Background
18 In this section of the reasons, I set out the background to the issues for determination. This background was to an extent uncontentious. On those topics on which there were differences in the evidence, I indicate my findings.
19 In 2002, Mr Brixton decided that Mastec should design and manufacture its own 240 litre MGBs, rather than acquiring the products of others for resale. This would mean that Mastec would be competing with Sulo MGB Australia Pty Ltd (Sulo), Otto Environmental Systems Pty Ltd (Otto) and Nylex Ltd (Nylex), which at that time were the principal suppliers of MGBs. Until 2002, Mastec had been acquiring its MGBs primarily from Otto and Nylex, and Mr Brixton appreciated that, by manufacturing its own bins, it would then be competing with them in particular.
20 In order to manufacture MGBs, Mastec needed injection moulding tools which, as Mr Brixton understood it, had not been designed or constructed in Australia previously. Viscount recommended Trident Tooling to him for this purpose. Trident Tooling had not previously manufactured tools for MGBs but there is a dispute as to whether it had carried out some maintenance or modification of tools of this kind which had been manufactured by others.
21 There were some differences in the evidence as to when Mr Brixton had first spoken to Trident Tooling (the first meeting). Mr Brixton thought that it was in December 2002 when he met Mr Saurbrey and Trident Tooling's then Tool Room Manager, Mr Heitmann. Mr Heitmann thought that the meeting had occurred "in around November or December 2002". Mr Saubrey thought that the first meeting had been in about September or October 2002. Little turns on identifying precisely when the first meeting occurred, but I consider it more likely than not that Mr Saurbrey is correct. That is because all witnesses agreed that there then followed some further meetings before Trident Tooling provided an initial quotation to Mastec dated 8 January 2003. It seems improbable that there would have been sufficient time for these further meetings before the provision of the quotation had the first meeting not occurred until December 2002.
22 The first meeting occurred at the premises of Trident Tooling which were then in the Adelaide suburb of Netley.
23 No participant kept a written record or note of what was said at the meetings. Each witness was accordingly relying on his own memory as to what had occurred some 14 years previously. It is accordingly unsurprising that there were some differences in their respective accounts.
24 Mr Brixton's account was to the following effect. His belief at the time of the initial meeting was that Trident Tooling had had no experience in constructing a bin tool. Accordingly, he wished to discuss the project and to find out whether Trident Tooling was capable of undertaking it. If it was capable, he wished to obtain a quotation for the cost of the design process. Mr Brixton told Mr Saurbrey and Mr Heitmann that his aim was to design a bin with features distinguishing it from other bins in the market so that it would be readily identifiable as Mastec's bin (noting that at that time Mastec was still known by its former name). He told Mr Saurbrey that he wished to have substantial input into the bin design using his own knowledge of the industry and his market research. Mr Brixton told Mr Saurbrey and Mr Heitmann that the project needed to remain confidential. Given the importance of what was said on this particular topic, I will outline later what each witness said and make findings concerning it.
25 Although Mr Brixton did not refer in his evidence in chief to subsequent meetings with Mr Saurbrey before receiving the design quotation, he accepted that he had attended a number of meetings, and that one or more may have been at Viscount's premises. His intention at the time had been to engage Viscount to use the tools which would be manufactured by Trident Tooling.
26 Mr Heitmann's account of the first meeting was that Mr Brixton had said that he wished to have tools constructed for the manufacture of a 240 litre bin. Although Trident Tooling had not manufactured such tools before and it had no experience in the industry, he and Mr Saurbrey decided that Trident Tooling could do the manufacturing. Mr Brixton told them that he wished the bin to be designed so as to be recognisable in the market as a Mastec bin and that, for this purpose, he would use his own experience and knowledge of the industry to identify the required features.
27 Mr Saurbrey's account was that, at the first meeting, Mr Brixton had told him that he had previously conducted a business providing waste collection services to councils in South Australia; that he had sold replacement bins acquired from other suppliers to those councils; that he was now intending to focus on the manufacture and supply of MGBs; that Viscount had told him that they could manufacture MGBs but could not itself make the tools which were necessary for that purpose; that he did not wish to use toolmakers in New South Wales or Victoria because those who would be suitable also worked for the MGB manufacturers with whom Mastec was intending to compete; that Viscount had recommended Trident Tooling to him; and that Mastec intended to make MGBs having a number of features which were superior to bins in the market at the time.
