Facton Ltd v Dash Industries Pty Ltd
[2012] FMCA 651
•9 August 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FACTON LTD & ORS v DASH INDUSTRIES PTY LTD & ANOR | [2012] FMCA 651 |
| COPYRIGHT – Contempt – alleged breach of injunction. |
| Federal Magistrates Court Act 1999, s.17 Federal Magistrates Court Rules 2001, r.19.02 Judiciary Act 1903, s.24 |
| Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd & Ors [2003] VSC 201 Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98, (1986) 66 ALR 577, (1986) 60 ALJR 608, (1986) [1986] HCA 46 Australian Competition & Consumer Commission v Hughes[2001] FCA 38 Deputy Commissioner of Taxation v Hickey (1999) 99 ATC 5124, (1999) 42 ATR 229, [1999] FCA 259 Facton Ltd & Ors v Dash Industries Pty Ltd [2010] FMCA 709 Louis Vuitton Malletier SA v Design Elegance Pty Ltd (2006) 149 FCR 494, (2006) 225 ALR 541, [2006] FCA 83 Primelife Corporation Ltd v Newpark Pty Ltd & Andrejic [2003] VSC 106 Rip Curl International Pty Ltd & Ors v Phone Lab Pty Ltd & Ors(2004) 63 IPR 496, [2004] FCA 1215 Witham v Holloway (1995) 183 CLR 525, (1995) 131 ALR 401, (1995) 69 ALJR 847, [1995] HCA 3 |
| First Applicant: | FACTON LTD |
| Second Applicant: | G-STAR INTERNATIONAL B.V |
| Third Applicant: | G-STAR AUSTRALIA PTY LTD (ACN 084 011 852) |
| First Respondent: | DASH INDUSTRIES PTY LTD (ACN 133 864 267) |
| Second Respondent: | HAI YIM CHEN |
| File number: | MLG 20 of 2010 |
| Judgment of: | Riley FM |
| Hearing dates: | 13 February 2012 and 19 June 2012 |
| Date of last submission: | 25 June 2012 |
| Delivered at: | Melbourne |
| Delivered on: | 9 August 2012 |
REPRESENTATION
| Counsel for the Applicants: | E J C Heerey |
| Solicitors for the Applicants: | Middletons |
| Counsel for the First Respondent: | No appearance |
| Solicitors for the First Respondent: | No appearance |
| Counsel for the Second Respondent: | The second respondent appeared in person |
| Solicitors for the Second Respondent: | The second respondent appeared in person |
ORDERS
The application contained in paragraph 5 of the notice of motion filed on 29 July 2011 be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 20 of 2010
| FACTON LTD |
First Applicant
| G-STAR INTERNATIONAL B.V |
Second Applicant
| G-STAR AUSTRALIA PTY LTD (ACN 084 011 852) |
Third Applicant
And
| DASH INDUSTRIES PTY LTD (ACN 133 864 267) |
First Respondent
| HAI YIM CHEN |
Second Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for the second respondent to be dealt with for contempt of court for breaching certain injunctions. The applicants submit that it would be appropriate for the second respondent to be sentenced to imprisonment for two to three months, with that sentence to be suspended for 24 months conditional upon compliance with court orders.[1]
[1] Paragraph 30 of the applicants’ supplementary closing submissions filed on 26 June 2012
The first respondent went into liquidation on 21 March 2011. The applicants seek no orders against the first respondent. The second respondent became bankrupt on 7 April 2011 on the petition of the applicants.
In a judgment in default of defence handed down on 23 September 2010[2], orders were made including the following:
[2] Facton Ltd & Ors v Dash Industries Pty Ltd [2010] FMCA 709.
(1)The respondents, whether by themselves, their servants, employees, agents or otherwise howsoever be restrained, in trade or commerce from:
(a)importing, manufacturing, promoting, advertising, distributing, offering for sale, selling or exhibiting in public, the Dash Garments (as defined in paragraph 11 of the Statement of Claim) or any other clothing or clothing accessories to which the G-Star Trade Marks and Copyright Works have been affixed or applied without the knowledge, authority or licence of the applicants or any of them (Counterfeit G-Star Products);
(b)disposing or dealing with the Dash Garments or Counterfeit G-Star Products in any other way than in accordance with order 2 below;
(c)authorising, causing, procuring or inducing any person to do any act which would be an infringement of the injunction referred to in order 1(a) above;
(d)representing that the Dash Garments, or Counterfeit G-Star Products are imported, manufactured, advertised, promoted, offered for sale or sold with the sponsorship or approval of the applicants or any of them;
(e)representing that the Dash Garments or Counterfeit G-Star Products are the G-Star Products (as defined in paragraph 3 of the Statement of Claim);
(f)representing that the Dash Garments or Counterfeit G-Star Products emanate from the same trade source as the G-Star Products;
(g)representing that the Dash Products or Counterfeit G-Star Clothing are made by the applicants or any of them;
(h)passing themselves off as the applicants or any of them; and
(i)passing off the Dash Garments or Counterfeit G-Star Products:
(i) as and for the G-Star Products (as defined in paragraph 3 of the Statement of Claim); and
(ii) as having the sponsorship, approval or a connection or affiliation in the course of trade with the Applicants or any of them and the G-Star Products.
