Fanco Fan Marketing Pte Ltd v Triple D Trading Pte Ltd [2025] SGHCR 15

Costs

The purpose of an account of profits is to disgorge the benefits which the tortfeasor ought not to retain. It seeks to prevent unjust enrichment but it does not seek to punish the tortfeasor (Dart Industries Inc v Décor Corporation Pty Ltd and another [1993] 179 CLR 101 (“Dart Industries”) at 572). In line with this, the court is concerned with the profits (ie, all financial gains) actually made by the tortfeasor (Main-Line Corporate Holdings Ltd v United Overseas Bank Ltd and another (First Currency Choice Pte Ltd, third party) [2011] SGHC 268 (“Main-Line”) at [23]). However, it is not uncommon that a claimant may experience difficulties adducing evidence of the defendant’s revenue and costs and expenses as these would invariably lie within the scope of the defendant’s knowledge. As such, what is required is essentially “a judicial estimation of the available indications” to assess the actual profits made. The court must do the best it can on the whole of the material before it (Bosch Corp v Wiedson International (S) Pte Ltd and others and another suit [2015] SGHC 105 (“Bosch Corp”) at [29]).

Costs

The difficulty in this account of profits inquiry arises from the paucity of documentary evidence of the defendant’s revenue and costs. Having carefully considered the evidence before me and the submissions made by the parties, I find that the defendant is liable to pay the sum of $316,590.18 to the claimant in account of the profits made in respect of its acts of passing off.

Costs

The claimant brought this Suit on 2 November 2022. In SUM 4552, it successfully obtained summary judgment against the defendant in its claim in passing off on 29 September 2023. Gill J granted an injunction restraining the defendant from passing off or attempting to pass off, by manufacturing, advertising, marketing, offering for sale, selling, distributing, supplying, importing or exporting fans by reference to the sign “COFAN" or any other sign identical or similar to the claimant's trade mark “CO-FAN", not being the claimant’s fans, as and for the claimant’s fans or as being connected to or associated with the claimant. Gill J also ordered an inquiry as to damages or, at the claimant’s election, an account of profits, together with an order for payment of all sums found due to the claimant with interest and reserved costs until after the inquiry as to damages or the account of profits.

Costs

By way of letter dated 7 March 2024, the defendant disclosed an unaudited summary breakdown of its sales of “COFAN” fans in Singapore (“Summary Breakdown”) from 1 August 2021 to 31 October 2022 to the claimant. The Summary Breakdown states that the total revenue generated by the claimant was $235,448.62 for the sale of 1,558 “COFAN” fans, the costs was $144,894 and the gross profit was $90,554.62. However, the defendant did not disclose any source documents for the Summary Breakdown because the source documents have allegedly been misplaced in a shifting of the defendant’s office from Yishun Bizhub to 21 Bukit Batok Crescent #02-75 WCEGA Tower Singapore 658065 (“WCEGA Tower Premises”).

Costs

On 11 April 2024, the claimant filed HC/SUM 960/2024 (“SUM 960”), an application for disclosure of documents, so that it could make an informed election between damages and an account of profits. The claimant sought all the invoices issued by the defendant relating to its sales of “COFAN” fans, all invoices issued by manufacturers or suppliers to show the costs of “COFAN” fans and all other costs and expenses in relation to the manufacture, distribution and sale of “COFAN” fans sold in Singapore. The defendant contested SUM 960 on the basis that there were no further documents in its possession and control that may be disclosed.

Costs

The learned assistant registrar Reuben Ong (“the AR”) granted the application on 28 May 2024 and ordered the defendant to disclose documents and information relating to its sales of “COFAN” fans in Singapore, costs and expenses attributable to the manufacture, distribution and sale of its “COFAN” fans sold in Singapore. Notwithstanding that the defendant deposed on affidavit that the documents were not in its possession or control, the learned AR found that there was a reasonable suspicion that the documents were in the defendant’s possession and control.

Costs

The claimant also submits that no deductions for costs should be made since the defendant has not met its burden of proof show that there are costs and expenses that should be deducted from its revenue. Alternatively, any deduction should be limited to manufacturing costs of no more than $79 per fan and the sum liable to be accounted should be $326,527.54.

