TM25 Holding B.V. v Redac International Pty Ltd

[2016] FCCA 113

FEDERAL CIRCUIT COURT OF AUSTRALIA

TM25 HOLDING B.V. & ORS v REDAC INTERNATIONAL PTY LTD & ORS [2016] FCCA 113

Catchwords:
COPYRIGHT – Trademarks – passing off – consumer law – applicants seeking relief arising from alleged sales by the respondents of counterfeit G-Star garments – whether garments sold were indeed counterfeit – whether respondents knew or ought reasonably to have known garments were counterfeit – respondents asserting only a small number of G-Star garments sold – Court finding that large number of garments sold – applicants’ case clearly made out – garments known by respondents to be counterfeit – applicants electing for damages rather than an account of profits – damages assessed – damages also assessed and awarded for damage to applicants’ reputation – additional damages awarded – declaratory and other relief claimed and not put in issue by respondents – declarations and injunctions made.

Legislation:

Trade Marks Act 1995, ss.120, 123, 126, 126(2)
Copyright Act 1968, ss.36, 37(1), 37(2), 115, 115(4)
Australian Consumer Law, ss.18, 19
Competition and Consumer Act 2010
Federal Court Rules 2011, r.16.07(2)
Evidence Act 1995, ss.76, 79(1)

Pan Pharmaceuticals Pty Ltd (in liq) v Selim [2008] FCA 416
Paul’s Retail Pty Ltd v Lonsdale Australia Ltd (2012) 294 ALR 72
Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407
Johnson & Johnson Aust Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326
Deckers Outdoor Corporation Inc v Farley & Ors (No.5) [2009] FCA 1298
Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (2007) 157 FCR 564

First Applicant: TM25 HOLDING B.V.

Second Applicant: G-STAR RAW C.V.

Third Applicant: G-STAR AUSTRALIA PTY LTD
(ACN 084 011 852)

First Respondent: REDAC INTERNATIONAL PTY LTD (ACN 139 119 930)

Second Respondent: MOHAMED KALEEL ABDUL CADER

Third Respondent: RAZIUDEEN SAFIFDEEN 

Fourth Respondent: DC FASHION HUB PTY LTD
(ACN 161 678 244)

File Number: MLG 1252 of 2014

Judgment of: Judge Burchardt

Hearing dates: 15, 16 & 17 June 2015, 4 & 12 August 2015, 11, 12 & 13 November 2015

Date of Last Submission: 21 December 2015

Delivered at: Melbourne

Delivered on: 12 February 2016

REPRESENTATION

Counsel for the Applicants: Mr Heerey

Solicitors for the Applicants: K&L Gates

First Respondent: In Person

Second Respondent: In Person

Third Respondent In Person

Fourth Respondent In Person

ORDERS

THE COURT DECLARES THAT, FOR THE REASONS SET OUT IN THE REASONS FOR JUDGMENT:

1. The Respondents have infringed the G-Star Trade Marks (as defined in paragraph 6 of the Statement of Claim) (“the Trade Marks”) in breach of s. 120 of the Trade Marks Act 1995 (Cth) (Trade Marks Act);

2. The Respondents have infringed or authorised the infringement of the Copyright Works (as defined in paragraph 8 of the Statement of Claim) (“the Copyright Works”) in breach of ss.36, 37 and/or 38 of the Copyright Act 1968 (Cth)(Copyright Act);

3. The first and fourth respondents have contravened ss.18 and 29 of the Australian Consumer Law as found in Schedule 2 of the Competition and Consumer Act 2010 (Cth)(ACL);

4. The second and third respondents have contravened sections 18 and 29 of the Australian Consumer Law (VIC) as found in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL VIC) (as adopted by section 9 of the Fair Trading Act 1999 (Vic)); and

5. The respondents have engaged in conduct which constitutes the tort of passing off.

THE COURT ORDERS THAT:

1. The Respondents, whether by themselves, their directors, employees, servants, 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 any clothing or clothing accessories in Australia to which the Trade Marks and/or the Copyright Works have been affixed or applied without the knowledge, authority or licence of the Applicants (Respondents' Products);

   (b)disposing or dealing with the Respondents' Products in any other way than in accordance with order 7 below;

   (c)authorising, causing, procuring or inducing any person to do any act which would be an infringement of the injunctions referred to in paragraphs 6(a) and (b) above;

   (d)representing that the Respondents' Products are imported, advertised, promoted, offered for sale or sold with the sponsorship or approval of the Applicants;

   (e)representing that the Respondents' Products are the G-Star Products (as defined in paragraph 4 of the Statement of Claim);

   (f)representing that the Respondents' Products emanate from the same trade source as the G-Star Products;

   (g)representing that the Respondents' Products are made by the Applicants or any of them;

   (h)representing that the Respondents are licensed, authorised, sponsored, approved or endorsed by the Applicants; and

   (i)passing off:

   (i) themselves as the Applicants; and

   (ii) the Respondents' Products as:

   (A) and for the G-Star Products; and/or

   (B) having the sponsorship, approval or a connection or affiliation in the course of trade with the Applicants or the G-Star Products.

2. The Respondents, whether by themselves, their directors, employees, servants, agents or otherwise howsoever deliver up to the Applicants:

   (a)all of the Respondents' 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 in breach of the foregoing injunctions.

3. The Respondents pay the Applicants $8,941.42 as damages for loss of sales.

4. The Respondents pay the Applicants $20,000 as damages for damage to reputation.

5. The Respondents pay the Applicants $100,000 additional damages.

6. The Respondents are to pay the costs of the applicants which are to be taxed pursuant to the Federal Court Rules in default of agreement.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 1252 of 2014

TM25 HOLDING B.V.

First Applicant

G-STAR RAW C.V.

Second Applicant

G-STAR AUSTRALIA PTY LTD (ACN 084 011 852)

Third Applicant

And

REDAC INTERNATIONAL PTY LTD (ACN 139 119 930)

First Respondent

MOHAMED KALEEL ABDUL CADER

Second Respondent

RAZIUDEEN SAFIFDEEN

Third Respondent

DC FASHION HUB PTY LTD (ACN 161 678 244)

Fourth Respondent

REASONS FOR JUDGMENT

Introductory

1. The three companies that constitute the applicants between them own various trademarks and copyright and retail and promote the same in Australia in respect of clothing apparel known as G-Star products. The applicants say that the respondents traded extensively in counterfeit G-Star product garments. Accordingly the claim is put for relief as a result of infringements alleged pursuant to s.120 of the Trade Marks Act 1995, s.36 of the Copyright Act 1968, ss.18 and 19 of the Australian Consumer Law as found in Schedule 2 of the Competition and Consumer Act 2010 and the common law tort of passing off.

2. The respondents admit, (although in a highly qualified way that goes at times as close as makes no difference to being a denial), that they sold some possibly counterfeit  G-Star product but say that the same was innocent or unwitting and in any event constituted only a very small supply of garments.

3. For the reasons that follow I accept the applicants’ assertions and the applicants will be entitled to substantial relief against all four respondents.

Preliminary issue, the substitution of TM25 Holding B.V. in place of Facton Ltd

1. When the trial first commenced on 15 June 2015 counsel for the applicant sought to file an amended originating application and Statement of Claim, the sole purpose of which was to reflect the fact that the original first applicant, Facton Ltd, had sold the relevant intellectual property rights included in the original Statement of Claim to TM25 Holding B.V (“TM25”).  This was attested to in an affidavit of Jonathan Feder dated 12 June 2015. As counsel submitted this was no more than an internal restructure within the group of companies that obviously exist to manage G-Star matters generally.

2. The second respondent, Mr Cader, took objection to the Application to Amend asserting that if there was a new first applicant then the case should commence all over again (see transcript P9) but I ruled summarily against this.  I observed I would give fuller reasons in my judgment.

3. Although these reasons are slightly fuller than the peremptory way in which I dealt with the matter at the time, the matter can in fact be stated shortly.  There is no doubt from Mr Feder’s affidavit that counsel was correct to describe the reallocation of the various intellectual property rights from Facton Ltd to TM25 as nothing more than an internal matter.  In fact as the applicants written submissions point out, the respondents have never put in issue any of the various formal matters asserted by the applicants as to their ownership of the relevant intellectual property and a number of other formal matters.  In these circumstances and given the obviously cogent evidence of Mr Feder, there was no possible prejudice to the respondents in the substitution of the new corporate identity as the first applicant.  For those reasons I granted the application.

Formal matters

1. The amended Statement of Claim pleads the incorporation of all three applicants.  It further pleads that since 1989 the second applicant and its predecessor in business G-Star International B.V. have designed, promoted, marketed, advertised, distributed, offered for sale and sold around the world clothing and clothing accessories branded with and by reference to the name G-Star.  The Statement of Claim then pleads that the third applicant is and was at all material times the exclusive Australian distributor of the G-Star products.

2. The Statement of Claim goes on to plead the ownership by the first applicant of various Australian trademarks (all of which contain either the words G-Star and/or a logo in the form of a “G”).  The Statement of Claim then pleads that the first applicant granted the second applicant an exclusive licence to use the G-Star trademarks.

3. The Statement of Claim goes on to plead that employees of the second applicant’s predecessor, G-Star International, created artistic works in the course of their employment being two G-Star “G” logos and the “Originals” Logo which have been used by the applicants on G-Star products and promotional material. It is pleaded that these works are original artistic works in which copyrights exist by virtue of the Copyright Act, such copyright being owned by G-Star International.  The said works and the right to sue for breach of copyright were assigned to the second applicant by way of a deed of assignment dated 19 April 2011.

4. The Statement of Claim goes on to plead the incorporation of the first respondent, and that the second respondent, Mr Cader, is and was at all times the sole director and shareholder of Redac, a director and shareholder of the fourth respondent, DC Fashion Hub Pty Ltd (“DC Fashion”), the co-proprietor of the registered business name Xzite and the co-proprietor of the registered business name DC Fashion Hub.

5. The Statement of Claim then asserts that the third respondent is and was at all material times a former director of DC Fashion, having commenced on 17 December 2012 and resigned on 14 June 2013.  The pleading asserts that Mr Sarifdeen is a former shareholder of the fourth respondent, and co-proprietor of the registered business names Xzite and DC Fashion Hub.

6. The pleading then pleads the incorporation of the fourth respondent.

7. The pleading then asserts that Mr Cader, Mr Sarifdeen and DC Fashion operated two retail stores named Xzite located respectively in Bacchus Marsh and Cairnlea, both in Victoria.

8. It should be noted that the defence of the respondents does not plead to paragraphs 1-9 of the Statement of Claim at all, these being the matters going to the incorporation of the applicants and their ownership of the relevant intellectual property. Counsel for the applicants is correct to say that by virtue of r.16.07(2) of the Federal Court Rules 2011, which it is in the circumstances in the absence of an equivalent rule in this Court’s rules appropriate to apply, these matters are admitted.  Furthermore, in the affidavit of Cameron Wesley Heymans, affirmed 11 August 2015, Mr Heymans provides direct information from his own knowledge confirming the licencing from TM25 and the second applicant to the third applicant of the trademarks and copyright works in any event.

9. Accordingly, as the applicants written submissions note at paragraph 23, the incorporation of the applicants, their relevant ownership of and/or licence to use the trademarks and copyright, and indeed the applicants’ ownership of the asserted intellectual property pleaded is simply not in doubt.  Likewise, it is clear that the evidence given by Mr Heymans as to the reputation subsisting in the G-Star trademarks, copyright works and G-Star products by virtue of their promotion since 1989 is not in issue.  As the applicants’ written submissions again correctly point out at paragraph 169, the respondents have not pleaded to these assertions nor was Mr Heymans’ evidence to this effect challenged in cross-examination.

Matters concerning the respondents which are either admitted or non-controversial

1. The first respondent is incorporated pursuant to Australian law and the respondents’ defence expressly admits that Mr Cader is the sole director and shareholder of Redac International Pty Ltd (“Redac”) and also of DC Fashion trading as Xzite.

