Jemella Australia Pty Ltd v MacKinnon

BETWEEN: JEMELLA AUSTRALIA PTY LTD ACN 104 455 138

BETWEEN: JEMELLA AUSTRALIA PTY LTD ACN 104 455 138

REASONS FOR JUDGMENT 1 The Applicant, Jemella Australia Pty Ltd, hereafter "Jemella Australia", has an agreement with a company in the United Kingdom, Jemella Limited, under which it is the exclusive distributor in Australia of products manufactured by Jemella Limited under the registered trademark "GHD". That trademark has, on the evidence, a particular market recognition for hair care products and more particularly for hair styling irons. The evidence establishes that there is a particular repute and a good repute associated with hair styling irons manufactured by Jemella Limited and distributed by Jemella Australia in this country. 2 Jemella Australia has brought proceedings against one David Bowman and one Scott MacKinnon in this Court in respect of an alleged infringement of the rights associated with the trademark and with its enjoyment of those rights in this country. Although they are separate proceedings, they raise a common issue of law and, at least at an interlocutory stage, it was convenient to hear applications made by Jemella Limited for interlocutory relief against each of the Respondents Bowman and MacKinnon together. The nature of the relief sought against each of Messrs Bowman and MacKinnon is as follows. 1. By way of interlocutory injunction an order under s 126 of the Trade Marks Act 1955 (Cth) ("the Act") restraining each respondent whether by himself, his servants, agents or otherwise howsoever from importing, promoting, distributing, advertising, offering for sale, selling, displaying or otherwise using: (a) Australian trademark number 951664 ("the Trade Mark"); (b) counterfeit hairstyling products bearing the marking "GHD Hairstyling Iron", "GHD Styler" or "GHD" until further order of the court. 2. An order that, until further order of the court, the Chief Executive Officer of the Australian Customs Service be restrained until further order from releasing goods referred to in a particular paragraph in the substantive application which goods are referred to in a notice of seizure to objector, there is then a date in respect of the notice of seizure which is 20 April 2008, in each case. 3. Alternatively, pursuant to O 25 r 2 of the Federal Court Rules, within 10 working days of the release of the goods referred to in the application to Mr Bowman, or as the case may be Mr MacKinnon, by the Chief Executive Officer of the Australian Customs Service, that Respondent must deliver up the goods to the solicitor for Jemella Australia, until further order of the court. 4. Provision is also sought for an order in respect to the costs of the application and for the giving of directions in respect to the further conduct of the proceeding. 3 One finds in the way in which the interlocutory relief sought is cast the occasion for hearing the applications together. Jemella Australia, very properly, has drawn to the attention of the court a potential difficulty apprehended in respect of the meaning and effect in the circumstances of each of these cases of s 137(1) of the Act. 4 It is convenient to set out the whole of s 137. That section provides as follows: Section 137 - Action for infringement of trade mark (1) An objector may bring an action for infringement of a notified trade mark in respect of seized goods and give notice of it to the Customs CEO: (a) if paragraph (b) does not apply--within the period (notified period) of 10 working days specified in the notice given to the objector in respect of the goods under section 134; or (b) if: (i) the objector has, before the end of the notified period, applied in writing to the Customs CEO for an extension of the notified period; and (ii) the Customs CEO, being satisfied that in the circumstances of the case it is fair and reasonable to do so, has extended the notified period for a number of working days not exceeding 10; within that period as so extended by the Customs CEO. Note: For objector , notified trade mark and seized goods see section 6. (2) The court hearing the action: (a) may, on the application of a person, allow the person to be joined as a defendant to the action; and (b) must allow the Customs CEO to appear and be heard. (3) In addition to any relief that the court may grant apart from this section, the court may: (a) at any time, if it thinks it just, order that the seized goods be released to their designated owner subject to the conditions (if any) that the court considers fit to impose; or (b) order that the seized goods be forfeited to the Commonwealth. Note: For seized goods and designated owner see section 6. (4) If: (a) the court decides that the trade mark was not infringed by the importation of the goods; and (b) the designated owner of the goods, or any other defendant, satisfies the court that he or she has suffered loss or damage because the goods were seized; the court may order the objector to pay to the designated owner or other defendant compensation, in the amount determined by the court, for any part of that loss or damage that is attributable to any period beginning on or after the day on which the action was brought. (5) If, after 20 working days from the day on which the action was brought, there is not in force at any time an order of the court directed at the Customs CEO preventing the goods from being released, the Customs CEO must release the goods to their designated owner. (6) If the court orders that the goods be released, the Customs CEO must, subject to section 140, comply with the order. 