Costs

The defendant’s position is that the material period in which the acts of passing off occurred is from 2 May 2021 to 31 October 2022. However, its position on the profits generated in this period is inconsistent. In the Summary Breakdown, the defendant says that the “gross profit” is $90,554.62. In Mr Phua’s affidavit of evidence in chief (“AEIC”), he says that there were other costs incurred of $65,554.62 and the total profit made by the defendant is $25,000.00 to $35,834.00. In closing submissions, the defendant takes the position that there are no profits made by the defendant given that it suffered losses on the sale of the “COFAN” fans.

Costs

Alternatively, the defendant is not opposed to the extrapolation method being applied but contests that there should be deduction for costs. However, the extrapolation of the material period from the claimant’s figure of $680,052.54 should be such that the total revenue is $666,451.49 (547 days / 557 days x $680,052.24). A 50% margin of error should be applied in favour of the defendant to bring the sum to $333,225.75 (50% of $666.451.49) because the Summary Breakdown was finalised without the source documents which were misplaced and profits could be overstated.

Costs

Further, costs are to be deducted. The net profit margin of the sales ought to be calculated by taking the selling price (as 100%) and deducting the estimated cost of inventory as a percentage of sales (as 52%), estimated cost of other goods sold as a percentage of sales (as 9%) and estimated other variable costs as a percentage of sales (as 11%). In this regard, the above percentages are calculated as follows:

Costs

The court’s approach in an account of profits is to determine the actual profit made by the tortfeasor which is attributed to the tortious acts. The costs and expenses (ie, outgoings) from revenue may be deducted in arriving at the quantum accountable as profits. As far as revenue is concerned, the burden of proof is on the claimant to prove the defendant’s revenue (Bosch Corp at [21]). If the profits are generated by a chain of activities and the tortious acts occupy a part of this chain, the tortfeasor need only account for the portion of profits attributable to the tortious acts (Bosch Corp at [10]; Main-line at [25] and [27]).

Costs

Turning to costs and expenses, the defendant bears the burden of persuading the court, by evidence, what costs should be properly deducted from revenue in order to determine the actual profits made (Bugatti GMBH v Shine Forever Men Pty Ltd [2014] FCA 171 (“Bugatti”) at [14]). Outgoings may take the form of direct or indirect costs. Direct costs are those associated solely with the tortious product such as manufacturing costs or delivery costs of delivering the tortious product. The defendant is entitled to seek a deduction of these direct costs from revenue to arrive at the profits to be accounted for. Indirect costs take the form of general overheads which cannot be allocated to any specific product but may support a range of products. This could include rent, plant, taxes, insurance, equipment and other office and managerial costs (Main-Line at [26]; Bugatti at [14] citing Unilin Beeher BV v Huili Building Materials Pty Ltd (No 2) [2007] 74 IPR 345 at 366 (“Unilin Beeher”); Dart Industries at 581; OOO Abbott v Design and Display Ltd [2017] EWHC 932 (“OOO Abbott”) at [57]). For general overheads, the court will need to consider whether the overhead is attributable to the tortious acts and the proportion which ought to be allowed (Main-Line at [26] citing Dart Industries and Main-Line Corporate Holdings Ltd v United Overseas Bank Ltd [2010] 2 SLR 986 at [24] and [26]). That said, it has been observed that it is notoriously difficult in cases involving the sale of a range of products to isolate those costs and expenses which are attributable to the tortious products and those which are not so attributable (Dart Industries at 572).

Costs

The majority of the High Court of Australia in Dart Industries, comprising Mason CJ, Deane, Dawson and Toohey JJ, held that it would ordinarily be appropriate to attribute to the infringing product a proportion of general overheads which sustained the capacity that would have been utilised by an alternative product and that was in fact utilised by the infringing product. However, if no opportunity was forgone and the overheads involved were costs that were incurred in any event, then it was not appropriate to attribute them to the infringing products. If not, the defendant would be in a better position that it would have been in if it had not infringed. It is not relevant that the product could not have been manufactured or sold without these overheads and nor is it relevant that the absorption method of accounting (ie, a costing method whereby general overheads are apportioned by some appropriate means such as sales or volume to the manufacture or sale of each product) would attribute a proportion of the overheads to the infringing product (at 574 and 575).

