Crimson SRL v Claudia Shoes Pty Ltd
[2007] FMCA 828
•20 June 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CRIMSON SRL & ANOR v CLAUDIA SHOES PTY LTD & ORS | [2007] FMCA 828 |
| TRADE PRACTICES – Passing off – summary judgement. |
| Evidence Act 1995, sub-ss.190(3), 190(4) Federal Magistrates Court Rules 2001, rr.13.07, 13.10 |
| Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 70 IPR 146 Commonwealth Bank of Australia (ACN 123 123 124) v ACN 000 247 601 Pty Limited (in liq) (Formerly Stanley Thompson Valuers Pty Limited) [2006] FCA 1416 H v Schering Chemicals (1983) 1 WLR 143 Murine Eye Remedy Co v Eldred [1926] VLR 425 Pearce v Button (1986) 65 ALR 83 |
| First Applicant: | CRIMSON SRL |
| Second Applicant: | LYNCH FASHION MARKETING PTY LTD (ACN 010 466 485) |
| First Respondent: | CLAUDIA SHOES PTY LTD (ACN 050 235 491) |
| Second Respondent: | CLAUDIA ASSERAF |
| Third Respondent: | SALAMAN ASSERAF |
| Fourth Respondent: | YL IMAGE HOUSE PTY LTD (ACN 113 824 230) |
| Fifth Respondent: | XIAO LIN DONG |
| Sixth Respondent: | YI LI QIAN |
| File number: | MLG1432 of 2006 |
| Judgment of: | Riley FM |
| Hearing date: | 15 June 2007 |
| Date of last submission: | 15 June 2007 |
| Delivered at: | Melbourne |
| Delivered on: | 20 June 2007 |
REPRESENTATION
| Counsel for the Applicants: | Michael Wise |
| Solicitors for the Applicants: | Middletons |
| Counsel for the First, Second & Third Respondents: | No appearance |
| Solicitors for the First, Second & Third Respondents: | MW Law |
| Counsel for the Fourth, Fifth & Sixth Respondents: | No appearance |
| Solicitors for the Fourth, Fifth & Sixth Respondents: | Dixon Holmes du Pont Lawyers |
DECLARATION
The first respondent has:
(a)in trade or commerce engaged in misleading and deceptive conduct or conduct that was likely to mislead and deceive contrary to the provisions of ss.52 and 53(c) of the Trade Practices Act 1974 (Cth); and
(b)committed the tort of passing off.
The second and third respondents have:
(a)in trade or commerce engaged in misleading and deceptive conduct or conduct that was likely to mislead and deceive contrary to the provisions of ss.9 and 12(e) of the Fair Trading Act 1999 (Vic);
(b)aided, abetted, counselled or procured the contraventions by the first respondent of ss.52 and/or 53 of the Trade Practices Act 1974(Cth);
(c)been directly or indirectly knowingly concerned in, or party to, the contraventions by the first respondent of ss.52 and/or 53 of the Trade Practices Act 1974 (Cth) ; and
(d)participated in the commission of the tort of passing off.
ORDERS
Pursuant to Order 13.07 of the Federal Magistrates Court Rules 2001 (Cth) and s.17A of the Federal Magistrates Act 1999 (Cth), judgment on liability be entered against the first respondent on the claims made by the applicants in paragraphs 1 to 26 of the amended statement of claim.
The first respondent, whether by itself, its servants, agents or any of them howsoever be restrained from:
(a)importing the Claudia infringing garments (as defined in paragraph 14(a) of the statement of claim);
(b)selling and/or offering and/or exposing for sale, or exhibiting in public the Claudia infringing garments;
(c)advertising, marketing and promoting the Claudia infringing garments;
(d)disposing of possession of the Claudia infringing garments other than in accordance with order 7 below;
(e)passing off and/or enabling to be passed off its business and/or goods for the business and/or goods of the applicants or either of them and/or the business and/or goods of or endorsed or approved by the applicants or either of them;
(f)importing for sale the Claudia skirt (as defined in the particulars to paragraph 14 of the amended statement of claim);
(g)disposing of possession of the Claudia skirt other than in accordance with order 7 below;
Pursuant to Order 13.07 of the Federal Magistrates Court Rules 2001 (Cth) and s.17A of the Federal Magistrates Act 1999 (Cth), judgment on liability be entered against the second and third respondents on the claims made by the applicants in paragraphs 1 to 26 of the amended statement of claim.
