mincrest against Coretell, and it provides a contemporaneous record confirming the assignment. 699 Further, Coretell calls attention to the invoice of Mr Barker dated 14 November 2006 and the entry made in the Coretell general ledger, which is said was evidence not adduced in the NSW proceeding. 700 Coretell, in response to the submissions of the applicants, makes further submissions concerning the credit of Mr Kleyn and the state of the pleadings that bear upon the question of the conduct of a business at material times. 701 Coretell also submits that its case does not cease at the first threat letter, and submits that the threat letters, either individually or in their totality, did not give permission to Coretell to continue with the alleged infringing activity. It is submitted that the letters, taken individually and in totality, demanded that Coretell, like Mincrest, cease all alleged infringing activities. Coretell did so. Consequently, Coretell says, it suffered loss and damage. 702 As to the question of whether Coretell was jointly involved in the exploitation of the tool at material times, Coretell submits that, so far as damages are concerned, Mr Ross did not advance any evidence to suggest that Coretell earned or was entitled to less revenue after it resumed trading because of the other co-actors. It makes the same points concerning basic operational expenses incurred by Coretell. 703 In my view, notwithstanding that the evidence of Mr Kleyn led on the question of assignment was, in some respects, vague and appeared to assume that there had been some assignment or some interest transferred to Coretell at about the time of incorporation of Coretell in May 2006, or between that time and November, on the balance of probabilities, I accept that at the time the first threat letter was received, and at the time the subsequent threat letters were received, Coretell was possessed of at least an equitable interest in the core orientation tool sufficient to found its damages claim currently before this Court, by reason of the conduct and expressed intentions of Mr Kleyn. 704 While I accept there is something of convenience in the assertions made by Mr Kleyn that only Coretell, at the time of the first threat letter, was possessed of the relevant interest in the tool and was the only entity trading in it, I consider, on the balance of probabilities, that the evidence relating to the incorporation of Coretell, the purpose of that incorporation, the lack of funding that led to Mincrest continuing to conduct activities in relation to the tool, but also the evidence of Mr Barker that he was instructed, at material times, to invoice Coretell for the work he had done at material times (which I accept), leads, on balance, to the view that there was at least the transfer of an equitable interest in the tool to Coretell at material times when the threat letters were received. Despite the submissions made by the applicants that Mr Kleyn should be adjudged to have fabricated his evidence in this regard, I do not consider, on the evidence before me, that any such adverse credibility finding should be made. On some views he may have seemed a surly, uncooperative and even combative witness, but as Coretell says, given the length and expense of the litigation the applicants had engaged him in, perhaps that is not surprising. 705 I do not consider that, at material times, Coretell was running a business in respect of the Camteq tool along with any other entities, specifically Mincrest and Mr Kleyn. The evidence plainly indicates that certainly from the time of the threat letters onwards, Coretell traded in the Camteq tool in its developmental stages and ran a start-up business in respect of it. 706 In this proceeding, at least, the question of the assignment of the tool at material times to Coretell was, if not an assumed fact, an issue that was left by the applicants as depending on the findings made in the NSW proceeding, where that issue had apparently loomed much larger. On the evidence in this Court, I am satisfied, on the balance of probabilities, that Coretell, at material times, held a material interest which it exploited alone in the Camteq tool, in its developmental stages, as part of a start-up business, when the threat letters were received. 707 In these circumstances, I do not consider it necessary for any further submissions to be made by the parties, particularly the applicants, as to aspects of the findings in the NSW proceeding. Nor do I think it appropriate to adjourn this proceeding until such time as an appeal in the NSW proceeding is concluded. It is appropriate that I should discharge my functions in relation to the damages assessment on the basis of the evidence before me, as explained above. 708 In those circumstances, I would dismiss, with costs, the interlocutory application of the applicants for summary judgment and alternative orders filed 11 December 2015.

Was Coretell operating a business at material times? 709 The applicants make the thrust of their no business/no loss submission in a concise way at [14]-[18] of the applicants' outline of closing submissions, and rather than paraphrase these carefully formulated submissions, it is best to set them out here: 14. In summary, the facts reveal that at all relevant times Mr Kleyn remained determined to design and develop an electronic core orientation tool for commercial release; in that respect he never ceased dealing with one or other of the core tools. His first attempt was with Mr Barker and the Camteq Tool. For many reasons, this was an ill -fated exercise and after 2 ½ years of development and testing, and no commercial release in prospect, Mr Kleyn instructed Mr Barker to cease activities on 31 July 2007 (ie after the proceeding had commenced). By then, Mr Kleyn had turned his attention to Procept as a professional engineering firm well-equipped to design and develop a tool that would get to market, which the Procept ORIshot core orientation tool (ORIshot) did in March 2009. Once the hearing on liability was determined and the respondents' succeeded on their cross-claim, they treated the unjustified threats finding as a commercial opportunity and claimed damages - in so doing they alleged the counterfactual scenario of Coretell having ceased conducting business in the Camteq Tool in response to the three letter of demand in order to try and conform to the requirements of s 128 of the Act. 15. It is important to observe at the outset that, unlike the majority of claims of unjustified threats brought before this Court, no threats were sent to the respondents' customers, distributors or their suppliers. There is a fundamental difference between the consequences of a threat made to a party that is then sued for infringement and a threat made to a third party - it is only the latter that could continue to claim that the threats were still operating. In the former case the proceeding for infringement completely overtakes any preparatory demands or threats (as in this case). To suggest otherwise, is as artificial as suggesting that a respondent to an infringement action is still being affected by the letters of demand issued to it prior to the filing of proceedings. 16. Further, cases in which damages have been awarded are typically commenced by the threatened party as the applicant (ie the threat of infringement proceedings has not been made good by the respondent). Instead, this is a collateral and opportunistic claim brought on a false premise that travels outside the parameters of the infringement proceeding. 17. As the principles discussed in Section D [of those submissions] demonstrate, a recipient of a threat of legal proceedings who cannot show that any loss accrued prior to proceedings being commenced cannot seek to rely upon such a threat as a continuing cause of damage during the period after proceedings have been commenced. The threats then cease to exist and cannot have any operative effect. There are both impediments in principle and in practice to Coretell's attempt to do so. The weight of authority is firmly against it. 18. Coretell has failed to prove that any loss crystallised during this crucial period prior to commencement of proceedings. Coretell not only rejected the threats, it maintained its attempts to develop the Camteq Tool for commercial release in the face of and in defiance of the threats and, following the receipt of legal advice, not only denied infringement but also countered by challenging the validity of AMC's patent. Such a response to a threat is the antithesis of a party that seeks to recover loss as a result of compliance with the threat and cessation of business as a consequence. Contrary to Coretell's approach, no liability can arise from the mere commencement and prosecution of an infringement proceeding (it is elementary that the only recovery available to the respondent in such circumstances is recovery of costs; a finding of unjustified threats does not, in and of itself, alter this position). 710 By reference to the pleadings in the liability case, which the applicants say have never been withdrawn, the applicants also contend that the respondents' pleaded position as to intention, after the receipt of the threats and the commencement of this proceeding, was and remains that they would continue to develop the Camteq tool with a view to ultimately being in a position to commercially release it. 711 In regard to the pleadings in the liability case, the applicants refer to [4.2] of the defence and cross-claim, as well as [5.2] and [15.1]. The applicants say that by reason of the pleading in [4.2], the respondents pleaded that they "ceased to keep or offer the Tool for hire or supply by a date on around 1 March 2007", but not that they ceased doing so as the result of the receipt of the legal threats on 14 November 2006 and following. As to [5.2], the applicants say the pleadings here should be construed to say that the respondents were developing a tool, and further say that the one order referred to in [5.2(iii)] for six of the tools for a payment of $60,000 - from MTL Philippines - was never actually filled, in that the tools were never supplied. 