Taleb v GM Holden Limited

Date of hearing: 7 November 2011

Place: Adelaide (Heard in Melbourne)

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 55

Counsel for the First & Second Appellants: Mr A Franklin SC and Mr J Mendel

Solicitor for the First & Second Appellants: Theodore Solomon & Partners

Counsel for the First, Second & Third Respondents: Mr E J C Heerey

Solicitor for the First, Second & Third Respondents: Middletons

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 672 of 2011

JUDGES: FINN, DOWSETT AND BENNETT JJ DATE OF ORDER: 22 DECEMBER 2011 WHERE MADE: ADELAIDE (HEARD IN MELBOURNE)

1. The appeal be allowed in part;
2. Order 3(c) be set aside and in its place it be ordered that: "(c) exemplary damages for passing off in the sum of $75,000; and";
3. The appeal be otherwise dismissed; and
4. The appellants pay 85 per cent of the respondents' costs of the appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 672 of 2011

JUDGES: FINN, DOWSETT AND BENNETT JJ DATE: 22 DECEMBER 2011 PLACE: ADELAIDE (HEARD IN MELBOURNE)

FINN AND BENNETT JJ: 1 There are two issues of substance in this appeal. The first is whether there was sufficient evidence to sustain the primary judge's finding that Ahmed Taleb was a joint tortfeasor in the trademark infringement and passing off committed by Taleb Tyres (Aust) Pty Ltd. The second is whether her Honour's award of exemplary damages against the joint tortfeasors, Taleb Tyres, Mohamed Taleb and Ahmed Taleb, for passing off should be set aside for error. There is, as well, a range of other matters which have been canvassed in the appeal which we will deal with shortly. 2 We have given careful attention to the reasons of Dowsett J who has reached a different conclusion in relation to the appeal of Ahmed Taleb from our own. We agree with his Honour's analysis of the legal principles involved but we are unpersuaded that the primary judge erred in the findings she made in relation to Ahmed Taleb.

Background 3 The claims made in this proceeding arose out of sales made, and advertising by Taleb Tyres, of car wheels to be used on a particular model of Commodore car (the VE series) which was manufactured and sold by GM Holden, a respondent in this appeal. The sales and advertising were alleged to involve the use without licence or authority of the Holden trademarks and registered designs, engaging in misleading or deceptive conduct under s 52 and s 53(a) of the Trade Practices Act 1974 (Cth) (and the equivalent provisions of the Fair Trading Act 1987 (NSW)) and passing off products as certified Holden products. The misconduct in question, which involved in the main the sale of "Supersport Wheels" and advertising on eBay, was alleged to have occurred between November 2008 and July 2010. Almost all of the evidence of sales relied upon in the proceedings and in relation to which damages were assessed, related to the period from August 2009 to July 2010. 4 Her Honour's conclusions were that: (a) each of the "Supersport" style wheels supplied by Mohammed Taleb and Taleb Tyres included centre wheel caps bearing the Holden Lion Mark; (b) each advertisement used the word "Holden" in respect of the products they sold; (c) this conduct constituted infringement of the Holden Lion Mark; (d) there was both passing off of the wheels sold and/or advertised as genuine Holden wheels and a misrepresentation that they were manufactured by or under the licence of the Holden applicants, when they were not; (e) Taleb Tyres represented that their products were the same as, or emanated from the same trade source as, the Holden products or were authorised by or associated with the Holden applicants when they were not; (f) Taleb Tyres thus engaged in misleading or deceptive conduct in breach of ss 52 and 53(a) of the TPA and ss 42 and 44(a) of the FTA and passing off the products as certified Holden products, when they were not; and (g) there was proved a sale or offering for sale of products that infringed s 71(1)(c) or (e) of the Designs Act 2003 (Cth).

(a) Preliminary Matters 5 Ahmed Taleb did not give evidence in this matter in circumstances which we will mention below. There is little by way of documentary evidence that implicates him in wrongdoing in the conduct of the company's affairs. There is circumstantial evidence of his role in the affairs of the company over time. And there is the evidence of his son, Mohamed, who denied his father was involved in the day-to-day management of the company since 2006. 6 It is necessary to emphasise three matters at the outset. The first related to Ahmed Taleb's failure to give evidence. He was aware of the trial date itself and had prepared an affidavit for it but he was not available to give evidence because of a long standing business engagement in China. No application was made for an adjournment. No application was made to give evidence by videolink or by telephone from China. The appellants sought at trial to tender both Mr Ahmed's previously prepared affidavit and a further affidavit sworn by him seemingly to explain his absence. The respondents, understandably, objected and the objection rightly was upheld: see Federal Court Rules, r 29.09. Given the circumstances, the case was not one warranting a dispensation from compliance with the ordinary requirement of attendance for cross-examination on an affidavit, if required. 7 The second matter related to Mohamed Taleb. Her Honour, with ample justification, found him not to be a witness of truth and indicated that unless his evidence was supported by contemporaneous documentary evidence from a reputable third party, it would not be relied upon. This conclusion clearly was directed towards evidence given that was favourable to the Taleb interests in this matter. The evidence also revealed that he had engaged in conduct that was calculated to mislead. We emphasise these matters given what we have to say of his evidence concerning his father and the company. 8 Thirdly, a notable feature of this case is the paucity of available evidence concerning the Taleb Tyres business and its affairs and how and by whom these were conducted. That state of affairs was in quite some degree contrived by the Talebs. We have referred above to Ahmed Taleb's unavailability and Mohamed Taleb's unreliability. Additionally, the Talebs failed to comply with a Court order on 12 November 2010 to provide evidence of the products imported by Taleb Tyres. Taleb Tyres was put into liquidation in circumstances noted below. The applicants were unable to obtain access to the company's records from the liquidator. These had not been supplied to him. Likewise the Report to Creditors prepared by the liquidator in reliance on information provided by Mohamed Taleb was grossly misleading in its description of the company's circumstances. A consequence of this state of the evidence has been the need to rely upon circumstantial evidence and inference, with the drawing of inferences finding comfort in the rule in Jones v Dunkel.

