(b) Professor Layton
54In relation to the domestic products, the way the Plaintiffs argued the matter shifted somewhat from the first time Mr Dawson addressed me to the final position that was put. Initially the Plaintiffs accepted that proof of the domestic products claim involved "not simply moving forward with the case as it is presently articulated". They submitted that what would be sought would be that Professor Layton would be asked to prepare a supplementary report which would proceed on the basis that some but not all of the products had been found to be superior. Their fallback position was that, as far as the laundry and dishwashing products were concerned, there was other evidence (both material already in evidence at the trial, and also supplementary reports from Dr Smulders) which demonstrated the superiority of those products.
55However, when Mr Dawson came to address in what was supposed to be his submissions in reply to Mr Stitt he put forward two further bases upon which he said the superiority assumption was made out. What had been put earlier were, at this point, said to be fallback positions.
56Mr Dawson said that his principal approach was that I should simply readmit Professor Layton's evidence because of what Professor Layton said in his third report of 11 July 2012, prepared after he had seen the reports of the testing experts. Professor Layton said this at paragraph 9:
In my opinion the information contained in the documents listed in paragraph 13 provided by Drs Smulders, Fong, Richardt and Lai confirms the initial assumption noted in paragraph 5 above in regard to the laundry, dishwashing and household cleaning products. The information contained in the documents, provided by Drs Lai and Motitschke confirms a similar assumption of superior or equal performance in comparison with competing products in the toiletries, and cosmetics market. The expert Report provided by Mr. Ben Wheaton confirms that the higher concentrations, specialised packaging, and use of natural resources would have created substantial advantages in terms of reduced costs and increased margins. He went on to note that "the products contain strong environmental features and these would have contributed to increased sales, particularly from 2007 onwards." Taken as a whole, these Reports confirm the initial assumption contained in paragraph 5 above with respect to each of the four markets considered, and the conclusions reached in my first and supplementary reports remain unchanged.
57The Plaintiffs submitted that a rejection of that opinion "is getting very dangerously close to a credit finding".
58I disagree. The issue is not one of credit concerning Professor Layton's belief. The issue remains as being whether the testing evidence proved that the products were superior. That is for objective determination by the Court - not based on the belief of an expert who initially assumed its correctness. Professor Layton is a marketing expert, not a chemist. His third report simply confirms, contrary to the Plaintiffs' submission, that Professor Layton's opinion was given on the basis of the superiority assumption. That assumption has not been proved or supported by anything contained in this third report. He does not have the expertise to do that.
59The Plaintiffs accepted that, if I did not determine that Professor Layton's third report brought about the result that all of his reports should be readmitted (based on the submission that the third report affirmed the validity of the superiority assumption), the testing evidence did not demonstrate that the cleaning products were superior and that the superiority assumption could not be supported for that category of product.
60Mr Dawson's second basis for arguing that Professor Layton's reports (except that part dealing with the cleaning products) should be re-admitted was that Professor Layton had not made the superiority assumption in relation to dishwashing products and toiletries, and that there was other evidence to demonstrate the superiority of the laundry products.
61As far as the dishwashing products are concerned the Plaintiffs pointed to what appears in paragraph 142 of Professor Layton's first report where he said this:
While the cleaning superiority of the Proton Technology dishwashing detergent range would have been asserted in the marketing and advertising (Assumption no.2), in my opinion, it is likely that this would have been perceived by consumers as matching similar claims made by existing entrants.
Mr Dawson submitted that Professor Layton was testing the receipt of the dishwashing products by the way they were perceived by consumers and not by virtue of any assumption of superiority.
62Attention was also drawn to part of paragraph 143 which said:
Assuming that the Proton Technology product would have offered one or more significant consumer benefits compared to Finish and Morning Fresh, possibly in effectiveness (Assumption no.2), convenience, safety or environmental concerns (Domestic Business Plan p8), in my opinion, Proton Technology with continued advertising and promotional support might have achieved around 10% of the concentrated powder tablet market, falling to 6% after one or two years, or around 2% initially falling to 1.2% of the total market.
63It seems likely that "Assumption no.2" is what is contained in paragraph 20 of his report because it is the second of the assumptions that Professor Layton sets out and it was the second assumption he was instructed to make. Paragraph 20 reads:
The chemical composition of the products in the Product List was such that the products were superior at cleaning the goods to which they were applied when compared with products with which they would have been in competition in 2001.