712 As to [15.1], the applicants say the pleading was about intention to "continue to develop" the tool with the "ultimate intention" of offering it for hire or sale - again, not a pleading consistent with, at material times when the threat letters were delivered, Coretell being in a position to offer the tool for hire or sale. 713 The applicants also draw attention to particulars provided by the respondents filed 2 November 2007, where the respondents said that two tools and kits were supplied to an agent whose business was the supply of mining and related equipment to the mining industry, by Coretell, who was advised by the agent that the clients in each case had returned the tools and kits to the agent, and both clients had separately informed him that the tests "rendered inaccurate and unreliable data" and "neither client was interested in participating in further trials" of the tools. 714 The applicants note that the tools thereby were in development and supplied only for "trial" purposes. 715 The applicants also refer to the particulars supplied of [5.2(iii)] of the defence and cross-claim regarding the order for Camteq tools and payment of $60,000 without supply, which stated that in October 2006, Mincrest received an order to the value of $60,000, but was "unable to overcome technical difficulties in the calibration of the Tools and did not supply any Tools to the client". 716 Further, the particulars indicated that Coretell had supplied on a "hire and trial basis" to a client resident in Australia, 10 tools over a four month period from January to April 2007, for which it had received payment of $33,000 - which appears to be approximate to the hires made to Silver City over that period. 717 Again, the applicants say the pleading and particulars of the respondents are consistent only with the Camteq tool being developed and there, in that sense, being no business of hire and sale at that point. 718 The applicants say Coretell now seeks to argue, impermissibly, a different factual case on the enquiry in order to claim damages. It is now asking the Court to find that: the development of the Camteq tool was actually complete and it was fit for purpose, commercially viable and in demand prior to receipt of the threats in November 2006; that it supplied six Camteq tools to MTL Philippines in October 2006; and that it responded to the applicants' threat letter in November 2006 by withdrawing the Camteq tool from sale, ceasing to advertise or promote it, and by refusing additional requests for hire. 719 The applicants say Coretell is bound by the respondents' pleaded and particularised case and its argument must fail. The determination of its cross-claim for unjustified threats cannot, it is contended, operate outside the bounds of, and contrary to, the respondents' non-infringement case advanced in the same proceeding and forming the basis of the current enquiry as to damages. The applicants observe the respondents have not, in the seven year long proceeding, sought to withdraw admissions and factual allegations made and cannot do so now. The applicants submit the Court cannot disregard the respondents' admissions and positive assertions of fact, none of which have been withdrawn or controverted. 720 In that regard, the applicants note that Coretell, in effect, seeks not to be bound by its pleadings and other documents filed in the case and seeks to mount a complaint that the applicants have adopted an "ambush" position at trial in relation to these issues. 721 It is appropriate to have regard to Coretell's responsive submissions, which comprise a separate annexure E to Coretell's closing submissions and which are headed "Rebuttal of applicants' new 'ambush' position adopted at trial". Annexure E deals with a number of issues including a ledger entry of 14 November 2006, the allegations of non-supply/delivery to MTL Philippines, allegations of a failed limited trial with an agent and allegations of recent invention of sending out the Camteq tool with the Procept tool. 722 In relation to the alleged non-supply/delivery of tools by Mincrest to MTL Philippines, Coretell contends the applicants' case appears to rest upon "statements" in "outdated" interlocutory documents in the 2010 infringement trial. However, when properly considered, it is said they have no probative value and are outweighed by the sworn evidence and objective record. 723 Coretell says the detailed accounting records maintained by Mincrest, including a bank statement and invoice relevant to the issue, must be regarded, and that nothing has been hidden by Mincrest or Coretell. Further, it says Mr Kleyn provided an explanation in cross-examination and in re-examination following "ambush" on a topic he had not been given any prior notice of and was not prepared for. However, in cross-examination and re-examination, his explanation was entirely consistent with his sworn evidence over time. Finally, it contends, Mr Kleyn was never taken to his interlocutory affidavit of 11 March 2009 or his first trial affidavit, both of which provided sworn evidence about the MTL Philippines transaction and rebutted any assertions of "recent invention" put against him. 724 Coretell says the explanation for the MTL Philippines transaction is simple and the Court should accept that: (1) some time prior to October 2006, Mincrest agreed to supply six tools to that entity; (2) on 31 October 2006, Mincrest issued an invoice for the supply of the tools in an amount of $59,992 (nearly $60,000); (3) on 11 December 2006, Mincrest received into its bank account the invoiced amount; (4) at some time either simultaneous with the invoice or soon after, late 2006 or early 2007, Coretell supplied the six tools as ordered and paid for; (5) no complaint of "non-delivery" or request had been received for refund or repayment of the amount of the invoice; (6) continued contact was maintained by Coretell with MTL Philippines including service and maintenance of existing equipment; and (7) the tools were reported as being sighted in the Philippines by a person described as Mr Raul Ballantyne, referred to in Mr Kleyn's affidavit of March 2009, and the subject of the evidence of Mr Brown in the proceeding. 725 Coretell says that from this evidence, including the invoice and the bank statement recording payment of the invoiced amount, it cannot be disputed that there was an agreement between Mincrest and MTL Philippines for the supply of tools, which tools were subsequently invoiced and thereafter paid for. Thus, it says, proof of an agreement for the supply of tools is beyond doubt. That only leaves the question of delivery in accordance with the agreement. As to that, Coretell says there is no question that the Camteq tools were in the Philippines and had been working for some time in 2007. 726 On the balance of probabilities, I am satisfied that Coretell's submissions concerning the fact of the order, payment and the fact of the delivery to MTL Philippines of the tool, should be accepted. 727 Coretell then deals with what it calls "statements" in "dated" interlocutory documents from the 2010 infringement trial upon which the applicants rely to argue there was no business. Coretell says it accepts there are such statements on which the applicants repeatedly relied in cross-examination, but the evidentiary position for the present enquiry can simply be stated by reference to: (1) Defence and cross-claim dated 10 September 2007 [5.2]. (2) Respondents' answers to applicants' request for further and better particulars dated 2 November 2007, paras (a) to (c). (3) Chronology prepared about 14 April 2010 (MTL Philippines entry). 728 Coretell says that, as a matter of law, the correct evidentiary position is that documents of this nature, and any statements in them, are not evidence. They can have no probative value against the respondents. Consequently, the evidentiary position remains as expounded by Mr Kleyn in his sworn evidence as early as 11 March 2009. He has consistently said that the MTL Philippines order was placed and delivered. 729 Further, Coretell submits that the documents themselves do not tell a consistent story and that, in effect, care should be taken referring to these pleadings or other documents relevant to the earlier liability trial. Neither party led or adduced evidence on these issues at the liability trial. Accordingly, Coretell submits, none of the documents or statements are probative against Mr Kleyn or Coretell. 730 In relation to the allegation of a failed limited trial of the tool through an agent, Coretell now says that the response in the 2007 particulars incorrectly suggested that in October 2005 Coretell supplied two toolkits to an agent and they were returned after being trialled. Coretell says it is common ground that it had not been incorporated by that time and that the first trialling commenced in December 2005 with Boart Longyear. 731 Coretell observes that, nonetheless, the applicants cross-examined to suggest that the particulars were correct and the dates merely had to be adjusted. Mr Kleyn rejected that proposition and said the particulars were incorrect. 732 Coretell notes that in cross-examination it was put to Mr Barker that Mr Kleyn had conceded that the agent referred to was Mr Reynolds and that the reference was to late 2006, but Mr Barker maintained that the tool was ready for introduction into the market. Mr Reynolds was also questioned in a similar manner and in fact could not substantiate the incorrect references. 