28 Mr Saurbrey deposed to multiple meetings having occurred before and after Trident Tooling provided its initial quotation dated 8 January 2003: approximately three at the premises of Trident Tooling (some of which were attended by other employees of Trident Tooling including Jan Saurbrey (Operations Manager), Chris Heinrich (CFO) as well as Paul Heitmann (Tooling Manager)); approximately three or four at Viscount's premises in which a small number of employees of Viscount (including a Mr Malone) also attended; as well as meetings at the Rex Hotel which it seems concerned a different subject matter.
29 Mr Saurbrey said that, at the initial meetings, those present discussed matters relevant to the manufacture of MGBs for Mastec, including tooling requirements, the process of plastic moulding, the requirements of moulding machines including ancillary equipment such as raw material feeders and cooling equipment, the making of the tooling, general estimates of the costs involving making the tooling, the factors which affected the cost of designing and making tooling, the matters which would be included in the price, the cycle times of moulding machines and the approximate cost per moulding cycle. He deposed that Mr Brixton had said on a number of occasions that he wished Trident Tooling and Viscount to understand his needs so that they could come up with the best and most efficient way to produce MGBs, given that his target unit price cost was approximately $8 per bin body.
30 I am satisfied that there were several meetings after the first meeting at which various aspects of Mr Brixton's project were discussed. Mr Brixton acknowledged that that was so. I am also satisfied that those meetings occurred at the premises of both Trident Tooling and Viscount, given that it was Mr Brixton's then intention to have Viscount do the actual manufacturing of the MGBs using the tools to be made by Trident Tooling. I am satisfied that the matters canvassed at the initial meetings were, broadly, the matters to which Mr Brixton and Mr Saurbrey deposed. At the subsequent meetings, Mr Brixton took samples of MGBs, and the lids, of the products which were available in the market. These formed the basis of some of the discussions, as Mr Brixton used them to identify desirable features and the modifications he required. I am also satisfied that the Trident Tooling personnel used these samples as a basis for the designs they prepared.
31 Mr Saurbrey also deposed that, on one occasion, Mr Brixton had described himself as really "just the cheque book". Although Mr Brixton denied making this later statement, I accept that he did say something to that effect. I consider, however, that Mr Brixton had sought, at the same time, to be involved actively in the design process. That desire is evident in the number of meetings which Mr Brixton did attend concerning the development of the designs. Mr Saurbrey also said that in about late November 2002, Mr Brixton had told him that the project was "live" as he had received finance approval.
32 The designs discussed at the meetings were both the product design (the design of the bin body, lid and handle pins) and the tooling design (the design of the tools to be used to manufacture those products). The former was done using a 3D CAD file. The latter was also done with a 3D CAD file using as the source the 3D CAD files containing the product design.
33 There are matters concerning these meetings on which I do not accept Mr Saurbrey's evidence. I will provide reasons shortly for my conclusion that much of Mr Saurbrey's evidence was unreliable.
34 I accept, contrary to Mr Saurbrey's evidence, that Mr Brixton did say words to the effect that he wished to have bin with features distinguishing it from other bins on the market. I do not accept Mr Saurbrey's evidence that Mr Brixton had said that he wished Mastec's bins to look similar to existing bins because of a concern that, being new to the market, its bins may be perceived as being of lesser quality than those of existing manufacturers. On the other hand, I think it likely, and so find, that Mr Brixton did say words to the effect that he wished the Mastec bin lid to be compatible with the MGBs of other manufacturers so that, in that respect, the bin bodies had to be of a similar design to those of other manufacturers. Mr Brixton was aware that this was a desirable feature. However, I reject Mr Saurbrey's evidence that Mr Brixton told him that he wished the Mastec bin body to be able to stack with the bin bodies of other manufacturers. In that respect, I accept Mr Brixton's evidence that there was no reason for him to have wished to have the Mastec bin body able to stack with other bins and, therefore, it is unlikely that he made such a statement.
