Vladimir Vaysman, Vaysman Pty Ltd and Hepbourne Pty Ltd
50 At all material times, Vladimir Vaysman was the sole director and sole shareholder of Vaysman Pty Ltd and of Hepbourne Pty Ltd.
51 The Applicant preferred the following charges against Vladimir Vaysman, Vaysman Pty Ltd and Hepbourne Pty Ltd:
· Charge 8
In breach of the December 2003 Orders, Vladimir Vaysman and Vaysman Pty Ltd deliberately and voluntarily sold sheepskin footwear bearing labels and accompanying printed materials bearing the word "Ugg" and/or "Ugg Australia" and/or the "Sun Device" and/or the "Ugg Logo" as follows:
(a) on 25 January 2004, Vladimir Vaysman processed an order via the website www.moneyorderdirect.net for one pair of "tall ugg boots" to Mari Stuppy, and payment for this order was received by Vaysman Pty Ltd on 28 January 2004;
(b) on 25 January 2004, Vladimir Vaysman processed an order via the website www.moneyorderdirect.net for one pair of "tall ugg boots" to Josef R. Castagnola, and payment for this order was received by Vaysman Pty Ltd on 28 January 2004;
(c) on 27 January 2004, Vladimir Vaysman processed an order via the website www.moneyorderdirect.net for one pair of "short ugg boots" to Dara Miles;
(d) on 29 January 2004, Vladimir Vaysman processed an order via the website www.moneyorderdirect.net for eight pairs of "tall UGG boots" and one pair of "classic short ugg boots" to "Sabine from Germany", and payment for this order was received by Vaysman Pty Ltd on 3 February 2004;
(e) on 4 February 2004, Vladimir Vaysman processed an order via the website www.moneyorderdirect.net for one pair of "tall uggs" colour black size 8, one pair "tall ugg boots" colour black size 9, two pairs "tall" colour pink size 8, two pairs "tall uggs" colour pink size 9, one pair "tall" colour chestnut size 9, one pair "short boots" colour pink size 8, one pair short boots colour pink size 9 to Sabine Weinstock and payment for this order was received by Vaysman Pty Ltd on 10 February 2004;
(f) on 7 February 2004, Vladimir Vaysman processed an order via the website www.moneyorderdirect.net for one pair of "classic tall UGG boots" to "Ani";
(g) on 24, 30, 31 December 2003, 5, 7, 10, 12, 13, 14, 16, 18, 21, 22, 23, 30 January 2004 and 1, 3, 4, 6, 10 February 2004, Vladimir Vaysman processed orders via the website www.moneyorderdirect.net for various "boots" to "Jamie" and payments for these orders were received by Vaysman Pty Ltd on 10, 19, 22, 28, 31 January 2003, 3, 4, 10 February 2004;
(h) on a date unknown to the Applicant, but which was after 22 December 2003, Vladimir Vaysman sent "Sue" a pair of boots which had been ordered on 10 December 2003; and
(i) on 9 February 2004 and 10 February 2004, Vladimir Vaysman processed an order via the website www.ikonaustralia.com for two pairs of "tall boots" to "Vicki Wallis".
52 The Applicant relied on evidence given by Mr Anthony Watson, a solicitor acting on its behalf, in affidavits sworn by him on 15 December 2003 and 26 February 2004. Mr Watson executed the search order at the Roper Street Factory on 11 February 2004. During the search, numerous orders for "ugg" boots were found. The orders were placed by email. Twenty-one orders for "ugg" boots were emailed to "John" between 25 January 2004 and 4 February 2004. These orders were processed via a website www.moneyorderdirect.net. Vladimir Vaysman is the registrant of the domain name www.moneyorderdirect.net. Eftpos receipts indicate that payment for sales was received by Vaysman Pty Ltd.
53 "Sue" and "Vicki Wallis" each confirmed that they had purchased boots from the website www.moneyorderdirect.net and www.ikonaustralia.com in late 2003. The boots that were sent to them in early 2004 bore the words "Ugg Australia" and the soles featured a "sun" and the word "ugg". The registrant of the domain name www.ikonaustralia.com was "John Vay" of "22 Apple Street, Melbourne 3000". There was, at relevant times, no "Apple Street" in Melbourne. Vladimir Vaysman was the registrant of domain name www.ikonaustralia.com. The evidence supports the inference that Vladimir Vaysman used a pseudonym and a false address in an effort to disguise this fact.
54 "Catherine Dye" emailed "John" at a1boots@ikonaustralia.com and queried the authenticity of the ugg boots which she had purchased on 10 December 2003. "John" advised her that "[t]hey are genuine ugg brand boots" and provided his details as "Hapbourne [sic] Pty. Ltd 1 Roper st, Moorabbin 3189". This is the address of the Roper Street Factory. Ms Dye's boots were shipped on 27 December 2003 and received by Ms Dye on 20 January 2004. Ms Dye confirmed in an email to Mr Watson that the boots she received were marked "Ugg".
55 Mr Watson also found copies of emails which evidenced sales of 76 pairs of boots to "Jamie" between 24 December 2003 and 10 February 2004 via the website www.moneyorderdirect.net. In an email to the Applicant's solicitor "Jamie" confirmed that the footwear he purchased on 10 January 2004 was branded "UGG australia".