The second and third respondents, whether by themselves, their servants, agents or any of them howsoever be restrained from:
(a)importing the Claudia infringing garments;
(b)selling and/or offering and/or exposing for sale, or exhibiting in public the Claudia infringing garments;
(c)advertising, marketing and promoting the Claudia infringing garments;
(d)disposing of possession of the Claudia infringing garments other than in accordance with order 7 below;
(e)passing off and/or enabling to be passed off the first respondent’s business and/or goods as the business and/or goods of the applicants or either of them and/or the first respondent’s business and/or goods as having been endorsed or approved by the applicants or either of them.
The first, second and third respondents, whether by themselves or by their servants, employees or agents howsoever deliver up to the second applicant all Claudia infringing garments in their possession, custody or control.
The hearing listed for 23 and 24 July 2007 be vacated.
Within 14 days of the making of these orders, the first, second and third respondents file and serve a list of discoverable documents including but not limited to:
(a)all documents relating to the wholesale, retail sale and/or any other sale or disposal of the Claudia infringing garments, including the Claudia skirt; and
(b)all other documents which would assist in the calculation of the profit made by the first, second and third respondents from such sales or disposal.
The first, second and third respondents pay the applicants damages, or, at the election of the applicants, an account of profits, together with interest, such amounts to be assessed.
The issue of quantum be referred to a mediation to be conducted by a mediator to be agreed between the applicants and the first, second and third respondents within 21 days, and in absence of such agreement within that time, by a mediator as directed by the court, such mediation to be conducted within 6 weeks of the hearing of this motion.
The first, second and third respondents serve a supplementary verified list of documents relevant to the issues of quantum by 29 June 2007.
The parties provide inspection of their discovered documents relevant to the issues of quantum by 6 July 2007.
The applicants file and serve the affidavits upon which they intend to rely in relation to the issues of quantum on or before 20 July 2007.
The first, second and third respondents file and serve the affidavits upon which they intend to rely in relation to the issues of quantum on or before 3 August 2007.
The proceeding be listed for a further directions hearing on 23 August 2007 at 9.30am.
The first, second and third respondents pay the applicants' costs of the proceeding to date (including reserved costs), in so far as the proceeding relates to the first, second and third respondents, to be taxed in default of agreement.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1432 of 2006
| CRIMSON SRL |
First Applicant
| LYNCH FASHION MARKETING PTY LTD (ACN 010 466 485) |
Second Applicant
And
| CLAUDIA SHOES PTY LTD (ACN 050 235 491) |
First Respondent
| CLAUDIA ASSERAF |
Second Respondent
| SALAMAN ASSERAF |
Third Respondent
| YL IMAGE HOUSE PTY LTD (ACN 113 824 230) |
Fourth Respondent
| XIAO LIN DONG |
Fifth Respondent
| YI LI QIAN |
Sixth Respondent
REASONS FOR JUDGMENT
Background
In this proceeding, the applicants allege breaches of copyright, misleading and deceptive conduct within the meaning of s.52 and s.53 of the Trade Practices Act 1974, and s.9 and s.12(e) of the Fair Trading Act 1999 (Vic) and passing off.
The first applicant is said to be a company incorporated pursuant to the laws of Italy and is said to be the designer and supplier of an exclusive range of high-end women's clothing and fashion accessories under the label PianuraStudio. The second applicant is said to be a company incorporated in Australia and the exclusive distributor in Australia of PianuraStudio products.
The application that is presently before the court is an application for summary judgement in respect of the trade practices and passing off claims made by the applicants against the first, second and third respondents. The applicants have indicated to the court that they do not expect to proceed with the copyright claims. A summary judgement application against the fourth, fifth and sixth respondents is being dealt with separately. All of the respondents are said to have been involved in the sale of counterfeit PianuraStudio garments. Apart from that, the first, second and third respondents appear to have no connection with the fourth, fifth and sixth respondents.