(b) Taleb Tyres and Ahmed and Mohamed Taleb 9 The Taleb Tyres business was established in 1989 by Ahmed Taleb. It assumed corporate form in 2003 and Mr Taleb became its sole director which he remained until 16 February 2010. On that date his wife, Fadia Taleb, became sole director. It is clear that Ahmed Taleb directly controlled the business from its inception until at least 2006. It was Mohamed Taleb's evidence that in 2006 he took over as "sole manager" of the business and continued as such until the company's liquidation on 14 December 2010. He also claimed that it was intended that he become the sole director in 2006 and that he and his father believed such was the case until early 2010 when they learned to the contrary. It was then that his mother was appointed on what he claimed was an interim basis. 10 We accept, though not unqualifiedly (for reasons given below), that Mohamed Taleb took over as manager of the company's day-to-day business in 2006. We do not accept his evidence that he was intended to be the sole director thereafter. It is without documentary corroboration. 11 In cross-examination he was emphatic that his father - and then later his mother - had no involvement in the day-to-day management of the company. Nonetheless he accepted that his father knew the tyre business very well; he had built it up from the ground; and he understood the day-to-day business sufficiently to be able to manage it in Mohamed's absence. We note in passing that there is documentary evidence that, on at least one occasion (5 June 2009), an "Ahmed" was recorded as the salesperson of infringing products. While the appellants contend that the reference to "Ahmed" was not put to Mohamed Taleb in cross-examination, the inference drawn and relied upon by her Honour that it was the first appellant (Reasons [58]) was an available and proper one in the circumstances. Ahmed Taleb was presumably able to put "the true complexion on the facts relied on as the ground for the inference": Jones v Dunkel (1959) 101 CLR 298 at 308; see also Kuhl v Zurich Financial Services Australia Ltd (2011) 85 ALJR 533 at [64]; but he did not give evidence. 12 The evidence of his father's non-involvement in the day-to-day management (save when Mohamed was overseas) needs to be appraised both in light of her Honour's finding as to the unreliability of his evidence and of subsequent events. 13 At the end of October 2010 Taleb Tyres was notified by the Australian Taxation Office that it had an outstanding GST liability for approximately $3.4 million. Earlier that month Taleb Tyres and Mohamed Taleb had been joined as parties in this proceeding (which initially had been brought against 24 respondents with most of whom the applicants had settled). As early as 10 March 2010 solicitors for the applicants had sent a letter of demand to Taleb Tyres and Mohamed Taleb concerning their infringing conduct. It was ignored as was a further letter of 21 September 2010. 14 Again in October 2010 Ahmed Taleb became the sole shareholder in AM Taleb Holdings Pty Ltd, a company which was registered as carrying on business as "Taleb Tyres and Wheels". The sole director was Mohamed Taleb. Ahmed Taleb was a director for 1 day - 11 October 2010. 15 On 14 December 2010, Ahmed and Mohamed Taleb as shareholders resolved to place Taleb Tyres into liquidation. On the same day Ahmed Taleb caused himself to be registered as the person carrying on the business in New South Wales under the business names "Taleb Tyres" and "Taleb Tyres Australia". Mohammed Taleb's cross-examination on this event warrants quotation. After referring to the registration documents' descriptions of Ahmed Taleb as the "person carrying on the business", counsel continued: Yes. Now are you saying that your father has lied to the New South Wales Business Name authorities?---No, he has not lied. No. So, rather than lying to those authorities, he has told them the truth, and the truth is that the person carrying on the business under this name is Ahmed Taleb. Correct?---Once again, your Honour, the name was registered just to keep on the side. Just so we don't lose that name. Can I ask you to answer the question, please?---Say it again for me, please. You accept that your father did not lie to the New South Wales Business Name authorities. Instead he told them the truth. That the person carrying on the business of Taleb Tyres is Ahmed Taleb. Do you accept that?---I accept that. You do accept that. Thank you. And he also told them the truth when he told them that the person carrying on the business, Taleb Tyres Australia, is Ahmed Taleb?---Yes. He was telling the truth there?---Okay. Yes. You accept that?---Yes. 16 The clear inference to be drawn from the pattern of conduct of the Talebs from October to December 2011 and from the above passage of cross-examination is that Ahmed Taleb had at all relevant times maintained his control of, and was attempting to preserve strategic assets of, the business he founded. Indeed, the conduct in question could reasonably excite the apprehension that the Talebs were engaged in a "phoenix activity", to use the description of the Holden parties' solicitors in their letter to the liquidator of 1 March 2011. 17 As with her Honour, we consider that Mohamed Taleb's evidence of his father's non-involvement in the affairs of the company cannot be accepted. In our view, he attempted to conceal rather than reveal the truth. We infer that Ahmed Taleb played a significant and continuing role in the conduct of the company. As a footnote to this, the largest of the two liabilities of the company in liquidation in the liquidator's report to the creditors of 14 December 2010 was an employee priority debt payable to Ahmed and Mohamed Taleb. It was Mohamed Taleb's evidence in cross-examination that most of this sum ($45,120) was owed his father. Mohamed Taleb provided this information to the liquidator. No mention was made of the $3.4 million tax liability. Ahmed Taleb could not have been unaware of the monetary claim made for him as well as of the false statements otherwise made in the liquidator's report. He was one of the six attendees at the creditors meeting.

(c) The Appeal 18 The questions her Honour posed for herself in considering whether Ahmed Taleb was a joint tortfeasor with Taleb Tyres in the trade mark infringement and the passing off committed by it, were drawn from the judgments of Besanko and Jessup JJ in Keller v LED Technologies Pty Ltd (2010) 185 FCR 449 at [291], [404] and [405]. (i) Did he have the necessary knowledge of the wrongs being committed by the company? (ii) Did he use the company as an instrument of his own wrong? (iii) Did he make the tort his own? (iv) Did he have a close personal involvement in the infringing acts of Taleb Tyres? 19 Approaching these questions in a composite fashion, her Honour answered them affirmatively. The first appellant's contention is that it was not open to her on the evidence to do so. The principal challenges made were that the evidence did not establish that Ahmed Taleb was involved in the day-to-day management of the company and the factual findings made do not support the liability findings and, in particular, that he had the necessary "knowledge". 20 In concluding that the evidence supported the contention that Ahmed Taleb played a significant role in the conduct of the company, her Honour said that that evidence included eight matters which she enumerated individually. We have referred to each of these in the course of the factual narrative above and will not reiterate them here. It should be emphasised, though, that her Honour did not regard any particular item of evidence alone as justifying her conclusion. The appellant's challenge was, primarily, a de-contextualised attack on the sufficiency or relevance of the eight matters to which her Honour referred. It is clear that her Honour considered and evaluated the evidence as a whole as have we. 21 The evidence upon which the primary judge relied was primarily circumstantial but was sufficient to sustain the conclusion at which she arrived. We have indicated already that we too accept her conclusion as to Ahmed Taleb's role in the company. We are satisfied, despite Mohamed Taleb's general denial, that that role was maintained notwithstanding the managerial function devolved on him. 22 Holden only sells spare parts and accessories for its vehicles to a network of authorised dealers. Approximately only 60 of the 250 dealers have been authorised to sell spare parts for Holden Special Vehicles which include the Commodore VE. Taleb Tyres was not authorised to sell the wheels bearing the infringing mark. Given Ahmed Taleb's familiarity with the business he created and his knowledge of how to run it on a day-to-day basis if and when necessary, it could be inferred without resort to Jones v Dunkel that (a) he knew his own business was not authorised to deal with Holden VE Supersport wheels and (b) the business was selling such wheels given the number sold by it in 2009-2010 and that he himself had sold such wheels. This inference can be drawn the more readily because it was in Ahmed Taleb's power to contradict this and he has failed to do so: see Jones v Dunkel (1959) 101 CLR 298; Cross on Evidence at [1215] (Australian edition). 23 We consider, in consequence, that he could properly be said to have had knowledge of the trademark infringement and of the passing off. Knowing that the company - his own creature - was engaging in such conduct, he took no steps as the controller of the company to terminate that conduct. On the contrary. By so acting he made the company's wrongs his own. He was complicit - was involved - in those wrongs. 24 Accordingly, we consider that her Honour committed no appellable error in finding Ahmed Taleb to be a joint tortfeasor as alleged. We have rejected already the challenge made to her Honour's refusal to admit his two affidavits: see [5]. We dismiss grounds 1 to 5 of his appeal. 25 The remaining grounds of appeal are relied upon by both appellants.