· Charge 9
In breach of the December 2003 Orders, Vladimir Vaysman and/or Hepbourne Pty Ltd deliberately and voluntarily sold sheepskin footwear bearing labels and accompanying printed materials bearing the word "Ugg" and/or "Ugg Australia" and/or the "Sun Device" and/or the "Ugg Logo" as follows:
(a) on or about 27 December 2003, in response to an order made by Catherine Dye via the internet on 10 December 2003, Hepbourne Pty Ltd and/or Vladimir Vaysman sent a pair of boots to "Catherine Dye".
56 The Applicant relies on the sale to Ms Dye outlined above under Charge 9 and Ms Dye's email to Mr Watson in which she stated that the boots she received from "John" of Hepbourne Pty. Ltd 1 Roper Street, Moorabbin 3189 were marked with the word "Ugg". Hepbourne Pty Ltd was the registered proprietor of the Roper Street factory.
· Charge 10
In breach of the December 2003 Orders, after 22 December 2003, Vaysman Pty Ltd and/or Hepbourne Pty Ltd deliberately and voluntarily manufactured and supplied Victoria Vaysman and Vladimir Vaysman with sheepskin footwear bearing labels and accompanying printed materials bearing the word "Ugg".
57 As I understand this charge it alleges that Vaysman Pty Ltd and/or Hepbourne Pty Ltd manufactured sheepskin footwear which purported to be genuine "Ugg" footwear and then supplied both Victoria and Vladimir Vaysman with that footwear. The Applicant relies principally on electronic records which were found at 11 Ellington Street Caulfield on 11 February 2004. Those records related to the sale, by Victoria Vaysman, of footwear which bore labels and accompanying printed materials bearing the words "Ugg Australia" and the "Ugg logo". The Applicant invites the Court to infer that this footwear "was sourced" from Vaysman Pty Ltd and/or Hepbourne Pty Ltd. It does so on the basis of the following evidence of Mr Watson:
"(a) the return address and the address given for [Victoria Vaysman in the sales records] was 11 Ellington Street, Caulfield, which is a private residence and does not have the facilities to manufacture sheepskin boots;
(b) amongst the footwear seized … during [the] execution of the orders at 1 Roper Street Moorabbin [on the same day], was new and partly constructed footwear and component parts therefore [sic] for footwear which featured the Ugg Logo and the Sun Device and which fits the description of the footwear being sold by [Victoria Vaysman];
(c) an electronic document which was on Ms Vaysman's computer states "Order Now!" … [in] that document:
(i) the contact telephone details are listed are (sic) "By Phone 03 9553 6607" which is the phone number for 1 Roper Street Moorabbin, "or 0405 095 926" which is Victoria Vaysman's mobile phone number;
(ii) the contact mail details are listed as "Post 1 Roper Street, Moorabbin" which is the factory address of [the two companies];
(iii) the contact email details are listed as "By email vitaway@hotmail.com" which is one of Victoria Vaysman's email addresses.
A further document downloaded from Ms Vaysman's computer at the Caulfield Premises titled "Please check out our Winter Clearance Range" is signed off by "Vita Weisman, Director, Vikstarr". … I believe Vita Weisman is an alias used by Victoria Vaysman for internet and other trading; and
(d) From electronic records seized at the Caulfield premises …. there are a number of photographs labelled with the Applicant's Ugg Logo and "Ugg Australia" trade mark. These photographs have a date in the corner which is 27 January 2004. … The footwear depicted is the same as the footwear seized … at 1 Roper Street Moorabbin and is the same footwear which was the subject of trap purchases made from websites operated by the [two companies]."
58 This evidence does not support the allegation that any of the footwear was supplied to Vladimir Vaysman. Insofar as the allegations of manufacture and supply to Victoria Vaysman are concerned I am unable to conclude, beyond reasonable doubt that the two companies which he controlled manufactured counterfeit footwear and supplied it to Ms Vaysman in the period between 22 December 2003 and 11 February 2004. The documentary evidence is consistent with the footwear referred to in the documents having been manufactured and supplied prior to the making of the December 2003 orders.
· Charge 18
In breach of the March 2004 Order, from about December 2005 and continuing as at 12 November 2007, Hepbourne Pty Ltd and/or Vladimir Vaysman deliberately and voluntarily permitted, directed, procured, caused and/or encouraged the Roper Street Factory to be used for manufacturing and selling sheepskin footwear which featured (either on the footwear or the accompanying care material) one or more of the names "Ugg", "Ug", "Uggs", "Ugh", "Ugg Australia", and the "Original Ugg Company", the "Ugg Logo", the "Sun Device" and/or the Copyright Works.
59 The Applicant relies on the reports of Andrew McRobert and David Wilson, the independent solicitors who supervised the searches of the Roper Street Factory on 13 November 2007 and 12 December 2007 respectively, and the affidavits of Mr Watson who carried out those searches. Craig Douglas, an investigative agent from Nationwide Research Group Pty Ltd, and a computer consultant from Ernst & Young assisted Mr Watson with the searches.
60 The Applicant also relied on affidavits sworn by each of Leah Jane Farley, Dianne Sommer, Joanne Strickland, Gihan Ezzat and Oliver Doederlein.
