Cadbury Schweppes Pty Ltd (ACN 004 551 473) v Darrell Lea Chocolate Shops Pty Ltd - [2007] FCAFC 70 - FCAFC 2007 case summary — Zoe

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Cadbury Schweppes Pty Ltd (ACN 004 551 473) v Darrell Lea Chocolate Shops Pty Ltd

[2007] FCAFC 70

Federal Court of Australia (Full Court)|2007-05-21|Before: Black CJ, Middleton JJ

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At a glance

Source facts

Court

Federal Court of Australia (Full Court)

Decision date

2007-05-21

Before

Black CJ, Middleton JJ

Source

Original judgment source is linked above.

Judgment (31 paragraphs)

[1]

REASONS FOR JUDGMENT THE PROCEEDING THE QUESTIONS IN THE APPEAL PRIMARY QUESTION: ADMISSIBILITY OF THE DISPUTED EVIDENCE The Evidence Act Cadbury's Case Before the Primary Judge Dr Gibbs' Evidence Relevant Basic Principles and Background Issues

The Brand Concept And Brand Equity:
Nature And Storage Of Brand Associations In Memory:
Role of Packaging as a Marketing Communication:
Importance and Impact of Colour:
Convenience Goods and Consumer Involvement: The Cadbury and Darrell Lea Brands The Consumer Information-Processing Errors The Primary Judge's Ruling on Admissibility The Primary Judge's Reference to Section 135 SECONDARY QUESTION: WHETHER DARRELL LEA'S USE OF PURPLE REPRESENTED AN ASSOCIATION BETWEEN CADBURY AND DARRELL LEA The Primary Judge's Findings Contentions on Appeal NEW TRIAL Need For Exclusivity Weight of the Disputed Evidence Conclusion As To New Trial COSTS CONCLUSION

[2]

THE PROCEEDING 1 The appellant, Cadbury Schweppes Pty Ltd (Cadbury), claims that the use by the respondent, Darrell Lea Chocolate Shops Pty Ltd (Darrell Lea), of a shade of purple in connection with its chocolate confectionary business has the consequence that consumers might mistakenly conclude that Darrell Lea products are Cadbury products or that there is some connection between the respective chocolate confectionary businesses of Darrell Lea and Cadbury. Cadbury says that, therefore, by such use of purple, Darrell Lea has engaged in conduct that is misleading and deceptive, in contravention of provisions of Part V of the Trade Practices Act 1974 (Cth) (the Trade Practices Act). Cadbury also says that Darrell Lea's conduct constitutes passing off of its chocolate confectionary business and products as a business or products of, or connected or associated with, Cadbury. 2 On 27 April 2006, a judge of the Court ordered that Cadbury's claims be dismissed. On 6 July 2006 the primary judge made orders for costs, including an order that Cadbury pay certain of Darrell Lea's costs of the proceeding on an indemnity basis. Cadbury has appealed to the Full Court from all of those orders.

[3]

THE QUESTIONS IN THE APPEAL 3 The principal question in the appeal is whether the primary judge erred in refusing, on 31 March 2006, in the course of the trial, to admit certain evidence (the disputed evidence) that Cadbury sought to adduce from: · Brian John Gibbs, Associate Professor of Marketing and Behavioural Science in the Melbourne Business School at the University of Melbourne; · Constantino Stavros, Senior Lecturer in the School of Economics, Finance and Marketing of RMIT University, Melbourne; and · Timothy Raymond Riches, the managing director of FutureBrand FHA Pty Ltd, a branding and design consultancy within the world's largest marketing services group. 4 The primary judge characterised the issues in the proceeding as being concerned with the making of consumer decisions for the purchase of items of commerce, namely, chocolate. His Honour considered that those issues are not outside the knowledge or experience of ordinary persons. His Honour found that the disputed evidence consisted of opinions as to the knowledge or experience of ordinary persons and, accordingly, held that, as a matter of law, the disputed evidence was not admissible. Cadbury says that his Honour erred in making that ruling. 5 In relation to Dr Gibbs' evidence, his Honour also concluded that, even if the evidence were admissible, his Honour would have refused to admit it under s 135 of the Evidence Act 1995 (Cth) (the Evidence Act), because its probative value was substantially outweighed by the danger that it might cause or result in undue waste of time. Cadbury says that any such rejection would have involved a miscarriage of the discretion conferred by the Evidence Act. His Honour expressed no such view in relation to the evidence of Mr Stavros and Mr Riches: it was not necessary for his Honour to do so, having concluded that the disputed evidence was not admissible. 6 The primary judge ultimately held, on the basis of the evidence that his Honour admitted, that the use of purple by Darrell Lea did not convey to the reasonable consumer the idea that its business or its products have some connection with Cadbury. A nominal secondary question in the appeal is whether the primary judge erred in that conclusion. 7 Cadbury asks, if it succeeds on the principal question, that there be a new trial. If it fails on the principal question but succeeds on the secondary question, Cadbury asks the Full Court to grant appropriate relief. It is convenient to deal with the evidentiary question first.

[6]