35 Trident Tooling provided an initial quotation to Mr Brixton dated 8 January 2003. The copy in evidence has a stamp showing that it was sent by facsimile on 14 January 2003, but I accept Mr Saurbrey's evidence that this may have occurred after the initial provision of the quotation to Mr Brixton. In any event, I do not consider that, for the purposes of this case, anything turns on whether the quotation was provided on the date it bears, or six days later on 14 January 2003. This document included quotations for the separate components of a 240 litre MGB, including bin dividers and a divider bin clip, as well as quotations for a 140 litre bin and bin cover. Although most of the document was either printed or typed, the payment terms were handwritten. It is not necessary to refer to the terms of this quotation in detail given that Trident Tooling provided a replacement quotation concerning the 240 litre MGB dated 17 January 2003 (Quotation 7150).
36 Mastec did not pursue plans at that stage for the manufacture of a 140 litre MGB. Thereafter the discussions between the parties concerned only the 240 litre MGB.
37 Quotation 7150 was for the manufacture of three tools, being for the 240 litre bin body, the bin lid and the handle pin. The separate price for each of these tools was $473,000, $109,500 and $15,800 respectively. However, Trident Tooling quoted a package price for three items of $588,000. The particulars of each tool included the following:
Tool design included
3D modelling from 2D drawing included
38 The quotation concluded with the following:
Quotation is valid for 30 days. Delivery time is given on best estimates and is subject to change, dependent on workload. Confirmation of delivery time will be given at placement of order. Lead times quoted above and in general are from approval of tool design. No mould flow has been quoted unless specified. Progress payments apply unless otherwise agreed. Prices are subject to change upon disassembly of existing tool. Pick up or delivery is not included unless specified above. Quotation is based on receipt of fully surfaced and trimmed CAD Data in IGES format. This quote excludes Australian Goods & Services Tax which is presently 10%, payable by local customers in addition to the base price.
(Emphasis added)
39 It is evident that further discussions occurred between Mr Brixton and Mr Saurbrey after 17 January 2003 before Mastec placed its order on 28 January 2003. Mastec did so, not by simply indicating acceptance of Trident Tooling's quotation, but by providing an order on its own letterhead (Order 700). The contract required Trident Tooling, amongst other thing, to create CAD drawings for the design of the tooling for the bin body, bin lid and handle pin.
40 Mr Whelan, a tooling designer employed by Trident Tooling, created the initial CAD files for the MGBs. In doing so, he worked from samples, which I find were those provided by Mr Brixton. The initial designs were then discussed in subsequent meetings with Mr Brixton. Mr Whelan, whose evidence I accept, described the process as follows:
[22] I do not now recall specifically what design features were discussed at individual design meetings, or the dates when the meetings took place, but I do recall the design features discussed, generally what was said or took place in relation to the selection of design features, and the process by which the components of the Mastec MGB were selected and created. In particular, I recall the following in relation to the design meetings for the Mastec project:
(a) …
(b) during the design meetings, including the first design meeting, there was discussion regarding the design features to be incorporated into the design of the bin body, bin lid, handle pin and insert to be manufactured;
(c) examples of existing MGBs were provided by Mr Brixton and available for consideration and discussion at the design meetings, including MGBs manufactured by Sulo, Otto and Nylex. The existing MGBs were used as the basis for discussing design features for aspects such as lid handles, lid structural support, bin handles, raised middle portions of the bin lid, and the means by which detail would be moulded into the lid;
(d) when a necessary design feature was considered for the first time, usually Mr Brixton made comments as to his views, preferences or desires for the functionality of the feature, and then the advantages and disadvantages of those features (in comparison to existing MGBs) were discussed by meeting attendees;
(e) at one of the early design meetings, I presented the "240 litre sulo copy" drawing (in its partially completed state at the time) for consideration and discussion;
(f) in relation to the bin body and lid, Mr Brixton said that, although he wanted the Mastec MGB to be designed to his specifications and requirements, he did not want to deviate too much from what was commonly available in the marketplace at the time;
(g) I created the CAD files for the Mastec MGB, and I was responsible for making any modifications to the designs in those files (as discussed during design meetings). As was the case with the CAD file for the Mastec MGB bin body, the initial drawings for other components for which tooling was required were created by me by taking a number of measurements from the sample MGBs, cross-checking those dimensions between samples where compatibility was required, and entering the chosen dimensions into a parametric CAD model. This was not difficult to do, and by way of example, to the best of my recollection now I estimate that I spent approximately 6 to 8 hours creating a working CAD file for the Mastec MGB bin lid that was detailed enough to present to Mastec for review and discussion. …; and
(h) if I made modifications to designs between meetings, I presented the updated designs at the following meeting so that it could be discussed and confirmed.
