Cartier International B.V. v Guest, P.H

[1991] FCA 614

JUDGMENT	NO. G($	l?/ .......	1 ,
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IN THE FEDERAL COURT OF AUSTRALIA	)
VICTORIA DISTRICT REGISTRY	1
GENEFULL DIVISION	1

No. VG168 of 1989

BETWEEN:	CARTIER INTERNATIONAL
B.V.

Applicant

AND :  PHILLIP H. GUEST

Respondent

No. VG176 of 1989

BETWEEN:	CHAMPAGNE	MOET	&
CHANDON S.A.

Applicant

AND :  PHILLIP H. GUEST

Respondent

No. VG177 of 1989

BETWEEN:  G. H. MUMM & CIE. SOCIETE VINICOLE DE CHAMPAGNE SUCCESSEUR. S .A.

Respondent

Applicant

PHILLIP H. GUEST

Respondent

No. VG178 of 1989

BETWEEN:  LOUIS WITTON S.A.

Applicant

m:  PHILLIP H. GUEST

No. vG208 of 1989

BETWEEN:  CHRISTIAN DIOR S.A.

Applicant

m:  PHILLIP H. GUEST

Respondent

No. VG209 of 1989

BETWEEN :	CHANEL LIMITED Applicant
PHILLIP H. GUEST

Respondent

CORAM:	Jenkinson J.
PLACE :	Melbourne
DATE :	26 April, 1991

REASONS FOR JUDGMENT

Taking of accounts pursuant to judg aents .

In each of these six proceedings an order was made either that the respondent "pay the Applicant . . . damages or at the Applicant's option provide an account of profits for passing off" (VG Nos. 168, 178, 208 and 209 of 1989) or that he "pay the Applicant damages ... or at the Applicant's option an account of the profits made by the Respondent by the said passing off and payment of the amount found to be due on the taking of such account" (VG Nos. 176 and 177 of 1989). In each proceeding the terns of other orders pronounced on the same occasion as that on which the order I have quoted was pronounced enable the passing off to which reference is made in the quoted order to be by inference identified as the passing off by the respondent of his goods as goods connected with the applicant by unauthorized use of the applicant's Australian registered trade mark in connection with those goods. In each case the inference is confirmed by reference to the originating application and the statement of claim in the proceeding and the goods passed off are by reference to those documents identified as "shirts". The evidence before me revealed the "shirts" in question to be articles of clothing commonly called sweat shirts and windcheaters and T shirts, and the places at which the passing off occurred to be stalls conducted by the respondent in the Queen Victoria Market in Melbourne.

In each proceeding the applicant elected for an account of profits, which I have taken. Before the taking of

the accounts the respondent had been examined on oath before a	judge of the court and a transcript of his examination was
tendered on the taking of the accounts. By the respondent's admissions on that examination it was established to my satisfaction that for a period of not less than a year he had sold at stalls conducted by him in the Queen Victoria Market sweat shirts, T shirts and windcheaters on which had been printed one of the applicants' trade marks, without in any case the licence of that applicant. The respondent's testimony on his examination was that he had not made or received any documentary record of the transactions by which he acquired those garments and by which he had printed trade marks on those not so printed when he bought them and by which he sold them by retail at his stalls, except some Bankcard vouchers of some of his sales, all of which had been delivered to his bank or destroyed by him before his examination. Nor was any document relevant to the taking of an account of profits produced by him during the taking of the accounts.
John Excell, a director of Wizard T Shirts Pty. Ltd., gave evidence which I accept that between about June 1988 and April 1989 that company printed the trade mark of the applicant in the proceeding VG No. 168 of 1989, the word "Cartier", on about 200 or 300 T shirts and windcheaters supplied to it for the purpose by the respondent, charging the respondent about $1.50 per garment for the work, and about $40 for the screen by means of which the word was printed on the garment. Wizard T Shirts Pty. Ltd. was sworn by Mr. Excel1 to
kept no record of their transactions. have received cash in payment by the respondent and to have
Evidence was called on behalf of the applicants of sales of substantial quantities of T shirts and windcheaters to the respondent by several wholesalers during the latter months of 1987, during 1988 and in the first months of 1989. These garments had nothing printed on them. The only evidence as to the quantities of printed garments coming into stock in

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the respondent's stalls was that of Mr. Excel1 and the .	- 1 .
respondent. Both witnesses professed to speak from a recollection unaided by any document. Mr. Excell's evidence was that he had delivered 200 to 300 garments on which the word "Cartier" was printed. The respondent gave no credible evidence contradictory of a finding in accordance with Mr. Excell's evidence.
The evidence did not disclose what the respondent had paid for the garments on which the word "Cartier" was
printed. Evidence of sales to the respondent by wholesalers
established great variations in price and the respondent
himself gave evidence of even greater variations. But the
evidence as a whole does not provide a basis for a finding as
to the cost to the respondent of his acquisition of the
garments he had printed with the word "Cartier", or as to the
cost of acquisition of any of the garments printed with any of
the other trade marks under consideration on the taking of	i
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these accounts. All that can be done is to make an estimate,

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based on the whole of the evidence, of the average cost of	I
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acquisition of the garments. My estimate is $7 per garment,	i
to which is added $1.50 for the printing and $40 for the	I ,
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screen.	:
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There is no satisfactory evidence of the price or prices at which the respondent sold the garments marked with	I .
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1
the name "Cartier", or any of the other garments which are in	: 1 .
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question on the taking of these accounts.	In the first months	! . '
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of 1989 agents of-the applicants posing as consumers bought garments at the respondent's stalls. But they did not bargain over price : they simply paid the price asked. The respondent's evidence was that many customers negotiated a price, often upon the basis that more than one garment was bought. During his examination before a judge of the Court the respondent swore that an average selling price of "a T shirt with a French trade mark on it" would be $15. The evidence affords no more satisfactory a means of calculating a gross profit on the sales by the respondent of the garments marked "Cartier", or of the other garments in question, than to find, as I do, an average selling price of $15 per garment.

