20 July 2016

Trade mark use in Australia: foreign distributor found liable for infringement even where the first sale of its product was overseas.

Two companies incorporated in Hong Kong which were part of a corporate group which manufactured and distributed toys to exporters in China have each been found to have infringed trade marks registered in Australia when the products were subsequently exported and sold in retail outlets in Australia.

A notable issue in this decision 1 is that this factual scenario gave rise to a finding that the overseas entities were found to have themselves ‘used’ the infringing trade mark for the purposes of the Trade Marks Act 1995 (Cth) (Act). This is so, notwithstanding that title to the products which carried the infringing trade mark had passed from the distributor to the exporter in China.

A key reason for this finding was that the Hong Kong entities were both held to have known that the products were being supplied in China for eventual sale in Australia.

An important, yet apparently unresolved question is whether, in the absence of this type of knowledge, the transaction which is described above, or others like it, would still result in a finding that the overseas manufacturer and distributor have ‘used’ the marks for the purposes of the Act, with the consequence that they would be left exposed to a potential trade mark infringement claim if another party had a relevant trade mark registration in Australia.

The applicant, Playgro Pty Ltd (Playgro), was a company incorporated in Australia which owned several trade mark registrations, including the following composite mark which was registered in respect of ‘games and playthings’ (Playgro Device Mark):

Trademark-Lawyers-Sydney-playgro

The respondents, Playgo Art & Craft Manufactory Limited of Hong Kong (Playgo Craft) and Playgo Toys Enterprises Limited (Playgo Enterprises), were members of a group of companies which designed, manufactured and distributed childrens toys and playthings in Hong Kong and China. Playgo Enterprises was responsible for the distribution and wholesale of the group’s products. Playgo Craft was the owner of the following registered trade mark in Hong Kong and China in respect of various goods, including toys (Playgo Device Mark):

Logo_PlayGo

Throughout 2013 and 2014, the Playgo corporate group manufactured toys in China, applied the Playgo Device Mark to the packaging on the toys, and supplied the toys to exporters operating out of the Chinese city of Shenzen. The Playgo Device Mark was applied to the products under the authorisation of Playgo Craft and the direction of Playgo Enterprises. Playgo Enterprises distributed the toys to the exporters. Under the respective agreements, title in the goods passed on being delivered to the appropriate exporter in China. The exporters then exported the toys to Myers and Woolworths, who sold the goods through their retail outlets in Australia.

Playgro asserted that, by the conduct described above, both Playgo entities had themselves infringed Playgro’s registered trade marks in Australia, including the Playgro Device Mark. In essence, the trade mark infringement claim was that the two Playgo entities had themselves ‘used’ a trade mark which was substantially identical or deceptively similar to Playgro’s registered marks in Australia, in contravention of section 120 of the Act.

Playgro also asserted that, if the Playgo entities’ conduct did not constitute trade mark infringement, such as by reason of not actually having ‘used’ the infringing trade marks in Australia for the purposes of the Act, they would nonetheless have been liable as joint tortfeasors to any trade mark infringement by the Australian retailers.

Were the Playgo trade marks substantially identical or deceptively similar to Playgro’s marks?

His Honour, Moshinsky J, first considered whether the Playgo Device Mark was substantially identical to Playgro’s registered trade marks. He noted that the visual appearance of the Playgo Device Mark, with a red background and white letters, ‘is distinct from the mark ‘PLAYGRO’, and the other Playgro trade marks.’ For this reason, on a side-by-side comparison, he did not consider them to be substantially identical.

In contrast, His Honour found that the Playgo Device Mark was deceptively similar to the Playgro Device Mark. An assessment of deceptive similarity involves considering all the surrounding circumstances, including which marks will be used, how the relevant goods will be bought and sold, and the character of the probable purchasers of the goods.2 When compared both visually and orally, there must then be consideration as to whether the Playgo Device Mark, when compared to Playgro’s registered marks, is likely to deceive or cause confusion.

Taking into account the notional consumer’s imperfect recollection, his Honour provided the following reasons for establishing deceptive similarity:

  • the first syllable ‘PLAY’ is identical in each mark
  • the last syllable is visually and phonetically very similar and only differs by the letter ‘R’
  • the marks, when considered as a whole, look and sound familiar.

