Mr Dorber
118 In one sense, the most important witness in relation to the claim for breach of contract was Mr Dorber. His background, for someone in the position of Managing Director of AWI, was unusual. From 1971 to 1985, he was a member of the New South Wales police force, having achieved the rank of Senior Constable. He was subsequently appointed Executive Director of the New South Wales Forest Products Association Limited, and was employed by that organisation for twelve years. He had also been elected Secretary/Treasurer of the Timber Trade Industrial Association from 1989 until 2001. During that time, he had been responsible for staffing matters and industrial relations. He had no scientific training, and it would seem no tertiary qualifications, but plainly had high-level management skills.
119 Mr Dorber was appointed Managing Director of AWI in January 2001, and remained in that position for almost two years, until December 2002. He obviously found it to be a difficult working environment. Mr Dorber was keen on technology and development. However, many woolgrowers resisted change, and wanted to follow traditional practices. The clash of cultures finally came to a head in November 2002, when the existing Board was removed at the Annual General Meeting. It was replaced by a new Board consisting of representatives of bodies like the National Farmers Federation, who were unhappy with the way in which AWI had been run.
120 Mr Dorber was strongly resentful when his employment at AWI was terminated. He was, at one time, the subject of a Senate Committee investigation. Serious allegations regarding his financial probity were made, though he complained that those allegations were never put directly to him. They arose out of the employment of his son and daughter at AWI. Each had worked for about a year before being terminated in November 2002. Mr Dorber had authorised termination payments for them totalling $130,000. His son was twenty-two years of age at the time, and his daughter just eighteen.
121 Mr Dorber said that these allegations had been fully investigated, and that he had been cleared. He claimed that the payments had been made upon advice. Nonetheless, they had been given wide publicity through the media as part of what Mr Dorber described as "a political campaign" against both him and the previous Board. Clearly, he had every reason to feel bitter about his treatment. He would hardly be expected to go out of his way to support the current Board. Although he was apparently a willing witness for AWI, I would not regard him as being "within its camp".
122 Mr Dorber accepted that he had been responsible for the Imaginate proposal. The code applied to that proposal was "MD71", indicating that it was a "Managing Director file". Ultimate responsibility lay with the Board of AWI as his particular delegation was limited to approving projects to a value of $2 million, and Imaginate far exceeded this.
123 Mr Dorber said that he regarded an on-farm fibre measurement device as potentially being an important advancement for the wool industry in Australia. He had been keen to progress the proposal. On 2 August 2002, he asked Dr Swan to provide a scientific evaluation, and he had considered Dr Swan's report to be extremely positive. Mr Dorber had also sought informal advice from people outside the company. He said:
"There were two classes of advice. The scientists and the technical experts to whom I spoke all believed that the adoption of technology and the direction generally outlined to them appeared to be long overdue, and then there were woolgrowers who were a little less enthusiastic because they felt that they had seen technology attempts come and go, and many dollars had gone into a bottomless pit. So that was really the view. But the people who ought to know in terms of technology and science were very supportive."
124 Mr Dorber also spoke to other members of the AWI Board at this time. They gave him "preliminary in-principle approval" to continue discussions regarding this proposal.
125 Mr Dorber said that the letter that he had sent to the applicants, Dr Buzzi and Mr Mercuri on 6 August 2002 had been prepared by him in consultation with an internal staff lawyer employed by AWI. The transcript of his evidence records the following:
"This letter of 6 August, as you've already agreed, was that memorandum of understanding?---Yes.
So this letter you sent with the intention that these men would act upon it to "commence this process", didn't you?---Yes.
I suggest to you that the very first step in these men "commencing this process" was that they would have to give notice to leave their employment at Amcor?
---I think that's a reasonable inference, yes.
Thank you. You expected that that's what they would do when they got and signed this letter, didn't you?---No, actually I didn't.
Did you not turn your mind to it?---I had turned my mind to it, yes.
You accept now that it's a reasonable inference to draw?---Yes.
It doesn't surprise you that at least one them did in fact give notice to Amcor immediately on receiving this letter and signing it?---I'm not aware of that.
You weren't aware of it?---No.
You don't suggest that that was an unreasonable thing for that man to do, do you, from the answers you've just given his Honour?---I wouldn't have done it.