733 Coretell says that on the objective evidence, there were more than two customers who trialled the Camteq tool. 734 In the result, Coretell submits that the contemporaneous documents and the evidence of Mr Kleyn and Mr Barker must be preferred over the anomalous entries in the particulars and chronology, which remained on the record after the split of the quantum and liability issues and the withholding of further investigation into the quantum aspects of the infringement claim in this proceeding. 735 Again, I consider the submissions made in these respects on behalf of Coretell should be accepted. 736 The pleadings and particulars earlier provided do tend to begin to paint a particular picture along the lines suggested by the applicants, but while it might be said they constitute admissions, it is not clear to the Court that the "admissions" are unambiguous. Now that the damages enquiry is underway, certain statements made in the earlier pleadings and particulars, as well as certain evidentiary materials may, in my view, reasonably be subjected to further investigation and analysis. They were not explored at the earlier liability trial. 737 I do not accept, therefore, that such matters as the MTL Philippines invoicing/delivery issue or the prior pleadings/particulars provide the "no business" or "no loss" knock-out point that the applicants contend for. 738 Similarly, I am not inclined to place much significance - as a knock-out point - on the additional entry made to the respondents' chronology dated 14 April 2010, at "early 2004", which made reference to Mincrest attempting to develop the Camteq tool and the reference to it "ultimately fail[ing] to produce a functioning model of the Camteq tool to commercial standards". 739 Nor do I place much significance - as a knock-out point - on an entry for November 2008 concerning Coretell and Procept agreeing to develop a "redesigned" tool. 740 Nor do I consider that it can easily be concluded, in passing and as a matter of evidence, from those materials, as the applicants submit it can be, that a "lack of merchantability" - an issue considered in more detail below - was thereby conceded in the Camteq tool. 741 What might be argued is that by late November 2006, the tool was at a certain stage of development but not ready for market. 742 The point ultimately made by the applicants, having regard to the factual narrative they contend for and the evidence of Mr Ross on which they rely, is that, as Mr Ross concluded in his expert report, Coretell did not have an established business at the time the threats were made, and so it was difficult to identify a reliable track record of sales and expenses to estimate but-for cashflows from the date of the threats. In passing, it may also be noted that Mr Meredith referred to the business at those material, threat times, as a "start-up" business. All this goes directly to the question of proof of loss or damage from the date of the threats. The "no business" or "no loss" argument, in that context, is something of a distraction. The question of the "track record of sales and expenses" is, however, relevant to the question of loss and dealt with below in assessing damage. 743 This question also tends to merge with the related and next question, whether the Barker/Camteq tool was of merchantable quality. In that regard, as discussed below, Mr Barker believed he had completed the design of a tool, by the end of 2006, that could be used, reliably enough, for the purpose of core orientation for which it was designed. However, having regard to the evidence of the witnesses called by the applicants concerning the performance of that tool in the field, which I have outlined and made findings about above, as well as Mr Kleyn's own evidence, especially his subsequent actions in calling Mr Barker off its production and later contracting for the design and production of the Procept tool, I am not satisfied the Camteq tool was in fact finally ready for the market as of the end of 2006 and soon after, and at the time the three threat letters were received, and this was recognised by Mr Kleyn. 744 That does not mean, however, that Coretell did not then have a "business" in the tool. Plainly, Mr Kleyn was working hard to perfect the tool and hire it out at material times. The MTL Philippines invoicing and Silver City transactions emphasise the tool's potential, but not any established revenue stream. AMC's conduct in sending the threat letters confirms the potential threat to the AMC tool that the Camteq tool, in its then current form of development, represented. As Mr Meredith said, there was something in the nature of a start-up business for the tool at material times.

Was the Camteq tool of merchantable quality at material times? 745 As just concluded, save for the evidence of Mr Barker, the preponderance of the evidence suggests the Camteq tool was nearing a state in which it would be ready for, but was not yet ready for, market when the threat letters were received. 746 I have found above that, while Mr Barker believed the tool he had designed and seen trialled was ready for market, the evidence of trialling in the field led by the applicants, and indeed Mr Kleyn's evidence overall, leads to a different conclusion. At the time of the threats, more work was required to bring the tool to a state in which it could be taken to market and hired out. 747 That is not to say, however, that Coretell was not then in the business of marketing the prototype tool at that time and did not sustain damage as a result of receiving the threat letters, as discussed below. 748 In my estimate, having regard to the time it took for the highly experienced and professionally capable Procept business and Mr Maher to design and produce the Procept tool with Mr Kleyn in 2009, and bearing in mind the lack of experience Mr Barker and Mr Kleyn had in developing such a tool by late 2006, and the problems they had experienced in perfecting it, and accepting that Mr Kleyn was a "driven" man who would have pressed hard to get the Camteq tool to market if he had not been impeded by the threat letters, as he later did with the Procept tool, I estimate the Camteq tool would have been ready for market about six months after the first threat letter, as of early June 2007.

What damage has Coretell sustained? 749 Having regard to these findings, what loss has Coretell sustained? 750 Coretell claims to have sustained loss or damage in withholding the Camteq tool from hire and sale, as a result of the unjustified threats, in the sum of $3,290,386, relying on the expert evidence of Mr Meredith, the expert accountant it called. 751 Mr Meredith, in forming his opinion as to loss, prepared two reports, the first, referred to as GM1, dated 11 September 2013, and the second, referred to as GM2, dated 31 October 2014. 752 In GM2, Mr Meredith took into account differing opinions as to loss expressed by Mr Ross, the forensic accountant called by the applicants, whose first report, dated 25 September 2014, was referred to as AR1, and whose second report, dated 13 November 2014, was referred to as AR2. 753 I should note here that Coretell objects to the admission into evidence of the opinion evidence of Mr Ross in both AR1 and AR2 in their entirety, on the basis that Mr Ross has exceeded his brief as an expert. I deal with that objection below, reject it and admit Mr Ross' reports into evidence. 754 Mr Meredith and Mr Ross prepared a joint report for the purposes of giving expert evidence at the enquiry, which went into evidence, and gave evidence concurrently at the enquiry principally by reference to the joint report. 755 In the joint report, the experts dealt with, amongst other things, the assumptions they had applied in assessing loss. 756 The first assumption, identified in part III, item 10 of the joint report, was: That the core orientation equipment was of merchantable quality as at the date that the threat(s) commenced. 757 The experts noted they had received different instructions on this issue. 758 Mr Meredith stated that, prior to Mr Ross raising the issue of merchantable quality in AR1, he had not been aware that this was a contention put forward in the matter. Accordingly, his opinions in GM1 were on the understanding that, as Coretell had made a limited number of hires to companies until around the end of July 2007, the Camteq tool was of merchantable quality. He said he had not been provided with information that would suggest that the revenue generated up to the end of July 2007 had to be refunded to those customers as a result of merchantable quality issues. 759 Mr Meredith added that in preparing GM2, he sought instructions about the merchantability of the Camteq tool and was instructed it was of merchantable quality as at 14 November 2006 (when the first threat letter was received) and July 2007 (when this proceeding was commenced). 760 Mr Meredith further stated that to address an alternative scenario where the Court determines that there were merchantable quality issues with the Camteq tool as at 14 November 2006, he was instructed to provide an alternative opinion on Coretell's losses assuming Coretell would have taken no longer than three or six months (from 14 November 2006) to develop an entirely substitute tool of merchantable quality. He then expressed his opinion on those alternative scenarios at [55] of GM2. He there provided alternative profit and loss calculations respectively of $2,265,337 and $1,772,775 (from about 1 June 2007). 