Costs

An example of an instance where it was not appropriate to allow a deduction for general overheads can be found in Windeyer J’s decision in Colbeam Palmer Ltd v Stock Affiliates Pty Ltd [1972] RPC 303 (“Colbeam Palmer”) at 312. This was a case of trade mark infringement in which Windeyer J ordered an account of profits and held that costs directly attributable to the sales of the infringing product may be deducted but general overhead costs and managerial expenses of the defendant’s business should not be deducted because all these would have been incurred in any event in the ordinary course of business and the evidence showed that the infringing products were a “side line”. The majority in Dart Industries explained that the reasoning in Colbeam Palmer was that there appeared to have been unused capacity in the defendant’s business in the form of overheads which would have been incurred whether or not the infringing products had been sold or delivered. The sale and delivery of the infringing products took up that surplus capacity or some of it and none of the overhead costs was attributable to the infringing activities because those costs would have been incurred in any event (at 574).

Costs

I note that McHugh J, in his dissenting opinion in Dart Industries, appears to have taken a different view. His view was that the absorption method of cost accounting is the appropriate method of accounting for general overheads (589 and 590). The learned judge held that the test was that any part of the general overheads of the infringer which assisted in deriving gross revenue from the infringing articles would be a relevant cost of that article and a deductible expense (at 582). This is based on the assumption that a rational entrepreneur who cannot produce a product because it infringes property rights will choose the next best alternative and the general overheads will be partially absorbed into the cost of the substitute product. Even if the next best alternative is to produce nothing, the defendant still has the option of reducing some of its overheads (at 582). Any smallness of the sales volume is not a ground for refusing to allocate any proportion of overheads to the infringing product. Further, the plaintiff must take the business of the infringer as it is and it is irrelevant that the defendant could have used their resources in a more efficient way (at 590). In considering Colbeam Palmer, the learned judge opined that the argument that overhead is a necessary element of production of any good and the concept of opportunity cost is as applicable to “side line” activities as to other activities. If the infringer can prove that its overhead assisted the production or sale of the sideline product and can provide a fair and reasonable method of allocation, it is difficult to see why a proportion of overhead should not be allowed (at 591).

Costs

I am more persuaded by the reasoning of the majority in Dart Industries over that of McHugh J in his dissenting opinion. Notwithstanding that it appears intuitively attractive to deduct a proportion of the overheads incurred if it can be shown to have assisted in the production or sale of the infringing/tortious product, the better question to ask is whether the general overhead is attributable to the tortious acts as per the reasoning of the majority in Dart Industries. If the overhead would be incurred in any event and no opportunity cost was forgone, then it may be just not to attribute any part of the overhead to the tortious acts even if the overhead can be said to have assisted in the generation of revenue from the tortious acts (at [29] above). This would guard against the unjust enrichment of the defendant by placing it in a better position that if it had not infringed. The concept of attribution therefore appears to be better placed to evaluate the evidence in support of each proposed deduction of general overheads.

Costs

Turning to the first consideration at [34(a)] above, where the defendant can adduce evidence to establish that the overhead increased by a certain amount as a result of the manufacture or sale of the tortious product or reduced had the tortious product not been produced, it may be appropriate to attribute the deduction in overhead costs to the tortious product. However, if the overhead would have been incurred in any event, it may not necessarily be appropriate to attribute it to the manufacture or sale of the tortious product (Dart Industries at 575). In the rather unlikely scenario that the overhead reduced by a certain amount because of the manufacture or sale of the tortious product, it is arguable that the reduction of costs of the non-tortious products ought to be attributable to the tortious products and accounted for appropriately as well.

