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[2003] FCA 1009
procedural. D & L Design Pty Ltd joined as respondent in V387; Redberry Enterprise Pty Ltd, Hot Chilli Group Pty Ltd and D & L Design Pty Ltd joined as respondents in V388. Leave to file and serve amended...
Review sued two wholesalers for alleged copyright-infringing garments and sought to join several companies and individuals (directors/secretaries) as additional defendants. The Court held that to join someone the plaintiff must show an arguable case that the person had actual or constructive knowledge of the infringement. Credible affidavit evidence showed that the individual proposed joinees had only limited, administrative or convenience roles and were not involved in selecting or importing the garments; the intermediary Sinotrans and an agent in China conducted those dealings. The Court refused joinder of the individuals for lack of an arguable case and because of delay, but ordered joinder of certain corporate entities and allowed amendment of pleadings. Costs were awarded against the applicant.
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1,818 words · generated 20/06/2026
1 cited instrument linked from this judgment.
Review Australia Pty Ltd commenced copyright infringement proceedings in the Federal Court against two Australian wholesalers, Redberry Enterprise Pty Ltd (V387) and XOXOXO Trading Pty Ltd (V388), alleging that garments imported and sold by those companies infringed Review's copyright in dressmaking patterns and related items [1-2]. On 17 June 2003 Review filed notices of motion seeking leave under Order 6 rule 8 (O 6 r 8) of the Federal Court Rules to join several additional corporate entities and a number of individuals, largely officers of the corporate group, and to amend its pleadings [3-4].
The additional parties proposed for joinder included D & L Design Pty Ltd, Hot Chilli Group Pty Ltd, and several individuals (Xiao Qing Ke, Zhan Yun Li, Sui Qiang Ke and Sui Dong Ke). Some proposed joinders were unopposed and some were contested [3]. The principal legal question addressed by Heerey J at the hearing was whether Review had an arguable case against each proposed joinee, in particular whether there was evidence that the individuals had actual or constructive knowledge of the alleged infringements as required by ss 37 and 38 of the Copyright Act 1968 (Cth) [7, 11-16, 21-31].
Affidavit material disclosed that the garments had been obtained through Sinotrans Guangdong Imp & Exp Trading Company (Sinotrans), an intermediary in China, and that Guo Xin Ke (resident in China) dealt with Sinotrans and arranged shipments; several proposed individual joinees deposed they had limited roles, often performed 'convenience' administrative tasks, and were not involved in selection, importation or sale decisions [11-16, 21-26]. The Court accepted these affidavits as credible in relevant respects [17].
Applying the established standard for joinder, that an applicant must have an arguable case capable of resisting summary judgment (following Tytel and the High Court principle in General Steel), the Court refused joinder of the individual officers, finding the evidence insufficient to establish actual or constructive knowledge. The Court ordered joinder of certain corporate entities (D & L in V387; Redberry, Hot Chilli and D & L in V388), granted leave to amend pleadings consistent with the reasons, dismissed other motions, and ordered Review to pay the respondents' costs of the motions [5, 34].
Three legal strands drove the decision.
The joinder standard under O 6 r 8: The Court applied the established rule that an applicant for joinder must show an arguable case against the proposed joinee, at least sufficient to resist summary judgment, a threshold set out in Tytel and grounded in the General Steel principle about preliminary controversy resolution [5]. That standard requires a close examination of the evidence available at the joinder stage.
The nature of liability under ss 37 and 38: Review sought to rely on ss 37/38 which impose liability where a person imports, sells or exposes for sale infringing works in circumstances where they knew or ought reasonably to have known that the making of the articles constituted infringement [7]. Heerey J adopted the formulation in Lahore: knowledge is notice of facts that would suggest to a reasonable person, having ordinary understanding in the trade, that a breach of copyright was being committed [18]. That frames a context-sensitive test, tethered to the trade's ordinary expectations.
Application to the individual officers: The Court observed that mere proof of directorship or company office is not enough to make a person personally liable. Heerey J quoted von Doussa J in Milpurrurru to emphasise that documentary proof of office or incidental notations on documents are typically insufficient to establish involvement and knowledge; directorship standing alone falls far short of the requisite degree of involvement and knowledge [19]. The affidavits in the present case, which described limited, largely administrative roles, the role of Sinotrans and Guo Xin Ke, and the absence of documents linking the individual officers to importation/selection decisions, provided a credible basis to conclude there was no arguable case of knowledge against the individuals [11-16, 21-26, 27-32]. Delay in filing the joinder motions (threats at an October 2002 mediation, formal motion only in June 2003) was an additional discretionary factor against joinder [33].
