Johns and Lyng Group Pty Ltd v Eldawood Enterprises Pty Ltd
[1987] FCA 153
•6 Apr 1987
| -.. | FOR | NOT | GENERAL | D I S T R I B U T I O N |
53
IN THE FEDERAL COURT OF AUSTRALIA !
V I C T O R I A D I S T X I C T P E G I S T R Y ) V . No. G 206 of 1984 I GENERAL DIVISION
JOHNS Si LYNG GROUP FT;'. L T D .
I formerly known as h X I T E I N C H PT?. LTD.
and C L A S 3 I C T I M E R FRIODUCTS PT?. LTD. 1 Appllcant and
ELDAWOOD E N T E R P R I S E S PTY. LTD. (formerly known as
CLASSIC TIMBER PRODUCTS (AUST.) F T Y . L T D . ) and
CHARLES CARLYLE BRYANT Respondents
COTJRT: NORTHROF J .
DATE: 6 APRIL 1 ~ 7
PLACE: MELBOURNE
MINUTES OF [ORDER
THE COURT ORDERS THAT: -
Rules of Court.)
1. The applicatlon be dismlssed. A. Tfie applicant pay four flfths of the respondents' costs
(Settlement and entry of Orders 1s dealt wlth in IN THE FEDERAL COURT OF AUSTRALIA )
i
VICTORIA DISTZICT REGISTZY ) V. No. G 2136 of 1384 JOHNS L L m G GROUP FTY. LTD.
JOHNS L L m G GROUP FTY. LTD.
(formerly known as WHITEINCH FTY. LTD. (formerly known as WHITEINCH FTY. LTD. and CLASSIC TIMBER PRODUCTS FTY. LTD.)
and CLASSIC TIMBER PRODUCTS FTY. LTD.) Applicant and
ELDAWOOD ENTERPRISES FTY. LTD.
(formerly known as
CLASSIC TIMBER FPODUCTS
(AUST. FTY. LTD. ) and CHARLES CARLYLE BRYANT Respondents
COURT: NORTHROF J.
m: 6 AFRIL 1987
W: MELBOURNE:
SEASONS FOR JUDGMENT
It is most unfortunate that these proceedmgs came
on for trlal. The trlal was lengthy and the costs incurred by each party must be very large. From a conslderatlon of the whole of the evidence, I have formed the opinion that the parties to these proceedings are each innocent of any wrong doing but were caught up in legal proceedmgs which got out of control. To a large extent, the proceedings got out of control because of the deplorable standard of the pleadings
and the fact that the pleadings did not raise clearly the true lssues between the partles. Thus the amended statement of claim was a prollx document tcontainlnq 31 paragraphs. The
defence tG the amended statement of clalm contalned 21 paragraphs each paragraph of x h r h was elther a non admlsslon
or a denlal of the allegations contalned ln each paragraph ofthe stat2ment of slalm. h c h a pleading 1s not of a standard
suitable to the prartlce and procedure of this Court and this
matter wlll be mentloned later I n conslderlng the question of costs. As a result of the Foor standard of pleadings, the
hearing of the proceedlngs t o o k on aspects of a fishmgexpedition. Many matters were raised which, as lt turned
out, were not relevant to the issues that have to be decided by this Court in these proceedings. The length of the
hearing was extended unduly. On a number of occasions durlng the hearing, the Court questioned the relevance of evidence,
but because the issues had not been identified by the pleadlngs, I was not sufficiently certain of them at the time to be able to exclude the evidence on the ground of belng irrelevant to any issue between the parties. Much time was spent on the question of the credibility of the respondent,
Charles Carlyle Eryant ("Bryant") , but I should state immedlately that I have formed the vlew that he xas a wltness of truth who at all relevant tlmes was doing his best to help and asslst the appllcant. Because of the oplnlons I have
formed, It is not npcessary for me to conslder much of the evidence glven at the hearing of these praceedlngs.
Ar. z u t l l n e 4 f ; the relevant farts ;;l11 aasrst In an
understandlnq s=f tihs case. In Play 1381, the respondent,
formerly kncxc 2: ClasaLc Tlmber Frodusts IAust. J Pty. Ltd. ("the respondent company"), was carrj-rng o n the bl;slness of manufacturlng stairways at Ita factory at Clayton under the name Claszlc Stalrxays and Classic Timber Products (Aust.)