(Emphasis added)
41 When the product designs were finalised (in about April 2003), Mr Whelan proceeded with the design of the tool for the bin body and another designer at Trident Tooling proceeded with the design of the bin lid and handle pin tools.
42 Trident Tooling completed construction of the tools for the 240 litre MGBs in mid-2003. Mastec paid Trident Tooling a total of $588,000 plus GST for those tools and took delivery of the tools in July or August 2003. Of the total of $588,000, $109,500 was paid for the design and manufacture of the lid tool and $15,800 for the handle tool.
43 Mastec then commissioned others to manufacture the bins, lids and handles using the tooling. The bin body tool was sent initially to Viscount Plastics (Vic) Pty Ltd for trial manufacture and a month or so later to Active Plastic Pty Ltd. Both of these companies had premises in Melbourne. Following the trials, Mastec contracted Trident Tooling to carry out some modifications to the bin body and lid tools. In late 2003, Mr Brixton contracted with Viscount for it to manufacture the MGBs in Adelaide.
44 At the completion of its contract, Trident Tooling did not provide Mastec with the CAD Drawings for the three tools. Mr Brixton did not request that at that stage but later in 2003 he was prompted to do so by Mr Heitmann who had then taken up employment with Mastec. Mr Heitmann told Mr Brixton that he would need the drawings in order to make repairs to the tooling or to modify them. Mr Brixton deposed:
[41] As a result, from around late 2003 for the next year or so, I contacted [Mr Saurbrey] on a number of occasions by telephone to request the drawings.
[42] Whenever I made contact with [Mr Saurbrey] to request the drawings, he remained non-committal about providing the drawings to me. He never said that I was not entitled to them, but nor did he ever provide me with the drawings.
45 Mr Saurbrey acknowledged that Mr Brixton had made one request for the drawings which he thought had been in early 2004. He deposed that he had responded to Mr Brixton with words to the following effect:
(a) Trident Tooling owned the drawings and CAD data;
(b) Trident Tooling was not obliged to give the drawings and CAD data to Mastec;
(c) I believed that Mr Heitmann had retained a copy of the relevant CAD data when he left Trident Tooling, and if he needed that material he should get it from him;
(d) In view of what had occurred with Mr Heitmann's employment and the investment by Active Plastic in bin moulding machines, if he wanted anything from Trident Tooling that it was not obliged to give, he would first have to provide some compensation for the nearly $1 million that had been invested in setting up a bin production facility at Active Plastic.
46 Mr Saurbrey also deposed that this had been the only occasion upon which Mr Brixton had requested the drawings.
47 Although Mr Brixton said that he had thought that he had made the request on more than one occasion, he could not remember the details of any other conversation.
48 It is not necessary to refer in any detail to the issue concerning Active Plastic to which Mr Saurbrey referred. It is sufficient to say that Active Plastic was a business established by the Trident Group in about 2003; that Mr Saurbrey deposed that Mr Brixton had given him some intimation that Mastec would place orders for the manufacture of MGBs with Active Plastic; and that on the basis of that information, Active Plastic had acquired a tool for the manufacture of MGBs. Mr Brixton disputed Mr Saurbrey's account. This was very much a collateral issue in the trial and it is unnecessary to make detailed findings concerning it. Had it been necessary to do so, I would have preferred Mr Brixton's account because, amongst other things, its seems improbable that, having gone to the considerable expense of obtaining its own tools with which to manufacture MGBs, Mastec would then have contemplated placing orders for the manufacture of MGBs by others.
49 Despite my reservations about the reliability of Mr Saurbrey's evidence generally, I think it probable that he is correct in asserting that Mr Brixton had contacted him on only one occasion to request the provision of the CAD Drawings. However, that one request was sufficient to put Mr Saurbrey on notice of Mastec's claim and, through him, both Trident Tooling and Trident Plastics.
50 Since 2003, Mastec has promoted, sold and distributed the Mastec MGBs extensively throughout Australia, making sales to:
local government authorities;
retailers;
waste contractors;
safety product companies; and
procurement bodies.
Mastec has sold more than 3.7 million lids.
51 Commencing in about 2004, Mastec manufactured the MGBs using the tools manufactured by Trident Tooling. It did so at the factory of Maxiplas Pty Ltd at Ottoway. In 2008, Mastec acquired that factory and has continued to undertake its own manufacture.