761 Mr Ross stated that, by contrast, he was instructed to assume that the Camteq tool suffered from merchantable quality issues, particularly in relation to accuracy and reliability, but that the ORIshot tool (which was released later by Coretell in 2009 - see agreed facts above) did not. 762 Mr Ross added that if the Camteq tool had merchantable quality issues, it would not be appropriate to assume, as Mr Meredith did, that Coretell could have achieved the same level of sales as it achieved with the ORIshot tool subsequently. Continuing to sell a tool with merchantable quality issues would harm Coretell's reputation and make it less likely to derive sales from that, or future tools, in his opinion. 763 Mr Ross said he had seen no information which would allow him to identify how long it may have taken Coretell in November 2006 or July 2007 to design, develop and to bring to market an alternative tool or, if it could do so before March 2009 (when it did in fact introduce such a tool - the ORIshot), what sales revenue would have been derived and what costs would have been incurred. 764 In Mr Ross's opinion, it was not clear that it was appropriate to use the period of time it took Procept to develop the new second tool in late 2008 as the basis for estimating how long it would have taken Coretell to address the merchantable quality issues in the first tool, the Camteq tool. 765 A second assumption arises by inference because of Mr Ross' separate opinion that there was no business conducted by Coretell at material times. While Mr Ross said his opinions expressed above were based in part on his instruction that the Camteq tool suffered from merchantable quality issues, he would have reached the same opinions about Coretell's alleged loss had he not been so instructed. He stated that Coretell, in his opinion, had no business in November 2006, that is to say, no track record from which its likely sales could be estimated. This has already been referred to above in dealing with the "no business" question, which I have rejected. 766 The third assumption, identified at part III, item 11 of the joint report, was in the following terms: Comparability of the Camteq Tool and the ORIshot Tool. 767 Mr Meredith said that in preparing GM2 he sought instructions as to whether the Camteq tool was substantially the same as the ORIshot tool, taking into account: (1) their uses and functionalities; (2) technical components, including the availability of components in late 2006; and/or (3) potential users of the tools. 768 He said he was instructed that in use and functional outcome, and in the two part overall design, the Camteq tool and the ORIshot tool were the same. However, there were differences in internal componentry by reason of the re-design undertaken by Procept of the ORIshot tool in 2009. 769 Mr Meredith said he interpreted this assumption to mean that, for the purpose of estimating Coretell's loss, if any, there were no material differences between the Camteq tool and the ORIshot tool that would affect his estimate of Coretell's loss. 770 Mr Ross, on the other hand, stated that he was instructed that, in its initial statement of claim Coretell differentiated between the Camteq tool and the ORIshot tool and that, while Coretell "has since elided the two tools into [the] one 'ORIshot tool'", he was to maintain the distinction between the two tools for the purpose of his reports. 771 He stated that if the two tools differ, it would be wrong to assume that Coretell would have developed the ORIshot tool any sooner than it did or, as Mr Meredith's approach does, that the results achieved by Coretell in relation to the ORIshot tool in and after February 2009 would have been experienced by Coretell in and after November 2006, had Coretell been selling a different tool. 772 Mr Ross further stated that the instruction provided to Mr Meredith for the purposes of GM2 was not, as Mr Meredith had reinterpreted it, that the two tools were "substantially identical products" or that there were "no material differences between [the two tools] that would affect [his] estimate [of Coretell's loss]". He stated that Mr Meredith provided no basis for his implicit assumption that the differences he was instructed existed, would have had no impact on the level of sales that Coretell could have derived from the Camteq tool. 773 Mr Ross added that, while his opinions on Coretell's alleged loss were based in part on his instruction that the Camteq and the ORIshot tools were different tools, he would have reached the same opinions in relation to Coretell's alleged loss without that instruction. He again stated that Coretell had no business in 2006 and no track record from which its likely sales could be estimated. 774 The Court should, at this point, highlight perhaps what is already abundantly clear from Mr Ross' statements, that he formed the view that Coretell had no business in November 2006 and no track record at that time, from which its likely sales could be estimated from that material time or subsequently in late 2006, in respect of the Camteq tool. Mr Meredith was not instructed to assume the existence of a business or to make any independent investigation as to whether a "business" was disclosed by the materials with which he was provided, but it may be inferred, from his statements of opinion and the assumptions that he made (as just set out), that he expressed his opinions relating to loss by Coretell on the basis it did have a business in November 2006, and then had a track record from which its likely sales could be estimated. 775 The fourth assumption, dealt with at part III, item 12 of the joint report, was expressed in the following heading: Financial and operational capacity 776 The experts stated that they disagreed as to whether Mr Meredith had provided a basis for his assumption that Coretell had the technical and financial capacity to meet the demand of the estimated but-for sales. 777 Mr Meredith stated that, in GM1, his opinion on Coretell's losses suffered assumed that Coretell had the technical and financial ability and capacity to meet the demand of the estimated but-for sales. 778 He stated that he maintained this assumption was reasonable given the information available. He disagreed that the assumption could only be validated by Coretell historically achieving the technical and financial capacity, and demand, as Mr Ross appears to allude to (through his comments about Coretell not having a business, and not having a track record). He said this assumption may be substantiated by lay evidence on the subject. 779 Mr Meredith further stated that Coretell's financial capacity from July 2008 can be validated by Coretell's position during the period of the hypothetical (but-for) estimation; for example, that Coretell was able to meet the significant legal costs in defending its position despite initially having made very limited sales - and Mr Meredith relies on an extract from annexure V of GM1 in that regard. 780 Mr Ross stated that Mr Meredith had provided no basis for this assumption (which he said Mr Meredith adopted at his own initiative rather than on instructions). As at 14 November 2006, Mr Ross stated, Coretell did not have a business, not even a bank account. It also had no track record of sales or operations upon which its financial and technical capacity could be adequately assessed. 781 Mr Ross said that Mr Meredith's reliance on his summary of Coretell's sales and legal fees as establishing that Coretell had an adequate financial capacity: did not address Coretell's financial capacity in 2007 and 2008 (those being the first two years in which, on Mr Meredith's estimates, Coretell would have been selling the Camteq tool); and ignored the fact that Coretell received $498,426 in trust distributions from The Kleyn Family Trust in the three years prior to 2010 and $437,000 in trust distributions from the Kleyn Investment Trust in 2010. 782 Mr Ross said, had those trust distributions not been received, Coretell would have reported losses over the four years prior to 2010 totalling $868,465 rather than the $64,764 in profits that it did report. 783 Mr Ross said, that by not dealing with these trust distributions in his loss estimates, Mr Meredith's approach implies that Coretell would still have received them had it been making the additional profits included in his estimates, and he provides no basis for such an assumption. In these circumstances, Mr Ross said he did not consider it a reasonable assumption. 784 The fifth assumption, identified at part III, item 13 of the joint report, was described as: that the economic conditions … were sufficiently comparable in and after November 2006 and in and after February 2009 for the purposes of [Mr Meredith's] sales and cost projections. 785 The experts said they differ as to whether there is an adequate basis for Mr Meredith's implicit assumption that the economic conditions (and consequently the levels of demand for the Camteq and ORIshot tools) were sufficiently comparable in and after November 2006 and in and after February 2009, for the purposes of his sales and costs projections. 786 Mr Meredith stated that this issue is addressed at [67]-[70] of GM2 and, in his view, the two periods are comparable. 787 Mr Meredith stated he disagreed with Mr Ross' view that "the underlying data records very large differences in the data for the relevant periods". He said that reviewing Mr Ross' analysis, the exploration spend increased by 51% in the period December 2006 to June 2008, and it increased 57% in the period June 2009 to December 2010. 788 Mr Meredith said he disagreed with Mr Ross' further comments. 789 Mr Ross stated that Mr Meredith's review of economic and market data was superficial and arbitrary in its selection of periods for review and comparison. 