Pty. Ltd.. Its maln business was the manufacture of spiral stalrcases. The best quallty staircase was known as the Classlc Deluxe model, but there were two cheaper models known as the Classlc Fineline model and the Classic Trimllne model
respectlvely. The stalrcases were sald to be designed in Scandinavla and manufactured in New Zealand from rlch gralned natural timbers. Not 311 of the parts for the staircases
were Imported from New Zealand, some were manufactured in
Australia. The component parts of the staircases were assembled at Clajrton. The pacts recjulred depended upon the
nature of che prenlaea m xhlch the stalrcase w a s to be
installed and mattzrs related thereto. The use of the stalrcases had to be approved hjr municipal authorlties applying bullding regulations. The component pacts of the
respondent company to install them on behalf of customers. engaged by customers or by sub-contractors engaged by the staircases were installed in buildings either by builders The respondent camsany was Incorporated ln Victorla and was
controlled by Bryant and his wlfe, Mrs. Bt-yant. It took on
the name C 1 3 5 s l c Tlmber Products !AUit.) Fty. Ltd. ln August
1977. On 2 3 January 1980, M r . and Mrs. Bryant caused the
buslness name "Classic Stalrwaya" to be t-eglstercd !under the
Buslness Naaes Act 1'362 (Vic. ) . Tlie names "Classlc
Stairways" ancl "C1as;lc Timber Froducts (Aust. 1 Fty. Ltd." were displayed prominently at the Clayton factor;;.
Mr. Eryant caused an advertisement to be Inserted
in the Flnanclal Revlew of Friday, 29 May 1381 announcing a business for sale . Under that headlnq there appeared the following: -
"Established company marketing speclalist imported
products used in the fields of
A Home renovatlons A New homes ;f Off ices - new/ refurbished
Attractlve leasehold premises in t+lelbourne area, Includes showroom, officez, store and work area. Price $106,000.
Price includes stack, fitkings and plant. Apply In writinq in flrst instance to:
Mr P. Ket-r, Chartered Accountant,
276 Wavzt-ley Road,
East Malvern, 3145."
' I l l s advsrtlaement %a3 5rxqht to the attention uf
Roberr: Wllllam Lyng { " L y n g " ) , a cl1rector of a number of
cGmpanlej w'rr~clh for many pars had tsen engaged ln ths
bulldlng industry and other industries. In practical terms, Messrs. Bryant and Lyng are the opposlng partles In these proceedings. As with respect to Bryant, I have formed the view that Lyng was a witness of truth. As a result of contacting Mr. Kerr, Bryant and Lyng met at the premises of
the respondent company. Thereafter, discusslons took place
between them and other officers on behalf of both interests, as to the nature of the buslness of the respondent company and the terms upon which that buslness could be sold to the Lyny Interests. Thess discussions took place over some weeks and eventually agresment was reached zoncernlnq the sale of the business. Some tlme later, an agreement In writlng for the
sale of the buslness was entered into. That agreement was dated 8 September 1981 but under the agreement settlement took place on the prevlous day, 7 September 1981. The negotlations between Bryant and Lyng were amlcable. Each was represented by solicitors. The delay in the execution of the agreement in writing gas caused by problems In drafting the
special conditions contamed in the agreement.