Cadbury's Case Before the Primary Judge 11 The disputed evidence consists of opinions about the existence of facts in issue in the proceeding. Darrell Lea contends that the relevant facts in issue are as follows: · Cadbury had exclusive repute in the colour purple; · Darrell Lea, by its use of the colour purple, represented that its products originate from or are associated with Cadbury. 12 In order to place the disputed evidence in its context, it is necessary to explain the case that Cadbury wished to mount against Darrell Lea. Essentially, Cadbury claimed an exclusive association with a colour purple in connection with the marketing of its products in Australia. Cadbury says that Darrell Lea has used Cadbury's colour purple for its own benefit so as to convey to reasonable consumers a representation that its products originated from or are associated with Cadbury. 13 The relevant allegations in the statement of claim concerning Cadbury's association with the colour purple may be summarised as follows: · Since approximately 1985, Cadbury has, in and throughout Australia, promoted the colour Cadbury Purple in such a manner as to lead the Australian public to associate the colour Cadbury Purple with: (a) Cadbury chocolate confectionary products; (b) Cadbury; and/or (c) the name "Cadbury". · Since 1995 at the latest, the colour Cadbury Purple: (a) constituted a separate component of the Cadbury trade indicia; (b) has created an association among the Australian public separate from the name Cadbury in distinctive cursive script and the depiction of a glass and a half of full cream milk; (c) signified and distinctively indicated to the Australian public, Cadbury; (d) signified and distinctively indicated to the Australian public, that the source of chocolate confectionary sold by reference to the colour Cadbury Purple was Cadbury; (e) caused the Australian public to recall Cadbury chocolate confectionary products, Cadbury and/or the name "Cadbury". · Accordingly, by no later than 1995 Cadbury had achieved a substantial, exclusive and valuable reputation and goodwill throughout Australia in the colour Cadbury Purple. 14 The allegations that are made in the statement of claim concerning the alleged conduct of Darrell Lea may be summarised as follows: · Since approximately mid to late 2001, Darrell Lea has, in the signage, badging, wrapping, store fit-out and point of sale facilities used in the conduct of the Darrell Lea chocolate confectionary business, utilised consistently and regularly a colour purple bearing a striking and obvious likeness to the colour Cadbury Purple. · By reason of that utilisation, Darrell Lea has, since approximately mid to late 2001, wrongfully appropriated and converted for its own use in the Darrell Lea confectionary business, Cadbury's reputation and goodwill in the colour Cadbury Purple. · By reason of the above matters, Darrell Lea has since approximately mid to late 2001 made and continues to make the following representations, or one or more of them, in trade or commerce: (a) that Darrell Lea chocolate confectionary products were and are offered for sale with the licence of Cadbury; (b) that Darrell Lea chocolate confectionary products were and are offered for sale with the sponsorship of Cadbury; (c) that Darrell Lea chocolate confectionary products were and are offered for sale with the approval of Cadbury; (d) that Darrell Lea chocolate confectionary products enjoy a connection and/or affiliation with Cadbury; (e) that Darrell Lea has entered into an association/arrangement with Cadbury; (f) that Darrell Lea has sought and obtained the endorsement of Cadbury. · Each of those representations is false or alternatively misleading or deceptive. · By reason of those representations consumers have been, and continue to be misled and deceived or likely to be misled or deceived into purchasing Darrell Lea chocolate confectionary product in circumstances where, but for Darrell Lea's misrepresentations, they would have purchased Cadbury chocolate confectionary. 15 The written outline of argument provided by Cadbury to the primary judge at the beginning of the hearing said that Dr Gibbs would say that Darrell Lea's use of the colour purple in marketing and sales activities referable to its confectionary business is likely to cause four consumer information-processing errors. The consumer errors were identified as: · misidentification; · miscuing; · misinference; · misassociation. 16 The outline said that Dr Gibbs would say, in particular, that misassociation would occur where consumers mistakenly link Cadbury brand associations with Darrell Lea, and vice versa, as a result of the two brands' associative networks having become connected in consumers' minds, through the common use of purple. Dr Gibbs would say that he believed misassociation was the most significant of the consumer errors in terms of impact on consumers and impact on Cadbury. Dr Gibbs would also refer to errors that might be made by retailers and investors and even Cadbury employees by reason of Darrell Lea's use of purple. Finally, he would say that the continued use of purple by Darrell Lea was likely to reduce the distinctiveness of Cadbury's products. 17 The outline summarised Mr Riches' evidence as being that Darrell Lea's use of the colour purple in the marketing of its products allowed it to take advantage of the positive associations that Cadbury had attached to the colour purple in the context of chocolate confectionary. The outline also summarised the position of Mr Stavros as being that the potential damage to Cadbury by reason of Darrell Lea's use of purple was enormous and would undoubtedly weaken the marketing position of Cadbury. 18 In the course of his oral opening, senior counsel for Cadbury stated that the case was concerned primarily with the colour purple. He said that the purple in question was Pantone 2685C, a colour identified in an annexure to Cadbury's statement of claim. Senior counsel went on to say that, for all sorts of reasons associated with the mass manufacturing of goods and the surface on which printing takes place, it is not always possible to strike exactly the desired Pantone. Hence, Cadbury claimed relief in respect of Pantone 2685C and Pantones that are very close to it, each of which was also identified in the annexure to Cadbury's statement of claim. He asserted that Darrell Lea is in fact using colours that are identical with, or very close to, Pantone 2685C.

[7]

Dr Gibbs' Evidence 19 On the fifth day of the trial, Cadbury sought to adduce evidence from Dr Gibbs. Dr Gibbs' evidence in chief was to be by affidavit sworn on 23 November 2005. He was also to give evidence in reply by another affidavit. Following objection by Darrell Lea and oral argument, the primary judge rejected the evidence of Dr Gibbs in its entirety. Before explaining his Honour's reasons for that ruling, it is necessary to describe Dr Gibbs' proposed evidence in some detail. 20 After recounting his qualifications and instructions, Dr Gibbs' principal affidavit provided an executive summary of his conclusions. In essence, the summary was as follows: · Cadbury has deliberately and consistently used the colour purple as a key branding element for its Cadbury Dairy Milk brand and its corporate Cadbury brand since at least the late 1980s. As a result, the colour purple is strongly associated with the Cadbury brand. Purple signifies the Cadbury brand to consumers. Purple is an activator of Cadbury's brand equity and is a brand element of considerable value to Cadbury. · Darrell Lea's use of purple is likely to cause four information processing errors to occur among consumers of chocolate confectionary as follows: · Darrell Lea has recently made significant use of purple in relation to packaging and point of sale displays. It has done so at the same time as it has focussed on a new distribution strategy that goes beyond its traditional dedicated shops and seeks to take advantage of convenience distribution channels. - Misidentification, where consumers seeking to buy Cadbury chocolate mistakenly identify a Darrell Lea product as a Cadbury product and therefore buy the Darrell Lea product by mistake. - Miscuing, where consumers use purple as a spurious cue in decision making and choice. In that capacity, the colour can function as a decision-heuristic cue, an operant-conditioning cue or a behaviour-instigating cue. - Misinference, where consumers, in trying to make sense of the common use of purple by Darrell Lea and Cadbury, draw mistaken inferences about one or both of the brands. - Misassociation, where consumers mistakenly link Cadbury brand associations with Darrell Lea, and vice versa, as a result of the two brands' associative networks having become connected in consumers minds through the common use of purple. · Darrell Lea's use of purple had two further effects as follows: - Errors analogised to misinference and misassociation may be made by retailers, investors and Cadbury employees. - The use of purple by Darrell Lea is likely to reduce the perceptual distinctiveness of Cadbury products. The first two points, concerning the respective uses of purple by Cadbury and Darrell Lea, could only be assumptions made by Dr Gibbs, since there was no evidence that he had any direct knowledge of those matters. 21 A number of detailed sections followed the executive summary. In those sections, Dr Gibbs expressed the opinions that Cadbury wishes to have admitted as evidence of the facts to which they relate.

[10]

Nature And Storage Of Brand Associations In Memory: 24 An essential function of memory is to draw together similar experiences to enable one to discover patterns in one's interactions with the environment. Thus, memory serves to make current perceptions meaningful by relating them to knowledge that has been distilled from previous experiences. In the field of consumer behaviour, the issue of how brand associations are stored in the minds of consumers and accessed by them, as they form judgments and make decisions, is typically understood in terms of "the associative-network model of memory". That type of model has a long history in psychology. On that model, a brand is conceptualised as a set of nodes that represent concepts or other information stored in memory and are interconnected in a network of links. This network of nodes in memory can include a wide variety of brand associations, which are created through actual use of the branded product or through exposure to advertising or other marketing. Those networked associations comprise all the explicit or implicit pieces of knowledge that the consumer retains about the brand. 25 Brand associations are formed in the mind of a consumer through a process of learning. However, not all such consumer learning is conscious. A key feature of associative-network models is the concept of spreading activation. Nodes vary in their activation levels, with some nodes having more activation and others having less at any given moment. A node is activated when the consumer perceives a stimulus or cue corresponding to that node. The extent to which activation spreads between two nodes depends on how closely they are linked in the associative network. The associative network conceptualisation of brands has two particularly important marketing implications as follows: · The complex amalgam of activated nodes in a consumer's associative network for a particular brand is what constitutes the brand's meaning or image for that consumer and is the basis for the brand's brand equity. It is therefore a crucial responsibility of brand management to maintain control over what associations become linked into the brand's network. · Because typically only a subset of nodes in a brand's network is activated at once, a brand's meaning or image is not fixed, even for a given consumer, but varies with the cues or activators present in the specific context. This context sensitivity of brand meaning creates the potential for the strategic activation of specific portions of the associative network, and a great deal of marketing effort can be understood as being directing at activating some portions of the network and not activating others. However, certain nodes in a brand's network, by virtue of being easily and strongly cued or closely linked to many other nodes in the network, can serve as "primes" or "triggers" to prompt consumers to retrieve a full range of brand associations. A major responsibility of marketing management and practice, therefore, is to establish such primes or triggers, often in the form of tangible brand elements, such as names, logos, symbols, slogans, signage and packages.