The Designs Act and s 75(3) Damages 26 Section 75(3) provides that, in infringement proceedings, the court may award such additional damages as it considers appropriate, "having regard to the flagrancy of the infringement and all other relevant matters". 27 The primary judge's finding was that the quantity of proven design infringement was small. However, Mohamed Taleb had been put on notice of the relevant design registration by Mr Round, the respondents' solicitor, on 25 March 2010 when he gave him details of the design in question. The wheels in question also bore a notice so as to indicate that registration of the design had been sought. 28 Her Honour concluded that these factors support a finding of flagrant infringement and awarded additional damages of $10,000. 29 There are two grounds of appeal relied upon. The first was that there was no infringement of s 71(1)(c) or (e) of the Designs Act. The second, that, if there was an infringement, it was not flagrant. 30 The evidence of the infringement was that Moussa Taleb, Mohamed's cousin, while acting as a sales representative purchased the wheels in question for resale to another employee's friend and they were so sold. In the language of s 71(1), Taleb Tyres sold a product, in relation to which the design is registered, which embodies a design that is identical to, or substantially similar to, the registered design. 31 The claim that there was no infringement of s 71(1)(c) is without any substance. 32 The claim that the facts did not warrant a finding of flagrancy is equally wanting in merit. We would add that, in addition to the matters relied upon by her Honour, the Talebs, though put on notice of Holden's design, took no steps to prevent possible future infringements. They simply disregarded the 25 March solicitor's letter. 33 We should say for the sake of completeness that no argument has been addressed to us on whether in the absence of a damages award under s 75(1), additional damages may be awarded under s 75(3). We do note though that in Polygram Pty Ltd v Golden Editions Pty Ltd (1997) 148 ALR 4 at 12-13 Lockhart J in a dictum expressed a view on ss 115(2) and (4) of the Copyright Act 1968 that additional damages could be awarded in such circumstances. 34 We reject grounds 9, 10 and 6 (insofar as it relies upon grounds 9 and 10) of the appellants' grounds of appeal.

The Compensatory Damages Award 35 In awarding compensatory damages for lost profits, her Honour, having identified the number of "Supersport" style wheels sold by Taleb Tyres (368), then applied a discount (40%) to that figure (to produce 220) and then multiplied that number by the respondents' net wholesale profit per full set of four such wheels with wheel centre caps. That last figure was set out in a confidential exhibit to the affidavit of Matthew Everett, the Product Manager for Collision Parts, at Holden. 36 On 15 April 2011, the Talebs' solicitors informed the Holden parties that Mr Everett would not be required for cross-examination. Additionally, the Taleb parties did not notify any objection to Mr Everett's affidavit when notifying its objections to affidavits on 13 April 2011. At the trial the Holden parties tendered Mr Everett's affidavit. Senior counsel for the Talebs confirmed they had no objection to the affidavit. Mr Everett was present in Court but was not cross-examined. The Holden parties closed their evidence. The Talebs then opened and closed their evidence. 37 Subsequently Senior Counsel for the Talebs raised for the first time a hearsay objection to Mr Everett's confidential exhibit. The trial judge told Senior Counsel that he could deal with the objection by way of submission. Their submission was, ultimately, that the evidence of Mr Everett failed to establish the relevant profit margin because it was hearsay: "one would have to have led detailed accounting evidence on that". They acknowledged to her Honour that they did not seek to obtain access to the underlying source documents relied upon by Mr Everett and put the Holden parties on notice about that. They were now making an objection as to form. 38 Her Honour did not rule formally upon the late made objection. She acted upon Mr Everett's evidence. We would infer that, quite understandably, she considered the evidence had, in the circumstances, properly been received and the right to object had been lost. 39 We would begin by emphasising that this matter was heard under the "Fast Track" procedures of the Court: see Federal Court Rules, Practice Note CM8; with their emphasis on cooperation, expedition, efficiency and, significantly for present purposes, the pre-trial notification and likely ruling on objections to evidence proposed to be tendered. On three occasions - two pre-trial, ie in the 13 April notification of objections and the 15 April letter indicating that Mr Everett was not required for cross-examination, and at trial on the tender of the affidavit where counsel expressly indicated "No, no objections" - counsel for the Talebs clearly acquiesced in the confidential exhibit being admitted in its then form and counsel for the Holden parties proceeded accordingly. The hearing was conducted on that basis and both parties' evidence was given and their cases closed. The Taleb parties had waived their right to object: Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 88 ALR 217 at 231; see generally Cross on Evidence, [1645]-[1680]. 40 This ground of appeal will be dismissed. It is manifestly unmeritorious.