61 Mr Watson's evidence was that, on 13 November 2007, when the Applicant's solicitors and Mr Wilson arrived at the Roper Street Factory, a man who identified himself to Mr Watson as Josef Vaysman was present at the premises and answered the door. Sometime later, a woman who Josef Vaysman identified as his wife, Polina Vaysman, arrived at the Roper Street Factory. Josef Vaysman would not permit the search of the premises to commence until Vladimir Vaysman arrived. Until then, no person other than Josef and Polina Vaysman was apparently in control of the factory.
62 Mr Watson observed the following material at the Roper Street Factory on 13 November 2007:
· many pairs of finished and partly constructed sheepskin footwear marked with the UGG Logo, the Sun Device and the Trade Marks;
· a substantial amount of materials used to manufacture sheepskin footwear marked with the UGG Logo, the Sun Device and the Trade Marks, sheets of sole material, cut out soles, sheepskin uppers and parts of sheepskin uppers and labels;
· boxes of packaging, information booklets, care instruction cards and brochures bearing the UGG Logo, the Sun Device and the Trade Marks;
· items of sheepskin footwear which appeared to have been made by or with the licence of the Applicant and which had been pulled apart; and
· numerous pieces of correspondence addressed to Bobby Vaysman, some of which was addressed to "Bobby Vaysman" at 11 Ellington Street, Caulfield, which Mr Watson believed to be an alias used by Vladimir Vaysman.
Photographs of this material were taken by Mr McRobert. The material was listed in the inventory attached to his report and was retained in his custody.
63 Mr Watson also observed that many of the boxes containing partially made sheepskin footwear had printed on them "Millhouse Pty Ltd." From 11 November 2004 to at least 16 November 2007 Josef Vaysman was the sole director and shareholder of Millhouse Pty Ltd. Vladimir Vaysman was actively involved in the business affairs of this company. During his attendance at the Roper Street Factory Mr Watson obtained copies of:
· orders for large quantities of beige and brown sheets sent by Bobby Vaysman on Millhouse Pty Ltd letterhead;
· freight forwarding accounts addressed to Millhouse Pty Ltd and "Bobby"; and
· a number of express courier international slips where Millhouse is named as the sender and the addressees are various individuals in the UK. On each slip the description of the goods is "boots" and the value of the goods is stated as AUS$50.
Mr Watson also caused photographs to be taken of boxes of footwear with Millhouse printed on the side of the boxes.
64 On 12 December 2007, the Applicant's solicitors again searched the Roper Street Factory. Josef Vaysman answered the door to the factory. Mr Wilson, the independent solicitor, waited for Vladimir Vaysman to arrive before he allowed the search to commence. On this occasion Mr Watson observed and seized material from the Roper Street Factory which included:
· approximately 200 pairs of finished and partly constructed sheepskin footwear marked with the UGG Logo, the Sun Device and the Trade Marks, some on shelves and some in boxes. Many of the boxes were labelled "Millhouse";
· four bags of completed counterfeit footwear bearing the UGG Logo, the Sun Device and the Trade Marks;
· several boxes of component parts for footwear such as soles, heel pieces and foot inset and completed uppers without soles and labels bearing the UGG Logo, the Sun Device and the Trade Marks;
· various labels on which were written the names of the various styles and colours of UGG footwear, such as "Tall Chestnut" and "Tall Choc"; and
· boxes bearing the UGG Logo, the Sun Device and the Trade Marks some of which were made up and ready for dispatch.
This material was not in the Roper Street Factory on 13 November 2007. Most of these items, and particularly the semi-completed footwear, were found under other boxes or included in boxes with other items or under benches. I infer that someone with access to the factory had attempted to hide the completed footwear.
65 When Mr Watson attended the Roper Street Factory he found that it was equipped with machinery used in the manufacture of sheepskin footwear such as cutting moulds, sewing machines and heat sealing equipment. On 12 December 2007 there was also stock of sheepskins, sole material, glues and edge trims which had not been present on 13 November 2007. The report of Mr Wilson confirmed that each of the items deposed to by Mr Watson were seized from the Roper Street factory on 12 December 2007. Mr Watson alleged that what he saw at the factory suggested that Mr Mykhalovskyi, Vladimir Vaysman and Josef Vaysman had continued to engage in manufacturing and distributing the counterfeit from the Roper Street Factory, despite the Court's orders that they cease to do so. Vladimir Vaysman unlocked a black Lexus car with licence plate number QHD 032 which was parked near the factory. When he searched the car, Mr Watson found approximately $10,000 in cash in the cabin.
66 Documents found at the Roper Street Factory revealed that, between July 2006 and October 2006 Vladimir Vaysman received payments in the total sum of $1,709,710.92 into four accounts held in his name. Cheque books related to those accounts showed that, in the period 5 October 2005 to around 6 March 2007, 98 cheques were made out to "Cash". The total amount of these cheques was approximately $450,000. Many of the documents relating to the purchasing and/or importation of materials used to make the sheepskin footwear were addressed to or made reference to "Bobby" or "Bobby Vaysman".