. I
The agreement was In the standard copyright sale of
buslness form. It was made betxeen the respondent company 3s vendor and LTniteu~cI-~ Pty. Ltd. of 333 Sepat-ation Street, NortbAcot?, as purchaser. CY'rrlteulch Fty. Ltd. was a shelf company acqulred by the Lynr~ Interests for t h e purpose of the purchase. 3ubsequently, lt changed its name to Classlc
Timber Froducts Fty. Ltd. The Northcote address was the address at whlch the Lyng group of companies carried on thelr various businesses. By clause 1 nf the agreement, the
respondenc company agreed to sell to FPritelnch Pty. Ltd. which agreed to purchase, all the rlght title and interest
"in the Stairway manufacturmg business" being carried on at
the Clayton premises together with specified chattels valuedat $7,390.00 and the goodxlll of the busine:s valued at
$18,891.00, for the purchase price of $26,781.00. Under
clause 2 , the purchase price was to be pald by a deposlt of $2,500 on tine slgnlng of the agreement. The balance of tlie purchase prlce, $24,231.00 plus adjustments, stock at valuation and goods m translt was to be pald on 7 September 1931, being the settlement: date. !I%e stock at valuation gas to be given on the settlement date and upon the payment of of the order of $63,000.00. IJnder clause 5, possesslon was the amounts set out in clause 2 . This was done. Under condition 2 , the respondent company was required to sign all documents requlred to enable Whlteinch Pty. Ltd. to apply for the transfer into Its name of, inter alia, the business name used in connexion with the business. Condltion 7 contained a restraint of trade provlslon limited
to the M21bcurne Metropnl1tan area whereby the respondent
company agreed that It would not, for d perlod of three
years, engage I n a buslness of like nature to that sold to Whteinch Fty. Ltd.. Condition 13 provlded that the buslness and chattels were sold "without any warrantles or condltlons other than those contalned" in the agreement. The agreement contalned a number of special conditmns. Under special condition 1, Wiltemch Fty. Ltd. agreed to reimburse the respondent company the sum of
$3,658.04 belng, I n essence, advertislng expendlture Incurred
by the respondent company wlth rzspect to continuing ad*Jertisements for Classic Stalrwa:Js. These expenses related to a publication known as Update 1982, the Yellow Pages of the telephone directory for the Melbourne and Metropolitan
area, a business dlrectory, the Sun Home Show at which
Classic Stairways had a stand and which took place in late August 1981, display material for the Home Show, a dlsplay at the Building Centre, Albert Street, Melbourne, and brochures which had been prepared and prlnted by the respondent company. These brochures were of a high yuallty glossy
nature depicting the
three
types
of splral staircases
manufactured by the respondent company. The brochures used the word "Classic" in a stylised script form. The amount involved for the brochur5s was $802.50 and at the bottom of
the front page the brochures had the notation:-
twG o r l g i n a l s u p p l l e r z i n Nzx Zealand belng Dunlcp of
S s e c i a l c o n d l t i o n s 8 and 9 are s e t out I n full:-
" 8 . On s e t t l e m e n t d a t e t h e Vendor s h a l l de l iver t u
the Furchaaer a Statement of Uihange of Regl s t e red
P a r t l c u l a r s I n respect t o the Regls te red Bus iness
Name nf 'Classlc Stalrwayz =-gned -. by I_trat-les Carllsle Bryant or' 2 8 M e r e d l t l i Street, Mount
Waverle:; x!-m 1s a Di rec to r of t he Vsndol- and 1s t he
r e g l s t t r e d owner of t he sald Name. Also a t
se t t l emen t date the Vendor ;hall pas: c, S p e c i a l
Resolut lon i n o rder t o changz ~ t s name to a name
other thar, Classlc Timber Products (Aust. 1 P t y .
L t d . ' o r ar.y name l n c o r p o r a t l n g the words
' C l a s s l c ' , ' C l a s s i c T l m b e r ' , ' C l a s s l c Stairways' or any l i k e name.
5 . For- a perlod of four weeks next followlnq the settlement date the sald Charles larllsle Bryant ;hall contlntle to xork In the sald buslness wlthout
salary and during such tlme shall use hls best endeavours to lntroduce the Fucchassr to customers, suppliers and others who may have deallngs with the
said h u z l n e s s . "
It should be noted that Bryant and Mrs. Bryant were registered as the proprietors of the buslness name "[Zlasslc
S talcways.
The respondent ccmpany and Brjrant complied with
these txo special sondltions. A s a result of compllance wlth special conditlon 8 , lClasslc Tlmber Products (Aust.) Pty. Ltd. changed its name to Eldawood Enterprises Pty. Ltd. and thereupon Whiteinch Pty. Ltd. changed its name to Classic Timber Froducts Pty. Ltd.
Sometime after settlement, Classic Timber Products Pty. Ltd. closed its operations at Clayton when the lease of those premlses expired and transferred the operations to the Northcote premlsea of the Lyng Interests. Thereafter, the
endorsement appearing at the foot of the front page of the
brochures was altered to read:-
"CLASSIC TIMBER FRODUCTS PTP. LTD. ;H@GF.@OM: 338 Separation Street, Northcote 3070
Telephone: (03) 489 7 6 8 8 . "
Classlc Timber Products Pty. Ltd. continued to manufacture
and sell the three models of the Classlc stalrcases - the Deluxe, the Fineline and the Trimllne.