Now could you answer my question? You don't suggest it was an unreasonable thing to do, do you?---Not by whichever one of the two it was, no."
126 Mr Dorber was asked whether, at the time this letter was written, he was confident that the Board would approve the proposal. He said:
"At that point in time I had absolutely no doubt that it would be approved."
127 He went on to say, in answer to a question from me, that he gave the applicants "every encouragement" to believe that the Board's approval would be a "formality", as indeed it ultimately was.
128 Mr Dorber said that he had always considered the idea of a hand-held device that could measure wool fibre to represent a very significant milestone for the wool industry, particularly if it could be marketed for about $2,000. He believed that woolgrowers would have bought such a device in significant numbers. He recognised that the mindset of the buyers would have to be changed in order to achieve that objective. In his own words:
"There's a passionate desire worldwide in the wool industry that they must be able to feel, see and almost smell the product. It's one of the things I learnt very quickly was that change was something that was very long term, and that the end users were very, very determined to ensure that they maintained control from the point of acquiring the wool. They're absolutely fixated on this 1000-year old history of actually touching and visually inspecting the product.
MR GUNST: We're agreed, I think, that if this culture of touching and feeling could be overcome, the method that I've just described here would have great advantages for woolgrowers?---Absolutely.
There'd be a lot of brokers who'd be out of a job, but the woolgrowers themselves would be the beneficiaries, wouldn't they?---I've always thought that's why I don't have a job there now."
129 Mr Dorber's evidence regarding the meeting with the applicants on 27 August 2002 was particularly illuminating. Referring to the handwritten notes of that meeting prepared by Ms Robinson, he said:
"The meeting was agreed that this project should go ahead in the manner set out here on page 2?---Yes, absolutely.
It was agreed that the proposed structure of the company would have a set out of model articles?---Yes.
There was nothing unusual about the company that you proposed, it just had to have a model standard set of articles of association?---I actually tabled a set.
It was then agreed who the board would be, and the members' names are set out?---Yes, it was agreed at that time. There were some discussions that took place later in the day, but that was agreed at that time.
It was agreed that the company would be called Imaginate Pty Ltd; it was agreed in 2.4 that Ian McDonald would be the chief executive officer, Russell Allan would be the senior research scientist, there would be two PhD students to act as assistants, and so on?---Yes.
All of those things were proposed by you and agreed by your project team and recorded in these minutes when they were prepared?---Yes, and my proposals arose from the work that the project team had done, amongst other things.
Over the page, on page 3, it was agreed in this meeting that 18 per cent equity would be offered, increasing to 30 per cent at the end of three years, subject to two successfully commercialised technologies, and it was up to Messrs Macdonald and Russell - Russell Allan, presumably you mean there. Is that right? You say it will be up to Messrs Macdonald and Russell?---Well, I didn't prepare these minutes, but yes, I'm sure that's what it was intended to say.
So where the minutes say it would be up to Messrs Macdonald and Russell as to how the equity is split, you mean what was agreed was that it was up to the applicants in these cases - Macdonald and Allan - as to how that equity would be split?---Yes.
You then provide a recap to this meeting of the original proposal for funding, and it was agreed by your project team that it would be recommended to the AWI board that funding of $1.75 million per annum for three years, with a full review halfway through year three would be provided to this new AWI subsidiary?---Yes.
It was agreed that the company would look at a shared location in Mt Waverley?---Yes.
Now, that's your meeting at 9 o'clock on this day, for about half an hour or so?---Yes.
You then have a break, as you've said, for a document to be written out that you use in the meeting that was scheduled to take place later in the morning with Messrs Macdonald and Allan?---This document.
I see, thank you. So you had this document, these minutes of meeting, at the time Mr Macdonald and Mr Allan came in at about 10.30?---I did.
Ms Robinson has given evidence to his Honour already, and she says that the total of the meeting, which she says started about mid-morning with Macdonald and Allan, went for about half an hour in a discussion, then there was a break where they went downstairs to talk amongst themselves for about half an hour, and then the meeting reconvened for about 15 minutes, she said. Would that accord with your recollection?---Yes."