Costs

As for the second consideration at [34(b)] above, whether the defendant’s business is running to capacity allows the court to draw an inference as to whether the defendant had forgone an opportunity to make and sell other non-tortious products in substitution of the tortious products. Opportunity costs refer to the value of the alternative forgone by adopting a particular strategy or employing resources in a particular manner (Dart Industries at 574). If the defendant’s business is not running to capacity and the defendant has not foregone an opportunity to make and sell other non-tortious products by reason of the acts of passing off, attributing a proportion of such overheads to the tortious acts may allow the defendant to profit from its unlawful activity (Hollister at [85] and [86]). However, if the defendant’s business is running to capacity, it would be easily inferred that the defendant would have replaced the sale of the tortious products with non-tortious products and the tortfeasor would have incurred the opportunity cost to sell non-tortious products because of the tortious acts. This would weigh in favour of attributing to the tortious product a proportion of the general overheads which would have sustained the opportunity (Dart Industries at 575; OOO Abbott at [54]).

Costs

I reject the defendant’s submission that a 50% margin of error should be applied in favour of the defendant because the Summary Breakdown was finalised without the source documents which were misplaced and profits could be overstated. The defendant relies on the observations of Tay Yong Kwang J (as he then was) in Bosch Corp to support its submission. In that case, there was a paucity of documents because the defendant (who infringed the trade mark) did not disclose any documents of its revenue and costs and the plaintiff was limited to a few hundred of documents seized in a raid (at [3], [11] and [15]). The plaintiff submitted that 5.5% of the total revenue over the infringement period were attributable to infringement sales because 5.5% of the total revenue from sales in the seized documents were attributable to infringement sales (at [24]). Tay J held that this extrapolation assumed that the proportion of infringement sales in the seized documents was not materially different from the proportion of overall infringement sales. However, this assumption may not be completely correct because the raid was conducted in a targeted fashion and the profits could be overstated. The learned judge applied a 50% margin of error in favour of the defendants which he observed was a generous margin “more than adequate to correct any over-estimation of profits” (at [27] and [28]).

Costs

The claimant submits that no deduction ought to be permitted for the defendant’s costs and expenses in the absence of supporting documents from the defendant but, alternatively, any deduction should not be more than $79 per fan to account for the manufacturing costs of the fans.

Costs

I observe that the defendant’s conduct in these assessment proceedings can only be described as lackadaisical. It fails to adduce any supporting evidence evidencing its costs and expenses in relation to the manufacture, sale and distribution of “COFAN” fans. Instead, Mr Phua merely makes bare assertions of the estimated costs or relies on estimates given by Mr Quek. As I explain below, these information is well been within the defendant’s knowledge and control. It can reasonably be expected to gather supporting documents to support its own case on the costs incurred for the sale of the “COFAN” fans but the defendant inexplicably chose not to do so. It goes without saying that the court would be reticent to accept bare assertions as the gospel truth as that would effectively allow the defendant to manipulate the account of profits inquiry to its benefit.

Costs

That said, having regard to the rationale of an account of profits which is not to penalise the defendant but to disgorge the actual profit made by the tortfeasor, the court will also be mindful not to unduly punish the defendant even in cases where there is a paucity of evidence arising from the defendant’s conduct. In my view, allowing reasonable deductions for costs and expenses that is justified on the evidence before me would strike the appropriate balance. I therefore proceed to consider each of the costs and expenses sought to be deducted by the defendant in turn.

Costs

The defendant’s Summary Breakdown states that $93 is the “average cost per unit” but Mr Phua averred in his AEIC that the cost price of each fan is $85. No supporting documents were adduced by the defendant and no explanation was given for this discrepancy. Mr Quek testified that the cost price of each fan for the claimant is between $79 and $82. In view of this, the defendant submits that a fair estimate should be $82.