The Lyng interests, througt lts company 1:lasslc
Tlrnber Frducts P t j ; . Ltd., x a ~ exhlbltlng ~ t s range of
Classlc splral staircases at Its stall. at the Sun Home Show
in late August 138'1. On Frlday, 2 0 August 1982, R.A. Graham Llmited and R . A . Graham ("Graham") as applicants commenced proceedings in this Court against Classic Timber Products Pty. Ltd. and Charles Carlyle aryant as respondents In matter V. No. G 115 of 1382. On that day, Graham obtained an ex parte interim injunction restraining those respondents until 4.15 p.m. on Monday, 2 3 August 1?82 # o r further order from, ~n substance, uslng the word "Classic" In connexion with the advertialng or selling of spiral staircases. The interim inlunction was served on Lyng at the Home Show on Saturday,
21 A u g u a t 1982. It s h o u l d be noted that neither the Interim ~n~unctior. nor the appllcation xas served on Bryant. Evencually his name was removed from the pruceedings. Bryant was never a party to the proceedings brought by Graham. Ttre
Interim in]unction lapsed at 4.15 p.m. on 2 3 August 1982.
The Lyng interests engaged in frantic activity
following the service of the interlm injunction. At that time, Bryant was living In Queensland. He co-operated in every way to assist the Lyng interests in their defence to the claim by Graham. Bryant took the view, which I accept,
that Graham had no right to the word "Classic" when used in connexlon with spiral staircases. To put thls view In technical terms, Bryant believed that In Victoria, Graham had not establlshed a reputation or goodwill in the word
"Classic" wlth respect to spiral staircases, that he, Bryant,
had h3d the right to use the word and that he, Bryant, had
transferred that rlght to the Lyng mterests. Brpnt took
the vlew that the Lyng Interests ?-ad a good defence to the action brought by
Graham and he did everything he could to asslst the Lyng Interests. To that snd, he had numerous telephone conversacinns with the solicltors for the Lyny Interests, he came to Melbourne for conferences, and he prepared long and detailed statements I n whlch he set out hls version of what had occurred. Bryant d ~ d nnt seek legal
advlce. The Lyng Interests dld not join Bryant as a cross respondent in the action brought by Graham. The legal advlsers of the Lyng lnterests had all those statements at the trial of the present proceedlngs. Bryant dld not have a
copy. Tile evidence Bryant gave before me was remarkably conslstent with what he had written over 4 years previously.
On 6 September 1982, the Lyng Interests gave undertakings to the Court that until the hearing and determlnatlon of the hearing of the Graham actlon or further order they would not use the word "Classic" In connexlon with the advertising and sale of spiral staircases. The Graham action was settled. In October 1982, prior to the settlement, Bryant signed an agreement ("the October 1982 agreement") prepared by the solicltors for the Lyng intprests. There were unusual features both with respect to the form of the agreement and the way in whlch Bryant came to slgn ~ t . I do not find it necessary to explot-? thgsr aspcts furthei. E,rq'ant xas puzzled as to why
the action was belntg setLled and h2 sought answers from the
solicltors f o r the Lyng Interests. Nevertheless, under the agreement, Eryant agreed t.2 make certaln payments to the Lj-ny
Interests.
Ey consent orders made on 2 7 May 1383, the Graham
action was settled. Classic Tlmber Froducts Fty. Ltd.consented t o permanent inlunctlons restralnlng it from using
che word "Classic" wlth respect to advertising or selling
splral staircases. It agreed a l s o to cancel the bus lness
name "Classlc 2talrways" and the company name "Classic Timber Froducts Fty. Ltd." and to pay $ 2 , 0 0 0 damages and costs. As a result of these orders, Classic Tlmber Froducts Fty. Ltd. changed its name to Johns St Lyng Group Pty. Ltd. ("the applicant"). The applicant has continued to manufacture and
sell spiral stalrcases under the names Deluxe, Fineline and
Trimline but has not used the word "Classic" wlth respect to any of them.