790 He said that, in any case, the apparent comparability of the two periods of spend data selected by Mr Meredith is somewhat illusory: the underlying data records very large differences in the data for the relevant periods. 791 Mr Ross said Mr Meredith's approach did not depend (as his response in the joint report implies) on the assumption that the relevant market conditions are the average market conditions across a discrete two year period. Rather, his approach, which relied on a regression analysis based on Coretell's monthly sales, implied that market conditions were sufficiently comparable in each month to which his calculation referred. Mr Ross said his analysis, in AR2, shows that this was not the case when considered across successive six month periods (let alone in each month). 792 The issues of fact, or fact and law, which divide the parties, are thus made plain by the experts. 793 By way of summary, the assumptions made by the experts that are seriously challenged, for the purposes of assessing the claimed loss, are: The first assumption (of Mr Meredith) that the core orientation equipment was of merchantable quality at the date the threats commenced. The second assumption (of Mr Ross) that at material times in November 2006, Coretell had no business. The third assumption (of Mr Meredith) that the Camteq tool and the ORIshot tool were substantially the same. The fourth assumption (of Mr Meredith) that Coretell had the financial and operational capacity to meet the demand of the but-for sales estimated by Mr Meredith. The fifth assumption (of Mr Meredith) that the economic and market conditions were sufficiently comparable in November 2006 and after February 2009, for the purposes of the sales and costs projections made. 794 As to the first assumption made by Mr Meredith, as I have found above, I do not accept that the Camteq tool was ready for market or, put another way, of merchantable quality, as of the date of the threats. I have made findings above that discount Mr Barker's confidence in that regard. 795 However, I have also above rejected Mr Ross' assumption that, at material times in November 2006, Coretell had no business. Rather, I have adopted the view there was a nascent, or start-up, business at the point of the threats that had the potential, subject to the resolution of a number of problems with the trial tool, to enter the market and effect hires of the tool. I have concluded that Mr Kleyn would have been in a position to take the ready-for-market Camteq tool into the market as of about early June 2007. 796 As to the third assumption, that the Camteq tool and the ORIshot tool were substantially the same, I accept that assumption. There is nothing in the evidence of Mr Maher to suggest any substantial differences and I do not consider the evidence given by Mr Brown to be such that a different view should be adopted. I find they were sufficiently similar in function and design for the Procept tool sales to be a proxy for a theoretical Camteq tool sales profile. 797 Having regard to the experience of Mr Kleyn with Mincrest, and the sales achieved by Mincrest in relation to the camera, and Mr Kleyn's and Mr Kenny's financial performance evidence, I consider the fourth assumption made by Mr Meredith, that Coretell had the financial and operational capacity to meet the demand of the but-for sales estimated by Mr Meredith, to be reasonable and correct. I am not convinced by Mr Ross' evidence that the financial position of entities and trusts associated with Mr Kleyn was so deleterious that he would have been thwarted from achieving a marketable tool in the six month period I have estimated. I accept that the onset of this patent litigation no doubt adversely affected his financial situation. But for the litigation he would have been well-placed to see the marketing of a bug-free tool. 798 I am satisfied, given Mr Kleyn's track record with his Camteq business, Coretell would have had, or assembled, the technical capacity to produce the tool for market. 799 The result is that, subject to consideration of the fifth assumption, sales of the Procept tool might be regarded for the purpose of estimating the but-for sales that Coretell or Mincrest were effectively denied from achieving as a result of the threat letters, from about 1 June 2007. 800 The fifth assumption is that the economic and market conditions were sufficiently comparable in November 2006 and after February 2009 - for that matter, in about June 2007 and after February 2009 - for the purposes of the sales and costs projections made. 801 While some sales in the period from November 2006 to May 2007 were identified by Mr Meredith for the purposes of his loss estimations, I discount those as relevant to an assessment of damage sustained, because they appear to be more in the category of one-off transactions and do not, in my view, provide proper evidence of sustained sales in that roughly six month, intervening period. 802 I consider that the alternative proposition put by Mr Meredith effectively of shifting the sales to the commencement of the delayed period, to be appropriate. In the course of giving their evidence concurrently, Mr Ross acknowledged that if the Court were to find that the Procept tool was a good proxy for the Camteq tool, in terms of the amount of sales that it would have made, then Mr Meredith's proposition of shifting the sales had merit, provided that the conditions in which those sales would have been generated were the same as the conditions that produced the actual sales. In other words, as he said, if one can be confident that the reason why Coretell made the level of sales it made of the ORIshot tool would have applied in relation to the Camteq tool, then the shifting approach may have merit. 803 The Court, in making the assessment as to whether or not the conditions would have been sufficiently comparable in the two periods, is very much working with hypotheticals. In the result, save as to the affect of the global financial crisis (GFC) question, I cannot see any sufficient reason to treat the two periods as significantly different. But, as explained below, I would discount downwards my estimate of loss in the final result. 804 I should record at this point that I do not accept a contention made by the applicants that a possible reason why there were not sales of the Camteq tool at relevant times was that Mr Kleyn had told people he could not sell the tool because of the proceedings, rather than because of the threats. I accept that to make such a distinction - between a stopping of hirings because of the threat of the proceedings, as distinct from the proceedings themselves - is semantical. In any event, as a matter of fact, in this case I consider that because of the threats, which were then followed by the proceedings, it is apparent that hirings did not proceed. I am satisfied that any loss of sales or hirings was due to the initial threats, and the intervening infringement proceedings, while they may have added some additional reason for a lack of business, did not break the causation chain. 805 In relation to the method adopted by Mr Meredith concerning comparable conditions, Mr Meredith implicitly assumed that, at material times, there would be tools available to meet the but-for sales demand and so that Coretell or Mincrest had the financial and technical capacity in this regard. I have already stated that I accept the evidence of Mr Meredith, and the evidence of Mr Kleyn and Mr Barker more generally, that that is so. 806 Mr Meredith has said he also made the implicit assumption that Coretell could have had the same sales response that it later had with the ORIshot tool. He said he did not specifically assume that there would be the same market demand but there would be a comparable sales response. He accepted that later on there may have been a stronger market demand for the competitive product, but the competitive product was more entrenched in that market, so the sales response for the ORIshot tool was not as strong as it may have been, had the other product not been entrenched. 807 There is reason to consider Mr Meredith's proposition correct. If the Camteq tool had been able to enter the market in the middle of 2007, it may have had an easier task in displacing the competition than it can be assumed to have had in the 2009 period. The fact that the applicants moved quickly to resist the Camteq tool in late 2006 is some evidence of this view having merit. 808 I accept Mr Meredith's proposition that in trying to make an assessment in the hypothetical world, that is to say, trying to calculate something that never existed, the best indicator of what would have been the position from early 2007 is what the position was, in fact, from March 2009. 809 As noted above, Mr Meredith calculated that, on the regression analysis he made, assuming the comparability of sales of the Procept tool at a later date, the but-for loss suffered by Coretell from about early June 2007, was in the sum of $1,772,775. 810 In relation to the regression analysis, both Mr Meredith and Mr Ross agreed that a decision has to be made about how to fit the curve, both at the beginning and at the end of the GFC. While the experts debated the correlation of actual sales in the later Procept period with what might have happened in an earlier Camteq period, and whether some months are better for sales than others, for the purpose of this hypothetical exercise I consider the actual Procept sale data can be used for the early period without making any significant adjustments on such an account. I do, however, below, as noted above, consider that, for a number reasons, including this consideration, there should be a final downwards discount of the loss estimated on this regression analysis. 