2. DC Fashion is a company incorporated pursuant to Australian law and it is, in my view, wholly uncontroversial that Mr Cader has been a director and shareholder of DC Fashion since it was incorporated on 17 December 2012 and that Mr Sarifdeen was a director and shareholder of DC Fashion from incorporation on 17 December 2012 until he resigned on 14 June 2013.  Likewise, it is clear from the materials put on by Mr Feder that Mr Sarifdeen was effectively replaced on 14 June 2013 as a director of DC Fashion and a shareholder thereof on 14 June 2013 by his wife.

3. Further, although the matter is put in issue on the pleadings, it is clear from the annexures JAF21 and 22 to Mr Feder’s first affidavit that Mr Cader and Mr Sarifdeen are the owners of the business names DC Fashion Hub and Xzite.  It is likewise clear that in some fashion at least Mr Cader and Sarifdeen are partners in the DC Fashion Hub and Xzite.  It is likewise clear that in some fashion at least Mr Cader and Sarifdeen are partners in the DC Fashion Hub business as they prepared a partnership tax return for 2013 ( Court Book “CB” 914).

4. Finally I note that at CB926 the respondents in a response to the affidavit of Ms Evans dated 9 July 2013 expressly assert:

   “MR CADER, MR KARL AND MR MOHAMED KALEEL ABDUL CADER ARE THE SAME AND ONE PERSON.”

The scope and scale of the alleged contraventions

1. Part of the difficulty in compiling these Reasons for Judgment arises from the fact that the respondents’ position as to the possible importation of counterfeit G-Star products has varied and shifted from time to time.  At times the respondents have made what appear to be unequivocal admissions and at others again, including during this trial, they appear to suggest that the garments themselves were not counterfeit at all.  It is appropriate to commence with the affidavits of the applicant that touch upon the matter.

The affidavit of Victoria Evans sworn 29 July 2013

1. Ms Evans is a licenced inquiry agent who on 21 September 2012 was engaged by the applicants to visit the two retail stores then operated by Xzite to investigate whether G-Star branded goods were being sold.

2. On 9 October 2012 Ms Evans attended the Cairnlea store and noted that there were approximately 100 G-Star branded shirts on display of which she purchased one.  She annexed as “VE-1” a photograph of the T-shirt that she purchased and as “VE-2” photographs taken during her visit to the Cairnlea store.

3. On the same day Ms Evans visited the Bacchus Marsh store and noted that there were approximately 50 units of G-Star branded T-shirts on sale of which she bought one.  She also obtained two business cards for a business name Xzite.

4. On 20 March 2013 Ms Evans visited the Bacchus Marsh store and found it closed.  On the same day she visited the Cairnlea store and noted there were three racks containing approximately 29 G-Star branded short sleeved T-shirts and 16 G-Star branded long sleeve T-shirts on display for sale.  Ms Evans asked the female assistants if there was a size XXL G-Star branded T-shirt and the assistant responded that she had plenty more in stock in the back of the shop.  Ms Evans’ evidence was (paragraph 22(d)):

   “I was able to see the backroom and I could see there was a stock of garments in the backroom which were packed in the same way as the “G-Star” garments which the shop assistant had obtained from the backroom.  I estimate there would have been in excess of 200 garments in the back room…”

5. She purchased a G-Star branded T-shirt (all three of her purchases were for $40 or less per garment).

6. On 13 May 2013 Ms Evans again visited the Cairnlea store and spoke to a man who identified himself as Mr Cader.  The discussion proceeded on the footing that Ms Evans was pretending to be a purchaser in larger quantities and Mr Cader said that G-Star product came in boxes of 50 and he was prepared to sell boxes of 50 if she wished to place an order.

7. The affidavit goes on to depose to Ms Evans’ endeavours to follow up this initiative, some of which involved contact with a person called Karl (clearly, in fact as admitted, Mr Cader).  Relevantly for these purposes on 25 July 2013 Ms Evans attended a storage unit in Makland Drive, Derrimut clearly operated by the respondents and on 25 July 2013 she had further contact with Karl which inter alia involved assertions by Karl (paragraph 34) that “he only had about 200 units of “G-Star” stock left at the warehouse,” “he received a container of stock this week however the stock had already been emptied with a lot of stock being moved to Sydney” and “he was just about to deliver the 200 “G-Star” shirts to a retailer in Coburg and that they were $17.50 each and were sold in bundles of 10.”.

8. On 26 July 2013 Ms Evans purchased a bundle of 10 G-Star branded shirts for $17.50 for which she obtained a receipt.

9. Finally, on 27 July 2013 (paragraph 37) Ms Evans called Karl and was told inter alia:

   “if I wanted to make any further purchases that I would need to contact “Sarif” and that he would text me Sarif’s phone number so that I could make contact with him to make future purchases.”

   And:

   “a shipment of further product, including “G-Star” product had arrived in Australia and that Sarif would arrange the release of these products from customs on his return.”

The affidavit of Craig Raymond Douglas sworn 30 July 2013

1. Mr Douglas is a licenced inquiry agent engaged by solicitors for the applicants.  On 27 July 2010 he attended the Xzite retail store in Cairnlea.  He noted there were approximately a hundred units of G-Star branded clothing on display.  He saw a room in the back of the shop with shelving and a large number of clothing items on the shelves, although he could not see the brands for those clothing items.  He purchased a G-Star branded T-shirt for $40 and was given a receipt for same.

The affidavit of Jonathan Ariel Feder affirmed 15 August 2013

1. Mr Feder deposed to his attendance at the Cairnlea store on 31 July 2013.  On this occasion, and pursuant to an order made on 30 July 2013 by North J, Mr Feder together with the Independent Lawyer, Andrew Goatcher, and Mr Douglas entered the Cairnlea store.  On that day both Mr Sarifdeen and his wife were present.  Mr Feder deposed at CB367:

   “Upon entering the Cairnlea store I saw that there were a significant number of “G-Star” branded items displayed on a rack in the store (Annexure JAF-28 are photographs of those goods).”

1. In conversations with Mr Sarifdeen, Mr Sarifdeen told Mr Feder inter alia that

   (a) he had sold the Xzite business to “Cader” two months ago; 

   (b) he was only a sales assistant at the Cairnlea store; 

   (c) he had purchased G-Star branded clothing from a website located at domain name but had only purchased 200 units about two years ago and the garments did not sell well. 

2. He also claimed that the G-Star goods were genuine end of season stock and that he had documents to prove this (although none were provided).

3. Mr Sarifdeen further confirmed relevantly that he manufactures his own brand of jeans in Turkey under the brand Eskimo, that he did not have any warehouses and did not have any other G-Star branded stock at any other locations and was not aware of any importation which had arrived in Australia containing G-Star goods.

4. At CB368 Mr Feder went on to depose that during the search he located G-Star branded garments under the cash register wrap and sales books which made reference to the sale of G-Star branded garments which were under the cash register wrap.  It further emerged despite Mr and Mrs Sarifdeen’s first denials, that at the back of the Cairnlea store there was a room with a number of plastic bags containing large quantities of G-Star branded garments (annexure JAF-30 are photographs of the same).

5. The report of the Independent Lawyer, Mr Goatcher, is at CB433-459 and as might be expected is essentially largely co-extensive with Mr Feder’s account of the search.

The affidavit of Jonathan Ariel Feder affirmed 29 April 2014

1. Mr Feder deposes at CB471 that there were 154 units of G-Star branded clothing seized on 31 July 2013 and gives details of what those were.  The affidavit also deposes to emails and text messages taken from Mr Sarifdeen’s mobile phone between 30 December 2011 and 30 July 2013, the day before the search order was executed (annexure JAF-41).

2. The affidavit also put into evidence material obtained from third parties.  Annexure JAF-42 are copies of documents produced by Johnson Wills International Pty Ltd showing a packing list, contract and commercial invoice dated 22 October 2013 issued by Reshnia Link International (“Reshina”) to the first respondent relating to the importation of 886 pieces of men’s T-shirts with mixed label names and a further such list, contract and commercial invoice dated 4 December 2013 issued by Reshnia to the first respondent relating to the importation of 2,033 pieces of T-shirts with mixed label names.

3. Mr Feder also annexed as JAF-43 copies of documents produced by EPL Corporation Pty Ltd showing a commercial invoice and packing list dated 4 January 2014 issued by Reshnia to Redac relating to the importation of 2,325 units.

4. The affidavit then deposed to a google search for Reshnia (JAF-44, CB541) which relevantly stated:

   “WE ARE DOING APPAREL STOCK LOT BUSINESS FOR WORLDWIDE AND WE ARE ALSO DOING BUSINESS OF BRANDED GOODS, EXAMPLE:  PUMA, NIKE, ADIDAS, G STAR, ARMANI, HUGO BOSS, THE NORTH FACE, POLICE ETC GOOD BRAND.”

5. The affidavit also deposed to reviewing of documents provided by Navia Logistics Pty Ltd showing that Stock Lot Fashion, which had been the subject of an invoice to Redac for 7935 units of clothing (see JAF-45, CB547-548) and that Stock Lot sells inter alia G-Star Raw denim (see JAF-46, CB550-560).

6. Mr Cader deposed to following a link on Mr Cader’s Linked In profile which took him to a domain name (JAF-49).  Paragraph 8 of the terms and conditions web page on the Affusion website provides that Redac owns and operates the Affusion website (CB567).

7. A search of the Affusion website revealed to Mr Feder that the registrant of the domain name for the Affusion website is Armani Fashion Fusion and that inter alia the registrant contact is listed as Khalil Cader, and that the ABN number for Armani is registered also to Mr Cader (annexure JAF-50, CB571).

8. On a search of the Affusion website as captured on 9 April 2013 G-Star was included as an available brand (annexure JAF-51, CB576).  A business name search for Affusion revealed that the same is registered to the Mr Cader himself.

The affidavit of Wade Scott affirmed 2 May 2014

1. Mr Scott is the general manager of Navia Pty Ltd (“Navia”).  He confirmed that in about June 2013 Navia was engaged by the first respondent to act as its agent and take delivery of an importation made from Stocklot Fashion.  Navia was also engaged by Redac to act as its agent and take delivery of two importations of clothing products in March and April 2013 although Mr Scott was not able to locate any documents relating to those two importations.

The affidavit of Michael McVeigh sworn 7 May 2014

1. Mr McVeigh is the branch manager of Paul’s Customs & Forwarding Solutions Pty Ltd.  In about December 2012 Paul’s arranged the customs clearance and brokerage of an air consignment consisting of six packages on behalf of DC Fashion Hub.

The affidavit of Norm Williamson affirmed 7 May 2014

1. Mr Williamson is the managing director of Johnson Wills International Pty Ltd (“JWI”).  Between March 2013 to December 2013 JWI was engaged by Redac to act as customs clearance and broker for four air consignments.  Mr Williamson produced as Annexure NW-1 copies of the documents relating to those importations and customs clearances as well as email correspondence with Khalil Cader.  At CB816 there is a message from Mr Cader to [email protected] which makes it clear in my view that Mr Cader was actively involved with obtaining customs clearance at that time.

The affidavit of Jonathan Ariel Feder affirmed 26 May 2014

1. This affidavit puts into evidence material obtained from the Australian Customs and Border Protection Service in relation to G-Star products imported by the respondents or the human beings associated with them and also to EPL Corporation Pty Ltd and DHL Express (Australia) Pty Ltd.

The affidavit of Cameron Wesley Heymans sworn 11 August 2015

1. It should be noted that the respondents originally intended to rely upon an affidavit sworn by Piet Poelmann on 30 April 2014.  This affidavit contained a number of confidential annexures.  No doubt because they were self-represented, no application was pressed in any way by the respondents for the confidential annexures not to be held confidential nor did they seek to inspect them.

2. On the second day of the trial in June 2015, Mr Sarifdeen indicated that he did wish to cross-examine Mr Poelmann, notwithstanding that both Mr Cader and he had expressly not made such an application the day before when the matter was traversed.