The respondent's evidence before me was that he got "virtually the same price" for a printed T shirt as he got for a plain T shirt of similar quality. Accepting that evidence, I infer that the trade mark printed on a T shirt sold by the respondent to a consumer "was for him an inducement, not necessarily the sole inducing cause, of his buying the goods",

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and I conclude, following the reasoning of Windeyer J. in	Colbeam Palmer Ltd. v. Stock Affiliates Ptv. Ltd. (1968) 122
C.L.R. 25 at 441 that the respondent "is accountable to the owner of the mark for the profit he made by the sale".
The general fixed costs of the respondent - rent, wages and transport - ought not in my opinion to be brought to account in the calculation of his profit. Of the several hundred T shirts, sweat shirts and windcheaters on display for sale in his stalls at any time only a relatively small number bore one of the trade marks in question on the taking of these accounts, as I find.
Accordingly the profit by sale of garments on which the word "Cartier" was printed is calculated as follows. I take as the number sold 250 and the cost of production as the aggregate of -

screen U

$2,165

The aggregate sale price is (250 X $15) $3,750, leaving a

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profit of $1,585.

Mr. Excell's evidence in the proceeding VG No. 176
of 1989 was that his company printed the trade mark "Moet &

Chandon" on "roughly 800 to 1000" garments to the respondent's

printed, and $40 for each of two screens, one for each colour.	order, charging him $2 per garment, there being two colours
I take as the number sold 900 and the cost of production as the aggregate of -

$7 X 900 = $6,300 $2 X 900 = $1,800 2 screens S 80

$8,180

The aggregate sale price is (900 X $15) $13,500, leaving a profit of $5,320.

From about December 1988 until about March 1989 Mr.

Excell's company printed on about 400 garments the trade mark

u ~ m ~ to the respondent's order, Mr. Excell swore. The

charges were $2 per garment and $40 for each of three screens, there being three colours in the printing. I calculate the cost of production thus:

$7 X 400 = $2,800

$2 X 400 = $ 800

3 screens S 120

$3,720

The aggregate sale price is (400 X $15) $6,000, leaving a profit of $2,280.

It will be observed that the garments bearing the " M m " trade mark were brought into the respondent's stock in the early months of 1989. There was evidence that in that period the respondent ceased selling garments bearing the trade marks in question in these proceedings. He may therefore not have sold all that he had had printed by Wizard T Shirts Pty. Ltd.. But he gave evidence, without any indication of quantities, that he had bought from vendors in the Queen Victoria Market garments already bearing those trade marks for re-sale by retail in the market. For that reason I have not made a deduction, in the proceeding VG No. 177 of 1989 or in any of the other proceedings, from the quantities given by Mr. Excel1 in his evidence.

Mr. Excell's evidence in the proceeding VG No. 178 of 1989 was that during the period from December 1988 to March 1989 he had printed on about 200 T Shirts the trade mark of the applicant, "Veuve Clicquot Ponsardin", or the words "Veuve Clicquot", to the respondent's order. It was not clear from the evidence whether the three words of the trade mark or only the first two words had been printed. The charge was $2 per shirt and $80 for two screens. I calculate the cost of production thus:

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$7 X 200 = $1,400 $2 X 200 = $ 400 2 screens S 80

$1,880

The aggregate sale price is (200 X $15) $3,000, leaving a

profit of $1,120.

About 2,000 or 3,000 garments had printed on them the trade mark "Christian Dior" by Mr. Excell's company for the respondent, between November 1987 and about March 1989, at a charge of $1.50 per garment. $40 was charged for the screen. I find the quantity to have been 2,500 and calculate the cost of production thus:

screen U
$21,290

The aggregate sale price is (2,500 X $15) $37,500, leaving a profit of $16,210.

Mr. Excell's evidence was that between November 1987 and March 1989 his company printed the trade mark "Chanel" on "two or three thousand" garments (mainly T shirts and some windcheaters) to the respondent's order, charging $1.50 per garment and $40 for a screen. I find the quantity to have been 2,500 and calculate the profit at the same sum as in respect of the garments on which were printed "Christian Dior", $16,210.

I certify that this and the 9

preceding pages are a true copy of the Reasons for Judgment of the Honourable Mr. Justice Jenkinson.

Dated: 26 April, 1991

Counsel for the Applicant	Mr. D. Shavin
Solicitors for the Applicant :	Freehill, Hollingdale & Page
Respondent in person
Dates of Hearing	15, 16 and 20 April, 1990 12 and 28 May, 1990