The Award of Exemplary Damages 41 It is accepted in this country that the circumstances of a passing off may be such as to make it appropriate to punish a respondent for conduct showing a conscious and contumelious disregard for the wronged party's rights and to deter the wrongdoer from committing like conduct again: see eg Flamingo Park Pty Ltd v Dolly Dolly Creations Pty Ltd (1986) 6 IPR 431 at 456-457; Deckers Outdoor Corporation Inc v Farley (No 5) (2009) 262 ALR 53 at [98] ff. Such awards have not commonly been made, the apparent reason for this being that the passing off has occurred in conjunction with a copyright infringement for which substantial "additional damages" have been awarded under s 115(4) of the Copyright Act 1968 (Cth): eg Decker Outdoors at [115]; on the interrelationship of such "additional damages" and exemplary damages, see eg Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd (No 2) (2008) 76 IPR 763 at [17]-[19]; and see generally Ricketson and Creswell, The Law of Intellectual Property: Copyright, Designs & Confidential Information, [13.900]-[13.940]. 42 The trial judge awarded $200,000 in exemplary damages for passing off. She had regard to some number of factors which she enumerated (in [96]). Her Honour then reiterated her view that (ibid): … the conduct of the respondents showed a complete and continual disregard of their legal obligations and, in particular, the rights of the applicants. While there was in our view significant evidence to support this conclusion - as for example in the correct characterisation of the passing off as being in the counterfeiting category (though disputed by the appellants) - it was said the character of their conduct was "brought into focus by the deliberate destruction of documents orchestrated by Mohamed Taleb". 43 It is clear from the evidence that her Honour was under a misapprehension concerning this last matter. The evidence was, first, that Mohamed Taleb moved a resolution at the first creditors meeting at the invitation of the Chair (a representative of the liquidator) to the effect that, subject to obtaining ASIC's approval as required by the Corporations Act 2001, the company's and liquidator's books and records "be destroyed by the Liquidator after the deregistration of the company". Secondly, he was asked about this resolution in cross-examination: You were happy to destroy as many records of the company as quickly as possible; that's correct?---That was correct. And thirdly, the applicants received a nil return to their subpoena to the liquidator seeking production of books and records of the company. The reason given was that these had not been provided to the liquidator's office. 44 This evidence, in our view, does not sustain her Honour's conclusion. In particular the question and answer quoted above cannot properly be construed in its context as referring to conduct already engaged in or to be engaged in otherwise than in accordance with the resolution passed. While one might reasonably conjecture about the reasons for the paucity of corporate records etc in evidence in this matter - and the behaviour of Talebs does little to assuage this - we consider that so serious a finding as was made has not been proved. 45 Nonetheless, the general finding made about the respondents' conduct did not depend upon this particular exemplification of it. We do not consider there is substance in the challenges otherwise made to factors referred to in [96] of the Reasons which informed that finding. These mostly have been referred to in passing and/or have been commented upon by us elsewhere in these reasons. We need not repeat them here. Indeed, her Honour's list of illustrative behaviour could well have been enlarged, as for example, the respondents' failure to comply with a court order of 12 November 2010 to provide evidence of products imported by the company. However, we do consider that once shorn of that erroneous exemplification, there is reason why the sum of exemplary damages should be re-visited. We are satisfied that the trial judge's discretion did not miscarry in determining that this case was an appropriate one for the award of exemplary damages. We do consider, though, that the sum awarded was excessive once account is taken of the misapprehension we have identified. 46 We would allow the appeal, set aside the award of $200,000 but make an award of $75,000 in its stead.

The Award of Indemnity Costs 47 On 5 April 2011 the Holden parties made an offer to settle the proceedings against Ahmed and Mohamed Taleb for $150,000 "inclusive of costs and interest". The offer, expressed to be based on the principles stated in Calderbank v Calderbank [1975] 3 All ER 333 expired on 12 April 2011. It referred to previous correspondence sent to the Talebs' solicitors which pointed out the weaknesses in their defence. The reply of the same date criticised the Holden parties' conduct of the proceeding and foreshadowed a response to the offer. None was forthcoming. 48 The offer was not one of compromise made under O 23 of the then Federal Court Rules. Nonetheless, as the primary judge accepted, the non-acceptance of a Calderbank offer can be a relevant matter to be considered on the question whether the discretion to award costs under s 43 of the Federal Court of Australia Act 1976 (Cth) should be exercised on an indemnity basis rather than in accordance with the Court's usual practice of ordering party and party costs, if its non-acceptance is followed by a result to the offeree which is less favourable than the offer made: see MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236; on the primacy of the ordinary practice see Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151; and see generally on Calderbank offers, Dal Pont, Law of Costs, [13.46]-[13.69] (2nd ed, 2009). 49 The significance for costs purposes to be attributed to a rejected Calderbank offer falls, increasingly, for determination by reference to criteria of reasonableness: Was the offer a reasonable one in the circumstances? Was its rejection unreasonable when viewed in light of the circumstances existing at the time of its rejection? See eg University of Western Australia v Gray (No 21) (2008) 249 ALR 360 at 361ff; Dal Pont at [13.58]. In making that determination, the circumstances of the litigation and the parties' understanding of the strengths and weaknesses of their respective cases can be relevant considerations: see GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 201 ALR 55 at [34]. The onus is on the offeror to show that the conduct of the offeree was unreasonable: Alpine Hardwoods (Aust) Pty Ltd v Hardys Pty Ltd (No 2) (2002) 190 ALR 121 at [21] and [28]. 50 Having found the terms of the offer were clear, precise and certain, her Honour went on to ascribe six reasons to why she considered the Talebs' conduct in refusing the offer was imprudent or unreasonable. 51 The appellants have not addressed any of the reasons given directly - and they clearly were relevant considerations. Rather their appeal was founded on the proposition that, as the Holden parties had not at the time quantified their claims - this first occurred during closing submissions - it was not unreasonable to reject the offer. 52 We would note that amongst the considerations relied upon by her Honour were (i) that the quantum of the offer (inclusive of costs and interest) was low; and (ii) the offer gave the Talebs sufficient time to obtain advice and to assess the merits of the offer and they already had solicitors and counsel available to them at the time. 53 In our view, these considerations are sufficient to dispose of the appellants' contention. The letter was a matter about which legal advice ought reasonably have been sought. No House v The King ground for interfering with the primary judge's discretion has been disclosed. 54 We reject this ground of appeal. 55 We would order that the appeal be allowed in part; that Order 3(c) be set aside and in its place it be ordered that: "(c) exemplary damages for passing off in the sum of $75,000; and"; and that the appeals otherwise be dismissed. The appellants having been successful in part in relation to one of her Honour's orders, we consider it appropriate to take account of that in making a costs order. Accordingly, we would order that the appellants pay 85 per cent of the respondents' costs of the appeal. I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Finn and Bennett.

Associate: Dated: 22 December 2011 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION VID 672 of 2011

JUDGES: FINN, DOWSETT AND BENNETT JJ DATE: 22 DECEMBER 2011 PLACE: ADELAIDE (HEARD IN MELBOURNE)

INTRODUCTION 56 I have had the benefit of reading the reasons prepared by Finn and Bennett JJ. Although I am otherwise in general agreement with their Honours, I do not agree that the evidence establishes the case against the first appellant ("Ahmed Taleb"). I shall refer to the second appellant as "Mohamed Taleb" and to the respondents collectively as "General Motors".

A PRELIMINARY MATTER 57 I should address one preliminary matter. General Motors sought to establish various causes of action against Ahmed Taleb, arising out of substantially the same fact situation. Causes of action included: breach of the Trade Marks Act 1995 (Cth) (the "trade mark breach"); breach of the Design Act 2003(Cth) (the "design breach"); passing off; breach of the Trade Practices Act 1974 (Cth) (the "TPA breach); and breach of the Fair Trading Act 1987 (NSW) (the "FTA NSW breach"). 58 The case seems to have been conducted upon the basis that, save for the FTA NSW breach, Ahmed Taleb's liability arose out of the conduct of Taleb Tyres (Aust) Pty Ltd ("Taleb Tyres"). As to the alleged FTA NSW breach, the factual basis was not clearly identified. Although the primary Judge addressed in detail Ahmed Taleb's involvement in the trade mark breach, the passing off and the TPA breach, her Honour did not so address his involvement in the design breach and the FTA NSW breach. However orders were made on the basis that all causes of action were established. I infer that her Honour treated all of the causes of action as arising out of the same facts and proceed accordingly.