67 Ms Farley is an eBay trading assistant. She sells products on the trading website "eBay" on behalf of other people and charges a commission for her service. Ms Farley used the eBay store "House of Designs" and the eBay identification "hUUGies House of Design" to trade goods on eBay. On 28 December 2005 Ms Farley was contacted by a person who identified himself as "Leon" who said that he had a quantity of Ugg boots that he wanted her to sell on eBay. Ms Farley now knows "Leon" to be Vladimir Vaysman. Vladimir gave Ms Farley information on how to list the boots on eBay, the prices he wanted her to list them for, product descriptions and the photos to display with the eBay listing. In an email from "Leon" to Leah (Ms Farley) dated 12 January 2006 he prescribed how the boots were to be described. Each description of the boots included the word "UGG". In the email Vladimir wrote:
"Some information about the boots:
100% Australian sheepskin
Available in whole sizes only. If between sizes order ˝ size down from your usual size.
UGG Australia brand
Thank you, Leon" (Emphasis added).
68 Initially Vladimir Vaysman delivered the boots to her house in Rowville. The boots and the boxes in which they were packaged bore the "UGG australia" logo. Ms Farley wrapped the boxes in butcher's paper prior to shipping them to the customers. From December 2006, Ms Farley packed the boots herself. Vladimir brought boxes branded with "Millhouse", the boots, tissue paper, cartons, cardboard inserts and care instruction cards to her home. Vladimir would decide which styles, colours and sizes she would sell.
69 In an affidavit sworn on 26 November 2007, Vladimir deposed that, since 2005, he had not had in his personal possession any of the listed things (as that term was defined in the 12 November 2007 Orders: see paragraphs [18] and [19] above) "save for one or two sample boots which I used during the course of my employment." As far as he was aware, all of the listed things which were in the possession of his employer (Millhouse Pty Ltd) were now in the possession of the independent solicitor, with the exception of a single brown Ugg boot which was in the possession of his solicitors. Vladimir Vaysman had that boot in his possession at the time the 12 November 2007 Orders were executed and he gave the boot to his solicitors for the sole purpose of obtaining legal advice for himself and Hepbourne Pty Ltd. He had not personally been supplied with or received an offer to be supplied with, any listed thing and he had never personally supplied, or offered to supply, any person with any listed thing. On behalf of Hepbourne Pty Ltd, Vladimir deposed that Hepbourne Pty Ltd had never had possession of, been supplied with, or received an offer to be supplied with any listed thing and had never supplied or offered to supply any person with any listed thing. The Applicant submitted this affidavit was false and contemptuous. Despite his assertions to the contrary it is clear that Vladimir Vaysman manufactured or caused to be manufactured boots which bore the Ugg Australia logo, had those boots in his personal possession and deliberately and willingly supplied those products to Ms Farley, amongst others. I reject the evidence of Vladimir Vaysman.
70 Ms Farley sold the boots in Canada and the United States of America and listed the boots on eBay's USA site. The boots sold well. Customers deposited the money for the boots into Ms Farley's PayPal account. As directed by Vladimir, Ms Farley transferred the money into a bank account held by Minatap Pty Ltd, and later into a bank account held by Millhouse Pty Ltd. Ms Farley deducted her commission from each of the sales receipts. Initially she deducted AUS$20 but later this was increased to US$20. By August 2006, Ms Farley was receiving 200-300 email enquiries each day. She asked her mother, Sandy Hazendonk (the tenth respondent), to help her with her business, and split the commission with her. Ms Farley prepared sales reports for Vladimir in which she listed the sales to the USA and the UK separately, and the number of sales made in each of her eBay trading names, and once she became involved, the sales made in Ms Strickland's eBay trading name.
71 In or around July or August 2006, Ms Farley invited Ms Strickland to participate in her business. Ms Farley asked Ms Strickland whether she would be interested in selling boots on eBay during busy periods. Ms Strickland assisted Ms Farley in selling boots on eBay between July 2006 and September 2006 and again between July 2007 and November 2007. Ms Strickland received US$10, half of Ms Farley's commission, for any pairs that she sold. Ms Farley provided Ms Strickland with the information and photos to post on eBay. Initially Ms Strickland obtained the boots from Ms Farley.
72 In June 2007, Ms Farley moved to 30 Gareth Avenue Beaumaris. From about this time, Ms Farley began collecting the footwear from the Roper Street Factory. She attended the factory approximately four or five times a day. Ms Farley was not aware that Vladimir was physically making the boots himself until she visited the factory. Ms Farley always rang before she picked up the boots from the Roper Street Factory and the persons now known to her as Josef or Polina Vaysman would answer the phone. Often Josef Vaysman or Polina Vaysman would answer the door when she arrived at the factory and they were always present when she visited the factory during the week. When she attended at the Roper Street Factory, Ms Farley observed that Vladimir and Josef would always be operating the sewing machinery.
73 In approximately July 2007 Ms Strickland contacted Vladimir, whose details had been provided to her by Ms Farley, and began collecting what she described as "the Respondents' Products" directly from the Roper Street Factory. By this I understand her to be referring to footwear manufactured by some or all of the Respondents to the proceeding. Ms Strickland faxed a list of the items sold to what Vladimir told her was his work facsimile number. Ms Strickland would ring Vladimir on his mobile telephone number and arrange a time to pick up the boots. Vladimir would have the boots ready for collection for Ms Strickland when she arrived at the Roper Street Factory. Vladimir admitted her to the factory. Vladimir admitted in his affidavit that he believed he had heard the name "Joanne of Designer Comfort" before, possibly during conversations with either Ms Farley or Ms Sommer "which he had in the course of his employment with Millhouse", but aside from that basic recognition of her name he did not have any further information about her.