[15]

The Consumer Information-Processing Errors 33 The most significant and most contentious part of Dr Gibbs' principal affidavit then follows in six sections headed as follows: · OVERVIEW: FOUR CONSUMER INFORMATION-PROCESSING ERRORS CAUSED BY DARRELL LEA'S USE OF CADBURY PURPLE AND RESULTING HARM TO CADBURY. · ERROR I: MISIDENTIFICATION. · ERROR II: MISCUING. · ERROR III: MISINFERENCE. · ERROR IV: MISASSOCIATION. · ADDITIONAL EFFECTS AND ISSUES 34 Significant parts of the disputed evidence are directed to describing what Dr Gibbs perceives to be the harm to Cadbury from the errors that he describes. They describe the consequences of consumers being misled or deceived by Darrell Lea's use of the colour purple. That was a basis of complaint by Darrell Lea. 35 Dr Gibbs began his Overview by saying that viewing the effects of Darrell Lea's use of purple in terms of consumer information-processing errors provides a useful unifying framework for understanding those effects. He expressed the opinion that Darrell Lea's use of purple in its marketing and sales activities is likely to cause the four errors to occur among consumers of chocolate confectionary. He explained that those four errors can be classified along two dimensions: whether they involve consumer choice or consumer judgment, and whether the relevant information processing is primarily conscious or primarily unconscious. Misidentification and miscuing relate, respectively, to conscious and unconscious processes of consumer choice. Misinference and misassociation relate, respectively, to conscious and unconscious process of consumer judgment. While some forms of those errors cannot occur simultaneously in the same consumer, the four effects are not mutually exclusive. 36 Dr Gibbs then dealt with the four consumer information processing errors, each of which he said is "likely to result from Darrell Lea's use of Cadbury purple". As indicated above, there was no evidence that Dr Gibbs had any direct knowledge of Darrell Lea's use of purple. His understanding of that use was based on photographs provided to him by Cadbury's solicitors. The photographs, which were in evidence, were of various Darrell Lea products as displayed in a newsagent, a tobacconist, a convenience store of some type and a store owned by Darrell Lea. 37 Dr Gibbs said that the photographs show: · A number of Darrell Lea branded products that use significant amounts of purple in their packaging; · A number of other unidentified products in the shape of a flat tray or typical box of chocolates, included within Darrell Lea displays, that have been wrapped for display using purple. Often those purple wrapped boxes have been stacked in piles on display shelves, with the effect of creating definite areas of purple as a significant feature of the overall display; · Headboard signage for Darrell Lea that uses purple as the predominant background colour; · Point of sale materials, cardboard displays, using purple; · Staff uniforms, including aprons, featuring purple. 38 Dr Gibbs expressed the opinion that the use of purple by Darrell Lea, that he thus briefly describes, is likely to have the result that: · Consumers seeking to buy Cadbury chocolate will mistakenly identify a Darrell Lea product as a Cadbury product; · Consumers utilising purple as a cue in decision making and choice will end up purchasing Darrell Lea chocolate and not the Cadbury chocolate that the cue was based on; · Consumers will draw mistaken inferences about the Cadbury and Darrell Lea brands that the common use of purple is cooperative and that there is some kind of corporate relationship between Cadbury and Darrell Lea; · Consumers will mistakenly link Cadbury brand associations with Darrell Lea, and vice versa. 39 Finally, Dr Gibbs also expressed his opinion about additional effects by reason of the influence of Darrell Lea's use of purple on decision makers other than consumers. Thus, Dr Gibbs suggested that retailers may notice and react to the described potential for weakening of the Cadbury brand and business and Cadbury may consequently experience a loss of reputation and leverage in the distribution channel. Those effects appear to be further instances of harm that would be caused to Cadbury by reason of errors analogous to the four consumer information-processing errors.

[16]