Costs

I note that the figures submitted by parties are quite close and it is clear that the defendant must have incurred manufacturing costs in order to sell the “COFAN” fans. Despite the fact that the defendant could have but inexplicably chose not to adduce evidence of its cost price, I grant an indulgence to the defendant and assess the cost price of manufacturing each fan at $79 on the basis that the range of manufacturing costs for the claimant’s “CO-FAN” fans is not likely to be different from the defendant’s “COFAN” fans. I reject the claimant’s submission that a discount should be given since the defendant fails to adduce evidence that their “COFAN” fans are similar in quality to the claimant’s fan such that the claimant’s cost price of $79 per fan may be used to approximate the defendant’s cost price. I am of the view that it would be speculative to say that the defendant’s quality of fans is inferior to the claimant’s quality of fans which would justify a discount. Further, the “COFAN” fans appear to be nearly identical to the claimant’s HELI fans in this case (Invalidation Judgment at [54]). Thus, the costs to be deducted for manufacturing costs is $342,623 based on $79 per fan multiplied by 4337 fans (see [52] above).

Costs

The defendant submits that the transport and logistics cost for each fan to be shipped from China to Singapore is $15 taking into account that market conditions and seasonal changes may affect the price. This is based on Mr Phua’s estimation as stated in his AEIC but the defendant again did not provide any evidence supporting this assertion. In its written submissions, the defendant included a graph named “World Container Index” (see Figure 1 below) developed by a maritime research and consulting firm that provides freight rates on eight major routes to/from the US, Europe and Asia.

Costs

The claimant submits that Figure 1 should be disregarded given that it is evidence from the bar and the defendant fails to adduce any supporting evidence. It also points out that the footnote to Figure 1 states the following: “Source: Drewry, in USD/40ft container, including BAF & THC both ends, 8 individual routes, excluding intra-Asia routes” and that all the eight routes referred to are long-haul cross-continental routes and China to Singapore is not amongst them. Under cross-examination, Mr Quek testified that the transport and logistics costs incurred by the claimant would be $1,200 containers for 1600 fans such that each fan would incur $0.75.

Costs

In my view, the defendant is not entitled to rely on the graph in Figure 1 to discredit Mr Quek’s proposed estimate as it is evidence from the bar. I agree with the claimant that, even if Figure 1 was adduced in Mr Phua’s AEIC, this does not assist the defendant as it does not provide an estimated freight cost for a shipment from China to Singapore during the relevant time period. Yet, it is not disputed that the defendant would have incurred shipping costs to import the “COFAN” fans to Singapore. As the true freight costs of the shipments paid by the defendant is within the defendant’s knowledge, its inexplicable failure to produce any supporting documents to support its estimate of $15 means that the court ought to view its estimate with greater circumspection. Even if the receipts or invoices issued by the defendant’s suppliers were lost or misplaced, the defendant could have contacted its counterparts and adduced evidence from them to support its version of events. Since it chose not to do so, it is an indulgence towards the defendant to nonetheless allow a deduction for shipping costs based on Mr Quek’s estimated costs of $0.75 per fan as a reasonable estimate of the defendant’s costs. Accordingly, the costs to be deducted for shipping costs is $3,252.75 ($0.75 multiplied by 4337 fans).

Costs

In respect of general overheads, the defendant’s case is that $35 should be deducted for each fan to account for other variable costs such as rental, staff salary and other incidental expenses. The defendant submits that these costs are not shared despite the defendant selling BESTAR fans and other lines. Considering Mr Quek’s testimony that the storage, transportation, warranty and other expenses would be $1 for each fan, the defendant suggests taking the average of $18 per fan to account for variable costs.

Costs

The claimant argues that there should be no deduction for any variable costs given the absence of any supporting documents or even a cogent explanation of how these figures have been arrived at. In any case, all these variable costs have not been shown to be attributable to the defendant’s sale of “COFAN” fans because these costs would have been incurred even if the defendant was not selling “COFAN” fans. The claimant relies on Mr Phua’s testimony that 90% of the defendant’s business is attributed to “BESTAR” while “COFAN” only made up a small part of the business to argue that the defendant’s overheads (be it rental, staff costs or delivery costs) would have been incurred anyway even if the defendant was not selling “COFAN” fans.