74 Ms Strickland sold boots to customers in Canada and the United Kingdom using the eBay trading name "Designer Comfort". Between July 2006 and November 2007, Ms Strickland sold approximately 420 pairs of the boots. The tall boots were sold for approximately $120 Canadian dollars and the short boots were sold for approximately $104 Canadian dollars. She sold the short boots for GBP60 and the tall boots for GBP65. Ms Strickland made $84,590.69 in total sales of the boots. Of this $58,668.16 was deposited into Ms Farley and Mr Biondo's accounts, eBay deducted $6,665.25 in fees, $11,460.47 was spent on postage and Ms Strickland retained $7,796.81 net profit.
75 In October 2007, Vladimir told Ms Farley that the boots had sold well in the past from websites dedicated to their sale. Vladimir created a website for Ms Farley located at www.dusiafootwear.com. Ms Farley opened up a new PayPal account for this website. Initially, Ms Farley received a 7% commission on the sales she made from this website. Later her commission increased to 12%. Vladimir controlled the prices at which Ms Farley sold the boots, the number of boots she had to sell and her profit margin. With Vladimir's encouragement, Ms Farley also sold a large amount of the boots to customers on a wholesale basis.
76 Ms Sommer is also an eBay trading assistant. She sold ugg branded products on eBay for Victoria Vaysman from mid-January 2006 to mid-March 2006. In August 2006 a person who Ms Sommer now knows to be Vladimir Vaysman contacted her and asked her whether she would be interested in selling UGG Australia footwear for him. Vladimir arranged for Ms Sommer to meet him at the Roper Street Factory. At the factory, Vladimir showed Ms Sommer the new "UGG Australia" product range and told her that she could see the entire range at any time on the UGG Australia website. He told her that once she had sold the footwear, she would need to come to the Roper Street Factory to collect the footwear and then send the boots to the customer herself. Ms Sommer emailed him a list of the footwear that she had sold and he would arrange for the goods to be ready for collection by her. Ms Sommer would place an order with Vladimir and then arrange a time to meet him at the Roper Street Factory to collect the goods. When Ms Sommer came to collect her orders Vladimir would have the boxes ready for her. Vladimir sold the footwear to Ms Sommer at cost price and she kept any monies she made by selling the boots to customers above the cost price.
77 In approximately August 2007 Vladimir suggested that Ms Farley and Ms Sommer move their separate "operations" into a factory. Ms Farley and Ms Sommer moved their operations to the Levanswell Road Warehouse. Polina Vaysman came to look at the Levanswell Road Warehouse and looked through every room and every box. Polina admitted that she had been to the Levanswell Road Warehouse but denied that she was curious as to the contents of the boxes.
78 Vladimir asked Ms Sommer and Ms Farley to submit a daily report to him which outlined the sales that they had made on that day. Ms Sommer and Ms Farley continued to collect the footwear from the Roper Street factory to satisfy the orders they received at the Levanswell Road Warehouse.
79 The Levanswell Road Warehouse and Ms Farley's home at 30 Gareth Avenue, Beaumaris were searched by the Applicant's solicitors on 12 November 2007. Mr Watson gave evidence that the following items were found at the Levanswell Road Warehouse:
· in excess of 600 units of finished ladies "and children's"' sheepskin footwear marked with the UGG Logo, the Sun Device and the Trade Marks in various stages of packaging and preparation for shipping and delivery. Some of these were in boxes which bore the UGG Logo, the Sun Device and the Trade Marks;
· 71 packages containing rubber sheets with the Trade Marks and the Sun Device moulded into them;
· in excess of 100 flat packed unassembled footwear packaging boxes featuring the Trade Marks and the Sun Device;
· printed care instruction cards and information booklets bearing the Trade Marks and the Copyright Works; and
· bundles of completed Express Courier International receipts with various "sender/return address" names and addresses printed on them including B Vaysman and Millhouse.
80 Documents found at the Roper Street Factory indicated that the Levanswell Road Warehouse had been leased to "J Vaysman". Invoices for rental payments on the property were sent to Mr Vaysman at 11 Ellington Street Caulfield, by Hodges Commercial Pty Ltd. Josef claimed that he was unaware of the leasing arrangements for the Levanswell Road Warehouse. He could not read English and had not seen the invoice for rent or the letter from Hodges.
81 Ms Sommer and Ms Farley observed the Roper Street factory on 7 December 2007 and the Victoria Market on 8 December 2007. On 7 December 2007 Ms Sommer and Ms Farley parked outside the Roper Street factory and observed Leonid Mykhalovski leaving the Roper Street Factory in a maroon sedan. At 4.45 pm a man of Asian appearance arrived at the Roper Street Factory in a light blue Holden Lexcen wagon with the licence plate ECT 781. He entered the factory and, 10 minutes later, left the factory with Josef Vaysman who was carrying two large boxes of sheepskin footwear with the name "Millhouse" on their sides. Photographs taken by Ms Farley and Ms Sommer show that the top of these boxes were open and that sheepskin footwear was inside the boxes.