3. Essentially what Mr Sarifdeen said was that he needed time to look at the confidential documents so that he could put questions.

4. Unfortunately, by the time the matter could be re-scheduled for further hearing, Mr Poelmann had resigned his employment although it seems clear from evidence given by Mr Heymans that he is still in Australia.

5. The applicant sought leave to file what was effectively the same evidence from Mr Heymans as that that was previously intended to be given by Mr Poelmann and I granted that leave.  In the circumstances it seemed to me wholly unremarkable to do so.

6. At various stages the respondents expressed some concern about the unavailability of Mr Poelmann and sought to draw some sinister inference therefrom.  I should make it clear that in my view there is nothing remarkable about someone changing employment and another employee being called to give the evidence that the former one would have given.  Obviously the witness thus called as a replacement has to have the requisite knowledge and/or skills but, as I say again, there is nothing remarkable about this.  Mr Heymans’ evidence at CB1113 deposes to formal matters of the ownership and licencing of the various trademarks, copyright materials and garments.  I have already dealt with this.

7. At CB1113-1117 Mr Heymans deposes as to the applicants’ reputation in terms which, in my view, have not been significantly, or really at all, put in issue.

8. At CB1117 to 1118 Mr Heymans deposes to the counterfeit nature of the documents exhibited at VE-6 and VE-9 to the affidavit of Ms Evans sworn 29 July 2013 and that exhibited as CRD-6 to the affidavit of Mr Douglas.  Confidential annexures CH-17 and 18 detail why this is said.

9. Mr Heymans also deposed as to the counterfeit nature of the garments exhibited as exhibit JAF-40 to Mr Feder’s affidavit affirmed on 29 April 2014 and confidential annexure CH-19 gives the reasons for that.

10. At paragraph 31, CB1118 Mr Heymans reviews the website titled Affusion and deposes that the first picture used on the home page of the Affusion website is taken from a G-Star advertising campaign which commenced in May 2013 featuring the famous DJ Skrillex.

11. The remainder of the affidavit at CB1118-1120 goes on to detail the damage to reputation asserted as a result of the G-Star products sold by the respondents.  Although the matters set out are detailed, they are not for present purposes remarkable because they were not, save to the extent that I shall indicate when I traverse cross-examination, put in issue by the respondents.

The evidence given in Court

1. What follows is not a transcript.  It is a digest of what seemed to me to be the more important aspects of the evidence taken from my notes.  It should be noted that Messrs Scott, McVeigh and Williamson were not required for cross-examination.

Jonathan Ariel Feder

1. Mr Feder was called and adopted his affidavits as true and correct.

2. Under cross-examination by Mr Sarifdeen Mr Feder confirmed that he had been dealing with cases such as this one since about 2005 to 2006.  He confirmed he was unable to say himself if garments were or were not counterfeit.

3. Under cross-examination by Mr Cader nothing of any moment emerged.

The evidence of Ben Midalia

1. Mr Midalia confirmed that his affidavit sworn 11 June 2015 was true and correct.  That simply deposes to his role as a computer expert in the search taken pursuant to the Anton Piller order.

2. Cross-examination by Mr Sarifdeen produced nothing in my view of any moment.

3. Under cross-examination by Mr Cader Mr Midalia was able to recall that there was a CCTV system in the store.  In response to a question from Mr Cader to the effect that there would be data stored for a month on such a system, Mr Midalia replied that he asked what mobile devices and what devices there might be that would store data to the business and the iPad and phone given to him were produced in response.

The evidence of Philip Goatcher

1. Mr Goatcher was called and confirmed that his affidavit sworn 11 June 2015 was true and correct.  That affidavit merely put into evidence his earlier written report.  Mr Goatcher confirmed in evidence in chief that he was at the Cairnlea store premises most of the day and he prepared his report from notes taken on the day within a few days.

2. Under cross-examination by Mr Cader in my opinion little of any moment emerged save that it was apparent that Mr Goatcher was an excellent witness.  Albeit that the events concerned took place two years ago and that he did not have any great direct recollection, Mr Goatcher it should be recorded impressed me as an entirely fair and thoroughly competent witness.

The evidence of Craig Douglas

1. Mr Douglas was called and confirmed his affidavit as true and correct.

2. Under cross-examination by Mr Cader about his visit to the warehouse on 24 July 2013, Mr Douglas confirmed that his purpose was to look at the warehouse that the agent had for lease.  He wanted to look inside the warehouse as to what was in there.  He visited three properties being units 19, 20 and 21.  Unit 20 was locked.  The agent unlocked it and let Mr Douglas on to the property.  He asked about the lease and was told that the previous tenant left on the 26^th (this being a visit on Saturday 27 July) and had been let out of the contract.  Mr Douglas just saw display racks and the entire premises was clear apart from those two racks.  He had told the agent he wanted to buy the property.

3. Under cross-examination by Mr Sarifdeen Mr Douglas confirmed that he is 55 years of age and wears spectacles to help him read documents.  He went into the Cairnlea shop and went up to the counter and could see racks of clothing.  He could see shelving and a doorway to a small room behind the counter.  Racks were both inside and outside the room.  The door to the other room was open but he could not see the brands as items were stacked or hung together.  Mr Douglas said some brands were identical but he could not identify the vast majority.  There were some swing tags that he could see and some clearly were a G-Star swing tag.  The swing tags he saw were the same as in exhibit A2.  He was unable to say why the swing tags were not mentioned in his affidavit.  They were approximately two metres from him and it was obvious that there was G-Star on the swing tag.  Mr Douglas said he looked at each garment in the photographs in CRD-4 and bought one of them.  The swing tags were G-Star.  Not all garments were G-Star and there were many other brands in the shop and storeroom.  All he could see was a couple of G-Star swing tags.  Most of the clothing was stacked.

4. I should interpolate and say that although Mr Douglas was at times somewhat combative in his answers to Mr Sarifdeen, it was clear that he was a truthful and reliable witness.

The evidence of Ms Evans

1. Ms Evans adopted her affidavits as true and correct and tendered as exhibits A3 and A4 exhibit VE-6 and VE-9.  These are the actual garments purchased by Ms Evans in March and July 2013 respectively.

2. Under cross-examination by Mr Sarifdeen Ms Evans confirmed her age of 54 years and that she wears spectacles for reading.  She says she wears bifocals and can see matters at a distance.

3. When cross-examined about what she saw when she visited on 20 March 2013 Ms Evans confirmed that she went right into the store, into the entire public area and saw the storeroom.  She did not believe there was a door to it.  She said she could see items similar to that she purchased and saw some plastic bags with T-shirts but could not see the brand.  She did not see any swing tags and could not recall if there were items hanging.

4. When challenged as to paragraph 16(b)(i) of her 29 July 2013 affidavit (her visit to the Bacchus Marsh store on 9 October 2012) Ms Evans said that she counted the items physically and was certain of the number she saw.  She said she took notes.  She said G-Star was spread all over the shop.  It was in approximately 10 to 15 places and she went to all the spots and counted.  The bulk was on the main rack as you walk in.  She could not say exactly how many.  When taken to the photograph at CB195 Ms Evans said approximately 20 items were hanging up.

5. When challenged as to there being product in 10 to 15 places on the first visit Ms Evans said that she counted and would stand by 10 places.  She denied taking the same photograph from three different angles.

6. I would interpolate again and say that Ms Evans was an excellent witness who answered these questions from Mr Sarifdeen both extremely directly and in my view entirely convincingly.

7. Ms Evans was extensively cross-examined by Mr Cader.  She said that she did not really know Mr Cader but had his telephone number.  She believed that she bought G-Star product from him.  She said she came alone on all visits and said that her name was Julianna.  She was unable to recall if she said to Mr Cader that she was from a hospital and wanted to buy in bulk.  She said that Karl wrote a phone number on a card and crossed out another name.  She had told Mr Cader that she sold garments in a private club and said she would introduce lady clients to him.  She did not recall bringing another lady to the Cairnlea shop and could not remember Mr Cader as Karl.

8. Ms Evans said that she often visited the warehouse and met Karl in the warehouse who related to the phone number given to her.  Karl took her inside and it was an open area where she saw boxes and racks although she could not say how many boxes she saw.  She could not say if they were marked G-Star.  She had seen a young boy packing and saw a van outside being loaded.  It was like a LiteAce van.

9. When asked by Mr Cader why she had not looked at the boxes in the warehouse, Mr Evans said she was advised by Karl that there were only so many left, approximately 200 units.  Ms Evans confirmed that she did buy directly from Mr Cader but could not say how much.  She had told Mr Cader she was from a courier company but did not say that she was from a hospital and was ill.  She did say she was a wholesale buyer and wanted to buy 30 items and that Mr Cader agreed.  Nonetheless he had not actually sold larger quantities to her.

10. It should be noted that a number of the questions put by Mr Cader show beyond doubt (notwithstanding it is admitted in the response in any event) that Karl was indeed Mr Cader himself.  Some of his questions such as “Do you recall what I said on the 4^th?” make it clear that this was Mr Cader himself.

11. The cross-examination in my view, notwithstanding its length, takes the matter no further.  I repeat that Ms Evans was an excellent witness.

The evidence of Cameron Heymans

1. Mr Heymans adopted his affidavit sworn 11 August 2015 as true and correct with one relevant minor change.

2. Under cross-examination by Mr Cader, Mr Heymans confirmed that he has been in his current position for five and a half years.  He selects product that goes into stores and had to visit Amsterdam some four to six times to be trained.  He came back and trained his colleagues.  Mr Heymans regularly visits Amsterdam where he is introduced to new ranges.  He is responsible for product development for the southern hemisphere generally.  Product is obtained from various sources but design and development is done in Amsterdam.  Manufacture is external in other countries.

3. Mr Heymans confirmed that he had no formal qualifications in this field.  He was cross-examined about Mr Poelmann who used to be his boss but confirmed that Mr Poelmann had left the company in June 2015.

4. Mr Heymans was cross-examined extensively by Mr Sarifdeen.  He has been working with the brand for six and a half years and been with the company for five and a half years.  He has been working in retail since he was aged 13 and is now 30.  He denied having limited experience in buying.  He has been undertaking this for two and a half years.  He had been appointed because of his experience.  He did not however have good knowledge of production.  He had never visited a factory where G-Star products was made and did not have knowledge of T-shirt manufacture.

5. While he was not an expert in manufacture he did have some knowledge of the ranges of fabric used in T-shirt production and he had trained staff in swing tags.

6. Mr Heymans confirmed that he saw the exhibits which he said were counterfeit and thought this was in the Court building.  He was unable to say to what extent his own affidavit was different from that of Mr Poelmann.  He had not seen Mr Poelmann’s affidavit before he wrote his own.

7. Mr Heymans was cross-examined about garment overruns.  This is an additional product run to replace faulty products.  Producers give the vendor an opportunity to buy overruns back.  Because of the high demand for G-Star products there is no additional stock generally, but if there was G-Star would take it.

8. Mr Heymans was cross-examined by Mr Sarifdeen in detail as to whether the allegedly counterfeit garments were indeed counterfeit.  I have been requested by the applicants’ final submissions to deal with this aspect of the evidence opaquely to avoid giving assistance to other counterfeiters.  While I very much doubt that any such possible counterfeiters will be likely to read the terms of this judgment, it is sufficient to say that Mr Heymans gave extremely convincing answers.  The detail by which he analysed the garments as counterfeit in my view was not the subject of effective challenge.

9. Mr Heymans confirmed that overruns would be likely to lead to a penalty on the overrunning producer.  He confirmed that he looked after faulty product and took part in quality control when younger although not with G-Star.

1. It is perhaps sufficient to record that inter alia Mr Heymans said that he worked with approximately four ranges a year and had six and a half years’ experience.  On this basis Mr Heymans said  he could conclude what is fake or not.  He said he used to visit Paddy’s Market on behalf of G-Star.  He said “I know G-Star inside out.”

