/cust-web/h/d/E1111111/sites/www.testsite.com.au/html/testshop/admin/../images/products/
is the equivalent of:
/cust-web/h/d/E1111111/sites/www.testsite.com.au/html/testshop/images/products/
the error is saying that the folder:
/html/testshop/images/products/
does not have the proper permissions to allow the uploaded image to be copied there.
double check the upload folder permissions to make sure they allow write access.