CONCLUSION AS TO TRADE MARK BREACH AND PASSING OFF 59 At [59] the primary Judge found that Ahmed Taleb was a joint tortfeasor with Taleb Tyres upon the basis that he had: (1) the necessary knowledge; (2) used Taleb Tyres as an instrument of his own wrong; (3) made the tort his own; and (4) had a close personal involvement in Taleb Tyres' impugned conduct.

CONCLUSION AS TO TPA BREACH 60 At [67] her Honour concluded that pursuant to s 75 of the Trade Practices Act Ahmed Taleb was, directly or indirectly, knowingly concerned in Taleb Tyres' breach of the TPA breach. Her Honour inferred that he had "… knowledge of the essential matters … of the contravention …".

EVIDENCE 61 At [58] her Honour identified eight matters as relevant to her conclusion that Ahmed Taleb was a joint tortfeasor. They were that: 1. Ahmed Taleb had a long and personal involvement in running the Taleb Tyres business having established the business in 2003 and having been sole director from this time until 2006, when Mohamed Taleb became the "sole manager"; 2. although on 14 December 2010 Fadia Taleb was the sole director of Taleb Tyres and had held that position since 16 February 2010, Mohamed Taleb's evidence was that she was not really a director of the company. Rather, Ahmed Taleb had been the sole director of the company since its incorporation in December 2003 until 16 February 2010; 3. on 14 December 2010, the shareholders, Mohamed and Ahmed Taleb, resolved to place Taleb Tyres into liquidation; 4. on 14 December 2010, Ahmed Taleb caused himself to be registered as the person carrying on business in New South Wales under the business names "TALEB TYRES" and "TALEB TYRES AUSTRALIA"; 5. in October 2010, Ahmed Taleb became the sole shareholder in "AM TALEB HOLDINGS PTY LTD" (CAN 094 089 040), a company which is registered as carrying on business as 'TALEB TYRES & WHEELS". The sole director and secretary is Mohamed Taleb. Ahmed Taleb was a director for one day - 11 October 2010; 6. Ahmed Taleb manages the day to day affairs of the business as a caretaker when Mohamed Taleb is overseas; 7. on at least one occasion, 5 June 2009, Ahmed Taleb is recorded as the salesperson of the infringing products; and 8. in the liquidation of Taleb Tyres, he and Mohamed Taleb claimed an employee priority debt of $50,120. 62 At [60]-[66] her Honour considered other matters arising out of the liquidation of Taleb Tyres, including dealings with the Australian Taxation Office, the report to creditors in the liquidation of that company and events at a meeting of creditors. These other matters led the primary Judge to an adverse assessment of credit against both Mohamed and Ahmed Taleb. At [66] her Honour said: Unless their evidence was supported by contemporaneous documentary evidence from a reputable third party, it cannot be relied upon. 63 Ahmed Taleb did not give evidence, and so the finding as to his conduct has no real relevance to his case. 64 It is not clear whether her Honour, in reaching her conclusion at [59] concerning Ahmed Taleb's involvement in the trademark breach and passing off (and, I infer, the design breach) took into account the matters addressed at [60]-[66]. The conclusion at [67] that Ahmed Taleb was knowingly concerned in the TPA breaches seems to be based upon the eight factual matters identified at [58] and the matters set out at [60]-[66]. I assume, for present purposes, that her Honour's conclusions at [59] were similarly based.

THE PLEADED CASE 65 The primary Judge's reasons must be considered in light of the case pleaded against Ahmed Taleb. At para 107, in the further amended fast-track statement, General Motors alleged that: From a date which is presently unknown to the applicants but since at least 11 November 2008, Taleb Tyres, Ahmed Taleb, Mohamed Taleb and Sydney Tyres, or any of them have, without the licence or authority of the applicants, imported, manufactured, offered for sale and sold products which embody designs that are identical to, or substantially similar in overall impression to, the Designs or offered under or by reference to signs which are substantially identical with or deceptively similar to the Trade Marks (Products) including: … . 66 A list of relevant products followed. It included alloy wheels, said to be identical, or substantially similar in overall impression to General Motors' products. Specific supplies were particularized in Schedule B which showed a total of 370 tyres supplied at a total value, excluding GST and freight, of at least $67,028.63. The infringing conduct appears to have occurred in a period extending from late 2008 until July 2010. Mohamed Taleb said in evidence that in 2006 or 2007, Ahmed Taleb ceased to be involved in the business of Taleb Tyres, save for a period in late October/early November 2010 when he, Mohamed Taleb was overseas. As I have observed, her Honour generally rejected Mohamed Taleb's evidence, save where it was satisfactorily corroborated. However such rejection means that there is little or no direct evidence of Ahmed Taleb's involvement in the impugned conduct. Such evidence as there is must be carefully scrutinized. 67 In para 160 of the further amended fast track statement, General Motors alleged that Taleb Tyres infringed trade marks and designs, engaged in misleading or deceptive conduct and passed off goods as being those of General Motors. In para 161 General Motors alleged that Ahmed Taleb procured or directed the alleged trade mark and design breaches and the passing off. In para 162 General Motors alleged that Ahmed Taleb: aided, abetted, counselled or procured; induced; was knowingly concerned in, or party to; or conspired with others to effect the TPA breaches. In para 163, General Motors alleged that "Ahmed Taleb's conduct as outlined in paragraph 107" constituted trade mark and design breaches, passing off and the FTA NSW breach. 68 In its pleading General Motors alleged virtually no specific conduct against Ahmed Taleb. There was also little evidence of such conduct, save for the possible sale of one set of infringing wheels on 5 June 2009. In particular, General Motors led no direct evidence to demonstrate that Ahmed Taleb had: procured or directed any impugned conduct as alleged in para 161; aided, abetted, counselled or procured any contravention of the TPA; or induced or conspired with others to bring about any contravention of the TPA.