For these reasons, the Court granted joinder only where an arguable case existed against corporate entities and refused joinder of the individual proposed respondents.
Before this judgment, the applicable legal principles were established: Order 6 r 8 confers a discretion to join persons necessary for complete adjudication; Tytel and General Steel articulate the threshold that a plaintiff must show an arguable case sufficient to withstand summary judgment before joinder will be permitted; Milpurrurru previously emphasised that mere directorship is insufficient to infer personal involvement or knowledge for importation liability; Lahore supplies a practical notion of 'knowledge' in commercial contexts.
Heerey J applied these pre-existing principles without altering them. The judgment confirms and applies the existing approach in the joinder context within copyright litigation: (a) courts will scrutinise affidavit and discovery material to determine whether there is a credible evidential foundation for alleging that an officer had actual or constructive knowledge; (b) directorship without more will not suffice; (c) delay may be a separate discretionary ground to refuse joinder. There is no novel doctrinal shift in the decision; rather the case exemplifies application of established principles to the facts of multi-layered import/distribution operations involving overseas intermediaries.
Paragraph 5: "It was common ground that Review needs to show an arguable case against the proposed respondents, at least to the standard of being able to resist an application for summary judgment..."
Paragraph 18: Quoting Lahore: "knowledge ... refers to notice of facts such as would suggest to a reasonable person, having the ordinary understanding expected of persons in the particular line of business, that a breach of copyright was being committed."
Paragraph 19: Quoting Milpurrurru: "Mere proof that ... were directors at the time of importation falls far short of establishing the requisite degree of involvement and knowledge..."
Paragraphs 11-16 and 21-26: Affidavit summaries describing the role of Sinotrans and Guo Xin Ke and the limited, administrative functions of the proposed individual joinees.
This judgment is directly applicable where:
In those fact patterns, courts are likely to scrutinise whether there is evidentiary material that would support a finding that an officer knew or ought to have known of the infringement, and may refuse joinder if the evidence is lacking.
This judgment itself applies and cites prior authorities (Tytel, General Steel, Milpurrurru, Lahore). The judgment demonstrates the Federal Court's approach to joinder and personal liability in the copyright-import context. The decision is not, within its text, a survey of subsequent treatments. The present reasons confirm the existing approach that mere office-holding is insufficient and that the Lahore formulation of 'knowledge' is appropriate. To determine how later courts have treated Review Australia v Redberry Enterprise in subsequent jurisprudence would require targeted post-2003 case law research; such treatment is not recorded in the judgment itself and cannot be inferred from the reasons [5, 18-19].
The judgment resolves the specific joinder applications on the facts presented but leaves several broader questions that often arise in related disputes:
Evidence sufficiency threshold in complex supply chains: While Heerey J applied the arguable-case standard strictly, where documentary trails are sparse (e.g., international intermediaries, consolidated payments), the boundary between 'arguable' and 'speculative' may be fact-sensitive. The case underscores that affidavits explaining a lack of knowledge can be decisive, but it does not delineate precise categories of documentary proof that would suffice.
Constructive knowledge standards across different trades: The Lahore formulation is trade-sensitive. What exact facts would suffice to put a reasonable person in particular sectors (fashion wholesale, manufacturing, import distribution) on notice is context-specific; the judgment illustrates the concept but does not enumerate precise indicia for the clothing trade.
Delay and tactical behaviour: The Court took delay into account as a discretionary reason to refuse joinder [33]. The judgment does not elaborate a principled test for when delay is sufficiently prejudicial to defeat joinder, beyond noting the facts here (threat at mediation in October 2002 and formal motion in June 2003).
Corporate structure and veil piercing: The decision shows a pragmatic unwillingness to attribute corporate operational conduct to individuals on the bare fact of office. Where a corporate group operates through interposed companies and overseas agents, further guidance on when the corporate veil should not shelter individuals (based on control, participation in decision-making, or receipt of proceeds) remains an area for detailed factual analysis in future cases.
Interaction between discovery opportunities and joinder timing: The Court considered discovery (or lack of documents) in assessing whether an arguable case was made. How discovery obligations and timing of motions for joinder interact, e.g., whether plaintiffs should delay joinder until a fuller discovery picture emerges, is an open practical question for litigators strategising in multinational supply-chain IP disputes.