Bryant made no payments to the applicant of any of the amounts speclfied in the October 1382 agreement. Towards the end of that year, he consulted his solicitors who by letter dated 30 December 1382 wrote to the sollcltors for the
applicant denying any liability In Bryant under the October 1382 agreement and any llabillty for breach of the agreement for the sale of business dated 8 September 1981. This letter 1s of importance since under the October 1382 agreement
Bryant agreed to lndemnlfy the applicant against all losses
| . ' | ,' |
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3nd costs Incurred h? the a p p l l c 3 n t as I result s ~ f t h e Gt-aham
proceedlnqa and to "ay to the appllcant $12,300 tnwat-ds the s.;c:enses of t h e appi1.zant I n promotlnq the sale .of the spiral
staircases under a name other t?.an "U1as;:z. ' The conslderatlon f o r thoss sbllgations =as
stated to
be the
forbearance of the appllcant from issulng praceedings against
Brjrant whether by separate action or by cross action in the
Graham proceedings and based on a breach of warranty of the sale agreemsnt of .>eptember c 13el. Ejr the time of the settlement of the Graham action in May 1383, the applicant knew that Bryant was denylng liability under the October 1582
agreement, but nevertheless the applicant consented to the orders made m the Graham action. The present proceedings wet-e commenced on 13 July 1394. By its applicatlon, the ap?licant is seeklng a declaration and damages against the respondent company based on 5.52 of the Trade Practlces Act 1974 with respect to conduct leadlng up to the sale agreement dated B September 1581 and a slmilar declaration and damages against Bryant on
the basis that he alded or abetted the conduct of the
respondent company. In addition, pursuant to the accrued
jurisdiction of the Court, the applicant is seeking orders
that the respondents pay damages for breach of that
agreement, breach of warranty, negligent mlsstatement and
fraud. It should be noted that there was no claim based on the October 1392 agreement.
A readlnq of the amended statement of clalm, xhlch
1 s dated 15 October 1985, lea-Jes the lnpreasinn that In t-eallty the applicant's claim 1 s based ann bceach of the agreement for sale of business dated 3 September 1931.
Thr
pleadlng 1 s prolix and repetitlve. It contalns many allegations xhlch w e r e abandoned at or before trlal. The clalm based upon ths Trade Practices Atrt appears to have been added ai; an afterthought. In reallty, ttle sondr.lct complained
nf consists o f repressntatlons which were made terms of the
agreement in xrltlng. The same representatlons which are sald constitute conduct In contraventlGn of 5 . 5 2 of the Trade
Practices Act are sald to be oral or lmplied terms of the agreement of sale, terms of the written agreement of sale, collateral warrantles, the basis for negligent misstatement and the basis for fraud. The damages claimed Include amounts claimed by the applicant to have been lost as a result of the proceedings brought by Graham but no claim was based on the October 1982 agreement. The appllcant clalmed damages in the sum of $160,664. In thls context, it must be remembered that at all times since September 1931, the applicant has manufactured and sold the three models of splral staircases,
the Deluxe, the Fineline and the Trlmline.
It has
continued
to use timber components lmported from New Zealand. It 1 s
continulng to manufacture and sell those staircases. The
only change is that it has ceased to u s e the xord "Classic"
In connexion with the advertising, promotion and sale of the staircases.
Durlng the .a?en1ntq 3dars;s 57 t : c ~ . m ~ + ? f o r the
appllcanr, the Court r a l s e d t?.e question of the accrued
lur1sd1ct1m-1 of the Ccurt bu t was prepared tn ?;<erc1se that
:urisdlctlon. Durrng the cbours? of flnal submlsslons, the Court was informed that there were proceedlngs pendlng in the Supreme Court of Victorla in whlrh the applicant was sulng Bryant on the October 1382 agreement. The Court ralsed the issue whether, in those circumstances, it should contlnue to exerclse its accrued ~urisdlccion since the proceedlngs I n
thls Court would not determine flnallqr all the issues arising
out of the substratum of commen facts glving rise to the
dispute between the part~es. Later, and before final
submissions lhad been completed, the Court was Informed that the Supreme Court proceedings had been dizcontinued.