The summary judgement application was brought by notice of motion dated 24 May 2007. It was returnable on 30 May 2007. On that occasion, the first, second and third respondents were represented by their solicitor, Mr Denby. On his application, the hearing of the motion was adjourned until 10 a.m. on 15 June 2007 on the basis that the first, second and third respondents had been given only a short time to prepare for the hearing.
The first, second and third respondents did not appear when the matter was called at about 10.25 a.m. on 15 June 2007. I am satisfied that the first, second and third respondents had notice of the adjourned hearing as their solicitor was in court when the time and date of the adjourned hearing were given. The application for summary judgement in these circumstances proceeded on an undefended basis. The judgement that is sought is in the form of declarations, injunctions, orders for delivery up and damages or an account of profits. The applicants also seek consequential orders to facilitate the calculation of damages or an account of profits.
The application for summary judgement is brought under Order 13.07 of the Federal Magistrates Court Rules 2001 and s.17A of the Federal Magistrates Act 1999. Sub-rules 13.07(1) and (2) of the Federal Magistrates Court Rules 2001 provide that:
(1)This rule applies if, in a proceeding:
(a)in relation to the whole or part of a party's claim there is evidence of the facts on which the claim or part is based; and
(b)either:
(i) there is evidence given by a party or by some responsible person that the opposing party has no answer to the claim or part; or
(ii) the Court is satisfied that the opposing party has no reasonable prospect of successfully defending the claim or part.
(2)The Court may give judgment on that claim or part and make any orders or directions that the Court considers appropriate.
Section 17A of the Federal Magistrates Act 1999 provides as follows:
(1) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is prosecuting the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
(2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a)the first party is defending the proceeding or that part of the proceeding; and
(b)the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3)For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
(4)This section does not limit any powers that the Court has apart from this section.
Section 17A of the Federal Magistrates Act 1999 is in substantially the same terms as s.31A of the Federal Court of Australia Act 1976. In Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 70 IPR 146, Rares J considered the effect of section 31A and said the following at [42] to [47]:
[42] I am of opinion that properly construed, s 31A(2)(b) requires a person moving a motion for summary disposal (‘the moving party’) to satisfy the Court that there is no reasonable prospect of the party claiming relief (‘the plaintiff’) successfully prosecuting the proceeding or the part of the proceeding in question. Experience shows that there are cases which appear to be almost bound to fail yet they succeed. As Dixon CJ once said (Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 20):
‘Experience of forensic contests should confirm the truth of the common saying that one story is good until another is told…’
[43] Brennan CJ and McHugh applied that observation in Jackamarra v Krakouer (1998) 195 CLR 516 at 522 [9] to a situation which an appellate court was exercising a discretion to permit a further step to be taken in an appeal that had already been instituted. Obviously, where there is a contested application under s 31A, both parties will be present to explain their case, but not in the context of a trial. The procedure envisaged by s 31A is summary. The concept of a party having ‘no reasonable prospect of successfully prosecuting a proceeding’ has some similarity to the test at common law for determining whether a jury properly instructed could reach a verdict for the plaintiff. That test was authoritatively stated by the Judicial Committee in Hocking v Bell (1947) 75 CLR 125 at 130-131, approving the following statement from the dissenting judgment of Latham CJ (Hocking v Bell (1945) 71 CLR 430 at 441-442):
‘If there is evidence upon which a jury could reasonably find for the plaintiff, unless that evidence is so negligible in character as to amount only to a scintilla, the judge should not direct the jury to find a verdict for the defendant, nor should the Full Court direct the entry of such a verdict. The principle upon which the section is based is that it is for the jury to decide all questions of fact, and therefore to determine which witnesses should be believed in case of a conflict of testimony. But there must be a real issue of fact to be decided, and if the evidence is all one way, so that only one conclusion can be said to be reasonable, there is no function left for the jury to perform, so that the court may properly take the matter into its own hands as being a matter of law, and direct a verdict to be entered in accordance with the only evidence which is really presented in the case.’ (emphasis added) (see also Swain v Waverley Municipal Council (2005) 220 CLR 517 at 522 [9] per Gleeson CJ, 561-562 [128]-[131] per Gummow J and 580 [203], 582-583 [208]-[209] per Kirby J; see also at 531-532 [33]-[34] per McHugh J)
[44] In a case to which s 31A applies, where there is a real issue of fact to be decided in the sense identified in the above principle, and, possibly, where there is a real issue of law of a similar kind, it is obviously appropriate that the matter goes to trial. And, one must be mindful that in Hocking v Bell (1945) 71 CLR at 487, Dixon J said that in effect, every judge who had heard the matter (through four trials, two Full Court appeals and, to that point, the appeal to the High Court) would have formed the view that the plaintiff should have failed had they been able to decide the facts, yet the Privy Council restored the second jury verdict in her favour and so concluded the litigation. This raises a very real question, as to what reasonable prospects are for present purposes.