(2)The respondents, whether by themselves, their servants, employees, agents or otherwise howsoever, deliver up to the applicants:
(a)all the Dash Garments and Counterfeit G-Star Products in their possession, custody or control;
(b)any and all brochures, pamphlets, advertising, labels, swing tags, promotional or marketing material and the like in their power, possession, custody or control which bear the G-Star Trade Marks or the Copyright Works; and
(c) any materials, products or things in the respondents’ power, possession or control, the exploitation of which by the respondents would be an infringement of the foregoing injunctions.
In a statement of charge filed on 29 July 2011, the applicants allege that the second respondent, in breach of the orders set out above:
a) sold, offered for sale or exhibited in public counterfeit G-Star goods;
b) advertised, marketed or promoted counterfeit G-Star goods;
c) passed off garments as G-Star products; and
d) passed off her business and certain garments as having the sponsorship or approval of, or a connection or affiliation with, the applicants or any of them and G-Star.
The statement of charge alleges that the second respondent’s wrongdoing occurred at Unit 79, 278-284 Sussex Street Sydney (“the Sussex Street shop”) on:
a) 23 March 2011; and
b) 28 June 2011.
However, at the hearing on 19 June 2012, counsel for the applicants said that the orders that the second respondent breached were:
a) order 1(a) above, to the extent that it restrained the respondents by themselves or their servants, employees, agents or otherwise howsoever from offering for sale counterfeit G-Star products; and
b) order 1(c), which restrained the respondents by themselves or their servants, employees, agents or otherwise howsoever from authorising, causing, procuring or inducing any person to do any act which would be an infringement of order 1(a).[3]
[3] Transcript 19 June 2012 page 3 lines 16 to 44.
There was no application by the applicants to amend the statement of charge to include a breach of order 1(c). Given that the second respondent was not legally represented, and given that she is not a native speaker of English, it is not at all clear that the second respondent understood that the nature of the case the applicants sought to put against her was substantially different from the case alleged in the statement of charge. In view of the very serious penalty sought by the applicants, I do not consider that it would be proper to proceed as if the applicants had sought, and been granted, leave to amend their statement of charge.
On the other hand, the applicants’ counsel in effect withdrew the alleged breaches of order 1(a), except insofar as it restrained the second respondent by herself or her servants, employees, agents or otherwise howsoever from offering for sale counterfeit G-Star products.
Consequently, I proceed on the basis that the only allegation against the second respondent is that she, or her servants, employees, agents or otherwise howsoever offered for sale counterfeit G-Star products on 23 March 2011 and 28 June 2011 at the Sussex Street shop.
Evidence
The contempt application came on for hearing on 13 February 2012. The second respondent appeared in person with the assistance of an interpreter. The second respondent denied the allegations against her.
The second respondent did not dispute the affidavit sworn by Joseph Khoury on 25 September 2011. Mr Khoury said in that affidavit that he personally served the second respondent on 20 November 2010 with a copy of the orders made on 26 October 2010 which amended the orders of 23 September 2010 to include the third applicant’s correct Australian Business Number.
The second respondent did not dispute the affidavit sworn by David Neil McAlister on 27 September 2011. Mr McAlister said that he saw six G-Star branded garments on display at the Sussex Street shop on the morning of 28 June 2011. Mr McAlister said that he bought two G-Star branded garments from the Sussex Street shop at 10.28 am on 28 June 2011. He exhibited the receipt for the purchases. It showed Dash Industries Pty Ltd as the vendor.
The second respondent did not dispute the affidavit sworn by Piet Poelmann on 4 October 2011. Mr Poelmann said that the two garments bought by Mr McAlister from the Sussex Street shop on 28 June 2011 were counterfeit.