130 Under cross-examination, Mr Dorber agreed that it was always understood that the Imaginate project would involve the creation of an AWI subsidiary. It was never contemplated that the various research projects would be farmed out to some external research team. There was no mention of Amcor in the minutes of the meeting of 27 August 2002. By that stage, it was clear that Amcor's R&T department would have no direct role to play in the project.
131 With regard to the discussion regarding salaries, Mr Dorber's evidence was as follows:
"MR GUNST: It would be fair to say that you put to these men in a firm tone the 250,000 that they were asking for was too much or over the top or not on?
---I spoke courteously and firmly to them. I didn't see it as the number one major crisis issue of the whole project. I was in no doubt what the outcome would be.
HIS HONOUR: What does that mean?---Well, I knew that the project was so important to them and us that the question of 10, 20, 30 thousand dollars here or there was unlikely to be the key issue, particularly when I had included a comment to the effect that of course the final package would be a matter for the Imaginate board. I had always made clear that once the company was established AWI would make a formal submission to its new board, knowing that we would be the majority of that new board. That formal submission would then become the basis of Imaginate's activities and would include, amongst other things, our opinion about how much of the total funds we were advancing would be set aside for salaries and wages.
In your mind when the figure of $220,000 was proffered as an alternative to 250,000 were you committed to recommending to the Imaginate board that that figure be accepted?---If they had come back and said something else I wouldn't have died in the ditch over it. But they just came back and accepted it.
So it was your intent at that time to have AWI representatives on the Imaginate board approve a $220,000 package figure?---Definitely."
132 It is important to note that, so far as Mr Dorber was concerned, there was no problem with the three-year contract component of what the applicants had been seeking in their letter of 7 July 2002. Imaginate was always a three-year project. Mr Dorber continued:
"What was agreed between you on this day was that they would come and work for this new AWI subsidiary for three years at a salary of $220,000 per year?
---Subject to the management and control of the Imaginate board.
And subject of course to approval of this by the board of AWI at its next meeting?---Yes.
Subject to the approval of the AWI board, you regarded AWI as bound by an agreement to that effect on that day, didn't you?---Yes. Had I remained there I would not have resiled from those arrangements. I certainly saw them as me speaking, subject to board approval, with the authority of the board.
We know for a fact that the AWI board did approve this project, as you've told his Honour yesterday?---Yes.
Unanimously with one abstention of the chairwoman because she knew Mr Macdonald personally?---Yes. After they had asked two questions.
That was something you'd - that is, the AWI board's approval was something that you had been confident of from a much earlier stage, as you told his Honour yesterday?---Yes.
It's right to say, isn't it, Mr Dorber, that once you had reached agreement with these men on 27 August 2002 and once the AWI board had approved what had been agreed on 27 August, that there was a verbal agreement between the parties which was conclusive in your view?---Conclusive as to the matters raised, yes.
That there would be a subsidiary set up?---Yes.
Called Imaginate Pty Ltd if that name could be had?---Yes.
But otherwise, nonetheless a subsidiary set up?---Yes.
In which AWI would own 82 per cent and these two men would own 18 per cent between them?---Yes.
And that AWI would invest $1.75 million per year for three years into that company?---Subject to the mid-term full review, yes.
Thank you, and that these two men would be employed by that company for that three-year period at $220,000 per year each?---Subject to the continuing approval of the Imaginate board, yes."
133 Mr Dorber continued:
"MR GUNST: Mr Dorber, just to be specific about this, it was your view after the 27 August, of 2002, meeting and that once what had been agreed in that meeting had been approved by the AWI board, that there was an agreement between AWI and Mr Macdonald and Mr Allan, which was concluded?
---Subject to all the necessary legal steps, yes.
Was there any mention in the meeting of legal documentation?---I had brought with me the constitution and shareholder agreement for an AWI subsidiary called Shear Express Pty Ltd, and I had made it clear that Allens and Robinson - I think they were called - were to be appointed and they would work to bring about a similar constitution and shareholder agreement for Imaginate. I'd alluded to it previously, but I made it very clear on that day that that was the model that we were using.
So far as Mr Macdonald and Mr Allan were concerned, after 27 August 2002, so far as their three-year employment at 220,000 a year was concerned, you were no longer in a negotiation phase, were you?---No.