[45] I am of opinion that in assessing what reasonable prospects of success are for the purposes of s 31A, the Court must be very cautious not to do a party an injustice by summarily dismissing the proceedings where, in accordance with the principles in Hocking v Bell (1947) 75 CLR 125, contested evidence might reasonably be believed one way or the other so as to enable one side or the other to succeed. As soon as the evidence may have such an ambivalent character prior to a final determination, I am of opinion that then, as a matter of law, at that point there are reasonable prospects of success within the meaning of s 31A. Unless only one conclusion can be said to be reasonable, the moving party will not have discharged its onus to enliven the discretion to authorize a summary termination of the proceedings which s 31A envisages. In moving the second reading of the bill introducing s 31A (the Migration Litigation Reform Bill 2005) the Attorney-General said that it strengthened ‘… the power of the courts to deal with unmeritorious matters by broadening the grounds on which federal courts can summarily dispose of unsustainable cases’.
[46] In Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 at 154-155, Dawson, Gaudron and McHugh JJ said that a party should not be shut out from litigating an issue which was fairly arguable and that the power to grant leave to amend should be exercised with that in mind. They observed (189 CLR at 154) that ‘...the ultimate aim of a court is the attainment of justice’. Obviously, s 31A regulates the attainment of justice by creating an entitlement in a party to be protected from claims or defences which fail to meet the threshold prescribed in the section. In granting leave to appeal on a decision involving the application of s 31A, Wilcox J observed in Vans, Inc v Offprice.Com.Au Pty Ltd [2006] FCA 137 at [12] that it was arguable that the effect of s 31A was that there could be summary judgment for an applicant ‘... notwithstanding the possibility that the applicant’s case will break down at trial; in other words, it is now not enough for a party resisting a summary judgment application to seek merely to put the other side to proof’ (his Honour’s emphasis).
[47] GE Capital also argued that s 31A required the Court to dismiss a claim or defence based on a predictive assessment of its prospects, even though it may be possible that had the matter gone to trial it would have succeeded. I am of opinion that this is not how the section operates. It is engaged only to determine summarily a claim or defence which has no reasonable prospect of success. The purpose of the enactment is to enable the Court to deal with matters which should not be litigated because there is no reasonable prospect of any outcome but one. If there is a reasonable danger that a claim or defence could be dismissed under s 31A, which could succeed at a trial, the provision would create miscarriages of justice. It is a key feature of the judicial power under Ch III of the Constitution that the Court be in a position to, and in fact does, quell a controversy. The exercise of the judicial power to prevent the substantive agitation of a controversy in which each side has a reasonable prospect of success would defeat, not advance, the ends of justice.
In Commonwealth Bank of Australia (ACN 123 123 124) v ACN 000 247 601 Pty Limited (in liq) (Formerly Stanley Thompson Valuers Pty Limited) [2006] FCA 1416 at [30], Jacobson J summarised the conclusions of Rares J in BostonCommercial as follows:
· In assessing whether there are reasonable prospects of success, the Court must be cautious not to do an injustice by summary dismissal.
· There will be reasonable prospects of success if there is evidence which may be reasonably believed so as to enable the party against whom summary judgment is sought to succeed at the final hearing.
· Evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects.
· Unless only one conclusion can be said to be reasonable, the discretion under s 31A cannot be enlivened.
I accept that these cases set out the relevant test for summary judgement on a claim in the Federal Magistrates Court. The test has been somewhat modified by the introduction of s.17A of the Federal Magistrates Act 1999 and is no longer that the opposing case is utterly hopeless. Rather, the test now is that there is no reasonable prospect of any outcome but one: Boston Commercial at [47].