The second respondent did not dispute the affidavit of Anthony Brooke Watson sworn on 4 October 2011. Mr Watson said that:
a) the first respondent was incorporated on 24 October 2008;
b) its sole director and shareholder was the second respondent;
c) the first respondent’s registered office and place of business was the Sussex Street shop;
d) the first respondent was placed under external administration on 20 March 2011;
e) YC Australia Pty Ltd (“YC”) was incorporated on 21 May 2007;
f) the second respondent is and has always been the sole director and shareholder of YC; and
g) YC’s registered office and place of business was the Sussex Street shop.
I accept the unchallenged evidence contained in each of those affidavits.
At the hearing on 13 February 2012, the applicants also said that they relied on the affidavit sworn by Robina Kamil Bhola on
4 October 2011[4]. Ms Bhola said that:
[4] Transcript 13 June 2012 page 5 lines 14 to 16.
a) she attended the Sussex Street shop on 23 March 2011 to serve a copy of the liquidator’s notice of appointment on the second respondent in her capacity as the sole director of the first respondent;
b) Ms Bhola asked a female who appeared to be in charge of the shop if her name was Hai Yim Chen;
c) the female said, “yes”;
d) Ms Bhola noticed G-Star branded clothing for sale in the Sussex Street shop;
e) the storefront had signage which said, “Dash Industries”;
f) the second respondent told Ms Bhola that:
i.the first respondent did not trade from the Sussex Street shop; and
ii.the shop was leased and operated by YC Australia Pty Ltd; and
g) the second respondent’s solicitor attended the shop with a copy of the lease showing that the lessee of the shop was YC Australia Pty Ltd.
The second respondent filed an affidavit on 13 February 2012 in which she sought that any period of imprisonment imposed upon her be suspended for the following reasons:
a) she is a single mother;
b) her 16 year old son has Attention Deficit Hyperactivity Disorder;
c) he was hit by a car in 2007 and suffered several injuries, which have required numerous operations;
d) the first respondent cares for her son, including by taking him to appointments with doctors, psychologists, physical therapists and rehabilitation practitioners;
e) she is under a lot of financial pressure, because she is bankrupt and looks after her son and her elderly parents;
f) after her son’s accident, she had no time to manage the Sussex Street shop and her other shop in Mount Druitt, so she asked her employees to manage the business;
g) on about 1 October 2010, she borrowed $20,000 from a friend to pay for her son’s medical expenses;
h) the two shops were used as securities;
i) the friend kept all of the profits from the business, although it was not formally transferred to her;
j) after the earlier proceedings, the second respondent told her friend not to sell any more G-Star products;
k) since then, the second respondent hardly spoke to her friend about the business;
l) the second respondent said it was her fault for not checking whether her friend was still selling G-Star products;
m) the shop was closed in August 2011;
n) the second respondent has no prior convictions for contempt;
o) the second respondent has limited English and can hardly understand the legal documents served on her; and
p) the second respondent had no subjective intention to disobey court orders.
In addition, the second respondent said from the bar table at the hearing on 13 February 2012 that:
a) she knew she was selling counterfeit G-Star goods when the applicants initially sued her in January 2010[5];
b) she had stopped running the business in 2010 and it no longer belonged to her, although it was still under her name;
c) the second respondent was not at the Sussex Street shop when Ms Bhola arrived;
d) the staff of the shop telephoned the second respondent and told her Ms Bhola wished to serve a document on her; and
e) the second respondent went to the shop one or two hours after Ms Bhola arrived.
[5] Transcript 13 February 2012 page 11 line 42
After hearing the second respondent’s statements from the bar table, the applicants sought and were granted an adjournment of the hearing. The applicants filed a second affidavit sworn by Ms Bhola on 11 April 2012. In that affidavit, Ms Bhola said that:
a) her first affidavit was not correct in that, when she arrived at the Sussex Street shop, the second respondent was not present;
b) Ms Bhola approached two shop assistants and showed them a piece of paper with the second respondent’s name on it;
c) she asked to speak to the second respondent;
d) one of the shop assistants said that the second respondent was not at the store, but that she was the owner of the store;
e) at Ms Bhola’s request, the shop assistant rang the second respondent who later came to the store;
f) Ms Bhola served the second respondent with the notice of appointment of a liquidator;
g) the second respondent made a telephone call and two men arrived;
h) the second respondent told Ms Bhola that:
i.the first respondent, Dash Industries Pty Ltd, did not trade at the store;
ii.the store was leased and operated by YC Australia Pty Ltd;
i) Ms Bhola asked to see a copy of the lease which was brought to the store by a solicitor, Mr Leung;
j) the lease showed that the store was leased by YC Australia Pty Ltd; and
k) while Ms Bhola was waiting for the lease to arrive, the two shop assistants started removing the Dash Industries signage by scraping the painted words, “Dash Industries”, off the front window.