You'd reached agreement with them about that on the day, subject only to the approval of the AWI board?---And the Imaginate board, yes.
Well, let me put this to you. I suggest to you that it is your view that there was a verbal agreement in place which was conclusive at this time?---To the extent that I have the authority to make it, yes.
And subject to the approval of the AWI, you did have authority to make it, did you not?---I did.
You also had the view that if you had remained in charge - that is, if you had remained as managing director - this project would have continued?---Yes.
Indeed, you've said as much to the applicant's solicitor in this case, on Friday 7 May of this year, haven't you?---I don't recall the date, but I know he asked me that question when he indicated I was to be subpoenaed.
Do you remember ringing the applicant's solicitor, Mr Fernandino Zito on the afternoon of Friday 7 May 2004?---I can't recall who rang who. I recall - I don't know how many times we'd spoken. The first time I spoke, I think was on a weekend, I thought. But I certainly remember a conversation with him.
I'll put to you two telephone conversations separated by five or ten minutes on the Friday afternoon, 7 May 2004. Does that sound right?---Yes.
I suggest to you that in that conversation Mr Zito - who is sitting here - asked you about whether there was a contract in place and you said, "Yes, of course I am" - in relation to a question, whether you are referring to verbal or written contracts - "Yes, of course I am, because as far as I'm concerned there was a verbal agreement which was conclusive." Do you recall saying that to Mr Zito on the afternoon of Friday 7 May 2004?---I do.
And that was true, when you said it. That was your belief?---It was stating the truth.
Mr Zito also tells me that Mr Dorber also said that if you were asked, "Had you remained in charge, would the project have continued?" you would have answered, "Yes."?---Yes. I've told anyone who has asked me that question repeatedly that answer.
Thank you. What you've said, so far as these men and their three-year employment at 220,000 per annum was concerned, there was a concluded deal on 27 August 2002, subject only to the approval of the AWI board and subject to the Imaginate board so agreeing?---Yes.
And that as AWI was, and would always be, the majority owner of Imaginate, that that permission - the permission of the Imaginate board - would have been forthcoming?---Yes.
You've said that if, for example, these men had come forward and said, "Well, we'd like a car", there might have been some mutually agreed variation to their salary package?---It would never have been discussed with me. I'd made it clear that once Imaginate was established, Imaginate ran its business."
134 With regard to the email sent by Mr Allan to Ms Robinson on 28 August 2002, and Mr Dorber's email to Ms McCaskill the following day, Mr Dorber said:
"If you go back to your email to your chairman, where you say, "Pushing the envelope is always interesting," you then say, "We can satisfactorily address all these issues." Now, those issues must, I suggest, be a reference to the issues that Allan and Macdonald have raised in their letter?---You're right, I think that's reasonable, yes.
So it's fair to say, isn't it, that ‑ ‑ ‑?---I've hit the forward button, made a comment and sent it on. I think that's what it's fair to say.
It would be fair to say that all of the issues in that three-page letter from Macdonald and Allan were issues that you, as you told your chairman, could satisfactorily address?---Yes.
They were details to be addressed?---Yes.
Can I take you to the last page of this email, please? This is the last part of the Macdonald and Allan letter to you. Do you see paragraph 8?---Yes.
Contractual Obligations is the heading?---Yes.
Do you see on the second line there's a sentence - the last sentence - that reads, "It is our understanding that upon approval at the forthcoming board meeting, the three principals of Imaginate will have a firm three-year contract at the agreed remuneration levels"?---Yes.
That was the view they expressed in this letter?---Yes.
And that was your view?---Yes.
The agreed remuneration levels for Mr Macdonald and Mr Allan were 220,000 a year for three years?---Yes."
135 It can be seen that Mr Dorber repeatedly acknowledged that, as far as he was concerned, AWI had reached a concluded agreement with the applicants on 27 August 2002 as to how Imaginate would be structured and operated. There was "no doubt" in his mind that it had been agreed with the applicants that they would be paid $220,000 per annum for three years. He had conveyed that fact to the Board of AWI, and it was the truth. He attended the Board meeting on 16 September 2002, and participated in its decision to adopt each of the recommendations put before it regarding this project.