Costs

I disregard the defendant’s estimate of $35 for variable costs since it fails to even break down the components of this estimate or provide any evidence to support it. It is also rather arbitrary and unsatisfactory to simply adopt the midpoint of $18 dollars based on estimates from Mr Phua and Mr Quek. The proper approach is to consider whether the defendant has discharged its burden of proof to show the quantum of overhead incurred, the overhead incurred is attributable to the sale of the “COFAN” fans and there is a reasonably acceptable basis for the allocation of a proportion of the overhead to the “COFAN” fans (see [29]–[37] above).

Costs

For rental costs, Mr Phua testified that the rent for each unit at Yishun Bizhub, namely #02-91 and #02-92, was $3,500 at the material time. There are no shared costs between “COFAN” and “BESTAR” because #02-91 is used for “BESTAR” and #02-92 is used for “COFAN”. Alternatively, he estimates that the rental costs should be apportioned in a 70-30 ratio in favour of “BESTAR”. The defendant seeks a deduction of $37,800 of rental costs based on rent of $3,500 multiplied by two units over the material period of 18 months and at a 30% apportionment to “COFAN”.

Costs

In my view, Mr Phua’s position that #02-92 was used for “COFAN” and #02-91 was used for “BESTAR” is untenable. It is contradicted by even his own testimony at trial. There is no evidence to suggest that #02-92 was only rented when the defendant began selling “COFAN” fans such that the rental overheads could be said to have increased as a result of the tortious acts or that the storage space in #02-92 was required for the storage of the “COFAN” fans. As such, I find that the rental costs are shared between “BESTAR” and “COFAN”. However, this does not mean that rental costs must invariably be attributed to “COFAN”.

Costs

I disallow a deduction based on rental costs for the following reasons. First, the defendant fails to discharge its evidential burden to prove the amount of rent incurred as a general overhead (see [68] above). Second, the rental costs are not attributable to the sale of “COFAN” fans. Given that “COFAN” only represents 10% of the defendant’s sales and #02-92 also contains the offices of the defendant’s staff, I am of the view that the rental costs for #02-92 would have been incurred in any case even if the defendant did not sell “COFAN” fans. This is also supported by the fact that even after the defendant ceased selling the “COFAN” fans on 1 November 2022, it is Mr Phua’s evidence that the defendant did not stop renting #02-92. There is also no evidence that the defendant was operating at full capacity such that it had forgone the opportunity to sell more “BESTAR” fans because there was no storage space in the units or that, but for the sale of “COFAN” fans, it would have sold more “BESTAR” fans. The defendant has not established that it incurred any opportunity cost as a result of the storage of “COFAN” fans and there is nothing to indicate that the sale of “COFAN” fans would have been replaced by the sale of other fans. Finally, I see no reasonable basis for Mr Phua’s estimate that 30% of the rental for both units be attributed to “COFAN”.

Costs

Mr Phua testified that the defendant had two vehicles on hire purchase that each cost $1200 or $1250 a month and incurred other costs such as petrol and parking that add up to more than $1000 each month during the material period. He also testified that there is one dedicated van for COFAN and therefore there is no shared costs.

Costs

The claimant submits that Mr Phua’s assertion that one van was dedicated exclusively for COFAN was unbelievable. Given that “COFAN” fans represent only 10% of the defendant’s sales, his explanation that this was done for easier accounting even though it would lead to increased costs is unbelievable.

Costs

In my view, Mr Phua’s evidence in this respect is incredulous. When he was asked what would happen if one of his customers ordered four “BESTAR” fans and two “COFAN” fans, he responded that the customer would receive deliveries from the two different vehicles because it is “easier to do all the accounting” notwithstanding that this would increase costs. I find his response to be illogical. While businesses have divergent practices and some businesses may well be inefficient, the court will be less likely to believe self-serving explanations that are commercially impractical. It would not make commercial sense for there to be such a strict demarcation of the use of the two vehicles on hire purchase especially given that “COFAN” sales only amount to 10% of the defendant’s sales. Again, the defendant fails to adduce any evidence supporting this version of events such as whether one of the vehicles was hired only at the time the defendant started selling “COFAN” fans. I find his explanation contrived and have no hesitation in rejecting his evidence. The hire purchase costs of the two vehicles are therefore shared costs.