The Primary Judge's Ruling on Admissibility 40 On 1 March 2006, Darrell Lea gave written notice of its objections to evidence of Cadbury foreshadowed by affidavits sworn by a number of witnesses, including Roger Alexander Layton, Dr Gibbs and Messrs Stavros and Riches. While the rejection of Mr Layton's evidence is not in issue in the appeal, the objections concerning Dr Gibbs and Messrs Stavros and Riches were expressed in terms of the objections to Mr Layton's affidavit. It is necessary, therefore, to say something about those objections. 41 Mr Layton, Dr Gibbs and Messrs Stavros and Riches expressed opinions on the basis of Document Q. The objection to Mr Layton's evidence was that, generally, he had been asked to comment on research carried out by others, being the research referred to in Document Q, which had not been proved in the proceeding. The objection went on that Mr Layton had indicated that he had accepted assumptions with respect to the usage of purple as from 1998 only and yet expressed conclusions concerning conduct in Australia that predates 1998. The objection then asserted that Mr Layton had not carried out any relevant research of his own, displayed no independent knowledge of the relevant industry, other than as a personal consumer, which is not a basis for expert opinion, and expressed statements of opinion that were not "based on any demonstrated specialised knowledge". Consequently, it was said, his opinion was inadmissible under s 76 or s 135 of the Evidence Act. The objection then went on to say that, in so far as the opinion evidence was based upon research that had not been proved, the objection was based on the statements made by Heydon JA in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 (the Makita Case). 42 The same objection was made in respect of the affidavits of Messrs Stavros and Riches and Dr Gibbs. The objection in relation to Dr Gibbs went on to say that the references to unproved research reports in Document Q impacted on specific paragraphs of Dr Gibbs' affidavit dealing with the Cadbury brand. 43 After referring to the "argumentative nature" of opinions expressed about Darrell Lea, the objection went on to say that none of the evidence was based on admissible studies of consumer opinion or on the opinion of any actual consumer sought to be proved in the proceeding. Yet, so the objection ran, the opinion speculatively suggested an array of adverse consequences on consumer judgment arising from Darrell Lea's conduct, adopting the phrase "likely to cause". The objection ended by referring to the commentary in Dr Gibbs' affidavit on harm to Cadbury's business, notwithstanding that Cadbury itself had not sought to prove any such harm. 44 Senior counsel for Darrell Lea expounded on the objection orally. The entire thrust of the oral submission was that, proof of Document Q having been rejected, much of the observations made by Dr Gibbs were based on factual material and documents that would not be in evidence in the proceeding. The material and documents, however, were said to be the foundation of Dr Gibbs' opinions about the use of the colour purple by Cadbury and Darrell Lea. 45 Senior counsel for Darrell Lea eschewed any suggestion that there is not a speciality called marketing. The primary judge, in turn, referred to the Full Court's decision in Domain Names Australia Pty Ltd v .au Domain Administration Ltd [2004] FCAFC 247 (the Domain Names Case). His Honour referred to observations in that case (at [20]) to the effect that opinion evidence sought to be adduced as to the likely characteristics of recipients might be met by the observation of the High Court, in Transport Publishing Co Pty Ltd v The Literature Board of Review (1956) 99 CLR 111 (The Transport Publishing Case), that ordinary human nature, that of people at large, is not a subject of proof by evidence, whether supposedly expert or not. 46 The primary judge also referred to the observations made by the Full Court in the Domain Names Case (at [21]) that market research evidence has not been received with enthusiasm in the Federal Court in recent years in certain cases. His Honour then referred to observations made by Branson J in Cat Media Pty Ltd v Opti-Healthcare Pty Ltd [2003] FCA 133, cited in the Domain Names Case, to the effect that evidence of opinions based on market research and expert appreciation of consumer behaviour will rarely be of assistance in litigation where the Court's primary concern is with the behaviour to be expected of, and the judgments likely to be made by, ordinary members of the community intent on making a relatively modest purchase in a conventional way: where a claim is essentially a matter for the Court's impression, expert views that are merely impressionistic can be given no more than nominal weight. 47 Finally, his Honour referred to a statement in the Domain Names Case (at [22]) that consideration of such difficulties shows the practical wisdom of the firm rule that the likelihood of conduct being misleading or deceptive is a question for the tribunal of fact and not for any witness to decide. His Honour referred to the observations in the Domain Names Case (at [23]) that, while a different rule applies in the case of sales to participants in specialised markets involving persons engaged in a particular trade, that different rule would not apply in a case where the consumers in the market constitute large sections of the public rather than participants in a specialised market. 48 Senior counsel for Darrell Lea then went on to criticise statements in Dr Gibbs' affidavit as being pure speculation and not the proper subject of expert evidence. Senior Counsel asserted that Dr Gibbs had no personal knowledge relevant to the case and brought no relevant expertise. He asserted that Dr Gibbs was placed in a situation where he was venturing opinion without a proper foundation. He summarised the point in this way: "Our point is simply this… there is a series of assumptions which underlie the giving of this evidence which, in short, are not proved and they are the very assumptions which underscore the commentary that your Honour will read [in Dr Gibbs affidavit]… [The assumptions are] not proved and not going to be proved in the case." 49 It is significant that no mention was made of s 80 of the Evidence Act in the course of the oral address by senior counsel for either party. In any event, the course of the interchange between senior counsel for Darrell Lea and the primary judge may serve to explain the conclusion that his Honour reached, and his Honour's reasons for the conclusion, without any reference to s 80 of the Evidence Act. 50 In the primary judge's ruling on the admissibility of Dr Gibbs' evidence, his Honour said that an expert's opinion is admissible to furnish the Court with scientific information that is likely to be outside the experience and knowledge of a judge or jury. His Honour suggested that the concept of specialised knowledge in s 79 imports knowledge of matters that are outside the knowledge or experience of an ordinary person, being knowledge that is sufficiently organised or recognised to be accepted as a reliable body of knowledge and that approach is very close to the common law approach. Thus, his Honour concluded that, even if a proffered opinion is that of a person suitably qualified within an organised area of knowledge, if that area is not outside the experience of ordinary persons, the opinion will not be admissible. 51 While his Honour accepted that marketing and behavioural science is an organised and recognised area of specialised knowledge and that Dr Gibbs has training, study and experience within that area, his Honour characterised the issues that arise in the case as not being outside the knowledge or experience of ordinary persons. His Honour concluded, therefore, that Dr Gibbs' evidence was inadmissible in its entirety, because it went only to a matter that is within the knowledge and experience of an ordinary person. 52 His Honour then referred to observations made by the High Court in the Transport Publishing Case at 119 to the effect that "ordinary human nature, that of people at large, is not a subject of proof by evidence, whether supposedly expert or not". Those observations, of course, were made before the enactment of s 80 of the Evidence Act. His Honour considered that the whole raison d'ętre of Dr Gibbs' evidence was to persuade the Court what ordinary human nature will lead people to do when making purchasing decisions about Darrell Lea chocolates, given the respective packaging, advertising, etc of that company and Cadbury. His Honour held that, before opinion evidence may be given upon the characteristics, responses or behaviour of any special category of persons, it must be shown that those persons form a subject of special study or knowledge. 53 The primary judge characterised the proceeding as being concerned with the brand names, colours and get-up of rival manufacturers of chocolate and the likely effect of those features on retail purchasing decisions by consumers. His Honour considered that virtually the whole of the Australian population over the age of about 8 years are purchasers or potential purchasers of chocolate, an inexpensive everyday product sold in hundreds of thousands of retail outlets throughout the country. His Honour did not consider that consumers of chocolates could be considered as a special category of persons that would constitute an exception to the rule under the common law. His Honour characterised the questions thrown up by the proceeding as "quintessentially questions of fact within the experience and knowledge of a trier of fact". 54 Such an approach appears to ignore the language of ss 79 and 80 of the Evidence Act. Certainly, opinion evidence will not be admissible unless the opinion is based on specialised knowledge and that specialised knowledge is in turn based on the opinion holder's training, study or experience. However, the former rule of the common law that excluded opinion evidence as to a matter of common knowledge no longer applies. Under s 80, evidence of an opinion is not inadmissible only because it is a matter of common knowledge. 55 Clearly enough, if the matter about which expert evidence is to be given is patent and known to all, the Court's time would normally be wasted by such evidence. Section 135 may be called in aid in those circumstances. Nevertheless, the evidence may still be strictly admissible. Further, an expert may still be of assistance to the Court, even in an area about which most people know something. So long as s 79 is satisfied, and the opinion evidence is based on specialised knowledge and that specialised knowledge is based on training, study or experience, that opinion evidence will be admissible, whether or not it might then be excluded in the exercise of the discretion conferred by s 135 (see generally the Law Reform Commission, Interim Report on Evidence, Canberra 1985, paragraph 743). 56 His Honour accepted Dr Gibbs' expertise and, for that purpose, that his opinion was based upon his expertise. Thus, his Honour accepted that the field of expertise was a recognised field and it may be accepted that his Honour did not reject Dr Gibbs' evidence on the ground that he did not have relevant expertise or that his opinion was not based upon his specialised knowledge. 57 The primary judge concluded, however, that it is a condition of the admissibility of opinion evidence that the opinion relates to an issue that is outside the knowledge or experience of ordinary persons. In so far as that was the reason for concluding that the opinions of Dr Gibbs were inadmissible, his Honour erred. The fact that an opinion is expressed concerning the making of consumer decisions for the purchase of everyday items of commerce does not disqualify the opinion from being admissible, so long as s 79 is satisfied. 58 In his ruling, the primary judge observed that the prime ground upon which senior counsel for Darrell Lea argued against the admissibility of the disputed evidence was that much of the opinion evidence was based on market research reports that had not been proved in evidence and were not likely to be proved. However, his Honour accepted the submissions of senior counsel for Cadbury that the lack of proof of a substantial part of the factual basis of Dr Gibbs' opinions does not of itself render his evidence inadmissible under s 79. His Honour considered that such lack of proof merely goes to the weight that may be given to the opinion. Darrell Lea did not contest that view of s 79 in the appeal. It is therefore not necessary to address the question, or the application of the statements made by Heydon JA in the Makita case. Our failure to do so should not necessarily be taken as endorsement of the correctness of the view adopted by the primary judge. 59 After his Honour had delivered written reasons for his ruling that Dr Gibbs' affidavits not be admitted into evidence, senior counsel for Cadbury proceeded to deal with the affidavits of Mr Stavros but observed that the objection to those affidavits was the same as the objection to the affidavits of Dr Gibbs. Senior counsel accepted that Mr Stavros' affidavits would be unsustainable in the light of his Honour's ruling in relation to Dr Gibbs. 60 His Honour observed that, notwithstanding the submissions as to the nature of Mr Stavros' particular experience, the same problem arose as arose with Dr Gibbs. That problem was that the proposed evidence was that of expert opinion in relation to the behaviour of ordinary people in consumer decisions and fell squarely within the grounds of the earlier ruling. His Honour therefore ruled that he would not receive Mr Stavros' affidavits. 61 Subsequently, his Honour dealt with the objection in relation to Mr Riches' affidavit and noted that the argument was the same as that put in respect of Dr Gibbs. His Honour observed that, while Mr Riches may approach the matter from a background somewhat different from that of the other two witnesses, his Honour considered that the evidence had essentially the same vice, in that it expressed opinions about how people are likely to react about consumers' purchases. His Honour therefore declined to receive the affidavit of Mr Riches.