His Honour went on to say:

The context includes the fact that people who purchase children’s toys include those who purchase them occasionally (for example, as presents for friends or family). Such purchasers may well have an imperfect recollection of the word mark ‘PLAYGRO’ or the Playgro device marks when they come to purchase a toy on another occasion… Given these matters, I consider there to be a real, tangible danger of confusion occurring; I think that a number of customers would be caused to wonder whether it might not be the case that the two products come from the same source.

In reaching his decision, Moshinsky J did not consider that the shape or colours of the Playgo Device Mark were sufficiently distinctive in preventing a real and tangible danger of causing confusion. Once reaching this conclusion, his Honour did not consider it necessary to compare Playgo’s Device Mark to Playgro’s registered word mark.

Were the Playgo entities themselves liable for infringement?

Having determined that Playgo’s Device Mark was deceptively similar to Playgro’s Device Mark, the next step in the analysis was to consider whether the Playgo entities had each ‘used’ the infringing trade mark for the purposes of section 120 of the Act. Section 120 requires that, for an infringement to occur, the alleged infringing sign (in this case, the Playgo Device Mark) must be ‘used’ as a trade mark in Australia.

The issue of whether an overseas entity is said to have ‘used’ a trade mark in the context of establishing ‘use’ in order to defeat a ‘non-use’ claim has been considered previously by the High Court in Estex.3 In this decision, the majority of the High Court found that, when considering ‘use’ in the context of a ‘non-use’ proceeding, ‘use’ is not confined to the physical use of the tangible object. Rather, when a manufacturer ‘projects’ the trade mark by means of displaying, offering, or selling to Australian retailers, use of the mark is attributed to that overseas manufacturer, even though title in the goods may pass overseas.

What is relevant is whether there is a connection in the course of trade between the goods and a person who has a right to use the mark.

In Estex, this factual scenario gave rise to the finding that the overseas manufacturer had used its marks for the purposes of the Act, and so it successfully defeated a ‘non-use’ claim brought against its registered marks in Australia.

In this most recent proceeding, Moschinsky J found no reason to limit this principle of ‘use’ to the context of a ‘non-use’ proceeding, and so applied the same principle to the context of an infringement proceeding.

His Honour therefore found that the Playgo entities did not cease to ‘use’ the infringing mark upon the sale and delivery of the goods in China, and the infringing mark continued to be used in the course of trade until their ultimate sale in Australia.

His Honour went on to find that it was to be inferred from the facts that the respondents were aware that their products were to be ultimately sold in Australia. His Honour’s finding therefore seemed to focus on the state of mind of the overseas corporate distributor. Importantly, Moschinsky J found it unnecessary to decide whether a foreign company would be liable for infringement of trade marks registered in Australia without this knowledge.

Joint tortfeasors

Although his Honour found that the Playgo entities had infringed on Playgro’s trade mark, he still considered the argument that Playgo would also have infringed on the basis of being a joint tortfeasor when Myer or Woolworths sold their goods.

A finding of being ‘joint tortfeasor’ at common law required a ‘common design by the respondents to participate in or induce or procure another person to commit an act of infringement.’4 This required that the alleged tortfeasor show some furtherance into carrying out this common design, and not merely having an agreement in place.5

In these circumstances, his Honour asserted that the facts did not suggest that Playgo and Myer engaged in a common design to offer for sale, and sell playthings with Playgo’s trade mark – it was merely a commercial relationship between a vendor and a purchaser. Despite knowing that their goods would be sold in Australia with their marks on them, this was insufficient, in his Honour’s opinion, to amount to a furtherance of a common design.

Comment

The finding that ‘use’ may have the same meaning under the Act in the context of both a non-use proceeding and an infringement proceeding has potentially profound consequences for any overseas manufacturer or distributor where their goods end up being sold in the Australian market.

While this decision seemed to turn on the factual finding that both the overseas entities were ‘aware’ that their products were to be sold in Australia, a more fundamental, and seemingly unanswered question is whether, in the absence of this type of knowledge, an overseas manufacturer or distributor could still be found to have ‘used’ potentially infringing marks for the purposes of the Act when their products are sold in the Australian market.

The answer to this seemingly fundamental question was not determined in this decision.