82 At 5.15 pm Ms Farley and Ms Sommer observed another car arrive at the Roper Street Factory. It was driven by an elderly man who entered the factory empty-handed but left the factory carrying two large bags. He was accompanied by Polina Vaysman.
83 On 8 December 2007 Ms Farley and Ms Sommer attended the Victoria Market and observed that at the stall numbered "K9" a person was selling sheepskin boots which bore the UGG australia logo. At stall number "C44" the same man of Asian appearance who they had observed at the Roper Street factory the previous evening and who was wearing the same t‑shirt which he had been wearing on 7 December 2007 was selling footwear. They saw the same bags at the stall that he had carried out of the Roper Street factory. Ms Farley and Ms Sommer also observed a box at stall C44 which was labelled "Joseph/Australia". Ms Farley and Ms Sommer purchased from stall C44 a pair of black slippers which had the Sun Device moulded in the sole. They took photographs which depict boots, with an "UGG Australia" label sewn onto them, on the stall.
84 Between January 2006 and November 2007, Ms Farley sold approximately 15,000 pairs of Ugg boots. In the months leading up to the search of the Levanswell Road Warehouse on 13 November 2007 Ms Sommer sold approximately 1,000 pairs of Ugg boots per month. Ms Farley and Ms Sommer sold the boots for approximately 100 GB pounds per pair to Europe and USD$ 125 to the USA.
85 Ms Ezzat is also an eBay trading assistant. Ms Ezzat sold "Ugg" boots at the invitation of Victoria Vaysman from mid-December 2005 to January 2006. From early 2006 Ms Ezzat dealt with Vladimir Vaysman. Vladimir sent her emails with photos of new footwear products. He also directed her that payments should be made to Millhouse Pty Ltd and provided her with the bank details for this company's account. Ms Ezzat set up a specific eBay user name "uggcentre" to sell the footwear. Throughout 2006, either Vladimir or Victoria delivered the ugg branded footwear to Ms Ezzat. In or about April/May 2007, Victoria advised Ms Ezzat that Vladimir was now too busy to box the footwear and that Ms Ezzat would need to box the footwear herself. Initially Ms Ezzat refused to do this but later agreed to do so for an increased fee. Subsequently, Ms Ezzat was told by Victoria that she would have to collect the stock from Vladimir's factory in Roper Street, Moorabbin. Victoria told Ms Ezzat that she would be contacted by Vladimir when the stock was ready for collection.
86 Ms Ezzat started visiting the Roper Street Factory on a regular basis to pick up her footwear. She dealt with Vladimir each time she attended the factory. Ms Ezzat saw people at the Roper Street Factory who were manufacturing the footwear. During her visits to the factory, Ms Ezzat was introduced to Victoria's parents, Josef and Polina Vaysman. On one occasion at the Roper Street Factory, Vladimir advised Ms Ezzat that she would no longer be selling for Victoria. He stated that it would be much easier for him to keep track of the stock and how much it had been sold for by issuing invoices to Ms Ezzat. Ms Ezzat was instructed by Vladimir to make payments to an account in the name of Rastov Pty Ltd. Vladimir required payments from Ms Ezzat each Friday. Vladimir told Ms Ezzat the price at which she should list the footwear on eBay. Ms Ezzat no longer received a fixed amount for each sale and was now required to pay for the eBay and PayPal fees. She was entitled to keep the remaining monies once she had paid these fees and had paid Vladimir for the footwear she had sold.
87 On or about 20 November 2007, Vladimir telephoned Ms Ezzat and told her that he wanted her to list the footwear on eBay UK. He told Ms Ezzat that he would no longer be providing the footwear to his other eBay sellers and that he wanted her to sell more stock and at a quicker pace. Ms Ezzat asked Vladimir why he was no longer supplying the goods to his other sellers and he told her that it was better not to ask what had happened. Ms Ezzat was joined as a Respondent to the proceeding on 27 November 2007.
88 In an affidavit dated 4 December 2007, Vladimir deposed that he recalled that, about six months earlier, in the course of his employment with Millhouse Pty Ltd, he had received a telephone call from Gihan Ezzat in relation to the possible supply of some boots to him, but that those enquiries never proceeded beyond that one phone call and he had no further information about her. In an affidavit sworn 11 December 2007, Vladimir deposed that, further to his previous affidavits, in the course of his employment with Millhouse Pty Ltd he had "arranged to provide "Uggcentre" with boots and shoes as requested by her from time to time." On or about 5 December 2007 he was told by his solicitors, that the person he knew as "Uggcentre" was in fact called Gihan Ezzat. These attempts, by Vladimir Vaysman, to suggest that he did not know Ms Ezzat and that he was unaware of the arrangements she had put in place to sell the UGG boots, are disingenuous. The evidence of Ms Ezzat, which I accept, makes it plain that Vladimir Vaysman had regular meetings with her during which arrangements to sell large quantities of the boots were made.
89 During her involvement with the sale of the boots Ms Ezzat paid the sum of $177,776.66 into accounts held by Samba Enterprise Pty Ltd, Minatap Pty Ltd and Millhouse Pty Ltd. This money was derived from the sales made by Ms Ezzat of the boots which were supplied to her by Victoria Vaysman and Vladimir Vaysman. The payments were confirmed by bank receipts which she produced.