The hearing recommenced on 19 June 2012. The second respondent appeared in person with the assistance of an interpreter.
The second respondent cross examined Ms Bhola. She conceded that the sign on the Sussex Street shop said “Dash” rather than “Dash Industries”. Ms Bhola stood by her affidavit evidence that the shop assistant had said that the second respondent was the owner of the store. The second respondent put it to Ms Bhola that the older of the two unidentified men who attended the store told Ms Bhola that the second respondent was not the owner of the store and she did not “own the finance” of the store. Ms Bhola denied that. The second respondent put to Ms Bhola that “that day, we didn’t have
G-Star stock”. Ms Bhola denied that, saying that she had a good look around the store while she was waiting over half an hour for the second respondent to arrive.
The second respondent put to Ms Bhola that she could not be believed because her first affidavit was wrong about whether the second respondent was at the shop when Ms Bhola arrived.
Ms Bhola said that she had not looked closely at the first affidavit before swearing it because she was staying at a friend’s apartment while in the process of relocating to New Zealand.
Under cross examination, the second respondent said:
a) her friend invested in the business as a partnership in 2008;
b) in October 2008, the second respondent incorporated Dash Industries Pty Ltd and the second respondent was the sole director and shareholder;
c) the second respondent’s friends had been compassionate towards her and helped her with the business;
d) the friend did not know how to run the business but the second respondent did;
e) the second respondent had no documents to support her claim that her friend had invested in the business;
f) the second respondent had not told the tax office about her friend’s involvement in the business;
g) the second respondent had never had any contact with an authorised G-Star distributor;
h) “when they were selling the G-Star product … I was not running the business”;
i) the second respondent was involved in running the business in June 2010 “but not much”;
j) as far as customers were concerned, as late as June 2011, the company selling the counterfeit G-Star products was Dash Industries Pty Ltd;
k) the receipt exhibited to Mr McAlister’s affidavit did not specify that the products purchased were G-Star products;
l) the receipt showed that the products were bought from Dash Industries Pty Ltd;
m) the EFTPOS facility at the Sussex Street shop was provided by St George Bank;
n) the second respondent never told St George Bank that anyone other than the second respondent owned Dash Industries Pty Ltd;
o) the second respondent never told the corporations registrar, or the landlord of the Sussex Street shop, that anyone other than her owned YC Australia Pty Ltd;
p) Dash Industries Pty Ltd was under the second respondent’s name but all of the profits went to her friend;
q) the second respondent was not deceiving her customers, the government or the bank when she let them believe that her wholly owned company was running the business;
r) the second respondent has no basis on which to challenge Mr Poelmann’s evidence that the garments bought from the Sussex Street shop by Mr McAlister are fake;
s) the second respondent knew after the judgment was handed down in September 2010 that she should not sell any more fake G-Star products; and
t)
she knew that she could be in trouble if she kept selling fake
G-Star products.
The law relating to contempt
The following summary of the law relating to contempt is taken substantially from the applicants’ written submissions.
Section 17 of the Federal Magistrates Court Act 1999 vests in this court the same power to punish contempts of its power and authority as that of the High Court, which in turn has the same power to punish contempts as the Supreme Court of Judicature had in England in 1903.[6]
[6] Judiciary Act 1903 (Cth) s 24; Deputy Federal Commissioner of Taxation v Hickey (1999) 99 ATC 5124 (1999) 42 ATR 229 [2006] FCA 83, [34] (Carr J).
Rule 19.02 of the Federal Magistrates Court Rules 2001 deals with contempts other than in the face or hearing of court. It relevantly provides:
(1)If it is alleged that a person has committed a contempt of the Court (other than contempt in the face or hearing of the Court), an application may be made to the Court for the person to be dealt with for the contempt.
(2) An application must:
(a) be in accordance with the approved form; and
(b) state the contempt alleged; and
(c)be supported by an affidavit setting out the facts relied on.
(3) An application may be made:
(a)if the contempt is in connection with a proceeding, by a party in the proceeding; or
…
(4) …
(5) …
(6) When the person attends before the Court, the Court must:
(a) tell the person of the allegation; and
(b)ask the person to state whether he or she admits or denies the allegation; and
(c) hear any evidence in support of the allegation.