REASONS AT FIRST INSTANCE 69 As I have observed, the primary Judge's findings against Ahmed Taleb, in so far as they concern the alleged trade mark breach, the passing off and, possibly, the design breach, seem to have been based on her conclusions that he: had the "necessary knowledge"; used Taleb Tyres as "an instrument of his own wrong"; made the tort "his own"; and had "a close personal involvement" in Taleb Tyres' infringing acts. 70 These conclusions pose numerous questions, such as: What was the necessary knowledge? How did he use the company as an instrument of his own wrong? How did he make the tort his own? What was his close involvement in the infringing acts? 71 Those questions cannot be readily answered by reference to the evidence, or to her Honour's reasons. To some extent the words have been extracted from the reasons for judgment given by members of the Full Court in Keller v LED Technologies Pty Ltd (2010) 185 FCR 449. In that case, Emmett J recognized, at [83], that a director of a company is not, per se, liable for its torts. See also the reasons of Besanko J at [272] and those of Jessup J at [400]. If his or her own conduct constitutes a tort, it will be no defence that it was committed in the capacity of director. In other cases, a director may be so involved in a tort, committed by or on behalf of the company that he or she, not having committed a separate tort, may be liable as a joint tortfeasor with the company. Where the director has not personally committed the tort, liability as a joint tortfeasor will generally depend upon his or her state of knowledge. A director is obliged to have such knowledge of the business of the company as is necessary in order that he or she can perform a director's duties. It follows that a director who is properly informed as to the affairs of the company will not automatically be liable as a joint tortfeasor with the company. 72 In Keller it was alleged that two companies had infringed registered designs, and that the directors of the companies were liable as joint tortfeasors. The evidence indicated that the directors had substantially greater involvement in the alleged infringements than is disclosed by the evidence against Ahmed Taleb in the present case. In Keller, the primary Judge found that each director was a joint tortfeasor. Emmett and Jessup JJ held that such findings should be set aside. Besanko J would have upheld the finding against one of the directors, but set aside the finding against the other director. For present purposes the relevance of the decision in Keller lies in the various tests applied by the members of the Court in reaching their respective decisions as to the directors' liability. Emmett J said at [83]-[84]: 83 A company cannot act other than through a natural person. In considering whether a natural person is a joint tortfeasor with a company, it is necessary to show something more than that the company acted through that person. Where a person is acting in the capacity of a director, the person will not be liable for the act of the company unless it can be shown that, in so acting, the director was doing something more than acting as a director. The person must do something that makes him or her, in addition to the company, an invader of the victim's rights … . The mere fact that a company is small and that the director has control over its affairs is not, of itself, sufficient to make the director a joint tortfeasor with the company … . 84 Infringement by a principal actor, of course, is an objective matter. For a director of a company to be held to be invading the rights of a victim of the company, by reason of the actions committed in the capacity of a director, there must be some mental element involved. Thus, in circumstances where a director can be shown to be making use of a corporation or company as an instrument whereby infringement is perpetrated, such that the director can be seen to be hiding behind the corporate veil, it may be thought that that director is going beyond actions performed merely in the capacity as director. If a company is merely the alter ego of a director, such that there is no real difference between the mind of the officer and the mind of the company, there may well be circumstances where it will be appropriate to conclude that the officer is invading the rights of a victim of the company. 73 Besanko J identified two relevant tests. At [272] his Honour referred to the "Performing Right Society" test based upon the judgment of Atkin LJ in Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd (1924) 1 KB 1. That test asks whether the director directed or procured the infringing act by the company. The language used in para 161 of the further amended fast track statement reflects this test. However there was no direct evidence of any such direction or procurement, save for the evidence of one possible sale by Ahmed Taleb on 5 June 2009. The second test emerges from the decision in Mentmore Manufacturing Co Ltd v National Merchandising Manufacturing Co Inc (1978) 89 DLR (3d) 195. It would impose liability upon a director for a tort committed by the company where he or she has engaged in the deliberate, wilful and knowing pursuit of a course of conduct that was likely to constitute infringement or which reflected an indifference to the risk of it. Besanko J concluded at [291]: In my opinion, in considering a director's potential liability as a joint tortfeasor, it is necessary to consider carefully the director's involvement in the unlawful or infringing acts. A close personal involvement in the infringing acts by the director must be shown before he or she will be held liable. The director's knowledge will be relevant. In theory, that knowledge may range from knowledge that the relevant acts are infringing acts to knowledge of an applicant's registered designs to knowledge of acts carried out by others. 74 Jessup J at [401] posed the question: What is it about the position of the director whose actions have caused the company to commit the wrong which should make him or her liable in addition to the company? 75 At [404] and [405] his Honour answered the question as follows: 404 Returning to the question which I posed at the end of [401] above, I believe that the answer lies in the application of the conventional rules of law as to joint liability to the particular circumstance where the primary wrongdoer is an artificial person who can act only by human agency. Each of the two main conventional rules to which I have referred - directing another to commit a tort and participation in a joint enterprise - requires, or at least assumes, a duality (or multiplicity) of actors. In this sense, the presentation of the problem has much in common with that of inducement to breach of contract … . For a director to be liable because he or she directs or procures his or her company to commit a wrong, the context must be such that the director is effectively standing apart from the company and directing or procuring it as a separate entity. There must be a sense in which the director is using the company as the instrument of his or her own wrong. … 405 It will be seen from the foregoing that I agree substantially … [that it is] a requirement of liability that the director should make the tort his or her own. Other courts have at times expressed reservations about this formula but, in my view, its utility lies in the focus it gives to an understanding of the principle of dual or multiple participation as I have attempted to explain it above. It would be a mistake to attempt to resolve cases by reference to a search for the moment in time when a director made the company's wrongdoing his or her "own". We are not here dealing with a species of property, or with ownership in any sense. However, in a situation in which the company role and the personal role of the director may be blurred, the formula does highlight the crucial distinction between acts which are done for and in the service of the company and acts which, in addition, are done in the director's own personal capacity - a "non-company capacity" as it were. 76 Obviously enough, there will be cases in which the director performs acts which may constitute a tort by him or her and the company. In other cases, the director may play no part in the physical acts constituting the tort but may be so closely associated with the acts of the company as to attract joint liability with it. As I have previously observed, such association will generally involve knowledge of the breach, including the circumstances in which it occurred. 