90 Mr Oliver Doederlein conducts a re-sale business on eBay. Mr Doederlein sold ugg branded boots for Victoria Vaysman from early January 2006 to February 2006 [from his affidavit, Doederlein was not contacted by Vladimir until "late 2006" so presumably only commencing re-selling the boots from that time] This was admitted by Victoria. When he sold the boots for Victoria he received a commission of US$20-30 per pair of boots sold. Mr Doederlein later met "Bobby" at the warehouse in Moorabbin. Mr Doederlein noticed that there was a lot of merchandise at the warehouse, including Ugg boots in a variety of styles. Mr Doederlein handed the money directly to "Bobby" or, if he wasn't there, he would hand the money to an older lady. From approximately April 2006 until August / September 2007, Mr Doederlein purchased the boots directly from "Bobby". Mr Doederlein purchased approximately 400 pairs of boots during this time for between US$90 and $120 per pair. In an affidavit dated 4 December 2007, Vladimir admitted that, about seven or eight months earlier, in the course of his employment with Millhouse Pty Ltd, he had received a telephone call from a person called "Oliver" in relation to the possible supply of some boots to him, but said that those enquiries never proceeded beyond that one phone call and he had no further information about him. Mr Doederlein's evidence was not challenged. I accept it. Vladimir Vaysman's evidence is untrue insofar as it fails to acknowledge his extensive dealings with Mr Doederlein.
· Charge 19
In breach of the March 2004 Order, from December 2005 to November 2007 Vladimir Vaysman deliberately and voluntarily procured, aided, abetted, assisted and/or instructed each of Ms Farley, Ms Sommer, Ms Strickland, Ms Ezzat and Mr Doederlein to act as his agents in promoting, advertising, offering for sale and selling on the internet sheepskin footwear under or by reference to the names "Ugg" and/or "Ugg Australia" and/or the Ugg Logo and the Sun Device and personally delivered such footwear to them.
91 The evidence relied on by the Applicant in support of this charge is that of Ms Farley, Ms Sommer, Ms Strickland, Ms Ezzat and Mr Doederlein which it also relied on in support of Charge 18.
· Charge 20
In breach of the March 2004 Orders, Vladimir Vaysman deliberately and voluntarily represented to Ms Sommer that the Respondents' sheepskin footwear products were manufactured, advertised and/or promoted with the sponsorship or approval of the Applicant.
92 The Applicant relied on the evidence of Ms Sommer. During her meeting with Vladimir at the Roper Street Factory in August 2006, Ms Sommer told Vladimir that he had a fantastic business and asked him how he got involved. Vladimir told her that his wife was a trade mark attorney and that she had negotiated a licence. He showed Ms Sommer a document which had the word "licence" on it which he said was between "us" and Deckers Corporation. Ms Sommer conducted internet searches on "Bobby's" wife Tanya Vaysman. Ms Sommer's searches confirmed that Tanya Vaysman was a trade mark attorney and that she worked for the law firm Allens Arthur Robinson. Mrs Tanya Vaysman denied that she had ever negotiated such a licence. I accept her evidence.
· Charge 21
In breach of the March 2004 Orders, Vladimir Vaysman deliberately and voluntarily represented to Ms Farley that the Respondents' sheepskin footwear products were manufactured, advertised and/or promoted with the sponsorship or approval of the Applicant.
93 The Applicant relies on the evidence of Ms Farley. Ms Farley deposed that, in January 2006, she was not aware that there was a brand associated with Ugg boots. When Vladimir said to her that his parents had made "genuine" sheepskin boots for 30 years, Ms Farley said she thought that he meant genuine sheepskin. Ms Farley also gave evidence that Vladimir had told her that he had a licence to sell the boots overseas but not a licence to sell the boots in Australia. Ms Farley presumed that he had an export licence. She was never shown a licence document. In my view this evidence is not sufficient to support the charge.
· Charge 22
In breach of the March 2004 Orders, Vladimir Vaysman deliberately and voluntarily permitted, directed, procured, caused and/or encouraged the Braeside Warehouse to be used for importing, exporting, manufacturing, distributing and/or selling the Enjoined Products (as defined in the March 2004 Order).
94 The Applicant relies on the evidence of Mr Watson and the report of Mr Wilson in relation to the search of the Braeside Warehouse on 12 December 2007. When Mr Watson searched the Roper Street Factory on 12 December 2007 he discovered an invoice which indicated that the Braeside Warehouse had been leased to Vernon Co Pty Ltd on or about 28 November 2007. The invoice was addressed to "Bobby Vaysman, Vernon Co Pty Ltd, 1 Roper Street Moorabbin." At relevant times Josef Vaysman was the sole director of Vernon Co Pty Ltd. Mr Watson immediately applied to the Court, via telephone, for an order extending the search order to the Braeside Warehouse. Mr Watson, Mr Wilson and Messrs Douglas and Adams of Ernst & Young attended the Braeside warehouse at approximately 5.20 pm on 12 December 2007.