Costs

I disallow a deduction for vehicle costs for the following reasons. First, the defendant fails to discharge its evidential burden to prove the quantum of hire purchase costs incurred as a general overhead. Again, the defendant fails to adduce any evidence of the quantum of monthly hire purchase payments or petrol or parking costs and merely makes a bare estimate of $1200 or $1250 a month for each vehicle. Second, the vehicle costs are not attributable to the sale of “COFAN” fans. Considering that the sales of “BESTAR” fans amounts to 90% of the defendant’s sales and Mr Phua’s testimony that the defendant retained the two vehicles even after it stopped selling “COFAN” fans, I find on a balance of probabilities that the costs of the two vehicles would have been incurred in any event even if the defendant did not sell “COFAN” fans. The defendant also fails to adduce any evidence that it was operating at full capacity such that the use of the vehicles for delivery of “BESTAR” fans was limited because of deliveries of “COFAN” fans which may have raised the possibility that the defendant had forgone the opportunity to make more deliveries of “BESTAR” fans. Finally, the defendant fails to offer a reasonably acceptable basis for the proportion of the overhead to be allocated to the “COFAN” fans.

Costs

I reject the defendant’s submission that the three staff members worked solely on “COFAN”. Mr Phua testified that each distributor would have a dedicated staff responsible to attending to all its enquiries. This means that if Michael was doing sales and his customers wanted to enquire about “BESTAR” fans, he would have to answer queries and place orders on it. In my view, this is practical and commercially sensible. There are several invoices that are “mixed” in that they contain orders for both “BESTAR” fans and “COFAN” fans and were issued in a single invoice. This shows that there is unlikely to be a strict demarcation of staff responsibilities to only “COFAN”. Further, given that “COFAN” sales only make up 10% of the defendant’s sales, it is unpersuasive to suggest that the defendant would limit Michael’s role to only “COFAN” sales. The defendant fails to adduce sufficient evidence to establish that the work functions of the other two staff were solely for “COFAN”. It is telling that the defendant chose not to detail the names of these staff in Mr Phua’s AEIC or call any of these employees to give evidence that their work functions were solely limited to “COFAN”. As such, there is no basis for me to accept Mr Phua’s bare assertions given at trial that the salary costs of the three staff members are solely for “COFAN”.

Costs

Despite the defendant’s claims that it maintained separate accounts and separate invoicing, it fails to produce even a shred of evidence to show that staff salary was accounted for in that manner, invoices were issued in that manner or that delivery of goods were effected in that manner. I accept on a balance of probabilities that it is more likely that the defendant did not have a strict separation of responsibilities for the three staff such that they only did work for “COFAN”. I consider the costs of salary for all the defendant’s staff to be shared between “BESTAR” and “COFAN”.

Costs

I disallow the deduction of salary costs as well. The defendant fails to adduce evidence of the staff’s salaries. It is also not appropriate to attribute the costs of staff’s salaries to the sale of “COFAN” fans. I note that the defendant did not lay off the three staff after the defendant stopped selling “COFAN” fans but redeployed them to support “BESTAR”. In my view, considering that “COFAN” fans represent only 10% of the defendant’s sales, the staff expenses would have been incurred in any case even if the defendant had not been selling “COFAN” fans as they would be working on the “BESTAR” sales. There is also no evidence that the defendant’s staff was operating at full capacity such that it forgone the opportunity to sell more “BESTAR” fans because there was a lack of capacity of staff to manage the sales of “BESTAR” fans. No reasonably acceptable basis for the proportion of the staff salaries to be allocated to the sale of “COFAN” fans has been provided by the defendant as well.

Costs

The defendant submits that the costs of the sample fans that were given away to customers are accounted for as part of the $35 of variable costs it seeks. I note from Annex A of the claimant’s closing submissions that the defendant gave away 138 “COFAN” fans free of charge as recorded in the invoices and this figure is not disputed by the defendant. In my view, this is a direct cost of marketing for the sale of “COFAN” fans as these costs were incurred as part of the launch period of the “COFAN” fans. Thus, I allow a deduction of $10,902 ($79 multiplied by 138 fans).