811 As to the issue of how the GFC would have affected Coretell's hypothetical but-for sales, the experts agreed that there was an issue but disagreed as to how the impact should be assessed. 812 Mr Meredith explained that he considered it was reasonable for him to adopt January 2009, as opposed to February 2009, for the purpose of making this analysis. He said that his analysis was, when he looked at the "bounce" from the GFC, which he assessed as being in the period January to March or April 2009, and when he looked at January, March and April, he came up with very similar numbers. He said that when he used the calculations starting with a February 2009 starting point, he came up with a loss number about 24% below the January 2009 number. He considered February 2009 was probably an "outlier" in the numbers and it was reasonable for him to use January. 813 On his calculations, if he used February 2009 instead of January 2009, it made a difference of about -24.4%; if he used March 2009 instead of January 2009, it would have been -3.8%, and had he used April 2009 instead of January 2009, it would have been a +3%. So he considered January, March and April 2009 were all fairly consistent and it was February 2009 that was not consistent. 814 Mr Ross, when asked whether he positively argued for an exercise of judgement in a different way, said that in one sense he did and that the answer Mr Meredith gave in relation to March and April 2009 did not make sense to him, because the purpose of the exercise is to pick the beginning and end of the GFC effect. Picking March or April 2009 when the numbers are plainly rising did not seem to him to be consistent with picking the end of the GFC effect. 815 He considered it was not surprising that if you chose March or April 2009, when the numbers had already come back up again, that you would get a higher number, and he did not think that could support a basis for treating February as an outlier. In relation to December 2008, he thought Mr Meredith's position had merit in that December does tend to have lower sales in all years. 816 Mr Ross considered that when you are trying to pick the bottom of the market, that a bounce of 85%, which is what the bounce was from December to January, does not reflect that you have reached the bottom of the market after bouncing. He could not see that February 2009 was any more an outlier than January 2009. 817 When asked by the Court whether there was a set of calculations that would follow if one were to form the view that February 2009, rather than January 2009, should be the appropriate choice, Mr Meredith advised as follows. With February 2009, the but-for sales number would be $7,935,407, the lost sales number would $3,343,589 and the lost profit number would $2,487,296 (from the date of the threat letters). 818 Mr Meredith added, so far as the choice of February 2009 was concerned, that the GFC provided two impacts or effects: one, that there was a rapid drop caused by the GFC; and two, then there was a rebound effect, a bit of a bounce to get back to what he described as a post-GFC level, from which to then start the analysis again. He was anxious to point out that he was not saying that January 2009 was the absolute bottom, but that the January 2009 number appeared to him to be a reasonable place from which to start the analysis of the further growth period, having taken into account the effect of the GFC and some elements of a rebound. 819 When asked why February should not be chosen as the relevant period, Mr Meredith considered there was a question of exercising professional judgement as to where to start the analysis again. He said that when he looked at each of the four months in contention and considered them in context, then January, March and April 2009 provided a consistent answer and February 2009 provided an answer which was quite different. 820 On that basis, in his view, January was a reasonable starting point. 821 Mr Ross did not accept that process of reasoning and came back to the point that the effect of its application, in Mr Meredith's loss calculation, was to reset the starting point after the GFC. So in Mr Ross' opinion, it needed to be the point from which sales would begin to grow again. If they began to grow from January 2009, that would ignore the fact that sales of Mincrest went down in February 2009. 822 In the result, as the evidence for the two experts shows, each accepts explicitly or by inference, that choosing January or February 2009 for the purposes of the regression analysis involves a question of professional judgement. In my view, in the result, I see no good reason to reject, on balance, the judgement call made by Mr Meredith, while I do acknowledge the reasons why Mr Ross said he does not understand why Mr Meredith made this call. On balance, I accept Mr Meredith's judgement call for the reasons he offered. 823 The result of this analysis of the experts' evidence, based on the findings I have made, is that but for the threat letters, assessed on an entirely hypothetical basis, if Coretell had taken the Camteq tool to market as of about early June 2007, the regression analysis made by Mr Meredith suggests that Coretell would have sustained a loss of $1,772,775. 824 While Coretell submits that the Court should not undertake further adjustments in relation to the calculation of damages, it remains the responsibility of the Court to make a proper assessment, on the basis of all the evidence, of what it considers, in this hypothetical circumstance, the loss would actually have been that Coretell sustained. In making that assessment, the regression analysis is of assistance, but it is not the final word. There are obvious uncertainties involved in the regression analysis. While I have accepted that certain assumptions should not be made and other assumptions are reasonably made, that does not mean that there is not a general uncertainty in the analysis which should not be the subject of some discount. I am, for example, of the view that a discount should be allowed, having regard to the extent that a Camteq tool, compared with a Procept tool, would have as readily found a place in the market as the Procept tool later did, given the obvious professional design and production of the latter. I also take into account that if a Camteq tool had been marketed around the middle of 2007, following the difficulties the Camteq tool had exhibited in field testing the previous year, there may well have been some initial market resistance to it. I accept, also, that a question of when the bounce from the GFC would have been experienced is not an easy question to resolve. While I have accepted Mr Meredith's professional judgement call on that question, I think some discounting should be allowed on that score for the relative uncertainty around that evidence. In the result, by reference to these factors, I consider it is appropriate for me to make some "instinctive synthesis" of the role of those various factors in the analysis in calculating an appropriate discount. Accordingly, I consider the damages assessment identified by the regression analysis of Mr Meredith should be discounted by a further 15%. That is to say, the sum of $1,772,775, calculated by him, should be reduced by the sum of $265,916 (rounded off) providing a final damage sustained figure, on this analysis, of $1,506,859. 825 I should also note here that I reject Coretell's submission that damages should also be assessed having regard to what it says is the anti-competitive behaviour of the applicants. Damages should be awarded only for the damages already sustained as proved by the evidence, not by way of some generalised penalty for alleged bad market behaviour. 826 In the circumstances, I should also add that no question of mitigation of loss arises. 827 To that sum, pre-judgment interest should also be added. By its amended statement of claimed loss and damage, Coretell claims damages together with interest on such an amount pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth). 828 Section 51A relevantly provides: (1) In any proceedings for the recovery of any money (including any debt or damages or the value of any goods) in respect of a cause of action that arises after the commencement of this section, the Court or a Judge shall, upon application, unless good cause is shown to the contrary, either: (a) order that there be included in the sum for which judgment is given interest at such rate as the Court or the Judge, as the case may be, thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date as of which judgment is entered; or (b) without proceeding to calculate interest in accordance with paragraph (a), order that there be included in the sum for which judgment is given a lump sum in lieu of any such interest. (2) Subsection (1) does not: (a) authorize the giving of interest upon interest or of a sum in lieu of such interest; (b) apply in relation to any debt upon which interest is payable as of right whether by virtue of an agreement or otherwise; (c) affect the damages recoverable for the dishonour of a bill of exchange; (d) limit the operation of any enactment or rule of law which, apart from this section, provides for the award of interest; or (e) authorize the giving of interest, or a sum in lieu of interest, otherwise than by consent, upon any sum for which judgment is given by consent. (3) Where the sum for which judgment is given (in this subsection referred to as the relevant sum) includes, or where the Court in its absolute discretion, or a Judge in that Judge's absolute discretion, determines that the relevant sum includes, any amount for: (a) compensation in respect of liabilities incurred which do not carry interest as against the person claiming interest or claiming a sum in lieu of interest; (b) compensation for loss or damage to be incurred or suffered after the date on which judgment is given; or (c) exemplary or punitive damages; interest, or a sum in lieu of interest, shall not be given under subsection (1) in respect of any such amount or in respect of so much of the relevant sum as in the opinion of the Court or the Judge represents any such amount. (4) Subsection (3) shall not be taken to preclude interest or a sum in lieu of interest being given, pursuant to this section, upon compensation in respect of a liability of the kind referred to in paragraph (3)(a) where that liability has been met by the applicant, as from the date upon which that liability was so met. 829 It is accepted that the award of interest is mandatory unless good cause is shown and, to that extent, the Court exercises a discretion. See Australian Guarantee Corporation Limited v Border Printing Services Pty Ltd & Ors [1989] FCA 194 at [12] and [16]. 