136 Mr Dorber acknowledged that he had telephoned Mr Macdonald the following morning. His evidence regarding that conversation was as follows:
"You told him the project was approved?---Yes.
And that in essence, you wanted him and Mr Allan to get on with it as soon as possible?---Yes.
There was no impediment to them starting employment?---I told them to speak to Ms Robinson about all of the legal issues, but certainly, as far as I was concerned, both in my mind and in reality, all systems were go."
137 Mr Dorber generally accepted Mr Macdonald's account of their conversation. His evidence was as follows:
"Just pardon me for a moment. When you rang Mr Macdonald on the morning of 17 September 2002, do you recall exactly what you said to him?---No.
He's given evidence to his Honour that you said, "The board has agreed to the proposal and has agreed to your employment unanimously. It only took them five minutes. How long will it take you to finish up your employment at Amcor"?---I think that sounds pretty consistent. I don't remember asking him when he was going to finish with Amcor, because that really was of little concern to me; the decision had been taken. But I certainly told him it had been dealt with, and I know I told him it had taken over five minutes.
He then goes in his evidence - this is paragraph 35 of the Macdonald affidavit, your Honour.
He says that he replied to you, "I think I can get clear by the end of the month," and he says that you then said, "You will start on 1 October then." Do you remember saying that or words to that effect?---I think words to that effect, to the best of my knowledge."
138 With regard to the Letter of Comfort that he prepared on 2 October 2002, Mr Dorber said:
"This is a two-page letter signed by yourself dated 2 October 2002?---Yes.
This is the letter that Mr Macdonald's evidence, that you've sad you agree with says he asked you to prepare on that day and which you did prepare and give to him?---Yes.
It's addressed to "Mr I. Macdonald, managing director designate, Imaginate Pty Ltd establishment pending", and that was the position at that stage?---Yes.
The solicitors by 2 October had not in fact arranged for the incorporation of Imaginate Pty Ltd, to the best of your knowledge?---No.
If we look at the end of the - if you look at the second page of the letter, the last paragraph, you say, "For the record I confirm that the decisions contained herein are within my delegation pursuant to the decision of the AWI board to agree to the establishment and funding of Imaginate Pty Ltd"?---Yes.
That's what you've said in this letter. That was true, wasn't it?---Yes.
At the immediately preceding paragraph you say, "A copy of this letter signed by you will constitute a formal agreement between us as to the terms set out herein"?---Yes.
Mr Macdonald did in fact sign this document and date it on that day, did he not?---Yes.
That was your view at that time as well?---Yes."
139 The transcript records the following further evidence regarding that letter:
"HIS HONOUR: What did you understand by the expression "letter of comfort" at that time?---I understood that I was guaranteeing that whatever was written in that letter of comfort was to be honoured by the company notwithstanding any pitfalls that might emerge. So whatever is recorded in a letter - I had issued perhaps a dozen of them in my time - those aspects identified in the letter would be honoured. That's how I interpreted it and that's how I wrote it.
MR GUNST: In the first paragraph here, second paragraph I should say, what you authorised Mr Macdonald to do was - and you set out five numbered paragraphs?---Yes.
The first of those was to commence the employment of himself and Mr Russell Allen "with effect from 1 October 2002 in accordance with the terms agreed between us"?---Yes.
Just so there's no doubt about it, "the terms agreed between us", as you say, were for those two men to be employed at 220,000 per annum for three years?
---Subject to the decision of the Imaginate board, that was the intention, yes.
Yes, and the decision of the Imaginate board being controlled, at least as to the majority shareholding, by AWI, that was a mere formality, was it not?---Yes, except that I couldn't say what might happen from day one of the Imaginate board being established in terms of the relationship between them and that board. Who knows what might occur?
But so far as AWI was concerned, you were authorising the commencement of that three years at 220,000 per year commencing on 1 October 2002?---I was.
You wrote this letter expecting that AWI would honour that commitment as you've expressed it here?---Yes."