64However, the perception by consumers says nothing about whether the products were, in fact, superior or not as the case may be. Professor Layton made it clear (paragraph 20) that he made the superiority assumption. If there were any doubt that he may have been modifying that assumption by what appears in paragraph 142 he reaffirmed the assumption expressly in relation to dishwashing products in his third report. At paragraph 5 he set out the assumption as follows:
The chemical composition of the laundry, dishwashing and household cleaner products in the Product List was such that the products were superior at cleaning the goods to which they were applied when compared with products with which they would have been in competition in 2001. (emphasis added)
65I have set out at [56] above Professor Layton's general conclusion in this third report. In addition he said this in paragraph 13 headed Dishwashing products:
Taken as a whole these findings support the initial assumption that I was asked to make in paragraph 5 above. Timing would have been critical as noted in my first report in paragraphs 142 and 143 as the innovative technologies envisaged by Proton Technology entered the marketing (sic) 2001 and later.
66That paragraph makes clear that paragraphs 142 and 143 were concerned with timing. It is also the case, of course, that Proton would not have been able (legally) to make the superiority claims in marketing and advertising unless they were true. That reinforces the view that Professor Layton was indeed proceeding on the superiority assumption in paragraphs 142 and 143.
67The position with regard to toiletries is not so clear. Professor Layton dealt with toiletries in his second report of 4 August 2006. Under the heading "ASSUMPTIONS" he said this:
4. With the letters of instructions, you provided me with a number of assumptions that I am to assume as facts for the purposes of this Report. I have also made a number of my own assumptions in undertaking the analysis and reaching my conclusions and opinions set out in this Report. Where these assumptions are in addition to those set out in the letters of instructions, I have stated these assumptions at the relevant points in this Report.
The assumptions provided with the letters of instructions and upon which I rely in this Report are set out below. The assumptions relate to the following product category:
Toiletry and cosmetics (liquid hand soap, shampoo, conditioner, shower gel and skin care products).
5. Proton Technology's new toiletries and cosmetics products are the toiletries and cosmetics range of products listed on pages 6, 7 and 8 of the March 1999 "New domestic enzyme products" product list ("Product List").
6. The launch of the toiletries and cosmetics products in the Product List would have followed the launch of the laundry, dishwashing and household cleaning products.
7. The toiletries and cosmetics products would be sold through retail grocery (supermarket) and pharmaceutical outlets throughout Australia.
8. There would have been sufficient production facilities and supplies of raw materials to produce the toiletries and cosmetics products and production of sufficient volumes of those products to meet anticipated sales.
9. The toiletry and cosmetics products would be priced so as to fall within a premium price range, but remain ''-competitive" with main competitors in that premium price range.
68It is necessary, at this point, to say something about the history of the instructions provided to Professor Layton. He was first engaged by Malleson Stephen Jacques. His instructions were contained in a letter dated 10 February 2005. He was asked to express his opinion in respect of the following question:
Taking into account the enclosed factual assumptions and other materials you consider relevant, what is your opinion of the likely annual sales volume and/or, if possible, the equivalent market share (in percentage terms) that probably would have been achieved by Proton had it proceeded with its proposed domestic product launch, in the following categories:
(a) laundry (liquids, powders, tablets, capsules);
(b) kitchen products (concentrated dishwashing - hand and
machine, oven cleaner);
(c) household general (concentrated window cleaner, concentrated surface cleaners)
69Annexed to the letter of instructions was a document entitled "ASSUMPTIONS TO BE MADE BY PROFESSOR R LAYTON". That document relevantly read:
The assumptions relate to the following product categories:
· laundry products (liquids, powders, capsules, tablets, fabric softener)
· kitchen products (concentrated dishwashing (hand and machine), oven cleaners)
· general household cleaning products (concentrated surface cleaners, window cleaners)
Assumptions
1 By March 1999 Proton Technology had developed a new product range which were listed in the enclosed March 1999 "New domestic enzyme products" product list ("Product List").
2. The chemical composition of the products in the Product List was such that the products were superior at cleaning the goods to which they were applied when compared with products with which they would have been in competition in 2001.
...
70I have not set out all of the assumptions Professor Layton was asked to make but I note that they consisted of nine paragraphs. Those assumptions were set out in Professor Layton's first report in paragraphs 19 to 25. In some cases he has modified the wording of the assumptions but assumption 2 in the above extract was reproduced precisely as paragraph 20 in his first report. It may be noted that the assumptions were said to relate to the three categories of laundry products, kitchen products and general household cleaning products.
71Subsequently the Plaintiffs instructed Sarvaas Ciappara. On 16 August 2005 they wrote to Professor Layton referring to his engagement by Mallesons. The letter went on to say:
Would you please also provide the requested opinion in respect of the following additional category of products:
(d) Toiletry and cosmetics (liquid hand soap, shampoo, conditioner, shower gel and skincare products).
...
We remind you of the Expert Witness Code of Conduct previously provided to you. In particular, if you rely on any facts, matters or assumptions informing your opinion, please ensure that these are clearly stated in your report. (emphasis added)
The "requested opinion" was that set out in [68] above which took account of the assumptions provided to him with that letter.