2. Mr Heymans was further cross-examined in some detail about various aspects of the allegedly counterfeit documents, with Mr Sarifdeen essentially suggesting that they were not in fact counterfeit.  It is sufficient for these purposes to record that I found Mr Heymans answers wholly convincing.

3. There were one or two minor matters in my view (as conceded in the applicants written submissions) where arguably Mr Heymans’ evidence was the subject of some challenge but it is sufficient to record that it is clear that Mr Heymans is an expert in the field of G-Star products and that his answers were not in my view effectively challenged at all.  He did however confirm that the counterfeits were so good that they were hard to identify.

The evidence of the respondents

1. The respondents have filed affidavits.  They have also made assertions to the Federal Court in various interlocutory hearings.  They have also included matters in their written submissions.  Because of their self-representation all of this should be taken into account.

2. I will take the affidavits in the order in which they are set out in the Court Book.

The affidavit of Mr Sarifdeen sworn 23 September 2013 (CB 878-902)

1. Mr Sarifdeen affirmed that he was a partner of the business at Cairnlea.  The name of the business was deposed as being DC Fashion Hub Pty Ltd trading as Xzite.

2. The affidavit confirms that on 20 May 2012 Mr Sarifdeen purchased from a Mr Bangla (or Bangala) 50 T-shirts advertised by Mr Bangla as G-Star.  He further was offered G-Star products from a Mr Haresh in Bangladesh from the website Alibaba (like Mr Bangla). He was also contacted by Mr Massom through Alibaba who sent two G-Star T-shirts which Mr Sarifdeen had not bought.

3. The affidavit confirms providing 13 t-shirts to Ms Evans, some were being taken by family and friends, and one was bought by Mr Craig Raymond.  The affidavit appears to show in total 228 G-Star garments bought from Mr Bangla and Mr Massom and that family and friends purchased 22 of these between June 2012 and September 2012.  A further approximately 45 were purchased by walk in customers mainly from Cairnlea residents (CB882).

4. The affidavit deposes at paragraph 3 (CB883):

   “I commenced this business in May 2012 it is my limited knowledge and experience resulted this matter all purchased from the supplier.”

   The affidavit asserts that G-Star T-shirts were not selling well because they had “no proper sizing order”.

5. The affidavit goes on to say that Redac imports non-branded clothing and that the warehouse at Derrimut, Victoria was to accommodate the same.

The affidavit of Mr Cader sworn 9 October 2013 (CB903-906)

1. This affidavit asserts that Mr Cader entered into partnership with Mr Sarifdeen.  It details the execution of the Anton Piller order while Mr Cader was overseas.  It asserts at paragraph 1 CB904:

   “(d) I am a silent partner of Xzite (DC Fast Hub Pty Ltd) and have not involved in any purchasing of any kind of G-Star products.  Since I have no products knowledge or supplier contacts, every purchase of any products have been purchased or bought by my business partner, Mr Raziudeen Sarifdeen. 

   (e)   I have known Mr Raziudeen Sarifdeen my business partner as a respected and credible gentleman.  Therefore, every purchase he buy is an authen products.  We both have no any knowledge about the G-Star products.  If the agent warned us beforehand we would not have sold a single piece of G-Star T-shirts.”

2. The tenor of the affidavit is perhaps illustrated by paragraph 2(d) at CB905:

   “I am a sleeping partner and I have no records of any G-Star quantities purchase or sold to best of my knowledge.  My involvement in the day to day shop operation is very minimal as I was selling cheap $1 kids and $2 ladies hoodie jumpers, track pants to a few shops from wholesale which (illegible)…”

Response to affidavit of Mr Jonathan Ariel Feder dated 30 July 2013 (CB910-920)

1. In large part this document is irrelevant but I note that at CB911 the respondents assert:

   “(c)(i)    We did not sell counterfeit G-Star product and the G-Star product we purchased were authentic and real as they are factory Quality control rejects and some are defects.  As we did not have proper sizing of each designs.  This was communicated to the customer upon purchase when necessary.  We did not have any G-Star products relating to importation of G-Star as claimed in Paragraph 26(b) dated 30 July 2013.”

Response to affidavit of Ms Victoria Evans dated 29July 2013 (CB923-928)

1. This in part consists of detailed criticisms of Ms Evans’ assertions as to the amount of G-Star branded products she had seen in the respondents’ shops.  It also put a version of the interaction between Ms Evans and Mr Cader.  Beyond the express admission that Mr Cader and Mr Karl and Mr Mohammed Khaleel Abdul Cader are the same person (already referred to) this document is essentially argumentative and does not take the matter further.

The affidavit of Mr Sarifdeen sworn 7 March 2013 (CB929-931)

1. This affidavit adds little. I note that paragraph 16 appears to confirm that DC Fashion was a partnership.

The affidavit of Mr Cader sworn 6 September 2013 (CB932-1076)

1. This affidavit confirms details of Mr Cader’s children and his history of employment.  I note that he is qualified as an accountant and worked as an accountant officer at Bob Jane Corporation until made redundant in 2009 to 2010.  Relevantly Mr Cader deposes that in early 2012 he and Mr Sarifdeen decided to start a small business with the help of the Department of Employment under the New Enterprise Scheme.  It deposes to the start of the clothing store in Cairnlea in mid-2012 and that Mr Sarifdeen and Mr Cader decided “to convert our partnership business into a company known as DC Fashions Pty Ltd.”  (CB934)

2. Having deposed to opening the second shop in Bacchus Marsh Mr Cader went on to say that in early 2013 he had met a wholesale supplier, Mr Ahmed Joy, in Melbourne who was on a business trip to Australia from Bangladesh.  Mr Cader annexed as MKAC-6 an affidavit affirmed by Mr Joy.

3. The affidavit confirms the resignation of Mr Sarifdeen as a director of DC Fashion and his replacement by Mrs Sarifdeen.

4. The affidavit deposes that in around March 2013 Mr Cader rented a warehouse in Derrimut to accommodate clothing goods arriving from Bangladesh and that he received three containers of non-branded clothing at the warehouse during April 2013 to June 2013.  Annexure MKAC-7 were copies of all imports from Bangladesh with details.

5. The affidavit deposes that in July 2013 Mr Cader decided to return the remaining stock to Bangladesh and that he shipped the goods to Malaysia.  The affidavit repeats the assertion that Mr Sarifdeen purchased the G-Star products online with a lack of business knowledge and the seriousness of the consequences of selling the products.  He deposes to having a belief that they sold approximately 50 to 60 pieces of G-Star products and made approximately $1500 to $2000 in sales (CB935).

6. The affidavit denies supplying G-Star to any other retailers or wholesalers and denies importation of any wholesale quantity of G-Star garments into Australia.

The evidence given at Court – Mr Cader

1. Mr Cader made an extensive opening (all, or almost all, his evidence and submissions were made with the assistance of an interpreter as was the case with Mr Sarifdeen).  Not all of the matters asserted are really directly relevant.  Mr Cader traversed the circumstances in which the search order was executed in 2013, he being in Sri Lanka at the time.  Mr Cader traversed the way in which he and Mr Sarifdeen came to set up their business.  He asserted that Mr Sarifdeen was a kitchen hand in a shop prior to the new initiative.  In 2012 they both started Xzite.  They were inexperienced and amateur.  He said that within six months the search warrant was issued.  He complained of damage to his reputation and business as a result.

2. Mr Cader confirmed that in 2013 a friend from Bangladesh visited and said he would help in the business with garments provided from $5-$10 for children and men.  Mr Cader said that none of this was G-Star and he had fully cooperated.  Mr Cader complained about the substitution of TM25 for Facton and also complained of the change from the affidavit of Mr Poelmann to that of Mr Heymans.  He appeared to complain that he had insufficient time to read and give a proper response.

3. Notwithstanding that Mr Cader said he did not know that he could not sell G-Star because of his lack of experience, nonetheless he sold genuine products.  He said overruns were supplied and these were genuine product with no more than 200 such pieces.  He said in Sri Lanka such matters are sold in the street.  This was simple ignorance on his part.

4. It should be noted that the respondents sought a general adjournment of the proceeding by letter dated 5 November 2015.  I will deal with this matter later.

The opening of Mr Sarifdeen

1. Mr Sarifdeen said that since he arrived in Australia he had worked as a kitchen hand on a low income.  He said he had no relationship with Redac and that G-Star products were not brought in in large quantities.  He said 20 to 25 pieces were brought in by post.  He had no knowledge of copyright and the like until this case.  He said that he was assured by the supplier that these were factory overruns and he never dreamed he would be in Court.  He said the maximum total of G-Star product was 200 to 250 pieces in mixed lots.  The cost in Bangladesh is nominal and these were genuine left overs.  Mr Sarifdeen said he had never sold any other counterfeit garments and had surrendered all products.  Like Mr Cader, he complained that such garments were readily available at the Laverton market and he complained that they were not targeted instead.

The affidavit of Ahmed Joy (CB960-962)

1. Mr Joy’s affidavit was admitted over objection.  Mr Joy did not attend for cross-examination despite the respondents being served with a notice that this was required.  Mr Joy’s affidavit deposes that he met Mr Cader in Australia in January 2013 and agreed to supply non-branded clothing to Redac.  The non-branded items were said not to be counterfeits or brand copy and no G-Star product was provided to Redac.

2. I note that Mr Joy said he has visited Australia every year since 2006 and spent well over 30 days each such visit.  One might infer that it would have been possible for him to attend had he so desired.

3. The affidavit goes on to say that he requested Mr Cader to return all remaining stock to his Malaysian warehouse and that this had occurred.

The evidence of Mr Cader in the witness box

1. Mr Cader adopted his affidavits as true and correct and said that what he had said in his opening was also true and correct.  He said that the biggest issue in the cross-examination of Mr Heymans is that Mr Heymans is in sales and marketing and does not have production or quality control experience.  He works for G-Star and is therefore not independent.  Mr Cader suggested that there was something sinister in the fact that Mr Heymans knows Mr Poelmann who was not called to give evidence, and that he had a vested interest in the matter.

2. It would be difficult and in my view not profitable to seek to paraphrase at any length the extensive cross-examination of Mr Cader.  In the main it involved putting documents to Mr Cader about which there was really, in one sense, very little open to significant controversy.  When taken to the Affusion website (CB576) and it was put to him that this showed G-Star brand material being available, Mr Cader’s responses were unresponsive and evasive.  He said that he had no knowledge of IT and that this had been created by the company who made the website.  He went on to say that the website was still under construction and that the website builder had put the reference to G-Star in.  He said he did not know what Levi’s were and had not intended to sell them in this store.  He said the developer visited his shop but he never gave the information recorded at CB576 to him.  When it was put to him that CB573 suggested that the Affusion website could have been registered in 2012 Mr Cader denied knowing about G-Star brands at the time the shop opened.  It should be noted that Mr Cader’s evidence about G-Star seemed to change from time to time during the course of his evidence.  Even allowing for any difficulties of interpretation and the like, the story seemed to me to be a moving target.  Mr Cader was however adamant that the garments he had bought from Mr Joy were not G-Star garments.  He attributed the purchase of the small quantity of G-Star stock he admitted was in his shop entirely to Mr Sarifdeen and said that he spent little time in the shop himself.  He said he had no time to learn about G-Star products.  Mr Cader was cross-examined in some detail about text messages at CB514.  It emerged nonetheless that in addition to taking goods to Highpoint, Mr Cader also distributed to Coburg, Plenty Valley, Mill Park and Altona and Broadmeadows.

3. When cross-examination continued on 13 November 2015 a slightly different tenor emerged.  Mr Cader said “We sell at the Xzite shop” and that he did take notice of what customers wanted.  He said that usually Mr Sarifdeen was there but sometimes he was.  When it was put to him that he had imported up to 37,000 garments from Mr Joy he said it was possible but he had not added them up.  When cross-examined about the number of garments allegedly returned to Mr Joy, Mr Cader’s answers in my view were imprecise and unconvincing.