(7)After hearing evidence in support of the allegation, the Court may:
(a)if the Court decides there is no prima facie case, dismiss the application; or
(b) if the Court decides there is a prima facie case:
(i) invite the person to state his or her defence to the allegation; and
(ii) after hearing any defence, determine the charge.
(8)If the Court finds the charge proved, the Court may make an order for the punishment of the person.
In Deputy Federal Commissioner of Taxation v Hickey,[7] Carr J held at [35] that:
Any contempt of court is serious. The seriousness transcends matters such as the personal dignity of the judiciary, or the rights in this case of the Commissioner as a litigant in this court. The offence involves interference with the effective administration of justice, by impeding and perverting its course … . Contempt of court is a matter of basic public significance. Unless the laws of contempt are properly enforced our whole system of justice is at risk.
[7] [1999] FCA 259, (1999) 42 ATR 229, (1999) 99 ATC 5124
In Witham v Holloway[8], Brennan, Deane, Toohey and Gaudron JJ held that:
All orders, whether they be Mareva injunctions, injunctions relating to the subject matter of the suit, or, simply procedural orders, are made in the interests of justice. Non-compliance necessarily constitutes an interference with the administration of justice even if the position can be remedied as between the parties.
…
... proceedings for breach of an order or undertaking have the effect of vindicating judicial authority as well as a remedial or coercive effect. Indeed, if the person in breach refuses to remedy the position ... their only effect will be the vindication of judicial authority. Given that purpose or object cannot be readily disentangled from effect and given, also, that a penal or disciplinary jurisdiction may be called into play in proceedings alleging breach of an order or undertaking, it is necessary to acknowledge ... that punitive and remedial objects are ... “inextricably intermixed”.
Moreover and, perhaps, of more importance, nothing is achieved by describing some proceedings as “punitive” and others “remedial or coercive”. Punishment is punishment, whether it is imposed in vindication or for remedial or coercive purposes. And there can be no doubt that imprisonment and the imposition of fines, the usual sanctions for contempt, constitute punishment. And the same is true of a sequestration made in consequence of a company's failure to comply with an order or undertaking.
[8] (1995) 183 CLR 525 at 533–4, (1995) 131 ALR 401, (1995) 69 ALJR 847, [1995] HCA 3
Nettle J in Primelife Corporation Ltd v Newpark Pty Ltd & Andrejic[9] said:
The court may impose sanctions for contempt of court on the ground of disobedience of an order for the purposes of coercing compliance and for the purposes of punishing the contemnor for non compliance. The aim of contempt sanctions in civil proceedings is primarily coercive or remedial, but it is recognised that a punitive aim is warranted to vindicate the authority of the court.
[9] [2003] VSC 106, [32].
Tamberlin J in Australian Competition & Consumer Commission v Hughes[10] said:
Ultimately, in the case of mandatory or prohibitory orders made by it, the sanction which the Court has in order to enforce its decisions is the power to punish for contempt. This is the way in which the Court preserves respect for its role and the rule of law. Without the enforcement of court orders the whole process of adjudication becomes a hollow exercise. If a losing party can defy the orders of the Court then such disobedience renders futile, in the perception of the community, the remedy secured by the successful party. Orders are not made simply to suggest or advise persons that they ought to keep to the law as proclaimed but to ensure that the law is carried out as determined by the decision pursuant to which the order is made. Defiance of court orders diminishes the authority of courts and removes the incentive of parties, if such conduct is left unpunished, to comply with the requirements of the courts.
[10] [2001] FCA 38, [15].
In Rip Curl International Pty Ltd & Ors v Phone Lab Pty Ltd & Ors,[11] Hely J held that:
[11] (2004) 63 IPR 496, 502 [2004] FCA 1215.
[t]he offence involves interference with the effective administration of justice
and at 503 cited Carr J’s observation in Deputy Federal Commissioner of Taxation v Hickey[12] that:
[12] (1999) 42 ATR 229, (1999) 99 ATC 5124, [1999] FCA 259 at [85].
Unless the laws of contempt are properly enforced our whole system of justice is at risk.
In AMIEU v Mudginberri Station Pty Ltd[13], Gibbs CJ, Mason, Wilson and Deane JJ said:
lying behind punishment for a contempt which involves wilful disobedience to a court order, is the very substantial purpose of disciplining the defendant and vindicating the authority of the court.
[13] (1986) 161 CLR 98, (1986) 66 ALR 577, (1986) 60 ALJR 608, (1986) [1986] HCA 46.
The general rule is that those who are subject to an order of a court are required to strictly observe the terms of the order[14].