[17]

The Primary Judge's Reference to Section 135 62 The primary judge rejected the evidence of Dr Gibbs on the basis that, because the area of law involved concerned ordinary human behaviour, such evidence, as a matter of law, is inadmissible. Nevertheless, his Honour went on to deal with the possible exercise of discretion under s 135 on the assumption that Dr Gibbs' evidence were admissible. 63 It is fair to say that the invitation to his Honour to reject Dr Gibbs' evidence under s 135 was not developed to any significant extent. Senior counsel for Darrell Lea simply said that, if his Honour was against Darrell Lea on its submission that the evidence was inadmissible: "then in the ultimate course section 135 should apply on this basis, that to engage now in a cross examination of this witness on the foundations of this report, with all the inherent limitations I have indicated, even if the admissibility threshold has been crossed, would be misleading or confusing, would be unfairly prejudicial and in particular would cause an undue waste of time in the conduct of the proceeding." No attempt was made to develop the proposition that cross-examination of Dr Gibbs would be misleading or confusing, would be unfairly prejudicial or would cause an undue waste of time. Indeed, it was not suggested on the hearing of the appeal that anything other than a possible undue waste of time was the ground for invoking s 135, notwithstanding what was said by senior counsel for Darrell Lea. 64 Senior counsel for Darrell Lea pointed to the reference in s 135 to "probative value", observed that it was "a weight consideration" and asserted that so little weight would be given to the evidence, absent a proper factual foundation upon which it was sought to be expressed, that its probative value was so limited and so small that it should not be allowed (emphasis added). That must be a further reference to the material in Document Q. 65 In due course, senior counsel for Cadbury dealt with that submission with the retort: "As a last resort my friend, as he was sitting down, said a few words about section 135." Senior counsel for Cadbury pointed out that, in the absence of anything further, it would not be an undue waste of time for Cadbury's case to be explored. Senior counsel pointed out that the discretion should not be exercised unless it is very clear that the probative value of the evidence is negligible and that there is some sort of identifiable prejudice. 66 Thus, the debate concerning the application of s 135 was limited in the extreme. Having regard to the conclusion that the primary judge reached on admissibility, it was not strictly necessary for his Honour to express a view about s 135 in relation to Dr Gibbs' evidence. Nevertheless, his Honour did so. 67 The primary judge considered that Dr Gibbs' evidence would create many areas of disputation with opposing experts and would greatly complicate and lengthen the trial of the proceeding. His Honour's basis for doing so was twofold. First, much of the factual material relied upon by Dr Gibbs was not in evidence or likely to be in evidence. Secondly, much of that factual material was vague, tendentious and of little weight. His Honour was not more specific as to that second basis. 68 Having rejected the evidence of Messrs Stavros and Riches, the primary judge did not turn his mind to the exercise of discretion under s 135 in relation to their evidence. If their evidence is otherwise admissible, there was an error in rejecting it. The Full Court cannot exercise the discretion arising under s 135 in respect of the evidence of Messrs Stavros and Riches. In the circumstances, there is no utility in considering whether the putative exercise of the discretion by his Honour in relation to Dr Gibbs' evidence would have involved a miscarriage of the discretion. Nevertheless, it may be useful for the Full Court to make some observations on the matters that were argued in relation to the application of s 135. 69 The primary judge referred to factual material contained in that section of Dr Gibbs' affidavit that dealt with the Cadbury brand. Cadbury accepted for the purposes of the appeal that much of the specific material to which Dr Gibbs referred in that section was not in evidence. However, Cadbury contended that the conclusions that Dr Gibbs derived from that material could be supported by other material that was in evidence before the primary judge. 70 Thus, his Honour referred specifically to material provided to Dr Gibbs by Cadbury's solicitors, including a document prepared by them and entitled "Overview of the History of Cadbury and the Colour Purple". That document contained two statements as follows: "Cadbury's mission statement is simply 'Cadbury means quality', this is Cadbury's promise and this is what the Company considers its reputation is built on. … The well established corporate colours of purple and gold and the Cadbury script logo, which are so prominent on livery, signs, stationery, printed material and the brands themselves are a visual statement of the company's authority within the market. Cadbury considers these elements lend themselves to Cadbury's being 'the First Name in Chocolate'." His Honour characterised those statements as "vague and self-serving". However, both statements were extracted from documents that were in fact in evidence. Those documents were admitted without qualification and were therefore in evidence for all purposes. 71 In any event, Dr Gibbs' opinions concerning "Basic Principles and Background Issues" were not subject to the deficiency thus identified by his Honour. That material could well have informed the decision making process that his Honour adopted in concluding, as his Honour did, that Darrell Lea had not used the colour purple in a way that conveyed to the reasonable consumer the idea that it or its products had some connection with Cadbury's products. 72 The primary judge said that Dr Gibbs' statement in his affidavit, that he had assumed that the colour purple used by Darrell Lea is "similar to that used by Cadbury", seemed "to assume one of the critical issues in the case". His Honour queried what was meant by "similar" in that context. His Honour then described the way in which Dr Gibbs addressed the question of similarity between colours and expressed the view that Dr Gibbs' evidence on the point seemed to amount to part speculation and part unnecessary intellectualisation of a simple question of consumer product comparison. His Honour concluded that the potential for time wasting cross-examination was "obvious". 73 However, one of the findings made in the proceeding by the primary judge was that Darrell Lea has, since at least Christmas 2000, used a purple colour "much like that used by Cadbury". That suggests that the assumption made by Dr Gibbs was in fact quite a reasonable one. In any event, even if there were a prospect of time wasting cross-examination, it would have been open to his Honour to prevent such cross-examination if there was no real issue concerning the similarity between the two shades of purple. 74 Section 135 calls for a balancing exercise. First it is necessary to consider the probative value of the opinion evidence in question. Next it is necessary to assess the danger that the evidence might cause or result in undue waste of time. Finally, the section requires determination of whether the former substantially outweighs the latter. 75 The opinions of Dr Gibbs in the section of his principal affidavit that dealt with Basic Principles and Background issues contained material that, if accepted, could have a significant bearing on a judge's understanding of consumer behaviour. Perhaps more significant would be his opinions on consumer information-processing errors. That evidence had some probative value within the meaning of s 135 of the Evidence Act. 76 In the present case, the balancing exercise that is called for by s 135 required an assessment of time that would be unduly wasted by the evidence of Dr Gibbs. The primary judge does not appear to have been asked to embark on any assessment of the time that might be taken by the disputed evidence, much less of the time that might be wasted by the disputed evidence. 77 Darrell Lea contended that admission of the disputed evidence may have added several weeks to the trial and would have been a huge burden on the parties. That contention, however, is not supported by the history of the proceeding. On 21 September 2005, the Court ordered, by consent, that the matter be set down for trial on questions of liability only, with an estimate of 20 days. That estimate was to be revised at a directions hearing on 7 February 2006. On 18 November 2005, the principal affidavits of Messrs Stavros and Riches were served. On 23 November 2005, the principal affidavit of Dr Gibbs was filed and served. On 1 February 2006, an affidavit by Mr John Robert Hall, in response to the disputed evidence, was filed and served by Darrell Lea. On 6 February 2006, the Court ordered, by consent, that the trial commence on 20 March 2006, with an estimate of 10 to 15 days. That estimate of necessity assumed that the Court might review the disputed evidence. There was no qualification on the estimate based on possible rejection of the disputed evidence. 78 That chronology was not the subject of any submission to the primary judge when his Honour was invited to exercise the discretion under s 135. It is not surprising, therefore, that his Honour made no specific finding as to the undue waste of time that might be saved by rejection of the disputed evidence of Dr Gibbs. A fortiori no finding was made in relation to any saving by rejection of the balance of the disputed evidence. Those factors would require consideration in relation to the evidence of Dr Gibbs as well as the evidence of Messrs Stavros and Riches.