77 As to the TPA breach, accessorial liability under the TPA depends upon s 75B(1) of that Act which provides: A reference in this Part to a person involved in the contravention of a provision of Part IV, IVA, IVB, V or VC or of s 95AZN, shall be read as a reference to a person who: (a) has aided, abetted, counselled or procured the contravention; (b) has induced, whether by threats or promises or otherwise, the contravention; (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention. 78 In finding that Ahmed Taleb was knowingly concerned, directly or indirectly, in Taleb Tyres' conduct which infringed ss 52 and 53(a) the Act, the primary Judge referred to the decision of the Full Court in Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 at [1]-[16] and [17]. However the seminal authority concerning s 75B is the decision of the High Court in Yorke v Lucas (1985) 158 CLR 661. In that case, at 667-8, Mason ACJ, Wilson, Deane and Dawson JJ observed that the words in para 75B(1)(a) are derived from the criminal law "where they are used to designate participation in a crime as a principal in the second degree or as an accessory before the fact". Their Honours further observed: If para (a) of s 75B imports the requirements of the criminal law it is clear … that Lucas could only be brought within that paragraph if he intentionally aided, abetted, counselled or procured a contravention by the Lucas company of s 52 of the [TPA]. Upon the findings of the trial judge, however, Lucas lacked the knowledge necessary to form the required intent. A contravention of s 52 involves conduct which is misleading or deceptive or likely to mislead or deceive and the conduct relied upon in this case consisted of the making of false representations. Whilst Lucas was aware of the representations - indeed they were made by him - he had no knowledge of their falsity and could not for that reason be said to have intentionally participated in the contravention. 79 Their Honours adopted this approach to s 75B(1)(a) and continued at 669-670: So far we have dealt only with para (a) of s 75B which refers to involvement of persons who are accessories. The appellants also rely upon para (c) of the same section which extends the definition of a person involved to a person who has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention. There can be no question that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention. It cannot, therefore, be suggested that Lucas falls within the first limb of para (c). It might be thought possible to construe the express requirement of knowledge as extending not only to being "concerned in" but also to being "party to" a contravention. However there are two reasons in our view why it is inappropriate to do so. First, the natural construction of para (c) is to regard the word "knowingly" as qualifying only the words "concerned in" which immediately follow it. The punctuation strongly suggests such a construction. Secondly, the word "knowingly" would be an unnecessary qualification of the words "party to". In the context of the paragraph a person could only properly be said to be "party to" a "contravention" if his participation was in the context of knowledge of the essential facts constituting the particular contravention in question. Whilst it is not a contradiction in terms to speak of a person being "party to" something of which he is unaware, some indication is needed to convey such a meaning. There is nothing in the paragraph itself which would point to any conclusion other than the words "party to" are used to refer to a participant in the nature of an accessory. Moreover, the wider context of the whole section leads to the same conclusion. We have already indicated why para (a) requires knowledge. Paragraph (b), which speaks of inducing a contravention by threats, promises or otherwise, and para (d), which speaks of conspiring with others to effect a contravention, both clearly require intent based upon knowledge and there is force, we think, in the observation made in the judgment of the Full Court below … that there is - "... no reason why Parliament would have intended that a section which renders natural persons liable for a contravention by a corporation should require some mental element or absence of innocence in every case to which it refers except one which itself requires in its first limb that the person was "knowingly" concerned in the contravention." In our view, the proper construction of para (c) requires the party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention. 80 In circumstances which are explained in the reasons prepared by Finn and Bennett JJ, Ahmed Taleb did not give evidence at the trial. I accept that his reasons for failing to give evidence were not satisfactory. The primary Judge relied upon the decision in Jones v Dunkel (1959) 101 CLR 298 as strengthening the adverse inferences able to be drawn from the evidence. That case establishes that a court may, in some circumstances, rely upon a party's failure to call a witness as strengthening an inference adverse to that party, provided that such inference is otherwise available on the evidence. After holding that other evidence supported a finding that a motor vehicle was, at the time of a collision, on the wrong side of the road, Kitto J continued at 308: Whether that inference ought to be drawn was, of course, a question for the jury. But they should not have been sent away to consider that question without proper guidance as to the relevance of the defendants' failure to put Hegedus into the witness-box. On that question a juryman actually asked the trial judge to supplement his summing-up, and counsel for the plaintiff submitted that if there was evidence to go to the jury they were entitled to take into consideration (meaning, obviously, on the question whether they should infer negligence) that "there was one person who could have told them the facts and they have no answer from that person". In my opinion, the direction which the judge proceeded to give was insufficient, and, because of its incompleteness, was incorrect. His Honour told the jury that the fact that Hegedus had not gone into the box left them in this position, that they could accept the facts given by the plaintiff as proved, and that the question for them then was whether they thought that from the proved facts an inference of negligence ought to be drawn. It was right enough to point out, in effect, that the evidence given might be the more readily accepted because it had been left uncontradicted, and that the omission to call Hegedus as a witness could not properly be treated as supplying any gap which the evidence adduced for the plaintiff left untouched. But what should have been added, and not being added was in the circumstances as good as denied, was that any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence. The jury should at least have been told that it would be proper for them to conclude that if Hegedus had gone into the witness-box his evidence would not have assisted the defendants by throwing doubt on the correctness of the inference which, as I have explained, I consider was open on the plaintiff's evidence. In my opinion what his Honour said on the point amounted to a misdirection. 81 At 312, Menzies J said: In my opinion a proper direction in the circumstances should have made three things clear: (i) that the absence of the defendant Hegedus as a witness cannot be used to make up any deficiency of evidence; (ii) that evidence which might have been contradicted by the defendant can be accepted the more readily if the defendant fails to give evidence; (iii) that where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference. 82 See also the reasons of Windeyer J at 317-321. 83 I stress that the decision makes it clear that the absence of a witness may only be used to strengthen an inference otherwise available on the evidence, and not to relieve a party of the need to prove a matter concerning which he or she bears the onus of proof.