5 The apprehended difficulty arises in this way. The notice given by the Customs to Jemella Australia is dated in each instance 20 April 2008. Affidavit evidence read before me deposes to, again in each instance, Jemella Australia's receipt of a notice from the Customs on or about 28 April 2008. 6 An examination of the material exhibited to the affidavit concerned gives reasonable confidence for a conclusion that the statement "on or about 28 April" was overly imprecise. Rather, I am satisfied from the evidence that Jemella Australia received the notice from the customs in each case on 28 April 2008. 7 Section 137(1) permits an objector to give notice of the bringing of an infringement action to the Customs within what is called the "notified period". That notified period is a period of 10 working days, specified in the notice given to the objector. These notices specify a period of 10 working days from the date the notice is given. The date on which the notice was given was 28 April 2008. Section 137(1) contemplates that a notice may be given either within that notified period, or if the Chief Executive Officer of Customs is satisfied in the circumstances of the case that it is fair and reasonable to do, within a further period of working days, not exceeding 10. 8 The difficulty which arises in this case is that, at least on the face of s 137(1), that extension must be granted by an application which is made within the notified period, or at least, that the Customs Chief Executive Officer achieves the requisite state of satisfaction and makes the extension decision within that notified period. It suffices to note that the extension that was at least purportedly granted in each instance by the Chief Executive Officer of Customs was not granted within the period of 10 working days from 28 April 2008. 9 The effect of the Act is that in the ascertainment of what amounts to a working day one looks to days which are working days in the Australian Capital Territory. In Queensland, but not in the Australian Capital Territory, a Labour Day public holiday fell in early May. It may very well be that it was a failure to appreciate the difference in the occasion for the observance of that public holiday between the Australian Capital Territory (where it is observed in October) and Queensland that resulted in the absence of an application and extension procedure occurring within the 10 working day period. 10 Be that as it may, two matters flow from the events which have occurred. Firstly, the Customs, at least on the evidence inferentially, still retain the goods concerned. That is because on the face of things the Customs have acted in accordance with the extension decision purportedly made. That means that today is the last day in respect of which an order under section 137(5) of the Act might be made on that assumed state of affairs. 11 The other matter which flows is a question of statutory construction. That question is whether or not, in the events which transpired, there was an invalid extension of time under s 137(1). That particular issue having been drawn to my attention, it seemed to me appropriate, in the circumstances and having regard to the potentially limited timeframe for the making of an order under s 137(5), that notice of the question which had arisen be given to the respondents and also to the Chief Executive Officer of the Australian Customs Service, before any final decision was made in respect of the meaning and effect of that provision in the circumstances. I note that Sackville J followed a similar course of giving notice of a question concerning the meaning and effect of s 137(5) of the Act in Chanel Ltd v Kim (2007) 166 FCR 1. I therefore gave directions for the giving of notice concerning the issue and the making of submissions in respect of it, to the Respondents and the Chief Executive Officer of Customs. 12 I am satisfied on the evidence before me that such notice has been given. I am further satisfied on the evidence that the existence of the proceedings has not only been drawn to the attention of the Chief Executive Officer of Customs but that there has been an opportunity for the Chief Executive Officer to take advice from the Australian Government Solicitor in respect of the question. 13 It suffices to note that correspondence has been directed to the Court from the Australian Government Solicitor, the effect of which is that the Chief Executive Officer is aware of the submissions made in respect of the provisions at s 137(1) by Jemella Australia, but does not wish to make any submission concerning the meaning and effect of that section on his own behalf. I am also satisfied on the evidence that the substantive applications have been served both on Mr Bowman and Mr MacKinnon. I note that in respect of Mr Bowman there was an appearance on his behalf by a firm of solicitors in Echuca at the first return date of the application. That appearance was not repeated on the adjourned date when substantive submissions were made in respect of the meaning and effect of s 137(1). 