Pragmatically, practitioners should note that this decision reaffirms that to pursue officers personally for importation/sale liability under ss 37/38, plaintiffs need more than corporate office and timing; they need evidence linking the officer to the relevant acts or to knowledge of the infringement, and they should bring joinder applications without undue delay and supported by available documentary material.
REASONS FOR JUDGMENT 1 The applicant Review Australia Pty Ltd (Review) has commenced proceedings for infringement of copyright against Redberry Enterprise Pty Ltd (Redberry) in V387 of 2002 (the Redberry proceeding) and against XOXOXO Trading Pty Ltd (XO Trading) in V388 of 2002 (the XO Trading proceeding). 2 Review alleges that it is the owner of copyright in certain dress making patterns, sample garments, scanned patterns and cutting sheets and that Redberry and XO Trading have manufactured or imported, offered for sale, distributed and/or sold garments which infringe Review's copyright. 3 On 17 June 2003 Review filed notices of motion in each proceeding seeking leave to join certain corporate and individual respondents in each proceeding and to amend its application and statement of claim. The proposed added respondents are set out in the following table. Where a tick appears the joinder is not opposed. Where a question mark appears the joinder is opposed. Where neither tick nor question mark appears, no application for joinder of that corporation or individual is made in the relevant proceeding. Redberry Proceeding XO Trading Proceeding D & L Design Pty Ltd ü ü Redberry Enterprise Pty Ltd ü Hot Chilli Group Pty Ltd ü Xiao Qing Ke ? ? Zhan Yun Li ? ? Sui Qiang Ke ? Sui Dong Ke ?
4 Review seeks joinder under O 6 r 8 of the Federal Court Rules which provides; "(1) Where a person who is not a party - (a) ought to have been joined as a party; or (b) is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceeding may be effectively and completely determined and adjudicated upon, the Court, on application by him or by any party or of its own motion, may order that he be added as a party and make orders for the further conduct of the proceeding. (2) A person shall not be added as an applicant without his consent." 5 It was common ground that Review needs to show an arguable case against the proposed respondents, at least to the standard of being able to resist an application for summary judgment by the proposed respondent had he or she been sued in separate proceedings: see Tytel Pty Ltd v Australian Telecommunications Commission (1988) 11 IPR 223 at 225, applying in this context the principles expounded in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. 6 The case of Review against the present respondents Redberry and XO Trading rests, at the moment at least, on what is said to be the high degree of similarity in appearance between Review's garments and the allegedly infringing garments. Review also relies on the circumstance that the Redberry and XO Trading garments were released into stores in Australia after the date of release of the Review garments. However, this argument is complicated by the fact that manufacture of the Redberry and XO Trading garments were ordered by contracts made, in most cases, at a still earlier date. In any event, I will assume that Review's claim against the present respondents is arguable and consider the case sought to be made out against the proposed respondents. 7 One of the bases on which Review pleads its case against the present respondents (see par 11(b) of the statement of claim) is the importing for sale, selling, or by way of trade, offering and/or exposing for sale, or exhibiting in public the infringing clothing in circumstances where the respondent knew or ought reasonably to have known that the making of the infringing clothing, if it had been made in Australia by the respondent, would have constituted an infringement of the copyright in Review's garments etc; see ss 37 and 38 of the Copyright Act 1968 (Cth). 8 In respect of the proposed respondents who are individuals it will be alleged (see par 12A of the proposed amended statement of claim) that they have engaged in the conduct referred to in par 11 (b) on behalf of the corporate respondents and have therefore infringed Review's copyright and/or have authorised the infringement of its copyright. Senior counsel for Review said that these respondents are sought to be made liable as joint tortfeasors. The "tort" in this context of course necessarily requires actual or constructive knowledge of the infringement.
9 Ms Ke is a resident of New South Wales. She is a director of Redberry, but was only appointed on 26 February 2003, that is to say after the transactions the subject of the present proceeding. She has never been a director of XO Trading. She was a director of D & L Design Pty Ltd (D & L) (appointed 9 February 2001) and a director of Hot Chilli Group Pty Ltd (Hot Chilli) (appointed 9 August 2000). She deposed that this latter appointment was as a matter of convenience. The other director of D & L Design, Xu Ling Cai, resides permanently in China.