The applicants rely on the amended statement of claim filed on
28 February 2007. The first, second and third respondents apparently rely on the defence filed on 16 February 2007. The first, second and third respondents did not admit the incorporation of the first applicant. Accordingly, it was necessary for the applicants to establish the incorporation of the first applicant.
The applicants relied firstly upon a statement in the affidavit of Anthony Brooke Watson sworn on 18 December 2006 that ‘the first applicant is an Italian company and owner of the brand of clothing sold under the "PianuraStudio” label around the world.’ The applicants’ counsel provided to the court authority which he said showed that that evidence was sufficient to prove the first applicant's incorporation in Italy. That authority was Murine Eye Remedy Co v Eldred [1926] VLR 425, H v Schering Chemicals (1983) 1 WLR 143 and Pearce v Button (1986) 65 ALR 83.
Reference was also made to s.190(3) of the Evidence Act1995 which permits the court to waive certain of the rules of evidence in relation to proof of documents. More particularly, the rules of evidence may be waived if the matter to which the evidence relates is not genuinely in dispute or the application of the relevant provisions would involve unnecessary expense or delay.
In my view, the incorporation of the first applicant is not genuinely in dispute in the sense that the first, second and third respondents did not appear to dispute the claim at all. Furthermore, it could not seriously be doubted that the first applicant is incorporated. There is evidence before the court that the first applicant is a substantial, international trading entity of the sort that is customarily incorporated. In the alternative, in my view, requiring strict proof of the incorporation of the first applicant would cause or involve unnecessary expense or delay. Obtaining a certificate of incorporation from Italy and the appropriate evidence to explain that certificate would obviously involve expense and delay. That expense and delay would be unnecessary because it cannot seriously be doubted that the first applicant is incorporated.
In the circumstances, and having taken into account the matters referred to in s.190(4) of the Evidence Act 1995, I am prepared to waive any requirement for documentary evidence of the incorporation of the first applicant. I accept the evidence of Mr Watson quoted above and the evidence that the first applicant is a substantial, international trading corporation as sufficient proof of the incorporation of the first applicant.
The first, second and third respondents admitted the incorporation of the second applicant subject to the production of the relevant certificate of incorporation. No such certificate of incorporation was produced. Accordingly, it is necessary for the applicants to establish the incorporation of the second applicant. Mr Watson in an affidavit sworn on 19 December 2006 deposed that, “The second applicant is an Australian company operating a clothing wholesaling business in Australia …”.
The incorporation of the second applicant is not genuinely in dispute in that the first, second and third respondents did not appear to dispute the claim. Furthermore, it could not seriously be doubted that the second applicant is incorporated. It would not have involved any particular expense or delay for the applicants to have obtained a certificate of incorporation of the second applicant. Nevertheless, having taken into account the matters referred to in s.190(4) of the Evidence Act 1995, I am prepared to waive the requirement for a certificate of incorporation and to regard the evidence of Mr Watson set out in the previous paragraph as sufficient evidence of incorporation of the second applicant.
The first, second and third respondents admitted that the first respondent is incorporated and that the second and third respondents are and were at all material times directors, servants and agents of the first respondent. They also admitted that the first respondent operates a retail clothing and fashion accessory store in Bridge Road, Richmond under the name “Claudia's Boutique” and that in or about December 2005, the second applicant started supplying the first respondent with PianuraStudio products.