52 Mr Heitmann, a director of Maxiplas, was Trident Tooling's Tool Room Manager and, in that capacity, had been involved in some of the discussions which Mr Brixton had with employees of Trident Tooling in late 2002 and early 2003.
53 Mastec did contract some of the manufacture to others. In particular, between August 2007 and April 2011, Mastec contracted some manufacture of bin bodies to Trident Plastics. Mr Brixton described this as "overflow" work, by which I understand him to mean the manufacture which it could not carry out itself or through its usual contractors. In this period, Trident Plastics manufactured approximately 192,000 240 litre bin bodies, which included approximately 48,000 140 litre bin bodies. Initially, Trident Plastics used Mastec's own tooling for this purpose but, from about March-April 2008, used its own tooling.
54 Mastec did not ever contract with Trident Plastics to manufacture MGB lids on its behalf.
55 In 2013, Mastec obtained a second tool for the construction of lids for its 240 litre MGBs. The second lid contained some minor variations from that manufactured using the tool made for Mastec by Trident Tooling.
56 Trident Plastics commenced manufacturing and selling its own MGBs in late 2012. It already had the tools for the manufacture of bin bodies and handles and, as I understand it, had been using them in the manufacture of the bin bodies and handles for Mastec. For the manufacture of the lids on the MGBs, Trident Plastics used tooling for which its Plant Services Manager, Mr Dalling, prepared the design and tooling in late 2011-early 2012. Mr Dalling is also a director of Trident Plastics. He deposed, and I accept, that as his starting point for the lid design, he used the CAD files (contained on a CD) for the Mastec tools. Those CAD files, along with the CAD files for the design of other tooling manufactured by Trident Tooling, were contained in the large container of archived material which Trident Plastics had acquired from the Receivers of Trident Tooling in 2009.
57 Mr Dalling deposed that he loaded the CAD files for the Mastec MGB lid into Trident Plastics' CAD software. He said that he discussed possible improvements on that design with Steen and Jan Saurbrey and, as a result, modified the CAD files for the Mastec MGB lid. Some other variations were made during the manufacturing process. The modifications to the design of the Mastec tool comprised:
(a) variations to improve water flow to improve cooling and reduce the cycle time;
(b) an improvement in the hot tip design to improve cooling (thereby reducing cycle time);
(c) a tapered tooling insert was added to allow additional information to be included on the MGB lid; and
(d) the clamp plate layout was changed to improve die change times.
58 Mr Dalling said that in addition, some 12 months later, a change was made to the lower edge of the lid to reduce a gap thereby removing the ability for flies and insects to enter the bins.
59 Mr Dalling deposed that the Trident Plastics' lids varied from the Mastec lids manufactured using the 2003 tooling in the following respects:
(a) the hinge pin rib of the Trident MGB is approximately 0.5 mm thicker;
(b) the Trident MGB lid has a date stamp which the Mastec MGB tool does not;
(c) the Trident MGB lid has a "gate dome" which is not on the Mastec MGB lid;
(d) the Trident MGB lid does not have a drill guide which the Mastec MGB lid does;
(e) the Trident MGB lid has "Made in Australia" embossed in it which the Mastec MGB lid does not;
(f) the rear lip of the Trident lid is 2 mm longer than the Mastec lid.
Nevertheless, on an ordinary visual examination the Trident Plastics lid is very similar to the Mastec lid. Counsel referred, fairly in my opinion, to the Trident Plastics lid as a "lookalike".
60 Trident Plastics sells the MGBs it manufactures to the same market as does Mastec.
61 As already noted, several of Mastec's complaints in these proceedings relate to the use by Trident Plastics of Mastec's MGB lids and handles design. In addition, Mastec complains that Trident Plastics has engaged in conduct (in its promotional material concerning the MGBs it manufactures and otherwise) which is misleading or deceptive.
62 In July 2016, Trident Plastics commissioned the manufacture of a second tool for the manufacture of MGB lids. It did so in order to increase the volume of lids which it could manufacture. It now uses both tools. There are some minor differences between the lids produced by each tool but these do not seem to be significant for present purposes. Trident Plastics does not offer its customers a choice between the lids manufactured by the two tools and may even fill one order with lids produced by each.