[19]

The Primary Judge's Findings 79 Cadbury has operated in Australia since the 1920s. The Cadbury business both worldwide and in Australia has expanded through amalgamations over the decades. His Honour found that Cadbury is beyond doubt the dominant figure in the chocolate confectionary market in Australia and that its particular strength lies in moulded block chocolates, especially Cadbury Dairy Milk, which is Cadbury's flagship brand. It is available in different size blocks and also in other forms. Cadbury has many other chocolate products. 80 Cadbury also produces a number of chocolate confectionary products specifically for sale during traditional gift seasons such as Christmas and Easter. Those products include Easter eggs as well as seasonal assortment packages for Christmas stockings. 30% of all boxed chocolates are bought at Christmas, which is the largest chocolate giving season. Easter eggs make up 10% of all chocolate sales. 81 Cadbury's confectionary, and in particular its chocolate products, are primarily sold through retail outlets such as supermarkets, convenience stores, service stations, tobacconists, newsagents and milk bars. Cadbury chocolate products are also sold at fund raising and sporting events, cinemas, amusement parks and public vending machines. Subject to very minor exceptions, Cadbury does not sell its chocolate products from premises that are, or are seen to be, owned or occupied by Cadbury itself. In 1998, there were approximately 86,000 outlets selling Cadbury confectionary products in Australia. Cadbury has a large dedicated sales force responsible for ensuring that its products are available at retail level and displayed to maximum effect at point of sale. 82 Cadbury has used purple wrapping for its Dairy Milk product since the 1920s, with the exception of the period of the Second World War, when austerity measures limited supplies of paper of that colour. In 1992, Cadbury resolved to extend the use of purple from Dairy Milk, to the rest of the moulded block chocolate range. Up until that time, the moulded block chocolate range other than Dairy Milk used purple, if at all, only for the colour of the word "Cadbury". For very many years, Cadbury has used as its brand its name in a cursive script, apparently adopted from the signature of its founder. 83 From about the mid 1990s, Cadbury adopted policies that included using significantly more purple in the packaging of its block milk chocolate products other than Dairy Milk. In addition, Cadbury began to incorporate a direction to its retail distributors that its moulded chocolate range be displayed on shelves in such a way as to create a "purple bullseye", with Cadbury Dairy Milk in the centre, or focal point, of the layout. 84 In addition to packaging, a dark shade of purple has been used by Cadbury in point of sale material such as display units, dump bins and counter stands, in television, print, outdoor and cinema advertising, in promotional activities in uniforms, company vehicles, factories and offices, in manuals, reports, catalogues, stationery, letterheads and on the Cadbury website. On the other hand, the majority, of some 56%, of Cadbury's total sales for chocolate confectionary products is constituted by products that do not prominently feature, or are not promoted by reference to, the use of the dark purple shade. 85 His Honour made the following specific findings that might have been influenced by the evidence of Dr Gibbs: · There is a wide awareness amongst Australian consumers of the use by Cadbury of a dark purple colour in connection with the marketing, packaging and presentation of certain chocolate products, particularly Cadbury Dairy Milk, and other block milk chocolate products; · There is wide awareness amongst Australian consumers of the use by Cadbury of a dark purple colour as a corporate colour; · Cadbury's use of purple in marketing, advertising and promotion is, and is seen by consumers to be, inextricably bound up with the well known name "Cadbury" and its distinctive script. Cadbury never uses the colour purple in isolation as an indicium of trade; · Darrell Lea is a name well known in connection with chocolate in those parts of Australia where it operates, although not as well known as Cadbury; · The names Darrell Lea and Cadbury are quite distinct in sound and appearance and not likely to be mistaken for each other; · Darrell Lea has, since at latest Christmas 2000, used in its marketing, packaging, promotion and point of sale presentation a purple colour much like that used by Cadbury; · Colour recognition or attraction can play an important part in consumer decisions to purchase chocolate; · Consumer decisions to purchase chocolate are often made quickly and on impulse but not necessarily irrationally. 86 The primary judge ultimately found that Darrell Lea's use of purple was not likely to convey to reasonable consumers a representation that its products originated from, or were associated with, Cadbury. His Honour concluded that, while Cadbury and Darrell Lea are competitors in the retail chocolate market, they have distinctive product lines that are sold from different sorts of premises under distinctive trade names and have distinct identities in the market place. His Honour considered that, while there is a wide awareness amongst Australian consumers of the use by Cadbury of a dark purple colour, Cadbury does not own the colour purple and does not have an exclusive reputation in purple in connection with chocolate. Accordingly, Darrell Lea was entitled to use purple as long as it did not convey to the reasonable consumer the idea that it or its products have some connection with Cadbury.