830 It is also accepted that the calculation of the sum of pre-judgment interest is in the discretion of the Court. However, the Court is usually guided by Practice Note CM16 - Pre-judgment interest. This provides that the Court will have regard to the rates agreed upon by the Discount and Interest Rate Harmonisation Committee, that rate being 4% above the cash rate last published by the Reserve Bank of Australia before the relevant period commenced. 831 If the Court is satisfied there is "good cause to the contrary" it must not order interest under this provision. See Hanave Pty Ltd v LFOT Pty Ltd (2004) 136 FCR 566 at [45] (Kiefel J); [2004] FCAFC 180; Fair Work Ombudsman v Skilled Offshore (Australia) Pty Ltd (No 2) [2015] FCA 1509 at [45]. 832 There is no good reason why an order for interest should not be made in favour of Coretell, and neither Mr Meredith nor Mr Ross suggested there was one. 833 Mr Meredith, in GM2, stated that in order to calculate a pre-judgment interest he applied simple interest; that is, Coretell would not be entitled to interest on any interest granted, consistent with s 51A(2)(a). 834 He also assumed that pre-judgment interest should be calculated to 31 October 2014, being the last day of the month that GM2 was submitted to the Court. 835 In calculating pre-judgment interest he said he applied the Practice Note as last published on 1 August 2011. 836 He said that applying the cash rate, plus the 4% margin stipulated in it, he calculated the pre-judgment interest to be $1,118,369. He set out the interest calculation at annexure I of that report. 837 That calculation, however, commenced as of 1 November 2006, whereas I have estimated damages from early June 2007. Mr Meredith's report, as I understand it, did not include an alternative interest calculation on this basis. It will now be necessary for this calculation to be made and I will hear from the parties as to an (hopefully) agreed calculation. 838 Mr Meredith correctly noted that Mr Ross suggested that pre-judgment interest should be calculated on Coretell's after-tax losses in AR1 at [19]; although ultimately it was a matter for the Court. 839 Mr Meredith said he adopted the interest calculation based on a "simple reading" of the Practice Note and said he was not aware of appropriate precedence for calculating interest on an after-tax basis. 840 Mr Meredith suggested, and I accept, as did Mr Ross, that if tax payments are not deducted from the estimates of lost profit, Coretell will be subject to tax on the compensation received. 841 In the circumstances, I consider that interest should be calculated on the damages assessed, namely the $1,506,859, and not by reference to some lesser sum considered to represent "after tax" profits. 842 As I have noted, I will hear from the parties as to the final calculation of pre-judgment interest from 1 June 2007.

Ruling on objections made by Coretell to Mr Ross' reports 843 I should, at this point, formally deal with objections made by Coretell to the reception of Mr Ross' expert reports, which have been referred to above as AR1 and AR2. 844 Coretell objects to these two Ross reports on the basis of: relevance; s 135 of the Evidence Act; not based on specialist knowledge; conclusions based on hearsay; Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305; assertion; argument; and speculation. 845 Coretell notes that Mr Ross purports to give admissible opinion evidence based upon his expertise as a forensic accountant. It says that in Minnesota Mining & Manufacturing Co v Tyco Electronics Pty Ltd (2002) 56 IPR 248 at [47]-[50]; [2002] FCAFC 315, the Full Court discussed the admissibility and weight to be given to the evidence of experts who purport to give opinion evidence, noting the requirements of ss 76, 79 and 80 of the Evidence Act. 846 Coretell contends that Mr Ross' reports are replete with assertion, argument and speculation, and he sets out summaries from a great many documents, transcript and other materials and purports to draw inferences from those documents and materials to come to a view about matters such as whether or not Coretell had a business at particular dates, whether Coretell had a tool which lacked merchantable quality or whether the unjustifiable threats for the litigation were the cause of the asserted damage, and that none of these involves an expression of an opinion in relation to accountancy. That he has, in effect, usurped the role of the Court. 847 Attention is drawn by Coretell to the rejection of sections of a report that Mr Ross made, it says of a similar nature, in National Telecoms Group Ltd v John Fairfax Publications Pty Ltd (No 1) [2011] NSWSC 455. In that proceeding, the trial judge (Davies J) at [33], in effect, criticised the setting out of extracts and summaries from documents, and drawing inferences from these documents about matters that were ultimately for the Court to decide; at [34], her Honour said that conclusions were reached not as a result of experience but rather by drawing inferences and reaching conclusions as any informed person might do; at [35], that the conclusions amounted only to submission and argument; at [44], that Mr Ross' opinion did not show a "demonstration or examination of the scientific or other intellectual basis of the conclusion reached", referring to Makita at [85]. 848 Coretell ultimately submits that the reports should be ruled inadmissible for not complying with s 79 or s 80 of the Evidence Act, and that they should be excluded under s 135 as any probative value of the reports is substantially outweighed by the danger that the evidence might be unfairly prejudicial to Coretell, misleading or confusing, or cause or result in an undue waste of time. 849 The applicants note that a similar broad brush objection was taken by the respondents against AMC's expert in the NSW proceeding and note that a similar approach was taken to an expert in JMVB Enterprises Pty Ltd v Camoflag Pty Ltd (2005) 67 IPR 68 at [98]; [2005] FCA 1474. 850 The applicants note that notwithstanding the rejection of certain evidence of Mr Ross in the National Telecoms Group case, the Court there found, at [18], that the transgression into evidence outside expertise was "not so self-evidently irrelevant" as to justify a rejection of the whole of Mr Ross' report nor even the specific paragraphs to which objection was taken. 851 The applicants submit the objection to the whole of the evidence should be treated with considerable scepticism and that Mr Ross has demonstrated considerable expertise in forensic financial and business analysis, and noted that Mr Ross should be considered to have given balanced evidence when he and Mr Meredith gave expert evidence concurrently at the enquiry. 852 The applicants submit the respondents' objections are without specificity and should be rejected on that basis. It was plainly within Mr Ross' study, training and experience to give evidence identifying whether Coretell in fact sustained loss and assessing the financial impact, if any, of that loss based on the financial information provided to him, referring to Castel Electronics Pty Ltd v Toshiba Singapore Pte Ltd (2011) 192 FCR 445 at [203]; [2011] FCAFC 55. 853 At the hearing, I indicated that I would rule on the objections to the expert evidence once I had heard the evidence and in the course of coming to a proper appreciation of its content. I indicated that it was difficult, at the outset of hearing from the experts, to rule a section or particular portion of the evidence objected to as failing the Makita test, which was the substantial ground upon which Davies J ruled parts of Mr Ross' evidence inadmissible in the National Telecoms Group case. 854 In the result, I do not consider, on balance, that any portion of Mr Ross' expert testimony should be struck out on any of the grounds of objection advanced by Coretell. 855 My primary reason for considering the evidence, in the circumstances of this damages enquiry, not to be objectionable, is that there are unusual factual circumstances in this case, many of which have already been canvassed. There are serious questions raised as to whether or not Coretell can have suffered any financial loss if it had not developed the Camteq tool to the point where it was marketable or merchantable. In such circumstances, it is, in my view, permissible for a forensic accountant, with the training and experience evidenced by Mr Ross, to be asked to interrogate financial records and other materials relevant to the question whether Coretell appears to have been conducting a business or have a track record of sales. A typical range of financial records may be assumed to exist at the commencement of any such enquiry, in order to establish trading figures, profit and loss, and lost revenue. If, in the course of interrogating such materials, the forensic accountant observes materials which throw doubt on the fact of trading or revenue receipt either because there appears to be no business or because there are, to put it generally, problems with the product in which it is assumed trading is being carried out and revenue is being earned, then it seems to me the forensic accountant can draw attention to that material. 