14 On behalf of Jemella Australia the submission which is made is that one ought not to regard the references in s 137(1) to a 10-day period as rigid. In aid of that particular construction reference is made to a passage in the reasons for judgment of the New South Wales Court of Appeal in Tasker v Fullwood (1978) 1 NSWLR 20 at 23, which was approved by the High Court in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 390. The passage from Tasker v Fullwood, which received approval is as follows: The problem is to be solved in the process of construing the relevance statute. Little, if any, assistance, will be derived from the terms of other statutes or any supposed judicial classification of them by reference to subject matter. The task of construction is to determine whether the legislature intended that if only to comply with the stipulated requirement would invalidate the act done, or whether the validity of the act would be preserved notwithstanding non-compliance: the Franklin Stores Pty Ltd case. The only true guide to the statutory intention is to be found in the language of the relevant provision and the scope and object of the whole statute: Hatton v Beaumont. The intention being sought is the effect upon the validity of the act in question, having regard to the nature of the precondition, its place in the legislative scheme and the extent of the failure to observe its requirement: Victoria v The Commonwealth. It can mislead if one substitutes for the question thus posed an investigation as to whether the statute is mandatory or directory in its terms. It is an invitation to error, not only because the true inquiry will thereby be sidetracked, but also because these descriptions have been used with varying significations. In particular, it is wrong to say that, if a statute is couched in directory terms, the act will be invalid, unless substantial performance is demonstrated; the Franklin Stores Pty Ltd case. A statute which, on its proper construction, does not nullify the act in question, even for total non-observance of the stipulation, is also described as directory in its terms: Victoria v The Commonwealth (internal footnote references omitted). 15 I approach the question of the construction of s 137(1) with this guidance firmly in mind. 16 Neither in the helpful submissions made on behalf of Jemella Australia, nor as a result of my own researches has any authority directly impinging on the construction of s 137(1) of the Act been disclosed. The closest point to which one gets is a passage at paragraph 31 in the reasons for judgment of Sackville J in the Chanel case: Had the draughter wished to make it clear that no application for an order preventing release of the goods could be made after the 20 day period, or that the court could not make any such order, it would have been easy to say so. Section 137(1), for example, makes it quite clear that an action for infringement must be brought within the 10-day period specified in the notice or with any extended period granted by the Customs Chief Executive Officer, provided the objector has applied for an extension "before the end of the notified period". There would have been no difficulty about incorporating similar language in s 137(5). 17 In the Chanel case Sackville J was confronted with a case which required the construction of s 137(5) of the Act. In that case which concerned a consignment of scarves bearing the applicant's trademark which had been seized by the Customs, the applicant applied for an order to restrain the Customs from releasing the scarves to the respondent. The question which arose for decision was whether it was possible for an order to be made where, as was the case there, more than 20 days had elapsed from the date on which the applicant had commenced its action for infringement of its trademark. It suffices to note that his Honour found that s 137(5) of the Act was not intended to be an exhaustive statement of the circumstances in which this court might make an order preventing the Chief Executive Officer of Customs from releasing seized goods. In other words, it was possible, albeit not under s 137(5), but under more generally conferred powers even after a lapse of the 20 day period, to make an order which prevented the Chief Executive Officer of Customs releasing seized goods. 18 One sees then from the passage which I have quoted from Sackville J's judgment in the Chanel case some indication of a view that there is a degree of rigidity in relation to the 10‑day period that one sees in s 137(1). 19 No particular guidance as to the construction of the provision is to be obtained either from the relevant explanatory memorandum or the relevant second reading speech. Section 137(1) falls with Pt 13 of the Act. That part is directed to the importation of goods infringing Australian trademarks. The place of s 137 in that part seems to be to provide a means by which an objector may secure a holding of allegedly infringing goods in the Customs zone, pending the hearing and determination of an infringement application. 