4. When taxed with the way in which he had adopted the name of Karl, Mr Cader said that Ms Evans was following him and that he said he was Mr Cader’s cousin and that his name was Karl.  When it was put to him, as was obviously the case, that this was a lie, Mr Cader said it was not a lie.  He said “She was bothering me” she had contacted him hundreds of times.

5. Mr Cader’s demeanour when giving these answers was incredibly evasive.

6. When it was put to him that he had told Ms Evans that he had G-Star products at the shop and the warehouse he was unable to recall.  He was not able to recall saying that he had more G-Star coming in the next shipment.  Nor could he recall telling Ms Evans that he was looking for sales of G-Star products of $500 upwards.

7. When it was put that he told Ms Evans that he was trying to expand the wholesale part of his business Mr Cader denied this.  He said he would not say this as he had decided to close his business.

8. Mr Cader confirmed that he had bought goods from Reshnia in November 2013 (CB531).  When he was taken to CB541 showing Reshnia provided G-Star goods, Mr Cader said that he just bought from them.  He said “what they do I don’t know”.  He said he did not buy G-Star products and strongly objected when it was put to him that he did.

9. Mr Cader denied telling Ms Evans that he had sent 200 pieces to Coburg.  In short, his evidence was, as might be expected, wholly self-exculpatory.

The evidence of Mr Sarifdeen

1. Mr Sarifdeen commenced by complaining that he had not had enough time to look at the material in preparation for cross-examination.  This is a matter interrelated to the letter of 5 November 2015.

2. Nonetheless despite his alleged lack of time to prepare for cross-examination, Mr Sarifdeen in chief repeated that there was an overrun the original purchaser could sell, these items were not counterfeit but that if a third party sold they were counterfeit.  Mr Sarifdeen repeated some of the matters he had already put in cross-examination to Mr Heymans about the detail of the allegedly counterfeit garments.  He said he had not had enough time but had rushed through the matter.  He did not accept Mr Heymans as an expert.

3. It is sufficient for present purposes to note that the matters asserted were indeed traversed by Mr Sarifdeen with Mr Heymans.

4. Under cross-examination by counsel for the applicants Mr Sarifdeen conceded that there were three suppliers, Bangla, Haresh and Masoom.  When taken to CB478, being an email from his own phone, Mr Sarifdeen said he did not clearly know about G-Star.  He said he did not work for G-Star.  He confirmed that Mr Bangla was offering 2000 pieces.

5. Mr Sarifdeen was cross-examined in considerable detail about the message streams between him and the three providers.  It is sufficient to say that those speak for themselves and are not consistent with Mr Sarifdeen’s evidence.

6. When cross-examined about the interrelationship between himself and Mr Cader in the running of the business, the picture painted by Mr Sarifdeen was rather different to that put forward by Mr Cader.  According to Mr Sarifdeen he ran the store and chose designs and colours, but that money was always checked with Mr Cader.  Mr Cader had joint responsibility for the budget.

7. Once again, as with the evidence of Mr Cader, it is neither profitable nor necessary to traverse in great detail the evidence given.  It is sufficient in my view to note that the various telephone and text records which Mr Sarifdeen sought to explain away ultimately speak for themselves and that his denials were not at all satisfactory.

Findings on the facts

1. I have already detailed my findings about the credit of the various witnesses.  All the witnesses called by the applicants were excellent and unfortunately both the respondents were very poor.

2. It is clear that Redac is wholly controlled by Mr Cader and always has been.  It is also clear that Redac is a significant importer of clothing.  Indeed so much is not necessarily really an issue although Mr Cader’s at times contradictory evidence about the state of his business affairs (the asserted current impecuniosity and the like) sits poorly with the scope and scale of the importation of clothing from Bangladesh.

3. Mr Cader and Mr Sarifdeen jointly set up a partnership which at some point was transformed into the fourth respondent.  The business carried on under the business name Xzite was clearly ultimately jointly controlled by both Mr Cader and Mr Sarifdeen.

4. It is quite clear from the evidence that both Mr Sarifdeen and Mr Cader were intimately involved with the affairs of the business.  To an extent each at times went perilously close to adopting a cut throat defence, but they never quite crossed that bridge. Nonetheless, I am comfortably satisfied that they were both heavily involved.

Some further observations about the way in which the respondents conducted their affairs

1. Notwithstanding the endeavours by each of Mr Cader and Mr Sarifdeen to allocate responsibility for what might be described as the respondents’ activities generally, it is apparent from the evidence as a whole that Mr Cader and Mr Sarifdeen were at the times with which this application is concerned operating as a partnership team.  They prepared a partnership return for the tax year 2013, and the various messages sent from time to time, to which I shall return, show that they were acting very much as a duo.  The reality is that the materials show that Mr Cader through Redac was importing substantial quantities of goods.  Some of these were as I find distributed by Redac/Mr Cader (Redac being an entity entirely under his control) as a wholesaler.  Others, and I will return to this also, and in substantial quantities, were sold through the Xcite shops.  The Xcite shops were clearly operated by Mr Cader and Mr Sarifdeen.  As I find, Mr Sarifdeen was well aware of the activities of Redac despite his denials, and Mr Cader was well aware of the activities of Mr Sarifdeen despite his denials.  The close interaction between them revealed by the materials cannot be set to one side.  Although the fourth respondent was also part of the overall scene, the reality is that both Mr Cader and Mr Sarifdeen ran this enterprise, if I may so describe it, jointly, and it is in my view immaterial that to an extent they used corporations to do so.

Findings on the relevant facts- were the goods sold counterfeit?

1. It has never been seriously in issue that the respondents sold a number of G-Star branded products.  The issues that have emerged are whether those materials were counterfeit and the scale of such sales.

2. I have already dealt with Mr Heymans’ evidence in passing.  I repeat that he was an excellent witness.

3. Opinion evidence is of course prima facie inadmissible as hearsay pursuant to s.76 of the Evidence Act 1995. There is an exception in s.79(1) of the Act as follows:

   “If a person has specialised knowledge based on the person’s training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge.”

4. Justice Emmett has pointed out in a Pan Pharmaceuticals Pty Ltd (in liq) v Selim [2008] FCA 416 at [34] that a person may develop expertise through a well-developed experience of a particular subject area notwithstanding that it may not involve professional qualifications.

5. In this case, Mr Heymans has as I find developed over the course of his employment in both retail generally and more recently for G-Star a sufficient understanding of G-Star product for him properly to be described as an expert.  The evidence he gave was plainly based on that experience.

6. The extremely helpful and comprehensive consolidated closing submissions of the applicants (which it should be noted are drawn on heavily for the preparation of this part of the judgment as they are cogent and fully supported by the evidence) deal at paragraphs 27-46 with the issue as to whether the goods were counterfeit.  It is sufficient to say that from the explanations given in the confidential material (which it should be again remembered I have been asked to deal with obliquely) it is quite apparent that the garments examined by Mr Heymans, all of which were either purchased from or seized from the respondents’ premises, are indeed both counterfeit, and good counterfeits at that.

7. I accept the submission of the applicants that “cross-examination focused on some isolated points that Mr Heymans made to support his conclusion that five of the garments are counterfeit” (written submissions at paragraph 28).  To the extent that any such challenge was even in part successful, I accept the applicants’ submission that in any event Mr Heymans had other overarching and credible reasons in each and every instance to find that the garments were counterfeit.

8. Furthermore, I accept Mr Heymans’ evidence that these were as he put it garments that it would be difficult for a person not expert as he was to discern as not being original G-Star product.

9. The other limb of cross-examination seemed designed to show, as was from time to time asserted in any event by both Mr Cader and more particularly Mr Sarifdeen, that the garments bought from Bangladesh were in fact genuine G-Star products the result of overruns or quality control failure.  In this regard, I fully accept the evidence of Mr Heymans.  It was convincing and inherently probable.  First, the nature of the G-Star company’s relationship with their manufacturers is such that any overrun product is keenly sought after by the G-Star companies themselves and would be more likely than otherwise to be bought back by G-Star.  Furthermore, overruns are the subject of what might be described as commercial penalties, and there are profound disincentives to suppliers to overrun.  It is apparent from this proceeding and the materials in it that the G-Star group pays the closest attention to such matters and is keenly conscious of the need to protect its product from counterfeits or unauthorised product being released.  I do not accept that the evidence shows that the garments were genuine G-Star products. 

10. I note the submission of the applicants that s.123 of the Trade Marks Act would not be satisfied by the respondents in any event.  In Paul’s Retail Pty Ltd v Lonsdale Australia Ltd (2012) 294 ALR 72, the Full Court of the Federal Court said at [64]-[65]:

    “The argument is to the effect that the importation and sale of goods marked with the consent of the owner of the trade mark or its licensee does not involve a use of the trade mark by the importer or seller. 

    If this argument were correct, an importer would not infringe the trade mark merely by acts of importation and sale even if the mark had been applied to the goods without the consent of the owner of the trade mark.  This Court has previously expressed the view that “...absent s.123 the mere sale by an importer of goods already marked would be an infringing use of the mark by the importer” (authority omitted).”

11. There is no evidence whatsoever that whoever manufactured the G-Star product that the respondents sold had the consent of G-Star to do so.  This is yet another difficulty the respondents face in this defence.

12. Put shortly, the evidence of Mr Heymans shows that the G-Star product sold by the respondents was counterfeit.  The evidence of Mr Joy, who as earlier observed was not called to give evidence, is simply not to be accepted, nor that he never sent any G-Star product to Mr Cader/Redac.  It is inconsistent with the documentation otherwise filed.

The scope and scale of the G-Star products imported and sold

1. The story told by the respondents about the scope and scale of their G-Star product sales has varied from time to time.  At a directions hearing before North J on 19 August 2013, Mr Sarifdeen stated to his Honour at CB61 variously:

   “…we had only 200 pieces of G-Star.  One hundred, I think, we got it from Bangladesh.  The rest of the 100, he brought it from the ... market.”

   “Yes.  We had approximately 200 G-Star in the shop.”

   “So we had about 200, around 200 G-Star from the beginning.  So we used to bring 30, 50, like that - around 200 pieces, out of which they have taken about 150.  So that I know about 100 pieces came from Bangladesh.”

2. At CB62, Mr Sarifdeen said:

   “Rest of the 100, I think he brought from overseas or - I’m not quite sure, to be honest.  I think he bought from one website, which I mentioned that...”

3. At a further directions hearing on 7 February 2014, CB103, Mr Cader said:

   “We sold around 50 per cent ... give the details.  We sold around 50 pieces in the shop and the money that came in is the profit from that 50 pieces.”

   “$1500 approximately we made.”

4. At yet another directions hearing on 26 May 2014 (CB143), Mr Cader told his Honour:

   “We admit that we sold 50 to 60 pieces and they have collected the rest.”

5. It is immediately apparent that those variations in figures reflect poorly on the credit of both Mr Cader and Mr Sarifdeen (both of whom were present at all the directions hearings before North J and during which they do not appear to have required any assistance by way of interpretation).  They must also be compared with the actual amount of product recovered during the search conducted by Mr Feder and Mr Goatcher.

6. At this point, I turn to follow the chronological summary of evidence of infringement taken largely, I should indicate, from the applicants’ written submissions. Those submissions in my view are an accurate representation of what occurred.

7. On 30 December 2011, Mr Sarifdeen received a message from [email protected] regarding 2000 units of G-Star goods in many colours and sizes at a cost of $8.5 AU each.  The applicants submit and I accept that it is more probable than otherwise that this is the Mr Bangla identified in Mr Sarifdeen’s first affidavit as a supplier of G-Star products.  I note that in his affidavit at CB880, Mr Sarifdeen deposes to making a purchase from Mr Bangla on 20 May 2012 of 50 t-shirts, and that this was done following discussion with “my business partner Mr Kaleel Cader”.

8. Mr Sarifdeen’s affidavit at CB882 deposes to further importations from Mr Bangla in June 2012 (50 short-sleeve t-shirts), September 2012 (30 short-sleeve t-shirts), September 2012 (20 long-sleeve t-shirts), January 2013 (50 long-sleeve t-shirts), January 2013 (15 long-sleeve t-shirts), January 2013 (60 G-Star t-shirts).