140 When asked how Mr Waldthausen had become involved in the Imaginate project, Mr Dorber made it plain that he was at a loss. He said that he had not recruited Mr Waldthausen, and knew nothing about him apart from the fact, which he discovered later, that he had a degree in commerce. He recalled seeing an email from Mr Waldthausen dated 10 October 2002, addressed to Dr Swan, regarding Imaginate but said that Mr Waldthausen had never been part of the Imaginate team. Project Managers such as Dr Swan were authorised to recruit persons to approved positions, but this was the first contact Mr Dorber had ever had with Mr Waldthausen. In relation to Mr Waldthausen's email, Mr Dorber had this to say:
"To your knowledge, this man, Waldthausen, had no ability or skill whatsoever to make a judgment about the alleged technical doubtfulness of this project, did he?---Yes. I was appalled to receive this."
141 Mr Dorber said that he had noted Mr Waldthausen's view that the applicants were in some way still associated with Amcor, and the implicit assumption "that there was some sort of Amcor conspiracy to muscle in to the wool industry". His comment, in response, was that "the timing [of the email] having regard to the AGM and the politics, it was dynamite". He continued:
"HIS HONOUR: What do you mean by that?---Well, to have worked so hard and with such detail, a whole team. To have gone as far ahead as we had gone, and to have this literally appear from nowhere by a person with absolutely no role whatsoever, I mean, I was stunned.
MR GUNST: And a person with no knowledge or ability to express these bizarre conclusions, I suggest?---Well, as I now understand it. But I didn't know at the time what his skills were.
All right. I'll tell you this: Mr Waldthausen has sworn an affidavit in which he says he holds a bachelor of commerce degree, and that's his only tertiary qualification?---In fairness to him, that makes him better qualified than I am. I don't hold one, but not relevant to this, clearly.
But you didn't make technical judgments did you?---Never.
You relied on experts?---Yes."
142 In a passage that rings particularly true, Mr Dorber described his feelings upon receiving Dr Swan's memorandum dated 18 October 2002:
"It's addressed to you, to "Col", is that right?---Yes.
At the outset, Dr Swan says he's had a detailed read of the complete Imaginate file?---Yes.
Did you understand him to mean that in all his previous involvement in the project team he perhaps hadn't read the complete Imaginate file?---No, I knew he's always read it all. I knew what Dr Swan was doing and what he was up to.
Yes, what was he up to?---Well, we had a very tense discussion when he brought this memo into me. I expressed considerable anger at his behaviour.
He was trying to undermine your position as managing director, wasn't he?
---No, I don't think he was after me. I think he'd sniffed the political wind. I don't think he was worried any more about me, I think he was looking to other matters, into the future. I hasten to say, I'm only supposing that in my own mind.
What are you supposing in your own mind? What were those other matters that he was after, in your view?---Well, if you understood the politics of the wool industry and the incredible angst that existed. Comments like, "How could an Englishman, a trade union official, an ex-policeman with no qualifications, run our organisation?" Evidence from the second day of my appointment that a clique within the industry wanted me gone before I even got to the front door. Objections generally to the whole government decision to remove research, development and innovation from its comfortable government quango-style existence. Dr Swan, being a very confident, very skilled - I recruited him personally ‑ ‑ ‑"
143 Mr Dorber's evidence continued:
"MR GUNST: I'll put the question in a different way, your Honour, in the way that I've identified. Mr Dorber, you read this memorandum of 18 October?---I did.
It made you very angry, as you've already said?---Yes.
Dr Swan purported to raise a number of financial difficulties or complaints about the Imaginate proposal in this memo, didn't he?---Yes, he was sitting with me as I read it.
But they are financial details, principally; financial details of financial purported difficulties, aren't they?---Yes.
The funding about the budget?---Yes.
In the first paragraph on the first page, he says, after reading the file - he does say, "I am abundantly aware of the fact that my previous advice - August 5 - was generally supportive of the proposals listed," and indeed, it had been, hadn't it?---Absolutely.
Well, "supportive" would understate it by a fair margin, actually, wouldn't it? I took you to his memo; in fact, I think it was 2 August not the 5th, as he says?
---The written word of the first memo would suggest that he endorsed the projects.
Wholeheartedly?---Wholeheartedly.
He thought it was a great idea?---He did.
When he analysed it from a technical scientific perspective, at your request, in early August 2002?---He did.
Nowhere here in this memo, I suggest, was he saying that that technical scientific analysis was flawed in any way?---No."