20 There is utility in that provision in that it preserves the subject matter of a proceeding and in particular preserves the utility of an infringement proceeding by preventing the passage of allegedly infringing goods from the Customs zone into domestic trade and commerce. 21 That particular quality does though raise for consideration another feature of s 137 and the time limits which one finds in s 137(1). It seems to me that one sees in s 137(1) a Parliamentary value judgment, a balance which has been struck by the Parliament between the interests of an importer in having goods pass into domestic trade and commerce and the interests of the holder of a registered Australian trade mark or another person qualified to be objector, which person is obviously interested in the prevention of the passage of goods which are infringing into Australian domestic trade and commerce. 22 There are, therefore, readily identifiable and potentially conflicting commercial purposes which are resolved by the Parliamentary value judgment that I have mentioned. The time that is specified prime facie is quite short. It seems to me that that time represents Parliament's view of a reasonable proportionality between potentially conflicting commercial interests. In those circumstances it seems to me unlikely that Parliament envisaged that there would be any ability for there to be what one might term "slippage" in the time limit prima facie specified in s 137(1). The language of s 137(1) also tends to reinforce that particular impression gleaned from evident purposes in the statute. Sackville J was plainly of the view that the language of s 137(1) had that quality. 23 In my opinion it is not the case though that a failure to institute a proceeding within the 10-day period renders the infringement application incompetent. Part 13 serves a very particular purpose, but it is not in any way exhaustive of the circumstances in which an infringement application may be brought in this court. 24 In short then my opinion is that there was no occasion for the granting of an extension of time to Jemella Australia by the Chief Executive Officer of Customs. It seems to me that what follows from that is that there is no engagement of the particular mechanism found in s 137(5) for the making of an order directed to the Chief Executive Officer of Customs. That is not to say that the court has no power to make such an order, see the Chanel case. 25 The evidence before me satisfies me firstly that there is a serious question to be tried in respect of infringement. There is evidence of a confidential nature in respect of particular identifying qualities of the hairstyling irons, which would lead one to the at least tentative conclusion that the goods which have been seized by the Customs have about them an absence of relevant identifiers. Further, in each instance, the volume of the goods concerned is such that they are unlikely to be merely for personal consumption, but rather there is a likelihood from the volume alone that they are intended to be articles of commerce in this country and have been imported for that purpose. 26 Jemella Australia has made reference to evidence in each case of what is said to be other indicia which suggest that the articles concerned are infringing and have been imported for commercial purposes. It is not necessary, in my opinion, to refer to that evidence, because it seems to be plain enough from the evidence of identification and volume that they are intended for commerce in this country. 27 The balance of convenience, in my opinion, does favour the retention of the goods by the Customs pending the hearing and determination of the substantive infringement proceedings. It also favours the granting of the interlocutory relief which is sought against each of the Respondents, Bowman and MacKinnon. 28 Thus, while there is no occasion for the exercise of the power conferred by s 137(5) of the Act, there is occasion, nonetheless, for the exercise of more generally conferred power to keep the goods in the Customs zone and I do propose to make an order directed to the Chief Executive Officer of Customs to achieve that end. I particularly also have regard to the time, albeit outside the particular statutory time limit, within which Jemella Australia has moved in its endeavour to secure the rights which it enjoys. I do not, on the evidence, regard Jemella Australia as having rested on its rights. It seems to me that quite understandable human error as to when public holidays fall in this country has intruded on the adherence to the particular scheme found in s 137 of the Act.

29 I note that Jemella Australia, by its counsel, has given the usual undertaking as to damages in respect of both the orders sought as against Mr Bowman and Mr MacKinnon, as well as in respect of the orders sought in respect of the Chief Executive Officer of Customs. In the circumstances it is unnecessary to consider the alternative relief sought under O 25, r 2 of the Federal Court Rules. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.

Associate: Dated: 9 July 2008 IN THE MATTER OF QUD 127 OF 2008 Counsel for the Applicant: Mr Williams

Solicitor for the Applicant: McInnes Wilson Lawyers

IN THE MATTER OF QUD 128 OF 2008 Counsel for the Applicant: Mr Williams

Solicitor for the Applicant: McInnes Wilson Lawyers