[22]

Need For Exclusivity 93 Darrell Lea contended, relying on Reckitt and Colman Products Ltd v Borden Inc (1990) 17 IPR 1 at 7, that there are three elements that must be established by a claimant in a passing off action, as follows: · First, the claimant must establish a goodwill or reputation attached to the goods or services that he supplies in the mind of the purchasing public by association with the identifying get-up under which the claimant's particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive, specifically of the claimants goods or services. · Secondly, the claimant must demonstrate a misrepresentation by the alleged wrongdoer to the public, leading or likely to lead the public to believe that goods or services offered by the alleged wrongdoer are the goods or services of the claimant. · Thirdly, the claimant must demonstrate that it suffers or that it is likely to suffer damage by reason of the erroneous belief engendered by the alleged wrongdoer's misrepresentation that the source of the alleged wrongdoer's goods or services is the same as the source of those offered by the claimant. Darrell Lea says that the first element requires a finding of exclusivity in relation to the relevant get up, which, in this case, is the colour purple. 94 The primary judge found that Cadbury does not have an exclusive reputation in the use of the relevant purple colour in connection with chocolate. Indeed, other traders have, with Cadbury's knowledge, for many years used a similar shade of purple. Cadbury has not consistently enforced any alleged exclusive reputation. In relation to its chief competitor, Nestlé, Cadbury has permitted a use of purple in relation to popular chocolate products. Cadbury has made clear in its conduct of the appeal that, for the purposes of the appeal, it does not challenge the finding made by the primary judge that Cadbury does not have an exclusive reputation in the use of the dark purple colour in connection with chocolate. 95 It does not follow, however, that the same finding would be made at a new trial. The whole thrust of Cadbury's contention is that the disputed evidence could lead to a different conclusion. That is to say, the fact that others may have used purple in the market place does not necessarily lead to the conclusion that the products of those other persons are identified or distinguished by colour. All that Cadbury accepts is that the truncated evidence before the primary judge left open the finding made by his Honour. The fact that, on the basis of the truncated evidence, such a finding was open does not preclude the possibility that, at another hearing, with additional admissible evidence, a different conclusion would follow, even before the primary judge. 96 In any event, the principles relating to passing off do not necessarily require Cadbury to establish an exclusive reputation in relation to the use of the colour purple. More significantly, it certainly does not follow that there cannot be a contravention of the Trade Practices Act simply because Cadbury does not establish that it has an exclusive reputation in relation to the colour purple. The question is whether Cadbury can establish facts that demonstrate that a particular use by Darrell Lea of the colour purple is likely to mislead or deceive consumers into believing that there is some relevant connection between Darrell Lea and Cadbury or their respective products. 97 Both in the context of Part V of the Trade Practices Act and the common law tort of passing off, trade indicia other than names and logos can become associated with a particular trader, such that a use by another trader could give rise to misleading or deceptive conduct or passing off. If particular branding elements used by a trader have been identified in a special way with that trader in the minds of the members of the public, there may be misleading or deceptive conduct by reason of the appropriation of those particular branding elements by another trader. 98 There is an overlap between causes of action arising under Part V of the Trade Practices Act and the common law tort of passing off. However, the causes of action have distinct origins and the purposes and interests that both bodies of law primarily protect are contrasting. Passing off protects a right of property in business or goodwill whereas Part V is concerned with consumer protection. Part V is not restricted by common law principles relating to passing off and provides wider protection than passing off. 99 Whether or not there is a requirement for some exclusive reputation as an element in the common law tort of passing off, there is no such requirement in relation to Part V of the Trade Practices Act. The question is not whether an applicant has shown a sufficient reputation in a particular get-up or name. The question is whether the use of the particular get-up or name by an alleged wrongdoer in relation to his product is likely to mislead or deceive persons familiar with the claimant's product to believe that the two products are associated, having regard to the state of the knowledge of consumers in Australia of the claimant's product. 100 The Court could not conclude, simply by reason of the findings made by the primary judge, that there was no miscarriage of justice. If the evidence of Dr Gibbs and Messrs Stavros and Riches were to be accepted at face value, it would certainly be open to a Court to find that Darrell Lea's use of purple is likely to cause the consumer errors identified by Dr Gibbs. That could be sufficient to justify a conclusion that Darrell Lea had engaged in conduct that was likely to mislead or deceive.

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Weight of the Disputed Evidence 101 Darrell Lea also contended, in substance, that the disputed evidence would not make any difference because to the extent that it is admissible, it is of no weight at all. It is necessary to say something more about the admissibility of opinion evidence in general and the disputed evidence in particular. 102 The primary judge erred in rejecting the disputed evidence in its entirety. That is not to say, however, that there may not have been specific objections to parts of the disputed evidence that could have been taken and should have been upheld. Further, it may be that, on full consideration of the applicability of s 135 of the Evidence Act in relation to the whole of the disputed evidence, all of it would be rejected as involving an undue waste of time in the light of its probative value. 103 In the course of an unsuccessful application to the Full Court by Darrell Lea during the hearing of the appeal for the Court to fix a further time within which to file a notice of contention, senior counsel for Darrell Lea outlined specific objections to significant parts of the disputed evidence. One such objection was that the affidavits did not demonstrate that the opinions expressed by Dr Gibbs and Messrs Stravros and Riches were based upon their specialised knowledge, as required by s 79 of the Evidence Act. 104 All of Dr Gibbs' conclusions concerning consumer errors appear to be based on the proposition that, merely by using purple in the way described on the part of Darrell Lea, those errors are likely to result. While Dr Gibbs described in some detail what he meant by the four consumer errors, it is at least arguable that his affidavit does not clearly explain how the use by Darrell Lea of purple in the manner that he describes constitutes "use of Cadbury purple". Nor does Dr Gibbs provide any reasoning as to how the particular use of purple by Darrell Lea to which he refers is likely to give rise to the four consumer errors in question. 105 It is not appropriate for the Court, in the circumstances, to express any view about the objections. They were not the subject of argument before the primary judge. Nevertheless, it should not be thought that the Court is expressing any view concerning the admissibility of the disputed evidence, if appropriate specific objections were taken at a new trial. Parts of the disputed evidence may well be properly rejected on particular formal grounds, subject to the possible grant of leave to rectify formal defects. Nor should the Full Court be taken to be expressing any view as to the application of s 135 to the disputed evidence. 106 A Court should not act upon opinions, unless the prerequisites of s 79 are satisfied. It must be established, on the balance of probabilities, that the witness who gives an opinion has specialised knowledge, that the specialised knowledge is based on the witness' training, study or experience and that the opinion is wholly or substantially based on that specialised knowledge. Accordingly, there must be evidence explaining both how the opinion stated is said to rest on the specialised knowledge of the witness and how the specialised knowledge is based, wholly or substantially, on the witness' training, study or experience. 107 The evidence in chief of a witness giving opinion evidence must explain how the field of specialised knowledge possessed by the witness, by reason of training, study or experience, and on which the opinion is wholly or substantially based, applies to the facts established or assumed, so as to produce the opinion about which evidence is to be given. If those matters are not made explicit in chief, it would normally not be possible for the Court to make a judgment as to whether the prerequisites of s 79 have been satisfied and whether the evidence is in fact admissible. 108 Further, unless a witness states in his or her evidence in chief the grounds and reasoning that have led to the opinion, the opinion is valueless. Before the Court can assess the value of an opinion, it must know the facts on which it is based. If the opinion is based on irrelevant facts or facts that are clearly not going to be proved, the opinion is likely to be valueless. It should not be for a cross-examiner to endeavour to elicit the facts or assumptions upon which an opinion is expressed, and it would be unfair to leave such matters to the cross-examiner. Except in a straightforward, uncomplicated case, where the facts are admitted or otherwise readily identified, opinion evidence would normally be rejected under s 135 if the facts or assumptions upon which the opinion is based are not expressly stated. 109 It is for the Court to judge the reliability of, and the weight to be given to, particular evidence. Opinion evidence, like any other evidence, must be comprehensible and reach conclusions that are rationally based. The process of inference or reasoning that leads to conclusions ought to be stated or revealed in a way that enables the conclusions to be tested and a judgment to be made about their reliability and the weight that should be given to them. If not, the opinion evidence would normally be rejected under s 135. 110 The primary judge rejected the disputed evidence by the application of an incorrect principle. While, if proper objections were taken, the disputed evidence might be wholly inadmissible, it may be that such objections could be overcome by eliciting further evidence. It is clearly not appropriate for the Full Court to endeavour to consider what objections could properly have been taken and what objections would be upheld. Cadbury would be entitled to the opportunity of applying for leave to elicit further evidence to overcome such objections.