95 Mr Watson there observed and secured many pairs of footwear and component parts marked with the Ugg Logo and the Sun Device including:
· 82 large cartons containing counterfeit boots with approximately 30 pairs of boots in each carton (amounting to over 2,400 pairs). Each carton was labelled with the name "MILLHOUSE";
· 6 large striped bags containing counterfeit footwear;
· 1 large garbage bag containing counterfeit footwear;
· an invoice dated 6 December 2007 from K&G Cartons for 2000 cartons which the invoice stated were delivered to the Braeside Warehouse. Footwear packaging boxes featuring the Trade Marks and the Sun Device sufficient to make up approximately 3,400 boxes.
· 17 boxes containing various fabric labels bearing the Ugg Logo which each contained 500 or 1000 labels;
· 6 packs of rubber sole material which featured the Trade Marks and the Sun Device;
· 5 boxes with printed care instruction cards bearing the Trade Marks and the Copyright Works, with 2000 cards in each box; and
· a package containing counterfeit footwear which was ready to be shipped to a purchaser in Canada.
96 The report of Mr Wilson confirmed that, when he entered the Braeside Warehouse on 12 December 2007, he saw many boxes containing "Ugg" labelled footwear and stacks of "Ugg" labelled pre-assembled cardboard packaging. The items seized were listed in an inventory attached to Mr Wilson's report.
· Charge 32
In breach of the November 2007 Undertaking, since 27 November 2007 and continuing as at 12 December 2007 Vladimir Vaysman and/or Hepbourne Pty Ltd deliberately and voluntarily permitted, directed, procured, caused and/or encouraged the Roper Street Factory to be used for importing, exporting, manufacturing, distributing and/or selling the Enjoined Products.
97 The Applicant relies on the observations made by Ms Farley and Ms Sommer, on 7 and 8 December 2007 and the evidence of Mr Watson and Mr Wilson in relation to the search of the Roper Street Factory on 12 December 2007. This evidence was outlined in dealing with Charges 18 and 22. See above at [81]-[83], [94]-[96].
· Charge 33
In breach of the November 2007 Undertaking, since 27 November 2007 and continuing as at 12 December 2007 Vladimir Vaysman deliberately and voluntarily permitted, directed, procured, caused and/or encouraged the Braeside Warehouse to be used for importing, exporting, manufacturing, distributing and/or selling the Enjoined Products.
The evidence relied on to support Charge 33 is the same as that relied on in respect of Charge 22.
· Charge 34
In breach of the November 2007 Undertaking, since 27 November 2007 and continuing as at 12 December 2007, Vladimir Vaysman has deliberately and voluntarily attempted to procure further agents to promote, advertise, offer for sale and sell the Enjoined Products on the internet.
98 The Applicant relies on the evidence of Ms Farley, Ms Sommer and Ms Ezzat and the material that was found at Vladimir's home at 303 Balaclava Road, Caulfield, and the Roper Street Factory on 12 December 2007.
99 Ms Farley's evidence was that, on 13 November 2007, after she had been served with a search order and her home had been "raided", Vladimir telephoned her and asked whether she still wanted to keep selling the boots. Ms Sommer also gave evidence that Vladimir had called her that day, at approximately 8.45 am, and told her not to go to the Levanswell Road Warehouse and said that, if anyone came to her house, she should say nothing. Vladimir told Ms Sommer that everything would quieten down in the next two weeks and he asked her whether she would continue to sell the footwear once everything had blown over.
100 On or about 20 November 2007, Ms Ezzat received an email from the email address ag1_12@hotmail.com from a person who was looking for a trading assistant to sell UGG Australia boots on the US and UK eBay sites. The email was signed by "John". On the same day, Ms Ezzat received the same email from the email address wwwuggs. On receiving the emails, Ms Ezzat contacted Vladimir and told him that someone had contacted her and asked her to sell "UGG Australia" footwear. Vladimir told her that the emails were from him and that she should just ignore them. He told her that he was searching for more trading assistants and that he forgot that the email address he had directed his request to belonged to Ms Ezzat.
101 On 12 December 2007 Mr Watson, Mr Wilson, Mr Douglas and Mr Adams attended 303 Balaclava Road, North Caulfield. A copy of the hard drive of Vladimir Vaysman's computer was taken. A search of the hard drive revealed draft emails to potential eBay sellers in which "John" advised that he was looking for a trade assistant to help him sell Ugg boots on eBay and the description the seller who to use when listing the products. The hard drive also contained images and text which had been taken from the Applicant's website.
· Charge 48
Vladimir Vaysman has not, either on his own behalf or on behalf of Hepbourne Pty Ltd, complied with paragraph 23 of the 12 November 2007 Orders.
102 Vladimir Vaysman did not object to complying with the 12 November 2007 Orders on the ground that to do so would incriminate him or Hepbourne Pty Ltd, or make him or it liable to a civil penalty. The affidavit of Vladimir Vaysman, sworn on 26 November 2007, was filed in purported compliance with paragraph 23 of the 12 November 2007 Orders. The contents of the affidavit are summarised above at paragraph [69].
103 The Applicant contended that Vladimir Vaysman and Hepbourne Pty Ltd have not complied with the 12 November 2007 Orders. I accept this submission. The overwhelming evidence supports the conclusion that the contents of Vladimir Vaysman's affidavit were untrue and that he had wholly failed to comply with his obligation to inform the Applicant as to the whereabouts of counterfeit Ugg products which were in his possession or under his control, the names and addresses of his suppliers and details of the marketing of the counterfeit products.