The claims in paragraphs 7 to 11 of the statement of claim were not admitted. However, there was evidence before the court in the form of an affidavit sworn by Mr Watson on 20 December 2006 substantiating each of those claims, namely, that:
a)the first applicant is an Italian designer and supplier of an exclusive range of high end women’s clothing and fashion accessories under the fashion label PianuraStudio;
b)the first applicant has been designing and distributing garments under the PianuraStudio label around the world since 1999;
c)the first applicant has exclusive distribution arrangements for the sale of PianuraStudio products with over 20 fashion distributors around the world, including in Australia, China, France, Germany, Japan, Spain, the USA and the United Kingdom; (a list was produced of Italian and international distributors of the PianuraStudio Products which appear on the first applicant’s website);
d)the second applicant became the exclusive distributor of the PianuraStudio Products in Australia in 2004;
e)the second applicant supplies the PianuraStudio products for retail sale to 35 customers across Australia; the customers are based in Sydney, Melbourne, Adelaide, Perth, Brisbane, Townsville, Cairns, Noosa, Gold Coast, Byron Bay, Nelson Bay, Newcastle and Bowral;
f)the second applicant employs a public relations company called “Sweaty Betty” to promote the PianuraStudio brand on its behalf;
g)the second applicant has spent $13,000 over the last 6 months with Sweaty Betty in promoting the PianuraStudio brand;
h)the PianuraStudio brand has been promoted in a number of publications in Australia, including the Brisbane News in June/July 2006; Famous in July and August 2006; Redzero in Spring 2006; Country Style in August 2006; Who in August 2006; TV Soap in September/October 2006, New Woman in October 2006 and Cosmopolitan in November 2006 (copies were produced of the articles from each of the publications listed above in which the PianuraStudio has been promoted);
i)the PianuraStudio brand has been promoted in a number of publications internationally, including Vogue, Elle, Marie Claire, Diva e Donna, BMM, D La Repubblica Delle Donne, Friendly, Woman, Clara, Gioia, Yo Dona, Donna Moderna, Amica Sportswear International, Camera Café and Oxigeno; (copies were produced of the articles from each of the publications promoting the PianuraStudio brand);
j)the PianuraStudio brand was promoted on Today Tonight in a swim suit special which aired on the program on Wednesday
23 August 2006;k)the first applicant operates a website promoting PianuraStudio Products at web address (a selection of web pages which appear on the first applicant’s website at was produced);
l)a Google search of the word “PIANURASTUDIO” returns 41,600 hits; (a print out of the first page of the Google search of the word “PIANURASTUDIO” was produced); and
m)a number of articles have been written about the PianuraStudio brand in Italy; (print outs of 4 online articles that have been written about the PianuraStudio brand were produced).
The applicants claimed that in view of the matters mentioned in the previous paragraph, the applicants had established a substantial reputation in the marketplace as the designers and distributors of PianuraStudio products. Based on the evidence set out in the previous paragraph, and in the absence of any contradictory evidence, I accept that claim.
The first, second and third respondents did not admit the allegation that prior to the issue of the proceedings they had, without the permission of the applicants, sold or offered for sale imitation PianuraStudio products to which the PianuraStudio label had been affixed without the authority of the applicants.
To substantiate their claim, the applicants relied firstly upon an affidavit sworn by Karin Blomquist on 25 May 2007. Ms Blomquist is an agent for a number of fashion houses and wholesale distributors of fashion garments including the garments of the second applicant. Ms Blomquist said that she had been supplying Claudia's Boutique with genuine PianuraStudio products since 10 March 2005. She said that since that time, Claudia's Boutique has purchased approximately 110 garments from Blomquist Agencies. Ms Blomquist said that in about September 2006 she received advice from a retail outlet in High Street, Armadale called Euro Collections that a customer had bought a PianuraStudio garment from Claudia's Boutique for substantially less than the retail price for which Euro Collections was selling them.
Ms Blomquist said that she attended Claudia's Boutique in about September 2006 to inspect the garments on sale. She said that Claudia Asseraf, the second respondent, and Paul Asseraf, her adult son, attempted to block her view of the garments. However, she said that she was able to see the garments. She said that there were about 20 to 30 garments for sale to which the PianuraStudio label had been affixed but which had not been supplied by Blomquist Agencies and which in her view were counterfeits. Ms Blomquist said that some of the garments were obviously counterfeit because the colour ways were different to genuine PianuraStudio garments. Ms Blomquist said all the counterfeit garments were current season stock and were being sold at a substantially lower price than the prices at which the retailers that she supplied were selling genuine PianuraStudio garments. Ms Blomquist also said that the counterfeit garments were being sold alongside the genuine PianuraStudio garments which she had supplied to Claudia's Boutique.