72Subsequently, Sarvaas Ciappara sent a further letter to Professor Layton on 10 January 2006. This letter was not available to me at the hearing of the Defendant's August s 192A application nor was it put into evidence until the third day of hearing of the present Motions. Mr Stitt QC said, and I accept unreservedly, that this letter had never before been produced to the Defendant's lawyers in the matter.
73The letter relevantly said this:
We refer to our letter dated 16 August 2005 which requests your opinion of the likely annual sales, volume and/or, if possible, the equivalent market share (in percentage terms) that probably would have been achieved by Proton Technology had it proceeded with its proposed domestic product launch in respect of the additional category pf products, being the toiletry and cosmetics (liquid hand soap, shampoo, conditioner, shower gel and skin care products) category.
In providing your opinion, please make the following assumptions regarding the toiletry and cosmetics product category:
1. The new products are the toiletries, arid cosmetics range: of products listed on pages 6, 7 and 8, of the enclosed document entitled "New domestic enzyme products" dated March 1999.
2. The launch, of the toiletries and cosmetics products in the Product List would have followed the launch of the laundry, dishwashing and household cleaning products.
3. The toiletries and cosmetics products would be sold through retail grocery (supermarket) and pharmaceutical outlets throughout Australia.
4. There would have been sufficient production and distribution facilities and supplies of raw materials to produce the toiletries arid cosmetics products and production of sufficient volumes of those products to meet anticipated sales.
5. The toiletry and cosmetics products would be priced so as to fall within a premium price range, but remain competitive with main competitors in the premium price range.
74The letter was never annexed to the second report of Professor Layton as the letter of 16 August 2005 had been.
75It can been seen that paragraphs 5 to 9 in the second report reproduce exactly the five assumptions set out in the letter of 10 January 2006 ([67] above).
76The Plaintiffs submitted that nowhere in this report does Professor Layton set out the superiority assumption.
77It may be accepted that what appears in paragraph 4 of this second report ([67] above) is ambiguous. First of all Professor Layton refers to the letters of instructions containing assumptions. The letter of 16 August 2005 from Sarvaas Ciappara asked him to prepare "the requested opinion" in relation to the fourth category (toiletries and cosmetics) and made reference to the letter of Mallesons which annexed assumptions including the superiority assumption.
78Then Professor Layton makes a distinction between assumptions given to him and his own assumptions and says:
Where these assumptions are in addition to those set out in the letters of instructions, I have stated these assumptions at the relevant points in this report.
Somewhat inconsistently he then says:
The assumptions provided with the letters of instructions and upon which I rely in this report are set out below
and he then goes on to set out only the five assumptions contained in the letter of 10 January 2006.
79The Plaintiffs pointed to that last statement and to the setting out of the five assumptions from the 10 January 2006 letter to submit that the superiority assumption was not made by Professor Layton when preparing this report. However, Professor Layton's conclusion in his third report ([56] above) makes it clear that he did make the superiority assumption in relation to the toiletries and cosmetic products. This is reinforced by the letter of instructions for this third report which, having noted the earlier report and the testing reports received, said this:
3.4 Accordingly, you are briefed to provide a Supplementary Expert Report that revisits the findings of your report in light of the Further Expert Reports and confirms whether the assumptions that you originally relied on are valid or invalid. Once this is done, you are then briefed to assess whether the findings of your existing Expert Reports have changed or not, in light of your findings as to the assumptions.
80Professor Layton then provided the conclusion ([56] above) and, in relation to toiletries and cosmetic products, the conclusion is further reinforced by paragraph 15 in that third report headed "Toiletries and Cosmetics" where Professor Layton says this:
Dr Motitschke agrees [with Dr Lai], noting that the ingredients are still used today, and the proposed formulations will have been premium products in 1999. In my view the assessments noted above confirm the validity of the assumption made in paragraph 5 above [the superiority assumption] and I do not wish to change my findings regarding overall sales and share.
81The Plaintiffs submitted that that statement of Professor Layton's was made in error because paragraph 5 does not in terms refer to the toiletries and cosmetics. I do not agree that Professor Layton has made an error in that regard particularly in the context of his references to Dr Lai's and Dr Motitschke's findings and in the light of what appears in paragraph 9 of the third report. In my opinion Professor Layton made the superiority assumption in respect of the toiletries.
82The Plaintiffs' third basis for the re-admission of Professor Layton's reports in relation to the laundry products, the dishwashing products and the toiletries was that there was existing evidence that validated the superiority assumption. That testing evidence was largely from Mr Chaina as found in exhibits 102 and 103 but also included testing by CIBA, AAFS testing and Clariant testing.