There's no evidence of any oral annual or biannual presentation or promotion to any buyer, and the opportunity your Honour gave in re-examination of Mr Botham to produce the very sort of evidence about which we now complain, we say, by itself demonstrates the breach because it's not there... but we have the great benefit of the standards set by both Mr Botham himself and Mr Spark, and according to both of their versions of the evidence, written material was a part of it because one needed a program and one needed a written presentation."
[Transcript 298 - 12 April 2002]
135 In my view the probabilities favour accepting the submission. I find accordingly. Whilst the plaintiff certainly bears the onus of proof in relation to this issue, in my view the evidence concerning what I find to have been a failure in the second defendant to forward the promotional program and schedule sought in the plaintiff's letters of 15 June and 27 June 2000, meant that the plaintiff had discharged its primary evidentiary onus and that an evidentiary onus now descended upon the defendants to prove that any promotional program in fact existed. That evidential onus was not discharged. And in any event outside altogether of any questions of onus, I simply do not accept that there is any reliable evidence before the Court of a promotional program having existed and been attended to during the first half of the year 2000. That was the period during which the defendants were carrying out active steps preparatory to passing off their product for that of the plaintiff and, in relation to Coles, were deliberately about appropriating for the second defendant, the Coles market. A market which, as licensee under the licensing agreement, the second defendant had promised to do all that it reasonably could to secure for the plaintiff.
136 In terms of the Agreed Statement of Issues:
· The answer to questions 6 (a) and (b) and 7 are in the affirmative;
· The answer to question 8 is in the negative.
The Coles GST blackout
137 The defendants in submissions strongly contended that the court should accept as reliable the evidence given by Mr Botham in paragraph 28 of his affidavit of 26 November 2001 to the effect that on 9 March 2000 he met with Mr McLeod and informed him of the GST blackout which was soon to take place, that Coles would be closing their computer system in preparation for GST and that it would be necessary for Mr McLeod/the plaintiff to get information to Coles about the change of supply from the first defendant to the plaintiff. On his evidence Mr McLeod had said that he would look into this. Mr McLeod denied that any comment was made by Mr Botham on any such occasion regarding the GST blackout. In my view Mr McLeod's evidence should be regarded as reliable in terms of this inconsistency.
138 IMM had in early 2000, in its capacity as distributor of products otherwise than Thrifty Cat, received from Coles notification of the GST blackout which Coles was to introduce for a few months in the approach to the 1 July 2000 implementation of GST into Australia.
139 An issue therefore arises as to whether or not there was an obligation upon the licensee to communicate with Coles in terms of the information which Coles had sought to be furnished to it before the commencement of the GST blackout. My view is that there was such an obligation. It was not discharged. The matter is not however, as it seems to me, of the type of significance which the defendants sought to attach to it during submission. The defendants submitted that the real explanation for the problem which the plaintiff faced with respect to Coles was its failure to furnish the necessary information to Coles before the commencement of the GST blackout. This is essentially a causation issue. It is misconceived on the facts in terms of my findings. And this by reason of what appears from a close examination of the materials admitted into evidence in relation to the GST blackout. On that evidence the Coles GST blackout period was not a period in which no orders could be placed. All that the relevant materials [Exhibit PX 1 page 273, page 270] upon a careful reading disclose is that the blackout period, comprised a prohibition of changes in costs of products or changes to products themselves and presumably also of changing the identity of the supplier of a product. The material amounts to the circumstance that if there was no change in the GST and no relevant form was completed, costs would not be permitted to be altered. In no way, shape or form did the UBF forms affect the ability of Coles to receive orders and to supply them at existing costs as long as the cost structure and precise product did not alter. Mr Wood usefully read onto the transcript certain of the passages in the materials which emanated from Coles which are difficult to read in the exhibit because of the size of the font. Using the transcript:
Page 273 of exhibit PX 1
"This is to confirm that there will be no cost changes to GHPL or Coles Myer supermarket businesses on the following products between 31 March 2000 and 10 July 2000."
[I interpolate that this simply conveys that a supplier is obliged to undertake to Coles not to change costs.]
Page 270 of exhibit PX 1
"GSD Product Details
Product cost changes effective 1 July 2000 should be sent to the merchandise department no later than 31 March 2000. We will require confirmation of all costs, even if you do not plan to change them. Cost details should also include any non-promotional deals (e.g., temporary cost reduction). Failure to obtain this information could cause us to be in breach of ACCC guidelines and the legislative requirements. It would be expected that prices would decrease by at least the value of any sales tax currently included. The GST rate applicable to each of your products is also required at the same time as you notify us of the costs. It will be your responsibility to correctly classify your products and charge the appropriate GST rate. Where you plan to change your costs, the information requested should be provided on the new universal buying form (UBF). Where there will be no cost change, the attached form is to be used to confirm GST rates for your product range. Supermarkets currently have approximately 500,000 costs for products within their systems, along with 4 million sale prices. This information will take some time to adjust the GST and update our stores. Once these updates commence, our systems will not be able to take into account cost and other product changes that may take place. Therefore, we will not be in a position to accept any cost changes, whether GST related or not, from 31 March 2000 to 10 July 2000. The introduction of new lines and range reviews will also be severely restricted during this time. Suppliers are requested to take this into account when planning such activity around this time. These restrictions will not apply to perishable products subject to fluctuating market prices."
140 On my findings there was no particular difficulty in either of the defendants furnishing the relevant information to Coles for the simple reason that the identity of the plaintiff was, on Mr Sparks evidence, a matter of no relevance to Coles. The identified supplier was the first defendant and the bar coding system was particular to the supplier. Whilst it is true that the new bar codes for the product to be in use following the end of the licence agreement required to be communicated to Coles and that this, on the evidence, could only have taken place by IMM or the plaintiff after early July, this is a far cry from the proposition that no orders could be placed by Coles to the defendants for product between March and the end of June or that no supply to fill such orders would be permitted in the absence of the completion of the UBF forms. The defendants' central submission in relation to the Coles GST circumstance is rejected on the facts.