However, if ‘use’ for the purposes of determining a trade mark infringement claim has the same meaning under the Act as when assessing a non-use claim then it would seem to follow that an overseas manufacturer and distributor can be liable for a trade mark infringement claim in Australia without knowing that their goods are being sold in Australia.

This is because of the recent High Court decision in 6which considered the meaning of trade mark ‘use’ in the context of a ‘non use’ proceeding.

In Gallo, the High Court found that intention or knowledge of a sale in Australia by a trade mark owner which is overseas is not a necessary condition of establishing ‘use’ in order to defeat a non-use claim under the Act. In this case, a foreign owner of registered marks in Australia authorised the application of its trade mark on goods by a manufacturer in the foreign country.  The goods were then sold overseas, subsequently bought by an Australian company and then imported into Australia for retail without the knowledge of the foreign owner of the Australian registered mark.

The High Court found that this factual scenario was sufficient to establish that the foreign trade mark owner had used its trade mark in Australia, and so the non-use claim brought against its registered mark in Australia failed. The Court found that the lack of knowledge by the overseas trade mark owner of sales in Australia was not a relevant consideration.

In the Playgro decision, Moschinsky J found that the consideration given to the meaning of ‘use’ in Gallo did not appear to be limited to the context of non-use claims, but also seemed equally applicable to an infringement context.7

On this basis, and without further clarification on this issue, it is difficult to see how overseas manufacturers and distributors are not exposed to potential risks of trade mark infringement claims in Australia even when they are unaware that their goods are being sold in the Australian market by other parties and even where title in those goods has passed in overseas markets.


Playgro Pty Ltd v Playgo Art & Craft Manufactory Limited [2016] FCA 280.

Southern Cross Refrigerating Company v Toowoomba Foundry Proprietary Limited (1953) 91 CLR 592.

3Estex Clothing Manufacturers Pty Ltd v Ellis & Goldstein Ltd [1967] HCA 51.

Universal Music Australia Pty Ltd v Cooper (2005) 150 FCR 1.

Unilever plc v Chefaro Proprietaries Ltd [1994] FSR 135.

E&J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144.

Playgro at [139]

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Lauren has over 12 years’ experience, specialising in insurance litigation and practicing in the areas of workers compensation, compulsory third party and public liability claims...

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Anna has 10 years’ experience practising in property and projects. She has particular expertise in managing large volumes of conveyancing work for developers.

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Thomas is an experienced litigation lawyer with knowledge across a diverse range of litigation practice areas...

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Sam’s practice focuses on estate and succession planning...

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Krisha has 19 years’ workers compensation and common law experience with a particular focus on section 151Z indemnity claims.

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Taleen has significant experience in insurance litigation and advice in workers’ compensation and public liability matters in Western Australia and the Northern Territory...

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Amy practices in insurance litigation and personal injury law.

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Marisa’s practice focuses on common law and statutory benefits claims brought pursuant to the Accident Compensation Act 1985 (Vic) and the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic).

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Catherine is an experienced insurance lawyer who focuses on public liability and property damage claims.

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    Fluent in Italian - Conversational

Jacinta’s current practice includes direct and indirect taxes, business transactions, corporate restructuring, taxation disputes (including pre-audit, audit and litigation), the not-for-profit sector and trusts.

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James has more than 8 years of experience working across a broad range of general commercial transactions and arrangements, including acting in mergers, acquisitions and restructures and drafting general commercial agreements.

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David is an experienced employment and industrial relations lawyer. He acts for a range of local and global clients across a wide range of industries.

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Glenn is an experienced litigator practicing predominately in commercial litigation with a focus on corporate and personal insolvency...

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Barbara works with insurers on CTP and public liability insurance claims involving sensitive and complex matters, often involving multi-defendant and medical causation issues.

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Jessica’s practice concentrates on personal injury litigation management. Jessica focuses on achieving quality outcomes for her clients in worker’s compensation matters, including statutory benefits and common law claims under the Accident Compensation Act and the Workplace Injury Rehabilitation and Compensation Act...

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Ben has a broad knowledge across all disciplines of property, planning and construction and currently acts for clients in a wide range of matters in the firm’s Property & Projects practice.