144 Finally, Mr Dorber was asked about the evidence of Ms Robinson regarding the decision by AWI not to proceed with the registration of Imaginate. She said that it was she who instructed Ms O'Reilly in effect to terminate the project. Mr Dorber's evidence continued:
"Ms Robinson then went on to say that the source of her information from the client - that is, from AWI - was this George Waldthausen?---I'm astounded.
Well, you've already answered my question earlier. Waldthausen was never on the board of AWI?---No.
And there was not, between 16 September, when the board approved this proposal, and 4 November, any further board meeting of the AWI board?---No.
There had been no repudiation or overturning of the board memorandum approving the Imaginate proposal of 16 September?---No.
Waldthausen had no authority at all to instruct these solicitors "not to proceed with the registration of Imaginate Pty Ltd", did he?---None whatsoever.
Yes, you can return that exhibit to his Honour's associate, please. Mr Dorber, do you know why Waldthausen apparently gave that instruction to solicitors, to stop proceeding with the registration of Imaginate?---No.
He had no authority from you to do that?---No.
Indeed, so far as you were concerned, the project was go; the agreement had been reached?---Well, I think by 4 November, it was pretty common knowledge that Col's regime was nearly over, so I suppose whatever I thought that day was a bit immaterial, but I had not given any instruction of any kind to do anything about this.
Nor, to the best of your knowledge, had any other AWI board member given Waldthausen permission or authority to torpedo this project?---Well, on 4 November they were different board members.
You can't speak for all of them then. Is that what you're saying?---I wouldn't want to speak for any of them.
HIS HONOUR: You were still the managing director on that day?---I was.
And remained managing director until when?
MR GUNST: December you said?---Yes, about 12 December, your Honour.
HIS HONOUR: Did anyone else within AWI have the authority to terminate the project?---No.
MR GUNST: It was fundamental to the going forward of this project that a company be incorporated?---Yes.
As a subsidiary of AWI?---Yes.
It was to be called Imaginate. The name doesn't matter perhaps but it was a fundamental part that there be a proprietary limited company established and that the research be conducted by that company?---In my mind, yes.
There's no doubt about that, is there? It was the foundation of the proposal to the board that the board had approved?---That's right.
An instruction to the solicitors to cease the incorporation of that company struck at the very heart of this project?---It did.
Killed it stone dead?---It did."
145 Mr Dorber's concluding remarks, in cross-examination, are particularly noteworthy:
"You knew that both Mr Macdonald and Mr Allan had ceased their employment with Amcor by 1 October 2002, didn't you?---I did.
You had that meeting on 2 October with Mr Macdonald in which you signed that letter of 2 October?---Yes.
Authorising him to commence employment on 1 October?---Yes.
You knew, from what you were told, that they had both left their employment with Amcor and had in fact started work the previous day, 1 October?---Yes.
As far as you're aware, this decision if such it be by Waldthausen to kill this project, in so instructing the solicitors took no account of the fact that these men had left their secure, decades-long employment, did it?---I can't say what was in his mind but ‑ ‑ ‑
Well, let me ask you this ‑ ‑ ‑?---That is the first time I'd even seen evidence that that decision was taken, when you just showed me the exhibit.
Now, let me ask you this, Mr Dorber. One couldn't, in all conscience, kill a project like this after these men had left their secure, long-term employment?
---No.
You agree with that, don't you?---Absolutely.
Completely unconscientious, that conduct, isn't it?---Absolutely appalling."
146 Mr Dorber was plainly aghast at the way in which the applicants had been treated. He considered that they had entered into a binding contract with AWI, which had been specifically approved by its Board. When he learned that Dr Swan had changed his view about the project's viability, he had felt compelled to put it under Dr Swan's direct control. Nonetheless, he was plainly uncomfortable about having to make that decision, and recognised that it was a complete departure from what had been agreed on 27 August 2002. According to Mr Dorber, for reasons that were never apparent, Mr Waldthausen ultimately took it upon himself to go further and ensure that the entire project was "killed stone dead". Certainly, Mr Dorber did not authorise Ms Robinson to instruct Ms O'Reilly to terminate the project.
147 In my view, Mr Dorber was a most impressive witness. His evidence was both truthful and accurate. What he said made perfectly good sense, and was entirely supported by all of the contemporary documentation.