Ms Blomquist went on to say that she instructed a Helen Morphett, the bookkeeper at Blomquist Agencies, to purchase a particular skirt from Claudia's Boutique which Ms Blomquist believed to be counterfeit. Ms Morphett has deposed that she did so. The skirt is an exhibit to the affidavit of Mr Watson sworn on 19 December 2006. Ms Blomquist said that she examined the skirt and determined that it was definitely a counterfeit of a PianuraStudio skirt. She said, among other things, that the fabric of the counterfeit skirt was different in texture to a genuine PianuraStudio skirt and that the colours in the counterfeit skirt were different to the equivalent shades on a PianuraStudio skirt.
None of this evidence was challenged. I accept that it establishes that the first respondent sold or offered for sale counterfeit PianuraStudio products. I accept that in doing so the first respondent acted without the authority of the applicants.
The applicants also claimed that the first, second and third respondents had imported into Australia counterfeit PianuraStudio garments. The first, second and third respondents did not admit this allegation. The applicants, to establish their claim of importation, relied upon an admission made in an affidavit sworn by Paul Asseraf on 29 November 2006. Paul Asseraf deposed that he was the purchasing officer of the first respondent. He said that in February 2006 he purchased 10 to 15 PianuraStudio garments from a wholesaler in Hong Kong. Based on this evidence, I infer that the first respondent imported counterfeit PianuraStudio garments from Hong Kong.
The applicants claimed that the second and third respondents were involved in the importation and sale and offering for sale of the counterfeit PianuraStudio products by the first respondent. In support of this claim, the applicants relied firstly upon a company search of the first respondent which showed that the first respondent was a proprietary limited company with 12 issued shares, six of which were owned by each of the second and third respondents. The applicants argued that in such a small company, it was to be readily inferred that each of the directors had personal knowledge of the conduct of the company.
Moreover, the applicants relied on an affidavit sworn by Mr Watson on 25 May 2007 in which he deposed that the third respondent telephoned him in response to a letter of demand and admitted that he had purchased 15 to 20 PianuraStudio garments from overseas. Mr Watson also deposed that the third respondent made various promises in relation to the delivery up of the garments. The applicants argued that this indicated that the third respondent was acting in a position of authority in relation to the first respondent and from that it could be inferred that the third respondent had knowledge of the actions of the first respondent.
In relation to the involvement of the second respondent, the applicants relied upon the affidavit of Ms Blomquist mentioned above in which she says that the second respondent attempted to block Ms Blomquist's view of the counterfeit garments when she attended Claudia’s Boutique on 19 September 2006. The applicants argued that this indicated that the second respondent works in the business and was involved in the conduct of the business.
The applicants also argued that the evidence of Ms Blomquist that genuine PianuraStudio garments were being sold alongside counterfeit PianuraStudio garments at Claudia’s Boutique and that the counterfeit garments were being sold at a substantial discount also indicated that the second and third respondents were well aware of the conduct of the first respondent including that it was selling counterfeit PianuraStudio garments. In the absence of any countervailing evidence, I accept that the evidence before the court substantiates the applicants’ claim that the second and third respondents were involved in, or at least had knowledge of, the importation, sale and offering for sale of the counterfeit PianuraStudio garments by the first respondent.
The applicants claimed that in consequence of the conduct of the first, second and third respondents described above, they were making representations in trade or commerce that:
a)the counterfeit PianuraStudio garments were manufactured, advertised or promoted with the sponsorship or approval of the applicants or either of them;
b)the counterfeit garments were made by the first applicant;
c)the counterfeit garments were PianuraStudio garments; and
d)the counterfeit garments emanate from the same trade source as the PianuraStudio garments.
In answer to a question from the court, the applicants withdrew all the claims regarding manufacture. The applicants in their amended statement of claim went on to make the usual consequential claims in relation to breaches of the Trade Practices Act 1974 and the Fair Trading Act 1999 (Vic) and the tort of passing off. In my view, those claims are made out in the circumstances of this case. In particular, I accept that the matters set out in paragraph 19 above establish that the applicants had the reputation necessary for a passing off claim.
In terms of Rule 13.07 of the Federal Magistrates Court Rules 2001, I am satisfied that there is evidence of the facts on which the applicants’ claim for summary judgement is based. I am also satisfied on the evidence that the first, second and third respondents have no reasonable prospect of successfully defending the relevant part of the claim. Orders will be made accordingly.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Riley FM
Associate: Melissa Gangemi
Date: 20 June 2007
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