AHMED TALEB'S LIABILITY 84 I have difficulty in understanding the actual basis upon which it is said that Ahmed Taleb was party to Taleb Tyres' torts. With the single exception of the incident on 5 June 2009, there is no suggestion of any action by him associated with the infringements, nor of any actual knowledge on his part of General Motors' intellectual property, that Taleb Tyres lacked authority from General Motors to sell its products or that the products being sold were not lawfully sourced. I should add that I do not understand General Motors to have conducted the case on the basis that the evidence concerning the transaction on 5 June 2009 was, itself and alone, sufficient to found an inference that Ahmed Taleb had committed any relevant breach. 85 Much reliance appears to have been placed upon an inferred (or perhaps assumed) familiarity with the affairs of Taleb Tyres. The evidence supporting such inference or assumption is less than persuasive. I accept that Mohamed Taleb's evidence was rejected, but such rejection meant that there was little evidence concerning Ahmed Taleb's involvement in the affairs of the company after 2006 or 2007. 86 I turn to the specific matters upon which the primary Judge relied in making her findings against Ahmed Taleb. First, her Honour observed that he had a long and personal involvement in running the Taleb Tyres business which he had established in 2003, and of which he was sole director until 2006 when Mohamed Taleb became the "sole manager". Notwithstanding the general rejection of Mohamed Taleb's evidence, her Honour seems to have accepted that from about 2006 he was the manager of the business. Her Honour apparently also inferred some continuing involvement on the part of Ahmed Taleb. That inference may well have been reasonably open, but the question is as to the extent and nature of such involvement. Ahmed Taleb's previous involvement in the business and an inference of continuing general involvement say nothing about whether he had knowledge sufficient to justify a finding that he was a party to Taleb Tyres' torts or was otherwise closely involved in them. 87 The second point relied upon was the fact that on 16 February 2010 Fadia Taleb, Ahmed Taleb's wife, became the sole director of Taleb Tyres, but "was not really a director of the company". I take this to mean that she did not perform the duties of a director. That fact, by itself, says nothing about Ahmed Taleb's involvement in the torts. Her Honour then observed that Ahmed Taleb had been the sole director of the company until 16 February 2010. Again, his position as director was not, of itself, sufficient to justify a finding that he was a joint tortfeasor with the company, even apart from the fact that by that time, management had passed to Mohamed Taleb. 88 Her Honour then pointed out that on 14 December 2010 Mohamed and Ahmed Taleb, as shareholders, resolved to place Taleb Tyres in liquidation. As far as I can see that says nothing relevant for present purposes. It demonstrates only that, as a shareholder, Ahmed Taleb considered that it was in his own best interests that the company be placed in liquidation. His position as a shareholder says nothing about his involvement in the impugned conduct. 89 Her Honour then observed that on 14 December 2010 Ahmed Taleb caused himself to be registered as the person carrying on business in New South Wales under the business names "Taleb Tyres" and "Taleb Tyres Australia". The liquidation of Taleb Tyres and these registrations seem to have occurred in the light of this litigation, or the threat of it, together with the existence of a large tax debt. Mohamed Taleb said that the business names had been registered in order to protect them. It is true that under pressure in cross-examination, he agreed that his father had not lied to the New South Wales authorities in claiming to be carrying on business under those names. However it is clear that he did not mean that his father was actually carrying on business under those names. Ahmed Taleb obviously had a pecuniary interest in Taleb Tyres. No doubt, he would have wished to salvage what he could of its assets. In any event the registrations occurred some months after the last impugned transaction. Registration of the business names in Ahmed Taleb's name says nothing about his involvement in those transactions. 90 Her Honour observed that "Ahmed Taleb manages the day to day affairs of the business as a caretaker when Mohamed Taleb is overseas …". As I understand the evidence, there was one occasion in late 2010 in which Ahmed Taleb performed that function. Mohamed Taleb also agreed that if he were away, his father had sufficient understanding of the business to conduct it. I do not understand the evidence to support the general proposition implicit in her Honour's statement that as a standing arrangement, Ahmed Taleb did so. In any event familiarity with the business of Taleb Tyres does not necessarily say anything concerning his involvement in the impugned transactions. One would need more information about the nature of such familiarity and of the business before one could draw any adverse inferences. 91 Her Honour then referred to the invoice dated 5 June 2009 which indicates that "Ahmed" was the relevant sales person. The invoice records the sale of six tyres and four wheels. The wheels are described as "S719805120SILV". Her Honour accepted that these were infringing products. Other evidence suggests that they were Supersport wheels. Her Honour inferred that the reference to "Ahmed" was to Ahmed Taleb. That inference was certainly open. However he submits that this proposition was not put to Mohamed Taleb in cross-examination, apparently invoking the rule in Browne v Dunn (1893) 6 R 67. Of that decision, Hunt J said in Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation (1983) 1 NSWLR 1 at 16: It has in my experience always been a rule of professional practice that, unless notice has already clearly been given of the cross-examiner's intention to rely upon such matters, it is necessary to put to an opponent's witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings. Such a rule of practice is necessary both to give the witness the opportunity to deal with that other evidence, or the inferences to be drawn from it, and to allow the other party the opportunity to call evidence either to corroborate that explanation or to contradict the inference sought to be drawn. That rule of practice follows from what I have always believed to be rules of conduct which are essential to fair play at the trial and which are generally regarded as being established by the decision of the House of Lords in Browne v Dunn … . 92 To the extent that General Motors intended to use the invoice as evidence of Ahmed Taleb's ongoing involvement in the business, its existence ought to have been put to Mohamed Taleb in cross-examination. Such use was designed to contradict his assertion that his father had no ongoing involvement in the business. The more significant particular evidence may be in the resolution of the case, the more significant is the failure to put it in cross-examination to a witness who might be expected to offer some explanation of it. On the other hand, it might be said that General Motors' challenge to this aspect of Mohamed Taleb's evidence was clearly made, and that this was only a relatively minor incident of the attack upon it. After all, one transaction may not prove very much in itself. This case was not about one transaction. It was about an ongoing series of deliberate copyright and design infringements, passing off and misleading and deceptive conduct. There appears to have been no further evidence concerning the isolated transaction to which the document apparently relates. It says nothing about whether Ahmed Taleb knew that the subject matter of the sale had been sourced other than from General Motors or was otherwise being unlawfully traded. Given those matters and the failure to put the matter to Mohamed Taleb, this matter is of slight evidentiary value. 93 Finally, her Honour referred to the fact that in the liquidation of Taleb Tyres Mohamed and Ahmed Taleb claimed, as employees, priority debts of $50,120, of which about $45,000 was owed to Ahmed Taleb. General Motors submits on appeal that at ts 83 ll 38-42, Mohamed Taleb identified that amount as wages. That proposition seems to be incorrect. However the fact that the amount was claimed as representing employee priority debts suggests as much. Her Honour appears to have accepted that Ahmed Taleb was involved in managing Taleb Tyres whilst Mohamed Taleb was overseas in late 2010, that is after the impugned conduct. It is possible that some of the amount owned to him arose out of that engagement. However it seems unlikely that the whole amount was attributable to it. One might well infer that he must have had some other involvement in the affairs of the company. However that says nothing about the nature of such involvement or the time at which it occurred. 94 In my view the only evidence capable of suggesting any involvement by Ahmed Taleb in the impugned conduct is the available inference that he made the sale on 5 June 2009 and his claimed priority debt as an employee. The other matters identified at [58] provide a context in which to view those two matters but do not otherwise point to any involvement in the impugned conduct. As to the transaction of 5 June 2009, it says nothing about any of the other impugned transactions and does not really go any way towards establishing that in making the sale on behalf of Taleb Tyres, Ahmed Taleb had the necessary knowledge to make him liable for its torts. His involvement in that one transaction may have constituted a tort by him, but the case seems not to have been conducted on that basis. As to the claimed debt it is, at best for General Motors, equivocal. 95 In assessing this evidence I have kept in mind General Motors' reliance on the decision in Jones v Dunkel. I accept that the question is whether there is any fair basis, on the evidence, for inferring the involvement of Ahmed Taleb in the impugned conduct. I am unable to conclude that General Motors' has established a factual basis from which it could be inferred that Ahmed Taleb was involved in the torts committed by Taleb Tyres. 96 The other matters addressed by the primary Judge at [61]-[66], certainly reflect badly on both Mohamed and Ahmed Taleb, but they have nothing to do with this case, save to the extent that they affect questions relating to the credit of Mohamed Taleb as a witness. They say nothing about Ahmed Taleb's involvement in the business of Taleb Tyres or in the impugned conduct. 97 For the same reasons, the evidence establishes no basis for inferring that Ahmed Taleb was knowingly concerned in Taleb Tyres' TPA breach, or that he breached the FTA NSW. 98 I also note that, as Finn and Bennett JJ have observed, the primary Judge appears to have misunderstood the evidence concerning the destruction of company records.

ORDERS 99 I would allow Ahmed Taleb's appeal and set aside the findings of fact made against him, the consequential declarations, orders as to damages, injunctive relief and orders as to costs. He should have the costs below and of this appeal. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.