10 At the times relevant to the present proceedings Ms Ke would be overseas approximately four to five times per year for periods of one to one and a half months at a time. When in Australia she could sign documents for D & L and Hot Chilli. This was her primary role in those companies. She would attend at one of the warehouses of XO Trading from time to time to help out in busy periods or when they were short staffed. She was not involved in the operations of Redberry or XO Trading on a day to day basis. 11 Ms Ke deposed that the business records of Redberry and XO Trading showed that the garments the subject of the two proceedings were obtained from a Chinese company Sinotrans Guangdong Imp & Exp Trading Company (Sinotrans). Sinotrans is an intermediary between Chinese manufacturers and wholesale purchasers. In relation to the garments the subject of the proceedings, so far as Ms Ke is aware, Redberry and XO Trading dealt only with Sinotrans and not the Chinese manufacturers. 12 Ms Ke deposed that the person responsible for dealing with Sinotrans and arranging for the importation to Australia of garments, including sample garments, was Guo Xin Ke. He resides permanently in China. He attends the premises of Sinotrans on a regular basis. It is his signature on behalf of the buyer which appears on contact documents discovered by Redberry and XO Trading. Ms Ke deposed that she had no involvement in any dealing with Sinotrans in relation to the garments the subject of the two proceedings and no involvement in the selection and importation of those garments. She has reviewed the respondents' lists and supplementary lists of documents and is not aware of any other document which relates to the proceedings. 13 To the best of Ms Ke's knowledge, Guo Xin Ke received the sample garments from Sinotrans and sent them to Redberry and XO Trading in Australia. Ms Ke has no knowledge or recollection as to who would have reviewed the sample garments relevant to the proceedings once they entered Australia. In the normal course of business a warehouse manager (not a director) or senior employee of the business would review the sample garments received from Guo Xin Ke and advise him as to what garment should be ordered in wholesale quantities from Sinotrans. Ms Ke deposed that she had no part in any other process of selecting and importing any garments the subject of the proceedings, nor did she participate in sales to retailers of any such garments. This was the job of employees of the business. 14 Ms Ke deposed that international money transfer applications discovered by the respondents usually deal in large sums of money relating to a large number of invoices. They do not reveal the contents of separate invoices. 15 Ms Ke deposed that Redberry and XO Trading do not manufacture any goods, nor does D & L or Hot Chilli. Redberry and XO Trading are merely importers and wholesalers of goods. They have businesses with many employees and deal with many hundreds of lines of garments at any one time. 16 She further deposed that until these proceedings she had not heard of Review, nor had she seen the Review clothing the subject of the proceedings. She did not at any time think about the copyright ownership of the garments imported from China. If she had, she would have assumed that any copyright belonged to the Chinese manufacturer as the maker of the garments. 17 Ms Ke was not cross-examined. The evidence in her affidavit is not inherently improbable and I accept it. 18 As already mentioned, Review has to establish actual or constructive knowledge of the copyright infringement. In Lahore, Copyright and Designs at [34,880] it is said that "…knowledge for this purpose refers to notice of facts such as would suggest to a reasonable person, having the ordinary understanding expected of persons in the particular line of business, that a breach of copyright was being committed." 19 The bare fact that Ms Ke was a director of D & L is not sufficient. In Milpurrurru v Indofurn Pty Ltd (1994) 30 IPR 209 at 233 von Doussa J said that the evidence against certain company directors "consisted of the statutory returns made to the Australian Securities Commission - documents which asserted that they had been directors of the companies since its inception - together with certain handwritten notations on financial records of the company. On bank statements emanating from a Vietnamese bank which held an account for (the company) there was one notation relating to Mr King and two relating to Mr Rylands. Standing alone those entries are meaningless and do not prove the involvement of either respondent in the importation of the offending carpets into Australia. Mere proof that Mr King and Mr Rylands were directors at the time of importation falls far short of establishing the requisite degree of involvement and knowledge to render them personally liable." See also Allen Manufacturing Co Pty Ltd and Another v McCallum & Co Pty Ltd (2001) 53 IPR 400 at [45] and Dixon Projects Pty Ltd v Hallmark Homes Pty Ltd [2002] FCA 1206. Here the only evidence to support an arguable case against Ms Ke is the fact that she was a director of D & L. Not only is that in itself insufficient, but there is positive and credible evidence from her to explain how the allegedly infringing garments could have been imported and sold without any actual or constructive knowledge on her part. 20 The application to join Ms Ke will be refused.