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Elise's practice focuses on common law and statutory benefits claims brought pursuant to the Accident Compensation Act 1985 (Vic) and the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic) and common law claims brought pursuant to the Transport Accident Act 1986 (Vic).

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    Fluent in Bahasa Indonesia - Conversational

Anthony assists insurers to resolve CTP claims involving complex liability and quantum issues, fraud, catastrophic injuries, nervous shock, multi-defendant matters and administrative law challenges.

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Jane-Elise is an experienced insurance lawyer whose practise focuses on general liability. Her clients include international insurers and large self-insured corporations.

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Adam is an experienced tax lawyer, and advises clients on a range of matters including tax planning and structuring, Division 7A, the small business CGT concessions, corporate restructuring, professional firm structures, trust taxation, the taxation of settlements and cryptocurrency taxation.

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    Fluent in French - Conversational | German - Conversational

Elizabeth is a commercial litigation lawyer who specialises in corporate and commercial dispute resolution, with a particular focus on contractual disputes, consumer law, corporations and equity, real property disputes and insolvency.

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Jennifer has over 10 years’ experience in the insurance industry and has worked in both private practice and in house defending claims under the Personal Injuries Proceedings Act 2002 and the Workers Compensation and Rehabilitation Act 2003.

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Natasha acts for a variety of professionals in the defence of professional negligence and other claims arising out of purely economic loss, property damage, defamation, and alleged breaches of the Australian Consumer Law.

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Felicity is an experienced energy and resources and corporate lawyer, who specialises in general corporate and commercial matters, rail, infrastructure and energy and resources...

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Catherine's expertise include compulsory third party (CTP) and public liability claims, including major claims, section 151z recovery matters and defendant insurance litigation.

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  • Fluent in Bahasa Indonesia - Conversational

Belinda’s practice focuses on the litigation of common law claims brought pursuant to the Transport Accident Act 1986 (Vic) and common law and statutory benefits claims brought pursuant to the Accident Compensation Act 1985 (Vic) and the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic).

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  • Fluent in French - Conversational

Alexandra has experience acting on behalf of and advising both public and private sector clients in a broad range of industries including in the tertiary education, apprenticeship training and retail sectors.

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Sarah is an experienced employment and industrial relations lawyer.  Sarah acts for a range of local and global clients across a wide range of industries in both litigious and non-litigious employment and industrial relations matters.

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    Fluent in Macedonian

Diana specialises in personal injury law and insurance litigation.

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Kate has close to 10 years' experience specialising in succession law including wills, testamentary and discretionary trusts, protective trusts, powers of attorney, appointments of guardian advanced health directives and probate and letters of administration.

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Julian is an experienced senior litigator who has acted in high profile, complex and fiercely contested commercial litigation, public inquiries and investigations on behalf of companies, individuals (including members of parliament) and Government entities...

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Sarah has over 10 years’ experience in workers’ compensation and personal injuries claims. She has worked predominately on workers’ compensation matters in Queensland and more recently in the Western Australian jurisdiction

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Terri is an experienced insurance and litigation lawyer who has defended claims on behalf of domestic and international insurers for a decade...

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Katherine’s practice is predominantly in the area of general commercial dispute resolution and litigation and includes tax litigation and tax audit, contractual disputes, leasing disputes, restraint of trade injunctions, debt recovery, and insolvency and corporations matters.

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George has particular expertise in representing and advising insurers in relation to large scale litigation including class actions, indemnity disputes and insurance fraud claims, as well as public and product liability and professional indemnity claims.

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William specialises in private M&A and general commercial transactions and provides strategic advice on acquisitions, restructures and exits...

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Sheridan specialises in insurance litigation, with particular experience in complex claims and fraud...

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Ben’s practice focuses on common law and statutory benefits claims brought pursuant to the Accident Compensation Act 1985 (Vic) and the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic).

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Clare is passionate, practical and results-oriented employment lawyer who takes pride in providing commercially-minded advice, exceptional communication and effective problem-solving skills to all types of employment, industrial and safety issues.

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Jennifer has significant experience in general insurance litigation. Her experience includes public and product liability, property damage and compulsory third party insurance...

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Jamie is an experienced lawyer with her practice focusing primarily on CTP claims, in particular non-meritorious claims.