9. Taking these matters together, I find that it is more probable than otherwise that Mr Sarifdeen’s involvement with accessing G-Star product started far earlier than he himself concedes, and at all relevant times directly involved Mr Cader.  Furthermore, I note that even on the figures that he has given, the total purchases from Mr Bangla alone would be some 225.

10. In some fashion not directly disclosed, the applicants became aware that product may have been sold from the Xcite shops in Cairnlea and Bacchus Marsh, and on 9 October 2012 Ms Evans attended the Cairnlea store and purchased a black short-sleeve G-Star branded t-shirt for $40.  The receipt was exhibited to her first affidavit.  On the same day, she also attended the Bacchus Marsh store and purchased a grey short-sleeve G-Star branded t-shirt for $35 (discounted from $55).  Once again, the receipts are exhibited to her affidavit.  Ms Evans observed about 50 units of G-Star branded clothing on display for sale.

11. I accept the submissions of the applicants (paragraph 54) that Ms Evans’ photographs and video shows:

    “...that these stores were not some sort of temporary or informal stores, but instead presented themselves as respectable legitimate shops within shopping centres and not the type of place where shoppers might normally assume they were looking at illegitimate products - in contrast to less formal market stall environments such as Laverton Market”.

12. Following the supply to Mr Sarifdeen of 125 G-Star t-shirts in January 2013 by Mr Bangla, on 2 February 2013 Mr Haresh Kesuwani emailed Mr Sarifdeen.  It is apparent from the email chain put in evidence by Mr Feder (CB480-488) that Mr Sarifdeen was actively seeking supply of G-Star product and ultimately settled on 200 units (see CB485-486).  Although this email chain, the authenticity of which is in my opinion beyond doubt, shows that Mr Sarifdeen bought 200 G-Star units from Mr Haresh, Mr Sarifdeen deposed at CB881:

    “Few month later, Mr Heresh offered me G-Star t-shirts.  I declined his offer due to the t-shirts available is assorted and not have in size order range.”

13. This assertion is plainly untrue.

14. At this point, the historical narrative turns to the dealings between Mr Cader/Redac and Mr Ahmed Joy.

15. In an email to my associate referred to at transcript P27 on 15 June 2015, Mr Cader asserted:

    “I have a witness who is a citizen of Bangladesh and lives in Bangladesh.  His name is Ahmed Joi, director of Stocklot and SI Designing Clothing Company in Bangladesh.  He has given me an affidavit to support my case.  He is unable to come to Australia because he could not get a visa.”

16. At transcript P29, Mr Cader went on to say:

    “Redac International commenced business in around March 2013.  The only source of supply at that time was from SI Designing.  And he has got two company, SI Designing and Stocklot Fashion.  So I mainly brought - we signed an agreement and opened a bank account and properly executed and all the transfer money was done through the Commonwealth Bank.  And through the Chamber of Commerce ... he actually ... the container with a cheap non-branded range.”

17. It is apparent from Mr Cader’s affidavit at CB934 that he met Mr Ahmed Joy (whose names are spelt in various ways in the materials) in Melbourne in early 2013 and that in around March 2013 Mr Cader rented a warehouse in Derrimut to accommodate the clothing goods arrived from Bangladesh.  Mr Cader deposed (paragraph 20 of his affidavit) that he had received three containers of non-branded clothing at his warehouse during April 2013 to June 2013.

18. I accept that it is clear from CB550 and CB960 (leaving aside the concessions made by Mr Cader) that Stocklot and SL Designer are part of a business run and operated by Mr Joy.

19. I also accept as the applicants submit (paragraph 62 written submissions) that Mr Cader’s assertion in his first affidavit that every purchase of products had been bought by Mr Sarifdeen was false in the light of Mr Cader’s dealings with Mr Joy.

20. Stocklot is clearly a significant producer of garments (see CB552) and the Stocklot web page clearly identifies G-Star products as being available from them (see CB550).

21. It is apparent from annexures to Mr Cader’s affidavit (CB968-969) that by 25 February 2013 Redac had ordered a shipment of 330 cartons (a total of 14,982 pieces) from SL Designer in Bangladesh including 5000 men’s long-sleeve t-shirts.

22. On 20 March 2013, Ms Evans attended the Cairnlea store and purchased a white G-Star branded short-sleeve t-shirt for $40, the receipt for which is in evidence and had the store name of Xcite on it.  As Ms Evans deposed, she observed approximately 29 G-Star branded t-shirts and 16 G-Star branded long-sleeve t-shirts, and took photographs of the same.  During the visit, Ms Evans asked the sales assistant for a size XXL G-Star branded t-shirt, and was told that there were plenty more stock in the back of the shop.  This was confirmed by another sales assistant.  Ms Evans looked at the back room, and estimated there were in excess of 200 garments therein.

23. A further major order had been placed by Redac to SL Designer prior to 22 March 2013.  The invoice from SL Designer is at CB986-987 and confirms a total of 632 cartons comprising 14,555 garments.

24. The affidavit of Mr Scott makes it plain that in March and April 2013, Redac engaged Navia to take delivery of two importations of clothing products, and Mr Scott was not required for cross-examination.

25. This brings us next to the Affusion website.  I have already dealt in part with this matter above.  As earlier indicated, I do not accept Mr Cader’s obfuscations about Affusion.  It is far more probable than not that the Affusion website means what it says.  The terms and conditions set out by Affusion (CB567-568) include that “This website, and our online store (our “Website”), is a channel for customers to place orders for products we have available for purchase” and “Affusion online store website is owned and operated by Redac International Pty Ltd trading as Affusion online store”.

26. From CB576, it is apparent that the Affusion website lists amongst other available brands G-Star and Levi’s.  This availability is dated 9 April 2013.

27. A further unsatisfactory aspect of Mr Cader’s evidence relates to the cross-examination of him about Levi’s.  At first he went so far as to suggest that he had never heard of Levi’s.  He ultimately resiled from this position.  His evidence while giving his answers was manifestly evasive and unsatisfactory.  It goes to his credit.

28. It is apparent from CB966-967 that on 16 April 2013, Australian Customs processed the importation of the 330 cartons the subject of the SL Designer invoice dated 25 February 2013.  It is further apparent that on 30 April 2013 Australian Customs processed the importation of the 632 cartons, the subject of the SL Designer invoice, dated 22 March 2013.

29. It is further apparent from CB547-548 that on 2 May 2013 Stocklot Fashion invoiced Redac for a total of 262 cartons (7935 garments) including 386 units of men’s printed t-shirts. 

30. As Ms Evans’ evidence reveals, on 13 May 2013 she attended the Cairnlea store and spoke with Mr Cader who assured her he currently had some G-Star products available in the shop, that he could get more G-Star product if necessary, that there was more G-Star product in the backroom which was the same as the product she had seen in the shop and that G-Star products came in boxes of 50, of various designs and sizes, and he was prepared to sell same if she placed an order.  Mr Cader told Ms Evans that he gets the stock as required by him and other retailers to whom he sells these products (see affidavit of Ms Evans’ CB154-155, paragraph 23).

31. I accept the submissions of the applicant that this account of the conversation was not challenged and ought to be accepted.  I do not accept the endeavours by Mr Cader to explain away what he might have said, which appeared to suggest that on occasions he somewhat over exaggerated.

32. In temporal terms the next thing is the provision by Mr Masoom, to Mr Sarifdeen, in June 2013 of two ladies’ G-Star t-shirts and one G‑Star men’s (CB882).

33. On 5 June 2013 (Australian Customs) Australian Customs processed the importation of the 262 cartons (7935 garments), the subject of the Stocklot invoice, to Redac, dated 2 May 2013.

34. On the next day, 6 June 2013, Ms Evans attended the Cairnlea store and noted that there was still G-Star branded product on display (CB155 – Ms Evans first affidavit, paragraph 25).

35. On 13 June 2013 Bangal Supplier sent Mr Sarifdeen a text message asking if needed more G-Star men’s t-shirts and shirts, and Mr Sarifdeen requested pictures thereof (CB489).

36. Notwithstanding that he resigned as a director of DC Fashion Hub on 14 June 2013, Mr Sarifdeen continued to seek to import G-Star goods.  On the same day he sent a message to Bengal Saleem stating, inter alia, “Find me G-Star t-shirts” (CB502).  The response was that were none available.

37. I accept that an earlier email, sent the same day, from Bengal Saleem to Mr Sarifdeen (CB501) shows that Bangal Saleem is someone that Mr Sarifdeen had ordered garments from previously.  Further texts sent the same day raised quality issues with the supplier’s goods. 

38. I do not accept the submission made by the applicants that the email exchange on that day shows that Mr Sarifdeen knew that the garments sent to him were not genuine G-Star goods.  CB502 shows Mr Sarifdeen orderings men’s sweaters, and the text exchange is equivocal, at best, as to whether the work that was not good for Australia was G-Star or otherwise. 

39. Nonetheless, what is apparent – from the various emails sent, including CB502 and on 17 June 2013 (CB491) (“I need gstar t-shirts”) and on 20 June 2013 – Mr Sarifdeen was asking another person in Bangladesh as to whether they had G-Star t-shirts available (CB499).

40. The picture emerges quite clearly that throughout June 2013 Mr Sarifdeen was seeking to access G-Star product from Bangladesh.

41. Nonetheless, while the texts and emails may not be decisive, I have no doubt whatever that Mr Sarifdeen well knew that the product he was seeking to access from Bangladesh did not include genuine G-Star product.  If for no other reason, I make this finding because of the manifest untruthfulness of the assertion made by Mr Cader and Mr Sarifdeen that G-Star product sold poorly.  If sales were so difficult and poor, Mr Sarifdeen would never have been seeking, energetically, to find more of the product.  The picture sought to be painted both by Mr Sarifdeen and Mr Cader is one of an almost accidental importation of a very small quantity of G-Star product, which they then found very difficult to sell.  This runs contrary to the evidence of Ms Evans, Mr Douglas and Mr Feder, and is entirely inconsistent with Mr Sarifdeen’s energetic attempts to access more G-Star product.

42. I further note that both Mr Cader and Mr Sarifdeen sought to eschew any detailed knowledge of G-Star product.  Nonetheless, Mr Cader has deposed that he worked at Laverton Markets for some years prior to anything to do with this current episode and his evidence was that there was a substantial amount of G-Star product on sale there.

43. The respondents’ palpably dishonest assertions as to their state of knowledge lead me to conclude that their evidence is not only incredible in that regard, but is also incredible in terms of the product that was accessed from Bangladesh.  I accept in the ultimate the applicants’ submission that each of the respondents well knew that such G-Star materials as they imported were not bona fide G-Star.

44. It should also be noted that both Mr Cader to an extent, and Mr Sarifdeen to a greater extent, impressed me as persons with a relatively sophisticated understanding of the clothing industry.  The questions put by Mr Sarifdeen in cross-examination suggest a detailed understanding of quality control and other matters.  Indeed, much of the criticisms made by the respondents of Mr Heymans’ evidence turned upon a detailed understanding of manufacturing processes totally inconsistent with the alleged lack of understanding of the industry professed by both Mr Cader and Mr Sarifdeen.  It should be noted, however, in passing that the criticisms advanced of Mr Heymans to the effect that not being involved in production his evidence did not stand up, was clearly misconceived.  Mr Heymans had more than sufficient understanding of the applicants’ style of doing business to justify the findings I have made.

1. Returning to the timeline narrative, on 1 July 2013 Redac entered into a contract with Doel International (“Doel”) in Malaysia to return 20562 garments (CB1034 and 1036).The company in Malaysia is clearly highly controlled by Mr Joy from the terms of his affidavit.

2. The packing list for the garments returned by Redac included 8300 Jack & Jones long-sleeved T-shirts (CB1037).  The Stocklot Fashion website advertised the sale of Jack & Jones branded T-shirts (CB555).