856 If the forensic accountant goes further and draws conclusions, for example, that a product is "unmerchantable", then it may well be that the forensic accountant is usurping the role of the Court about the existence of that fact. Broadly speaking, I do not consider that Mr Ross, in the approach that he has taken, and as illustrated by the discussion of the differing assumptions of Mr Ross and Mr Meredith in the joint report, just set out above, when properly assessed, has transgressed into impermissible areas not based on his qualifications and experience. 857 In my view, this is not a case like Makita and other instances where a capable and informed person has, in effect, been asked to read a set of documents and to inform the Court what, in their opinion, are the factual conclusions that may be drawn from it. What Mr Ross did, albeit that his approach to the questions in issue had been different from that adopted by Mr Meredith - although only because Mr Meredith was instructed to make certain assumptions and had no need to undertake any additional forensic enquiry of the type that Mr Ross did - was to employ his forensic accounting skills to interrogate relevant financial and other records of Coretell and related companies which plainly bore on the primary question whether Coretell suffered financial loss by withdrawing the Camteq tool from circulation in late 2006, and material times thereafter. 858 It may be accepted that when adopting this forensic accounting approach there is a danger that the forensic accountant will find himself or herself canvassing some issues that also fall to the Court for ultimate resolution, because they have a factual component. But that is not to say that such issues having some factual component are irrelevant to the accounting exercise and the bringing to bear of the forensic accounting qualifications, training and experience of the expert witness. 859 In short, just because Mr Ross' approach to the task of interrogating Coretell's financial records to determine whether or not they disclose loss from withdrawal of the Camteq tool from circulation following the making of the threats, has led Mr Ross to doubt the existence of a "business" at material times, including because of issues going to the substance of Coretell's operation at material times, is not, in my view, an adequate reason to rule inadmissible the forensic accounting evidence proposed to be given by him. 860 One example that might be given to illustrate the point made is that in the course of the experts giving concurrent evidence, Mr Meredith confirmed that he was asked to provide an opinion on the alleged loss suffered, assuming that (1) Coretell withheld from sale and hire the core orientation equipment; and (2) that causation had been established, that is, that the withholding was due to the unjustified threats. Mr Meredith indicated that he proceeded on the instructed assumption that the tool was withheld and therefore there were lost sales, so the task became, how do you estimate those lost sales, and for that purpose he used a regression analysis technique (discussed below). 861 Mr Meredith told the Court that he accepted that as an instruction, and by implication did not need to interrogate the records to validate the allegation or the instruction that Coretell withheld the equipment from sale and hire. 862 Mr Ross explained that Mr Meredith and he both agree that the way to approach loss is to compare the position in which Coretell was as a result of the threats and the position it would have been in had the threats not occurred. Mr Meredith had an instruction as to what the position was as a result of the threats. He was instructed to assume they stopped selling. Mr Ross said that he was not given that instruction. He was asked to consider, based on the information put to him, what happened as a result of the threats and how Coretell responded, and, having identified how they responded, that made it possible for him to consider what would have been different had the threats not occurred. He said that until one identified what change in position occurred as a result of the threats, in his view, one could not identify what the different position would have been had the threats not occurred. 863 Mr Ross repeated that he was asked to consider that himself and he went and looked at the financial records to see what Coretell said and did in response to the threats. He analysed that information, which included a large amount of financial information from Coretell's records and a chronology of events that he was instructed to adopt. He formed conclusions that it did not, in fact, see selling or trading in that period. He also formed the view that it did not actually have a business to begin with, to cease trading. He said the whole proposition about how it changed its position in response to the threats, which drives the damages calculation, needs to be undertaken in the context of what it actually did. And what it might have done two years later (with the ORIshot tool) is, in his opinion, not particularly relevant to that question. 864 In my view, the forensic accountant enquiry that Mr Ross thereby described is not impermissible and lies at the root of the analysis he made in his expert report, as well at the root of the objection made by Coretell. I do not consider it to be a valid objection in the circumstances of this case. 865 I therefore do not allow the objections made by Coretell to the admission in its entirety (or, for that matter, portions) of the expert reports of Mr Ross. Mr Ross' reports go into evidence, as does the joint report made by Mr Meredith and Mr Ross.

Other matters 866 As intimated elsewhere in this judgment, these parties are never satisfied unless they are continually turning stones. Certainly it is the case that no stone in the proceeding has been left unturned by them. Even after closing submissions were made, further submissions came in. First, Coretell filed "Submissions in reply to applicants' closing submissions" which received a rejoinder, "Applicants' response to Coretell's reply submissions". I have had regard to both sets of submissions. 867 As to other matters that then, as a consequence, fell into some disputation (as set out in the letter of Arns & Associates Lawyers dated 24 February 2015, addressed to my Associate), I make the following rulings: I abstain from making any amendments to the transcript at p 237, lines 11-12. As to the document at tab 15 of Mr Kleyn's cross-examination bundle, the further evidentiary matter that remained in dispute at the conclusion of the damages enquiry, was the evidentiary status of the email there included dated 2 April 2007 from Mr Kleyn to Mr Brian Hales of Boart Longyear. Coretell sought to rely on this as showing that it was trading in the orientation tool at material times earlier than the date of that email. Coretell submitted that the significance of the email was emphasised by the fact that the applicants did not cross-examine Mr Kleyn on the email and did not make any submissions on it, even though it was in the Kleyn cross-examination bundle. The applicants, however, submit that the document did not go into evidence and is not evidence and formed no part of Coretell's affidavit evidence in chief or in reply and was not tendered by them. The applicants submit that the document was not referred to by Coretell until after judgment had been reserved and was not referred to in cross-examination or re-examination. The applicants reasonably point out that the practice followed at trial was that materials in cross-examination bundles not referred to were to be removed from exhibits. I accept the submission made on behalf of the applicants and rule that this document did not go into evidence and so exclude it from my consideration of the material issues considered above. The Court further rules that the applicants' understanding of the Court's ruling on the objection, referred to at [30] of the applicants' response to Coretell's reply submissions, is correct and, in the result, no real regard has been given to the evidence referred to.

Orders 868 The appropriate substantive order would appear to be that the Court finds the damage sustained by the first respondent to be in the sum of $1,506,859, together with interest calculated thereon under s 51A of the Federal Court of Australia Act 1976 (Cth). 869 The Court will hear from the parties, if necessary, concerning the calculation of the interest payable in accordance with these reasons; and on the question of costs of the enquiry into damages. 870 The immediate orders should however be made: (1) The first respondent, following consultation with the applicants, to file a proposed minute of orders giving effect to these reasons. (2) The Court will hear further from the parties, if necessary, on the question of the calculation of pre-judgment interest and costs. (3) The applicants' interlocutory application for summary judgment filed 11 December 2015 be dismissed with costs, such costs to be taxed if not agreed. I certify that the preceding eight hundred and seventy (870) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker.

Federal Court of Australia Act 1978(Cth)

Patents Act 1990(Cth)s 128, 128(1), 128(1)(a), 128(1)(c)

Evidence Act 1995(Cth)ss 79, 80, 135, 191

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