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Daniella’s practice focuses on common law and statutory benefit claims in all jurisdictions, where she continuously delivers quality results.

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Rachel is a tax lawyer specialising in direct taxes and tax disputes. Rachel’s areas of experience include advising on a variety of domestic and international tax laws...

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Kate has a broad practice, having experience in public and product liability, professional indemnity, fraud and policy interpretation...

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Holly provides advice and acts on behalf of insurers in a variety of CTP claims including advising on complex quantum and liability issues and representing insurers in the Local and District Courts and the Claims Assessment and Resolution Service.

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Mark has a broad range of experience in corporate and commercial practice areas, with a particular focus on the sports and media industries.

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  • Fluent in Cantonese - Conversational | Mandarin - conversational

Joey’s practice focuses on property acquisitions and sales, property due diligence, contract negotiations, commercial leasing, and foreign investments.

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Jeanette has over 10 years’ experience working in the Asia-Pacific region. She specialises in advising borrowers and financial institutions on bilateral and syndicated financing, as well as cross-border project financing.

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    Fluent in Mandarin - conversational

Tina is experienced in defending public and product liability claims in New South Wales and Queensland on behalf of domestic and international insurers.

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William is an experienced litigator with over 11 years’ experience in both Australia and overseas and currently practices in multiple Australian jurisdictions...

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Stacey has over 6 years’ experience in workers’ compensation law. In addition to her workers’ compensation practice, Stacey has specialised expertise in common law, public liability and asbestos claims.

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David’s practice is predominantly in commercial litigation and insolvency...

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Donna has approximately 20 years’ experience in alternative dispute resolution through her previous roles in the insurance and legal industry...

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Bianca’s commercial dispute resolution and litigation practice extends to include acting for entities and individuals in contractual disputes, high quantum intellectual property disputes, breach of confidence and restraint of trade matters, shareholder oppression claims, partnership disputes, estate disputes and large equitable disputes.

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Nina has 11 years’ broad experience as a commercial lawyer with a specialty in intellectual property and information technology law, and related areas of practice including privacy, data security and competition law.

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Amber has more than 12 years of experience in the legal insurance sphere, and has covered the field, working in State and Federal Government legal practices, private practice and in-house at WorkCover in 2011.

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Hamish is a commercial dispute resolution lawyer. His experience extends to applications for urgent relief, appellate matters and defence of class actions.

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  • Fluent in Bahasa Malaysia - Conversational | Hokkien | Mandarin - conversational

Victoria’s practice focuses on the common law and statutory benefits claims brought pursuant to the Accident Compensation Act 1985 (Vic) and Workplace Injury Rehabilitation and Compensation Act 2013 (Vic).

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With over fourteen years’ experience working in the NSW workers compensation area, Jenny is a highly skilled and proficient lawyer who defends statutory and common law workers compensation claims.

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Toniel’s practice focuses on general insurance advice and litigation. She manages complex and varied matters for a number of high profile insurers and private clients.

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Elisa's practice focuses on common law and statutory benefits claims brought pursuant to the Accident Compensation Act 1985 (Vic) and the Workplace Injury Rehabilitation and Compensation Act 2014 (Vic).

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Hannah practices in general insurance litigation with a particular focus on claims and risk...

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Rebecca's areas of expertise include the preparation of design and construction documents, and construction dispute advice and litigation...

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Jessica practices in employment and workplace relations law and provides strategic advice to clients across a range of industries.

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    Fluent in French - Conversational | Italian - Conversational | Mandarin - conversational

Pia is a Senior Associate in the Commercial Dispute Resolution team with experience across general commercial litigation, banking enforcement and insolvency...

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Markus’ practice focuses on statutory benefits claims brought pursuant to the Accident Compensation Act 1985 (Vic) and Workplace Injury Rehabilitation and Compensation Act 2013 (Vic).

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Martin specialises in insurance litigation, working with insurers on defending compulsory third party claims...

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Liz's practice focuses on state compensation and liability claims. She has developed particular expertise in identifying and managing complex and technical liability and state compensation claims, considering, analysing and providing commercial advice to both insurers and self-insured employers...

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Lauren specialises in resolving disputes, and works collaboratively with her team and with clients to provide strategic advice and success for the client...