[14] Australian Competition & Consumer Commission v Hughes [2001] FCA 38, [17]
It is a contempt of court to:
a.refuse or neglect to do an act required by an order of a court within the time specified in the judgment or order;
b.disobey an order restraining a person (including a body corporate) from doing a specified act;
c.act in breach of an undertaking given to the court, on the faith of which the court permits a particular course of action or inaction; or
d.breach an injunction.
In Louis Vuitton Malletier SA v Design Elegance Pty Ltd[15],
Merkel J summarised the current state of the law on when disobedience of a court order will constitute a contempt of court and the standard of proof required. His Honour said:
Deliberate conduct which is in breach of a court order will constitute wilful disobedience of the order, and therefore a civil contempt, unless the conduct be casual, accidental or unintentional: see Australasian Meat Industry Employees’ Union v Mudginbeeri Station Pty Ltd (1986) 161 CLR 98 at 106–107 and 112–113. However, the disobedience will amount to a criminal contempt if it involves “deliberate defiance or, as it is sometimes said, if it is contumacious”: see Witham v Holloway (1995) 183 CLR 525 at 530 … However, as all proceedings for contempt are now regarded as criminal in nature, all of the charges must be proved beyond reasonable doubt: see Witham at 534.
[15] (2006) 149 FCR 494 at 497–8, (2006) 225 ALR 541, [2006] FCA 83
In Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd[16], Gillard J identified the elements which it is necessary for a complainant to establish in order to make good a charge of civil contempt of court. His Honour said:
[16] [2003] VSC 201.
[31]In order to prove a civil contempt of court involving a breach of an order of the court, the plaintiff has to prove the following:
(i) that an order was made by the court;
(ii) that the terms of the order are clear, unambiguous and capable of compliance;
(iii) that the order was served on the alleged contemnor or excused in the circumstances, or service dispensed with pursuant to the Rules of Court;
(iv) that the alleged contemnor has knowledge of the terms of the order;
(v) that the alleged contemnor has breached the terms of the order.
[32]It is necessary for the plaintiff to prove each element beyond reasonable doubt. In accordance with the principles of the criminal law, in proving element (v) it must be proven that the act or omission which constituted the breach of the order was deliberate and voluntary.
Application of the law to the facts
In applying the law to the facts, it is necessary to keep firmly in mind that a charge of contempt requires the applicants to prove:
a) each element of the offence beyond reasonable doubt; and
b) that the conduct constituting the alleged breach was deliberate and voluntary.
a. whether orders were made by the court
Orders were made by the Court on 23 September 2010 and varied on 26 October 2010. The relevant orders are set out above.
b. whether the terms of the order are clear, unambiguous and capable of compliance
It was not expressly disputed that the orders were clear, unambiguous and capable of compliance. Having said that, the second respondent said, and I accept, that her command of the English language is limited, and she did have some difficulty understanding the legal documents connected with this matter. However, she also said very clearly that she understood when she was served with the orders made on 23 September 2010 and varied on 26 October 2010 that they meant that she and, implicitly, the first respondent, would be in trouble if they sold counterfeit G-Star goods.
c. whether the orders were served
It was not disputed that the orders were served on the second respondent. Evidence of service is set out in affidavits sworn by Anthony Brooke Watson and Joseph Khoury.
d. whether the second respondent had knowledge of the orders
It was not disputed that the second respondent had knowledge of the orders. She was personally served with them, she said that she knew that she would be in trouble if she breached them and she said that, upon receipt of the orders, she told her friend not to sell any more counterfeit G-Star products.
e. whether the second respondent has breached the orders
The question for the court is whether the second respondent breached the orders in the way alleged in paragraph 9 above, that is, that she, by herself, her servants, employees, agents or otherwise howsoever, offered for sale counterfeit G-Star products on either or both of 23 March 2011 and 28 June 2011 in the Sussex Street shop.
This is not an application against the first respondent. The first respondent is a separate legal entity from the second respondent. The second respondent was the sole director and shareholder of the first respondent. However, that does not necessarily mean that all of the acts of the first respondent, or its servants and agents, were the acts of the second respondent. The first respondent, at least in theory, could have had numerous servants and agents, other than the second respondent, through whom it acted.
There was no discussion at the hearing about what is meant by the phrase “offer for sale”. However, in the present context, that phrase would seem to mean “placing the garments where they were available to customers to buy them”.
It is abundantly clear from the unchallenged evidence of Mr McAlister and Mr Poelmann that counterfeit G-Star products were offered for sale at the Sussex Street shop on 28 June 2011.