Zhan Yun Li 21 Ms Li is a resident of New South Wales. She has sworn an affidavit in which she has deposed as follows. 22 She was appointed secretary of D & L on 10 April 2001 and a director of XO Trading on 5 October 2001. She no longer holds those offices. D & L was at the time relevant to the Redberry proceeding a shareholder in Redberry. Ms Li has never been an officer of Redberry. She was appointed secretary of D & L and a director of XO Trading as a matter of convenience as she lived in Australia. From time to time she would sign documents of that company. She occasionally attended one of the warehouse premises of XO Trading. She was not involved in the operations of D & L, Redberry or XO Trading on a day-to-day basis. 23 Ms Li deposed as to the role of Sinotrans and Guo Xin Ke in terms similar to Ms Ke. Ms Li has had no involvement in any dealing with Sinotrans in relation to the garments the subject of the proceedings and she had no involvement in the selection or importation of those garments. 24 Ms Li has reviewed the discovery of Redberry and XO Trading and is not aware of any other relevant documents. 25 As to payment for garments and their subsequent sale to retailers, she deposed that these matters are in the normal course routinely attended to by employees of XO Trading. On occasion, when she was at the warehouse of XO Trading, she recalls signing a money transfer application. She only did this if no one else was available and as a matter of convenience. She similarly signed bank documents on behalf of D & L. The money transfer application usually dealt with large sums of money relating to a large numbers of invoices. When signing the money transfer application she was not aware of the contents of each of the separate invoices relating to the payment. The money transfer application does not identify what the garments the subject of the payment actually looked like. She did not participate in sales to retailers of any of the garments the subject of these proceedings as this was the job of employees of the businesses. 26 Again the evidence, not withstanding the completion of discovery, fails to establish an arguable case of actual or constructive knowledge on the part of Ms Li.
Sui Quian Ke 27 Sui Quian Ke held the office of director and secretary of XO Trading from 5 August 1998 to 28 August 2002. He held four shares in the company. This is no affidavit from him. Zhan Yun Li deposed that she had sometimes seen him at one of XO Trading's warehouses but did not know how much he was involved in the business. 28 The respondents' solicitor Ms Diana Thorburn deposed that she is informed by Sui Quian Ke and believes that he would attend the XO Trading premises from time to time but was not actively involved in the business of that company or any of the affairs of the companies sought to be in joined so far as they relate to the importation and sale of clothing. She deposed that he travelled overseas frequently and would be out of Australia for periods of one to two months at a time approximately on four or five occasions each year. 29 I find there is not arguable case made out against Sui Quian Ke.
Sui Dong Ke 30 He was appointed a director and secretary of XO Trading on 5 October 2001 and still holds that office. He has not sworn an affidavit. Zhan Yun Li deposed that she was aware that although Sui Dong Ke lived in Australia he had no involvement in the day to day running of XO Trading's business. 31 Ms Thorburn deposed that she was instructed that whilst Sui Dong Ke lived in Australia at the time relevant to the XO Trading proceeding he had no involvement in the day to day running of its business or any affairs of the companies sought to be joined in these proceedings. 32 I am not satisfied there is any arguable case for joinder of Sui Dong Ke. Delay 33 An additional reason for refusing joinder is that Review's solicitors first threatened to join the individual proposed respondents at the time of an unsuccessful mediation in October 2002. The notice of motion seeking joinder was not filed until 17 June 2003.
Conclusion 34 There will be orders for the joinder in Redberry proceeding of D & L and in the XO Trading proceeding of Redberry, Hot Chilli Group and D & L. There will be leave to file and serve amended applications and statements of claim consistent with these reasons. I note the observation of senior counsel for Review that in par 12A of the amended statement of claim the reference to pars 10 to 12 should be a reference to par 11(b). Otherwise the motions by notice dated 17 June 2003 will be dismissed. 35 Since the respondents were successful on the only contested issues there will be an order that in each proceeding Review pay the costs of each respondent to the motion. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey .
Solicitors for the Respondents: Finlay, Thorburn & Marshall
Review Australia Pty Ltd
Redberry Enterprise Pty Ltd
D & L Design Pty Ltd joined as respondent in V387; Redberry Enterprise Pty Ltd, Hot Chilli Group Pty Ltd and D & L Design Pty Ltd joined as respondents in V388. Leave to file and serve amended applications and statements of claim consistent with reasons. Motions of 17 June 2003 otherwise dismissed. Applicant to pay respondents' costs of the motions [Orders; 34].