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    Fluent in Japanese - Conversational

Kathryn advises and represents clients in a wide range of matters, including general commercial litigation, banking and finance litigation involving mortgages, guarantees and loan agreements, debt recovery and enforcement and corporate insolvency advice.

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Brandon is an experienced insurance litigator specialising in workers’ compensation, medical treatment liability and public liability claims.

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Mitch is an experienced insurance and litigation lawyer who has defended claims on behalf of insurer and private clients as well as state government departments.

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Zoe acts predominately for corporate clients and company directors in cases involving contractual disputes, fraud, corporations and equity matters, competition and consumer law...

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Bridget is an experienced insurance and litigation lawyer who has acted for leading Australian and international insurers and underwriters...

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Shane has a broad commercial and regulatory litigation practice, encompassing investment fund and trustee disputes, banking and company law, financial services, civil and commercial fraud, aviation, construction and infrastructure disputes.

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Belinda is an insurance lawyer with decades of experience over a range of jurisdictions. Belinda is an Accredited Specialist in Personal Injury Law...

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Daisy has extensive experience within the Common Law Workers’ Compensation area. She has also acted in public liability, product liability, medical negligence and CTP cases...

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Ebonie has worked in the area of insurance law since 2011. She has a specific interest in representing employers in workers compensation claims, with her practice encompassing both physical injury and psychological injury claims in both litigated and non-litigated advice matters.

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  • Fluent in Italian - Conversational

Melissa is an experienced insurance lawyer who focuses on advising major national insurers on CTP and public liability claims ranging from homeowners to small businesses.

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    Fluent in Vietnamese - Conversational

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    Fluent in French - Conversational

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    Fluent in Bahasa Indonesia - Conversational | French - Conversational | German - Conversational | Spanish - Conversational

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    Fluent in Mandarin - conversational

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    Fluent in Italian - Conversational

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    Fluent in Bosnian - Conversational | Croatian - Conversational | Serbian

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    Fluent in German

Dr Wolfgang Babeck has more than 20 years’ experience as a corporate and commercial lawyer and is admitted in New South Wales, England & Wales and as Rechtsanwalt in Germany...

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Sumith Perera

Chief Operating Officer

Sumith is the Chief Operating Officer and the national Head of Corporate Services at Hall & Wilcox. He has over 20 years' experience in leading and managing teams at professional services firms.

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Peter is the Client Solutions Director at Hall & Wilcox where he drives their Smarter Law program and fosters innovation at the firm...

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Dean is the Head of Hall & Wilcox’s Finance team. He has over 15 years’ experience in finance within professional services firms.

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Katie is the Director of People & Culture for Hall & Wilcox. She has over 20 years’ experience in the legal industry.

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Melanie is the national head of Hall & Wilcox’s Business Development, Marketing & Communications team...

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Mike manages the Legal Excellence & Risk team at Hall & Wilcox and is responsible for the firm’s precedents, risk management and general counsel/company secretarial functions.

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    Fluent in Dutch - Conversational

Janneke is the operations manager and head of operations nationally at Hall & Wilcox. She has over 15 years’ experience in human resources and project management across a variety of industries, including professional services, IT, banking and utilities...

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    Fluent in Hindi

Pious is the IT manager and head of IT nationally at Hall & Wilcox. He has over 18 years’ experience as a senior IT executive with a proven track record in legal and government technology management sectors.

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Melinda is the national marketing and communications manager at Hall & Wilcox. She has more than 20 years’ experience as a journalist, content creator and marketing communications specialist at professional services firms.

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Corporate and Financial Services Reform Update March 2007

The first tranche of draft regulations was released for public consultation on 26 March 2007 as part of the Corporations and Financial Services Regulation Review process. Some key issues dealt with in the first round of draft regulations are set out below: Keeping Financial Services Guides and Product Disclosure Statements up to date Where there […]

Thinking | Mon 05 2007

Compensation Arrangements for Financial Services Providers

Yesterday the Parliamentary Secretary to the Treasurer (Chris Pearce), announced that regulations to complement section 912B of the Corporations Act 2001 (the Act) are expected to be made by 1 July 2007. The Act requires financial services licensees that provide financial services to retail clients to have in place appropriate compensation arrangements. The arrangements must either be approved […]