Ms Bhola gave evidence that products purporting to be G-Star products were offered for sale at the Sussex Street shop on
23 March 2011. The second respondent put to Ms Bhola that, in fact, there were no products purporting to be G-Star products for sale in the Sussex Street shop on 23 March 2011. Ms Bhola gave firm, clear and detailed evidence to the effect that there were such products offered for sale on 23 March 2011 at the Sussex Street shop.It was then put to Ms Bhola that she had not been truthful in her first affidavit about whether the second respondent was at the Sussex Street shop when Ms Bhola arrived, and therefore her other evidence should not be believed either. Ms Bhola was adamant that products purporting to be G-Star products were being offered for sale in the Sussex Street shop on 23 March 2011.
The error in Ms Bhola’s first affidavit involved a substantial misstatement of the events of 23 March 2011. That error could have had a very significant impact on this case, if it had not been corrected after the second respondent disputed the matter on
13 February 2012. It is troubling that a professional person such as Ms Bhola could have made such a significant and fundamental error in a sworn statement.The second respondent disputed that G-Star products were offered for sale in the Sussex Street shop on 23 March 2011. However, on her own evidence, she did not see whether G-Star products were on display that day, so she is not in a position to say positively that there were no G-Star products offered for sale in the Sussex Street shop on 23 March 2011.
I am satisfied beyond reasonable doubt that products purporting to be G-Star products were offered for sale at the Sussex Street shop on 23 March 2011. Ms Bhola’s evidence on this point was given clearly and confidently. She explained that she had ample time to look around the shop while waiting for the second respondent to arrive. She appeared to me to be telling the truth about this matter. Moreover, there is the unchallenged evidence of Mr McAlister and Mr Poelmann that products purporting to be G-Star products were offered for sale at the Sussex Street shop on 28 June 2011.
There was no direct evidence that the products purporting to be
G-Star products that were offered for sale in the Sussex Street shop on 23 March 2011 were counterfeit. There was no evidence that the applicants’ agents bought any such products from the Sussex Street shop on 23 March 2011. There was no evidence that an expert had examined any such products and found them to be counterfeit.Nevertheless, the second respondent said that she had never had any contact with any authorised G-Star dealer.[17] Additionally, there is no doubt that the garments bought by Mr McAlister from the Sussex Street shop on 28 June 2011 were counterfeit. In these circumstances, it beggars belief that any purported G-Star products offered for sale in the Sussex Street shop on 23 March 2011 could have been genuine. Consequently, I am satisfied beyond reasonable doubt that, on 23 March 2011, counterfeit G-Star products were offered for sale at the Sussex Street shop.
[17] Transcript 19 June 2012 page 25 lines 44-45.
The next question is who offered for sale the counterfeit G-Star products at the Sussex Street shop on 23 March 2011 and 28 June 2011? There was some dispute about whether the front of the shop had signage bearing the name “Dash” or “Dash Industries”. The second respondent said the former and Ms Bhola said the latter. However, when pressed, Ms Bhola conceded that the sign only said “Dash”.
This again gives rise to some doubts about the accuracy of Ms Bhola’s evidence generally. However, it does not seem to me to be material that the sign on the front window said “Dash” rather than “Dash Industries”. It is not suggested that there was some entirely separate entity called “Dash” that was responsible for the alleged wrongdoing.
There is no direct evidence that the second respondent personally offered for sale any counterfeit G-Star goods on 23 March 2011 or 28 June 2011. She was not at the Sussex Street shop when Ms Bhola arrived on 23 March 2011. The second respondent said that, when she went to the Sussex Street shop to meet Ms Bhola, she went straight to the office, had no chance to look at the shop, and left immediately afterwards.[18] I accept that evidence. It was not challenged. There was no evidence that the second respondent was at the Sussex Street shop at all on 28 June 2011. Mr McAlister’s affidavit was silent on the point. The applicants did not put to the second respondent that she had personally placed counterfeit G-Star products on display at the Sussex Street shop on or around 23 March 2011 or 28 June 2011.
[18] Transcript 19 June 2012 page 40 lines 5 to 13
I see no proper foundation for an inference that the second respondent personally offered counterfeit G-Star products for sale at the Sussex Street shop on 23 March 2011 or 28 June 2011. Accordingly, it has not been proved beyond reasonable doubt that the second respondent personally offered counterfeit G-Star products for sale on 23 March 2011 or 28 June 2011 at the Sussex Street shop.