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COSTS 115 On 21 September 2005, with the consent of the parties, the primary judge directed that: · Cadbury's evidence in chief be filed by 18 November 2005; · Darrell Lea's evidence in chief be filed by 23 December 2005; · Cadbury's evidence in reply be filed by 20 January 2006; · the trial of the proceeding commence on 20 March 2006. Cadbury filed eight affidavits on 18 November 2005. However, Cadbury filed a further affidavit on 21 November 2005, four more on 23 November 2005 and another one on 1 December 2005. Four of those 14 affidavits were by experts. 116 On 23 December 2005, Darrell Lea's solicitors wrote to Cadbury's solicitors foreshadowing objection to parts of the experts' affidavits on the basis that those parts constituted commentary on consumer research reports carried out by third parties, which had not been proved. On 9 January 2006, Cadbury's solicitors replied, indicating that all parts of the affidavits would be relied upon. 117 On 28 February 2006, Cadbury filed a further five affidavits, four of which were effectively further evidence in chief. Between 1 and 15 March 2006, Cadbury filed a further 12 affidavits, all but one of which were effectively evidence in chief. On 17 March 2006, with the trial due to commence on the following Monday, Cadbury served additional volumes of the Court Book which included a further two affidavits. Most of that further affidavit evidence was directed to overcoming the objection foreshadowed in the letter of 23 December 2005. 118 In relation to the affidavits that were filed outside the time fixed by the primary judge, Darrell Lea incurred solicitors' costs and counsels' fees in reviewing those affidavits, preparing cross-examination and notices of objection and corresponding with Cadbury's solicitors. 119 Darrell Lea retained Mr John Hall to respond to the disputed evidence and filed an affidavit sworn by Mr Hall on 1 February 2006. Because the disputed evidence was excluded, Darrell Lea did not call Mr Hall at the trial. 120 The primary judge accepted that there are often legitimate reasons why exact compliance with directions is not possible. However, his Honour considered that there is a line beyond which non-compliance becomes acceptable and that that line had been well and truly crossed by Cadbury. His Honour considered that the Court's directions for the filing of evidence, fixed by consent well in advance of the trial date, had been treated with disdain by Cadbury and that the Court's disapproval should be reflected in the costs order made. His Honour therefore ordered Cadbury to pay, on an indemnity basis, Darrell Lea's costs of preparing to meet evidence not filed in accordance with the directions given on 21 September 2005, including the affidavit of Mr Hall. 121 Cadbury contended, in the appeal, that his Honour's discretion miscarried for two reasons. First, Cadbury contends that his Honour had failed to have proper regard to the uncontested evidence of Ms Natalie Jane Hickey explaining the delay in complying with the directions. In addition, Cadbury complained that the order of 6 July 2006 went too far in that it extended to all of Cadbury's evidence not filed in accordance with the directions, including evidence filed only one or two days late and which was not rejected for lateness. 122 Ms Hickey's explanation as to why the directions timetable was not adhered to was that Cadbury wished to rely on the evidence of Dr Gibbs and Messrs Stavros and Riches and that, to assist them in the formation of their respective opinions, each was provided with the various consumer research reports, which had been prepared for Cadbury over a period of years. Those documents were identified in some detail in Dr Gibbs' affidavit and in the other disputed evidence. 123 Ms Hickey said that the process of locating the deponents of those affidavits to prove the consumer research reports of Document Q and obtaining instructions for those affidavits was time consuming and laborious. Much of the research went back to the early 1990s and therefore, for the most part, it was not possible to obtain the assistance of Cadbury personnel who had originally commissioned the reports, since they had long since left Cadbury's employ. Some of the deponents were difficult to trace and others were located interstate or overseas. 124 Ms Hickey asserted that it could not be suggested by Darrell Lea that it had insufficient time to respond to the disputed evidence. In particular, Mr Hall had already commented on the affidavits that referred to the consumer research reports and there would have been no need to provide Mr Hall with the affidavits proving the consumer research reports. 125 Notwithstanding Ms Hickey's explanation for the delay, no attempt was made on behalf of Cadbury to seek an extension of time to comply with the directions. That was unfortunate. If there is good reason why a direction of the Court cannot be complied with, it is incumbent upon the party who cannot comply to approach the Court as soon as it becomes apparent that there may be difficulty in keeping to the timetable, so as to seek an appropriate extension. To fail to do so, without explanation for the failure, evidences a degree of disdain for the Court's orders. While Ms Hickey explained the delay, she offered no explanation for the failure to seek an extension. In the absence of any explanation as to why no application was made to vary the timetable, there was no error of principle on the part of the primary judge in deciding to make a special order for costs. 126 Cadbury complained, however, that the costs order extended to the affidavit of Mr Hall, which was prepared in response to Cadbury's opinion evidence and not in response to the affidavits proving the consumer research reports. To that extent, the order made by the primary judge was inappropriate. To the extent that his Honour rejected evidence that was filed late, the order was within his Honour's discretion. However, to the extent that, literally, the order extends to affidavit evidence that was not rejected on the grounds of lateness, it was inappropriate to make a special order in relation to the costs of those affidavits. 127 Mr Hall's evidence was to meet the evidence of Dr Gibbs and Messrs Stavros and Riches. But for the ruling as to the admissibility of that evidence, it is clear enough that Darrell Lea would have relied on Mr Hall's evidence. It was not correct to require Cadbury to bear, on an indemnity basis, the costs of preparing to meet the evidence of Dr Gibbs and Messrs Stavros' and Riches' material, simply because it was filed several days late.

Cadbury Schweppes Pty Ltd (ACN 004 551 473) v Darrell Lea Chocolate Shops Pty Ltd

At a glance

Court

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Judgment (31 paragraphs)

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Legislation Cited (4)

Cases Cited (5)

Cited By (22)