3. The packing list for the garments returned by Redac also included 1600 ladies leggings branded Marks & Spencer and 380 men’s hoodie jackets branded Jack & Jones (CB1040).  So far as the packing list reveals in the matter, none of the returned items were branded G-Star.

4. The matter is set out at paragraph 101 of the applicants’ submissions.

5. As set out above, between 25 February 2013 and 2 May 2013, Redac imported a total 37,472 units of clothing in three importations from Mr Joy’s Stocklot and SL Design businesses.  From that total of 37,472 units imported, there were 16,910 garments which were not returned under the contract dated 1 July 2013.

6. While I have not myself checked the arithmetic, it is clear that a very large number of units were not returned to Doel in Malaysia.

7. On 3 July 2013 Mr Cader sent a text message to Mr Sarifdeen reading, “Masoom gone no g star arrive pls check”, to which Mr Sarifdeen replied, “It’s on the way” and Mr Cader replied “G star came” (CB515).  This once again shows the close working relationship between Mr Cader and Mr Sarifdeen, in this instance after Mr Sarifdeen had resigned as a director of the fourth respondent.

8. On 5 July 2013 Ms Evans attended the Cairnlea store and spoke with Karl (in fact, Mr Cader) who, for reasons unknown, described himself as Mr Cader’s cousin and business partner.  Ms Evans’ account is given at CB155-156 (paragraph 27 of her first affidavit).  Mr Cader told Ms Evans that he was leaving overseas shortly to organise the importation of the next container of products.  He told Ms Evans that he had a lot of G-Star, both at the shop and also at the warehouse, and was expecting further G-Star stock to be in the next shipment.  He undertook to email details about the G-Star product available and the pricing of it, and was looking for reasonable-sized purchases, $500 upwards.  Mr Cader also told Ms Evans that he and his cousin were trying to expand the number of people that they supplied business to.  Ms Evans noted that there were at least 30 G-Star items in the shop during the visit, and Mr Cader told her that there was a lot more stock out the back.  Mr Cader provided Ms Evans with a business card for Redac International (see annexure VE-8). 

9. On 25 July 2013 Ms Evans attended the Derrimut warehouse (see CE157-158, paragraph 34 of her first affidavit).  The person she knew as Karl told her that he did have some G-Star product left, had been very busy in the previous week making deliveries of stock to retailers as “Sarif” was still overseas, that he only had about 200 units of G-Star stock left at the warehouse, had received a container of stock that week but it had already been emptied with a lot of the stock moved to Sydney, and that he was just about to deliver the 200 G-Star shirts to a retailer in Coburg, and that they were $17.50 each and were sold in bundles of 10.

10. On 26 July 2013 Ms Evans spoke again with Karl (CB158, paragraph 36 of her first affidavit).  Karl told her that he had about 200 items of G-Star product and Ms Evans noted that there were approximately 50 G-Star branded items on display for sale at the Cairnlea store.  She purchased one bundle of 10 G-Star branded shirts for $17.50.  The receipt and purchases are exhibit to her affidavit.

11. On 27 July 2013 Ms Evans telephoned Karl (CB158, paragraph 37 of her first affidavit).  Karl informed her that, relevantly, he was heading to the airport to go overseas, and that if she wished to make any further purchases she would need to contact “Sarif” and that a further shipment of product, including G-Star, had arrived in Australia and that Sarif would arrange the release of these products from Customs on his return.

12. Also on 27 July 2013 Mr Douglas visited the Cairnlea store.  He saw approximately 100 G-Star branded T-shirts on display for sale, of which he purchased one and received a handwritten receipt on the back of an Xcite business card (CB324, paragraphs 7-10 of Mr Douglas’ affidavit).

13. I note that once again the person with whom Mr Douglas had a conversation asserted that, “In Kaleel’s absence, I could speak with Sarif as he is now back and will be able to assist”.

14. On 29 July 2013 Haresh emailed Mr Sarifdeen saying, relevantly, “Pls cnfrm on gstar as need to pay some amount and block the goods – thanks.” (CB529).  Mr Sarifdeen responded, “Ill pay this week for sure.  Please make $7” on 29 July 2013 (CB528).  The purchase ultimately went through.

15. Thereafter, on 31 July 2013 the search order was executed and a total of 154 G-Star products were seized.

16. Finally, between November 2013 and January 2014, Redac imported large numbers of garments from Reshnia in Bangladesh.  The Reshnia invoices are shown at CB531 and following.  It is apparent from CB541 that Reshnia produced branded goods including G-Star.  The shipments from Reshnia to Redac included 886 T-shirts in November 2013 (CB531-3), 2033 T-shirts in December 2014 (CB534-6), and 2325 garments, mostly T-shirts but also singlets and shorts (CB538-9).

17. The applicants note that the Affusion website, owned by Mr Cader, at CB576, on 28 April 2014, included a picture taken from the G-Star advertising campaign the applicants commenced using in May 2013 (see affidavit of Mr Heymans, paragraph 31, CB1118).

18. From all of these materials the applicants submit  (paragraphs 102-103 written submissions) that:

    a)It is highly improbable that the products returned to Mr Joy on 1 July 2013 included G-Star products;

    b)It is far more probable on the contrary that any G-Star products imported from Stocklot and SL Designer were included in the 16,910 garments not returned to Mr Joy;

    c)G-Star products made up a significant proportion of those garments;

    d)By the time of the search on 31 July 2013 all but 154 G-Star products had been sold;

    e)The G-Star products imported from Mr Joy were sold in the Cairnlea store and in bulk 50-garment boxes to other retailers.

19. The applicants also submit, based on the materials from Reshnia and the conduct of the respondents as a whole (paragraph 126-127 of the applicant’s submissions) that the Court should infer that the garments imported from Reshnia included G-Star clothing.

20. In the light of the evidence as a whole, the applicants submit that the respondents’ assertions as to the limited nature of G-Star product imported should not be accepted.

21. The applicants also point, at paragraph 123 of the written submissions, to a number of alleged lies told by Mr Sarifdeen during the search on 31 July 2013.  I have already dealt with a number of these matters (most importantly, the assertion that G-Star product did not sell well).  Mr Sarifdeen’s denials to Mr Goatcher that he had any connection with the business is obviously untrue in the face of the text messages sent thereafter.  Likewise, his assertion that there was no G-Star stock in the room at the back of the Cairnlea store was also untrue.  His assertion that he had not known this and that it was his first day back at work is not one I can accept.  If he was genuinely ignorant, he would have said at the time to Mr Feder that it was his first day back and that he did not know whether there was G-Star product there or not.  I regret to say that it is obvious that his answers were untruthful.

Findings about the Scale of Importation of G-Star Product

1. While I accept that the goods returned to Mr Joy in 2013 more probably than otherwise contained no G-Star product, it does not follow that the bulk or all of those that were not returned must have been G-Star.  The evidence is simply not conclusive either way.

2. What is apparent, however, is that G-Star products sold extremely well.  Mr Sarifdeen, who seems to have acted, at least in part, as the purchaser, was always keen to get more of it.  Mr Cader was plainly involved directly in the distribution and sale of G-Star stock.  This is revealed in the texts/emails and, moreover, is confirmed by what I found he had said to Ms Evans.

3. It is far more probable than otherwise that the respondents did import substantial quantities of G-Star stock which they well knew was counterfeit.  I have not dealt at this stage with the issue of pricing, but the fact is that the prices at which this stock was being bought were manifestly below the market rate for true G-Star product. Given the familiarity that I find Mr Cader and Mr Sarifdeen had with G-Star stock, they well knew it was not genuine.

4. Likewise, I accept that Mr Cader had a substantial wholesaling business.  The evidence of Ms Evans, Mr Douglas and Mr Feder shows that whatever the amounts of G-Star with which the respondent dealt was, it was substantially in excess of what they have admitted.  It is not possible to say exactly how much the quantum was.  Nonetheless, I note the very substantial number of garments imported from Reshnia well after the search order was executed and I further note that the Affusion website, which I take to have been an up and running, active proposition, contrary to Mr Cader’s denials, show that G-Star product was being sold.  Some of the stock from Reshnia must have been G-Star in the face of this history as a whole.  I am not, however, able to say exactly how much.

Did the Respondent’s Conduct Infringe the Trade Marks Act, the Copyright Act, the Australian Consumer Law and/or Constituting Passing-Off?

1. In the face of the materials filed these matters can be dealt with relatively briefly.  I accept, as the applicants submit (submissions paragraph 135):

   “In the present case, it is clear that the G-Star Trade Marks appear on the products purchased by the applicants’ agents from the BM store and the Cairnlea store in a way that would have appeared to consumers as possessing the character of a brand, which is the well-established test for determining use of their mark “as a trademark”. 

2. The cases cited, Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 424-425 per Kitto J and Johnson & Johnson Aust Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at [348] per Gummow J, make good the submission.

3. I accept further that in this case the trademarks appearing on the products sold by the respondents to the applicants’ agents are marks identical to those pleaded and proved by the applicants.

4. The applicants’ submissions at paragraphs 139-142 set out the details of the garments purchased by Ms Evans and Mr Douglas and identify the trademarks with which the trademarks on those garments correspond to those owned by the first applicant.  The correlations are indeed exact.

5. Since there is no requirement under s.120 of the Trade Marks Act to establish intention or knowledge on the part of the respondents, it follows that the respondents were involved in the importation, distribution and sale of G-Star branded products that feature marks that are identical with, or substantially identical with, the trademarks of the first applicant.  It is equally clear that these trademarks were not affixed to any of the G-Star branded garments with the licence or consent of the applicants and therefore the garments are counterfeit.

6. So far as the Copyright Act is concerned, the respondents did not plead to the formal ownership of copyright on the part of the applicants and those matters are taken to be admitted (and, as earlier indicated, are proved in any event). Pursuant to s.37(1) of the Copyright Act copyright is, relevantly, infringed by a person who, without the licence of the owner of the copyright, imports an article into Australia for the purpose of selling or exposing for sale the article if the importer knew or ought reasonably to have known that the making of the article would, if the article had been made in Australia by the importer, have constituted an infringement of the copyright.

7. By s.37(2) of the Copyright Right Act it is provided that:

   “In relation to an accessory to an article that is or includes copy of a work, being a copy that was made without the licence of the owner of the copyright in the work in the country in which the copy was made, subsection (1) has effect as if the words “the importer knew, or ought reasonably to have known, that” were omitted.”

8. Although the applicants put their case, at least in part, pursuant to s.37(2) (see paragraph 150 of the written submissions) in my view it is not necessary to go so far. On the facts as I have found them, both Mr Cader and Mr Sarifdeen knew, or at the very least ought reasonably to have known, that the making of the garments infringed the copyright.

9. In the circumstances revealed by this case it is sufficient to note that the applicants have plainly made out their case for the infringement of their copyright.  I note in passing, at CB102, at the directions hearing before North J on 7 February 2014 the following exchange took place:

   “HIS HONOUR:   But these goods that - they were pretending to be G-Star, weren’t they?

   MR CADER:   Yes…”

10. This exchange only goes to highlight what I have already said.  The respondents knew that their products were not genuine G-Star products.  If there were any doubt, they ought reasonably to have known for the reasons I have expressed.

11. The applicants have also pleaded and pressed their case under the Common Law tort of passing-off and under the Australian Consumer Law and the Australian Consumer Law Victoria.

12. The submissions dealing with these matters are at paragraphs 158-168 of the written submissions.  Given that counsel for the applicants has made it very clear that there is no desire to seek remedies cumulatively under these various heads of action, and given that in my view the primary focus of this case has been on the Trade Marks Act and Copyright Act components of the claims, I do not propose to deal with these matters in any detail. It is sufficient to state that it is quite clear that the respondents have indeed committed the tort of passing-off and have infringed the Australian Consumer Law and the Australian Consumer Law Victoria, as alleged.