Nevertheless, the question is whether the second respondent, by herself, her servants, employees agents or otherwise howsoever offered counterfeit G-Star products for sale on 23 March 2011 or
28 June 2011 at the Sussex Street shop. The employees of Dash Industries Pty Ltd were clearly not the second respondent’s employees. The first and second respondents were separate legal entities. However, the shop assistants at the Sussex Street shop could well have been the servants or agents of the second respondent, because she was the sole director and shareholder of their employer, namely, the first respondent.Someone must have put the counterfeit G-Star products on display at the Sussex Street shop and thus offered them for sale. It seemed to be implicit in the second respondent’s case that it was the shop assistants who had done so. The question then is whether the shop assistants were acting as the second respondent’s servants or agent’s, or as someone else’s servants or agents? The second respondent suggested that the shop assistants were actually acting at material times as the servants or agents of her friend, who had bought into the business.
The second respondent claimed that her unidentified friend had bought into the business in 2008. The second respondent did not make it clear whether she was claiming that the friend bought a share of Dash Industries Pty Ltd, or bought a share of the business, such that the friend was in some sort of partnership with Dash Industries Pty Ltd. However, the distinction is immaterial.
The second respondent said in her affidavit sworn on
10 February 2012:
19.After my son’s Accident [in 2007], I have essentially no time to manage and run the Sussex Dash Shop and the Druitt Dash Shop on a daily basis. I, essentially, asked my employees to look after the business.
20.On about 1 October 2010, I borrowed $20,000.00 from my friend. The borrowed money was used for my son’s medical and rehabilitation fees. In return for the borrowed money, both the Sussex Dash Shop and the Druitt Dash Shop were used as securities.
21.Although we have not done the transfer of business properly through the solicitors, all the products and profits were kept by my friend since 1 October 2010. This is the main reason why I was absent from the two shops whenever the Applicant’s solicitor serve[d] legal documents upon me.
22.After the G-Star proceedings, I told my friend not to sell any more G-Star products. After that, I hardly spoke to her about the shops and the business.
23.I admit that it is my fault for not checking whether my friend is still selling the G-Star products after I told her not to sell anymore. However, I deny that I [had] any intention to [commit a] contempt [of] the Court.
The applicants put it to the second respondent that her oral evidence was inconsistent with her affidavit in relation to timing. Her oral evidence was that, from 2008, she went to the shop much less often, and her friend invested in the business.[19] In her affidavit, she said the friend invested in the business in 2010.
[19] Transcript 19 June 2011 page 21 line 19 and page 22 line 22
There are many reasons to doubt the second respondent’s evidence on this point. The second respondent has never identified the friend. No evidence was called from the friend. There is no evidence of any official record of any transfer of any part of the business. There is no evidence of any bank record of any money being invested in the business. There is the inconsistency in timing identified by the applicants.
However, there are also reasons to consider that the second respondent’s evidence on this point might be true. I do accept that the second respondent’s son was seriously injured in a car accident in 2007. That evidence was not challenged and the second respondent appeared to be entirely truthful when speaking about it.
I also accept, for the same reasons, that the second respondent has had to spend a great deal of time caring for her son and her elderly parents.
Moreover, the second respondent was definitely not at the Sussex Street shop when Ms Bhola arrived on 23 March 2011. There is no evidence that she was at the Sussex Street shop on 28 June 2011, when Mr McAlister bought the counterfeit G-Star products. These facts are consistent with the second respondent’s claims that she withdrew from the business and spent little time there.
In response to a question about why the business had not been transferred officially, the second respondent said that it was a very small business. It seems to me to be plausible that a woman in the second respondent’s position, being a very busy single mother with a seriously injured son who needed frequent medical attention, elderly parents to care for, and no mastery of English, might not attend to the legal niceties if she had the good fortune to have a friend who would financially assist her. It also seems to me to be plausible that she would not voluntarily identify her friend, for fear of getting her into trouble.
Consequently, I find it plausible that the second respondent did have a friend who had some involvement with the business, and under whose instruction the shop assistants at the Sussex Street shop were acting at material times. In these circumstances, I am not satisfied beyond reasonable doubt that the second respondent, by herself, or her servants or agents or otherwise howsoever, offered counterfeit G-Star products for sale on 23 March 2011 and 28 June 2011 at the Sussex Street shop.
Moreover, I am not satisfied beyond reasonable doubt that any conduct in breach of the orders by the servants or agents of the second respondent was deliberate and voluntary on the second respondent’s part. She gave evidence that she instructed her friend not to sell G-Star products. It was not specifically put to the second respondent that that evidence was not true. The second respondent appeared to me to be truthful when speaking about this matter.
For these reasons, the application must be dismissed.
I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of Riley FM
Date: 9 August 2012
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