Costs

As regards costs and disbursements, the claimant seeks indemnity costs at one-third more than the costs sought on a standard basis. The claimant submits that indemnity costs is justified because the defendant was unreasonable in its conduct before and during the proceedings and its conduct in relation to amicable dispute resolution. The main points it raises are: (a) the defendant’s attempt to obfuscate its profits has resulted in costs wastage and delay to proceedings; (b) Mr Phua had altered digital photographs and adduced it as evidence in court; (c) Mr Phua gave inconsistent evidence in the examination of judgment debtor proceedings and these proceedings; and (d) the defendant unreasonably refused to accept the claimant’s offer to settle the claim by stopping the acts of passing off before the commencement of the Suit on 28 September 2022 and another offer to settle for $120,000.00 in October 2023.

Costs

It is trite that the court will only award indemnity costs in exceptional circumstances “when it is clearly just or appropriate to do so” and it is the exception rather than the norm. The court must ask itself whether the party’s conduct was so unreasonable (as opposed to conduct that attracts moral condemnation) such as to justify indemnity costs. Such conduct must reflect a high degree of unreasonableness and cannot merely be wrong or misguided in hindsight. However, it need not rise to the level of dishonesty or moral iniquity for it to attract indemnity costs (QBE Insurance (Singapore) Pte Ltd and another v Relax Beach Co Ltd [2023] SGCA 45 at [35]–[38]; GTMS Construction Pte Ltd v Ser Kim Koi (Chan Sau Yau (formerly trading as Chan Sau Yan Associates) and another, third parties) [2021] SGHC 33 at [10]–[14] and Airtrust (Hong Kong) Ltd v PH Hydraulics & Engineering Pte Ltd [2016] 5 SLR 103 at [17], [23] and [50]).

Costs

I decline to award indemnity costs because I am not satisfied that the defendant’s conduct had such a high degree of unreasonableness as to justify an award of indemnity costs. While I accept that the claimant had made reasonable offers to settle the proceedings and the fact that the amount awarded in these proceedings significantly exceed those offers must surely be taken into account for costs, I am unable to say that the defendant was highly unreasonable in its conduct in the settlement negotiations. I note that it made an offer to settle the proceedings on 31 July 2024 at the sum of $165,000.00 but this was not accepted by the claimant. As for the conduct of Mr Phua and the defendant, I have explained above at [43]–[50] that I do not believe the defendant’s explanations regarding the source documents that were allegedly lost during the shifting of the defendant’s office, the alteration of the photographs of the units at the WCEGA Tower Premises, and the inconsistent evidence given by Mr Phua regarding access to the WCEGA Tower Premises, I do not find that the evidence before me shows that this Suit was an abuse of process on the part of the defendant or that any unreasonableness of the defendant’s conduct rises to the high threshold required for indemnity costs.

Costs

In terms of the quantum of costs, the claimant seeks a total of $161,000, based on $90,000 for pre-trial costs, $36,000 for trial and $35,000 for post-trial work. The defendant submits that $15,000 for pre-trial costs, $$12,000 for trial and $15,000 for post-trial costs is appropriate. Given that Gill J had reserved costs of SUM 4552 until after these proceedings (see [12] above), parties agree that any pre-trial costs sought should be limited to costs incurred after summary judgment.

Costs

I consider that fixing costs at $60,000 comprising $20,000 for pre-trial costs (which is limited to pre-trial costs incurred after SUM 4552 was decided), $20,000 for trial (based on $10,000 per day for two days) and $20,000 for post-trial work is appropriate for the following reasons:

Costs

In sum, I find that the total revenue generated by the defendant for the sale of “COFAN” fans during the material period is $673,367.93 (see [52] above) and the costs to be deducted are $342,623 (see [59] above), $3,252.75 (see [62] above) and $10,902 (see [81] above). The defendant is accordingly liable to pay the sum of $316,590.18 to the claimant in account of the profits it made in respect of its acts of passing off.

Costs

Costs is fixed at $60,000.00 and disbursements is fixed at $14,750 (as agreed by parties) (see [89] above) to be paid by the defendant to the claimant forthwith.