The Relief to which the Applicants are Entitled

1. As the written submissions correctly assert, the applicants are entitled in respect of the trademark, copyright and passing-off claims to elect between an account of profits or damages. They have elected for damages, and seek damages for lost sales, loss of reputation, and additional damages pursuant to s.126(2) of the Trade Marks Act and s.115 of the Copyright Act, and exemplary damages for passing-off (paragraph 194 of the written submissions).

2. It is conceded that the damages under these headings overlap and it is sought that they be assessed coextensively for the various causes of action (paragraphs 196-197 of the written submissions).

Assessment of Compensatory Damages - Lost Sales Profits

1. In this case, it is appropriate to adopt the methodology identified by Tracey J in Deckers Outdoor Corporation Inc v Farley & Ors (No.5) [2009] FCA 1298 at [80]-[82]. It is sufficient to note that at [82] his Honour said:

   “In the present case, this assessment will involve an attempt to identify the number of infringing sales, the value of the sales, and the profit margin which Deckers would have secured on those sales.  There will then be a need for discounts to be applied to take account for the possibility that not all of the purchasers of the counterfeit products would necessarily have bought more expensive genuine products and the reduction in Deckers’ costs as a result of not having to meet the additional orders.  Allowance will also need to be made for the loss of goodwill associated with the inferior quality of the counterfeit footwear.”

2. As the applicants’ written submissions fairly concede (paragraph 201) they have been unable to ascertain with any precision the number of units of counterfeit G-Star stock that has been sold by the respondents.  It is, as they submit, difficult to quantify the lost sales as a result of the sales of Xcite items.  However, from the list of purchases set out at paragraph 203 of the applicants’ submissions, I accept that the respondents have sold at the very least 575 counterfeit G-Star shirts, less the 13 bought by the applicants’ agents.  The claim for loss of profit on the resultant total of 562 counterfeit G-Star T-shirts is $8941.42, based on the average profits that the applicants make, as deposed to by Mr Heymans at paragraphs 23-24 (CB11-17) and confidential annexures CH12-CH13).

3. I note that in Deckers, Tracey J posited that there would be the need for discounts on the facts of that case.  In this case, however, the counterfeits were good ones, so that the loss of goodwill referred to by his Honour for inferior product must be taken to be very limited.  Furthermore, as the applicants submit in other connections, these sales took place from what appeared to be a mainstream sales outlet(s) and it is reasonable to suppose that a very substantial number of those who bought the G-Star product would have bought the real thing if they had not bought the counterfeit product.

4. Furthermore, and far more importantly, while the evidence does not show exactly how many G-Star garments were imported by the respondents, it was far more probably than otherwise a far, far greater number than that for which the applicants seek loss of profits.  In the circumstances, I am comfortably satisfied that the amount claimed is more than justified by the facts.

Assessment of Compensatory Damages - Loss of Reputation

1. The evidence has well and truly established (see affidavit of Mr Heymans) that G-Star spends substantial time, money and resources in establishing its brand name.  The brand name is of value to it and any damage to it plainly will be significant.  Mr Heymans has deposed (paragraph 333, CB1118) that the product sold by the respondents is of poorer quality than that of G-Star.  He goes on to depose to the various consequences thereof at CB1119-1120).  The difficulties asserted by Mr Heymans are paraphrased at paragraph 211 of the written submissions as including loss of sales, because customers refuse to pay high prices for the real G-Star products, the loss of customers as the G-Star product is no longer considered exclusive, and retail customers no longer wish to purchase G-Star product as counterfeit product is sold at retail stores within close proximity to their stores at cheaper prices.  I accept the force of all those observations.  I accept that damages for loss of reputation are not a matter of precise computation.  The written submissions set out at paragraph 210 a number of cases where such damages have been awarded.

2. Each case must be taken to turn on its own facts and even the variety of awards made in the various past cases should not be taken to constitute any kind of range that inhibits the Court’s exercise of discretion.  In this case, matters that are directly relevant include the likely substantial nature of the infringements (albeit absent precise computation).  A further relevant factor is that these garments were not being sold at street markets but, rather, in established retail outlets albeit not, so far as I can see from the photographs and video, ones that would be thought to be at the upper end of the clothing market.  Furthermore, the prices being charged were relatively close to the retail price for the real thing ($40 as opposed to $70).  Both these latter two factors would have suggested that the product was genuine to customers, although I note and repeat Mr Heymans’ observations about the quality of the counterfeit garments.

3. Taking all these matters into consideration, I conclude that the applicants should receive general damages in the amount of $20,000.

Additional Damages and/or Exemplary Damages

1. It is clear that the Court has various powers which would enable it to award additional damages, whether so described or as exemplary damages for passing-off. S.115(4) of the Copyright Act gives such a power and a very similar form of words is used in s.126 of the Trade Marks Act.  Indeed, the two sections are relevantly identical.

2. I have noted the authorities referred to in the applicants’ written submissions, all of which are pertinent.  It is enough for present purposes to repeat what Rares J said in Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (2007) 157 FCR 564 at [116], where his Honour said:

   “There is a need to deter and punish those who act or seek to act as Vidtech and Mr Parry were proved to have done. I am of opinion that a further $40,000 or 50% of the profit they made was too small a figure to reflect an appropriate sum to award under s.115(4)(b). One of the important purposes served by the power to award additional damages granted in s.115(4)(b) is that market practices of the kind engaged in by Vidtech and Mr Parry can be firmly discouraged. In a case like the present where precision of assessment of damage or profit is impossible but substantial, deliberate and flagrant infringement has been proved, a substantial sum of additional damages should be awarded. I am of opinion that having regard to the whole of the evidence, the $80,000 profit and interest already quantified, the flagrancy of Vidtech and Mr Parry and the need to deter similar conduct, additional damages should be awarded against them in a lump sum amount of $200,000.”

3. I note and refer, with respect, also to the analysis of additional damages in the joint judgment of Black CJ and Jacobson J at [40]-[52].  In this case the applicants point in paragraphs 226 and 227 to a number of matters supporting their claim for $225,000 additional damages.  They submit that the Xcite items were very good copies and therefore flagrant infringements.  The products were offered for sale and sold as if they were G-Star products.  The respondents can be presumed to have gained a significant commercial advantage in selling products bearing the G-Star brand, as these enabled a premium that would have been otherwise unavailable.  The respondents point to Mr Sarifdeen’s failure to disclose the whereabouts of the G-Star products during the execution of the search order.  The applicants point also to the fact that the respondents both wholesaled and retailed their Xcite items, although they denied wholesaling entirely.  The applicants point to the respondents’ failure to disclose the true extent of their sales of the Xcite items and point to the large numbers of goods imported.

4. Accordingly, the applicants submit that the respondents’ infringement was flagrant, involving a calculated disregard for the applicants’ rights, conduct that is both deliberate, deceitful and serious.  The applicants submit there needs to be general deterrence to prevent similar infringements of copyright in the marketplace.

5. The applicants point to a number of reported cases in which additional damages have been awarded (the same ones referred to in respect of damages for loss of reputation).  It should be noted, however, that the only cases to which the applicants have pointed in which very substantial additional damages were awarded appear to have involved infringements by companies at a far greater level of commercial activity and resource than those of the respondents in this case.

6. I accept that the conduct of the respondents was flagrant.  Mr Cader and Mr Sarifdeen well knew that the garments they were importing were counterfeit, albeit that they were good counterfeits.  The prices they sold those garments for were relatively close to the retail price for which the applicants’ own garments sold.  This contiguity or proximity reflects the relative success of the counterfeiting process.  It was indeed a cynical and serious breach of the law.

7. The respondents have not in any way been contrite.  They have never revealed the true scale of their operations but have sought at every turn to minimise their involvement and to underestimate the extent of it.  They have pursued this dishonest conduct through to trial and in their evidence before the Court.

8. Furthermore, there is a need to discourage such conduct more generally.  Deterrence is clearly a significant and important matter where a counterfeit product is apparently so readily available.

9. Finally, although it has not been possible to quantify the sale of these operations, they were significant, involving wholesale and retail activities in circumstances where, as already observed more than once, the retail activities were certainly at a greater level of sophistication than, for example, street or market sales.

10. The respondents have not sought to say anything of any moment about the scale and quantum of any award made against them.  Both have professed impecuniosity but have not put on any affidavit material that would justify any findings one way or the other as to their circumstances.  It should be noted, however, that whatever the success or scale of the business operations of the respondents, one of the two shops they operated had to be closed down.  Although, as I say, this was a wide-ranging activity, it was perhaps not entirely successful as the picture the applicants would wish to paint.

11. In all the circumstances, in my view, the applicants should be awarded compensation in the sum of $100,000 under this heading.

The Applications to Adjourn

1. I have left this discrete matter to one side until now. It did not easily fit into the judgment.

2. On 5 November 2015, a matter of days before the trial was due to restart, Mr Cader wrote to my associate seeking that the matter be adjourned on the footing that Mr Piet Poelmann was available to give evidence and should be made to do so.  It should be recalled that the proceeding was adjourned on 16 June 2015 because of a request made (after the applicants had formally closed their case) to have Mr Poelmann give evidence.  It will also be noted that at the conclusion of the proceedings on 16 June 2015 Mr Sarifdeen had been offered the opportunity to attend at the applicants’ solicitor’s offices to peruse Mr Poelmann’s materials, and it was foreshadowed that if Mr Poelmann had been available the matter would proceed the following day.

3. One of the difficulties in this matter has been the self-representation of the respondents.  This has meant that the material held by the Court as confidential (and no issue has been taken as to that at any stage) could not be released, as they ordinarily would be, to the respondents’ legal practitioners.  Nonetheless, since 16 June 2015, it has been open to either of the respondents to attend upon the solicitors for the applicants and to review, first, Mr Poelmann’s, and subsequently Mr Heymans’ material with a view to preparing cross-examination.

4. Both during the hearing, but more particularly in the final written submissions, the second respondent has sought to re-agitate the question as to whether there was sufficient time made available for the preparation of his cross-examination of Mr Heymans and/or to conduct it.  In my view, Mr Sarifdeen and Mr Cader were given ample opportunity in terms of time to prepare their cross-examination.  As earlier indicated, both, but more particularly Mr Sarifdeen, put their questions in a fashion that suggested a far greater experience of and involvement in the garment industry than they otherwise professed.

5. Finally, contrary to the second respondent’s submissions, I should make it clear that such limitation of cross-examination of Mr Heymans as was imposed was on a footing revealed by the transcript at P-36:

   “I will give you till ten past, and I will give Mr Cader another quarter of an hour after that.  And I should say, I’m not limiting this time in this way because the witness has to return to Sydney.  He can stay here overnight if he has to.  It’s just that I think I have given a fair opportunity for this witness’s evidence to be tested and the…amount that is now coming out that is new and of assistance to me is increasingly small.”

6. Those assertions reflected my state of mind at the time and an examination of the transcript will I hope reveal that Mr Sarifdeen was granted all reasonable latitude, as was Mr Cader, in his questioning of Mr Heymans.

Conclusion

1. Accordingly, for the reasons already given, there will be damages in the amounts indicated to be awarded to the applicants.  Insofar as the applicants sought other ancillary relief in the form of declarations, injunctions and costs, the respondents have not meaningfully put anything in contradiction.  On the materials as established by the pleadings and the evidence, it is clear that the applicants are entitled to the additional relief they seek, including costs.

2. I note that the applicants have foreshadowed in their written submissions in reply a desire to be heard as to whether any costs awarded in their favour should be taxed pursuant to the Federal Court Rules. I do not propose to put the parties to further expense in this regard. This has been a case of some considerable complexity heard over a number of days. The event based scale prescribed by this Court’s rules is not, in my view, in the circumstances of this case an appropriate resolution mechanism for any dispute that may emerge as to costs. The costs of the applicants will be taxed pursuant to the Federal Court Rules in default of agreement.

I certify that the preceding two hundred and sixty-three (263) paragraphs are a true copy of the reasons for judgment of Judge Burchardt

Associate: 

Date:  12 February 2016