Durlng the openlng address by counsel for the
applicant, and on a number of occasions durlng the course of
the heariny, the Court raised the questlon of what was the real issue between the parties and suggested that it appeared that in order to succeed the applicant had to establish that
in September 1381, the applicant had no right to use the word "Classic" in connexion with the advertising, promotion and sale of splral staircases. This appeared to be accepted but
in order to establish that fact, the applicant called
evldence from the Graham interests directed to the dealings
between Bryant and Graham. As a result, the proceedings developed as If I n truth the actlon =as one between Graham
and Bryant but wlthout the beneflt of the normal
lnterlocutory pruceedings such as pleadings and discovery
havlng been had between Graham and Bryant. Graham kept
producing document; whlch had not been discovered, many a E
Whlcli were ndtocuments m-Itten by Bryant,. C.Iunse1 for the
applicant crass-examlned Bryant vl'~or~usly and at length
naklng full u s e of thsse documents which had been wrltten
many years befcre. A s a result of the whole of the evldence,
I forned the opinlon that Bryant :a;; a wltness of truth
giving evldence to the bzst (of t i l z kncrwledge and recolleztion. A t t h z szme time, I formed the vlew that Robin Alexander Graham, t'rre maln witness from the Graham interests, was a person whmse word could not always be trusted. He
presented as a rather incompetent man of business whose
~udgment was suspect. Although he had used the name
"Classlc" in Hew Zealand, he had not reglstered that name
under any leglslatlon in New Zealand or Australia with
respect to spiral staircases, or f o r that, matter, any other product. At the request of the partles, the Court agreed to
hear and determine the issue of llabillty before entering
appllcant proved its case on liabillty. In opening his final upon any question of damages that should be awarded I f the submissions, counsel for the respondents contended that the Issue in this case was whether Graham had any reputatlon or goodwlll attaching to the use of the word "Classlc" in Victoria in September 1981 m association with spiral stalrcaaes. Thrls applled to thz word " C l a s s l r " xhether ln
lts styllsed form or not and as used by Eryant and the applicant 71th respect to the Deluxz, and Tt-lmlLne staircases.
In my opinlon, that is the issue to be decided in
thls case. Counsel conceded tlhat If Graham did have a
rcput3tlon of that klnd, neither the respondent company nor Bryant had the right to r'epresent It or he had thf rlght to
sell that name to the appllcant and therefore would be
llable, on some ground or other, to pay damages to the
appllcant. In n j r opinlon, that concession was made
correctly. Counsel contended further that on the evidence, the appllcant had falled to establlsh that In Victoria Graham had accju;red at any relevant tlme a reputatlon or goodwill attachlny to thc use of the word "Classlc" used m connexlon wlth the advertlslng, promotion and sale of spiral staircases which could have been protected by action based on s.52 of the Trade Practices Act and therefore the application must fall. I accept that contention and hold that the application
has failed to prove
claim rests. the baslc facts on which the whole of its In the unusual circumstances of thls case, I do not
find it necessary to refer to the whole of the evldence
relating to the deallngs between Bryant and Graham. A brlef outline of my flndings wlll sufflce.
From about the middle of the 1 9 7 0 ' s , a company
incorporated in Vlctorla, Weathermaster Fty. Ltd. (in Recelvership) ("Weathermaster") , began selling Classic staircases in Victoria. On 9 February 1377, an agreement In wrlting wai entered Into between Weathermaster of the one part and P . A . Graham Ltd. and R.A. Graham (West Coast) Ltd.
( "Graham" ) of the other part, "the distributorship agreement"). The recitals to that agreement Include a statement that Graham had developed and manufactured In New Zealand a wooden spiral staircase "under the style of Graham
Weathermaster by arrangement with Graham had been marketlng, Zealand and elsewhere and a statement that for some time 'Classic' spiral staircase" and had marketed the name in New distributing and installing Classic staircases in Victorla. Under the distributorship agreement, Graham appointed Weathermaster the sole distrlbutor of the Classic staircases in Australla. The exclusive nature of the agreement was that Graham would not sell any of the parts of the staircases to anybody In Australia except Weathecmaster. Weathermaster
. I
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und+rtook t~ market the stalrcases I n Australia "under the
name and style of ' ~ : l a s s ~ c ' s p l r a l staircases" and no other brand O K namnz.
This venture falled. There 1s nn e-ridence to
Suggfst that as a result of activltles carried out by Weathermaster, Graham accplred a repucation or g ~ ~ r l w l l l in
Victsria with respect to the word "Classic" In cnnnrxlsxl wlth
sp i r a l staircases. If any reputation or goodwlil 111 Vlctorla
had been e s c a b l l a h e d , it aas wlth respect to Weathermastsr. One thing 1 s clear, Weathermaster was not aztlng as the agent nf Graham 1n the case of arranglng contracts between Graham
and the eventual purchasers of the staircases. In about the middle of the year 1977, negotiations
took place between Graham, Bryant and Mr. E.H. Niemann, thereceiver manager of Weathermaster. 4s a result of those
negotiations, a tentative arrangement was made whereby a
company, to be called "Timber Products" was to be formed to be controlled by Graham and Bryant who were to provide the necessary moneys for the venture equally, f o r the purpose of
manufacturing and marketing the Classlc staircase in
Victoria. A letter of intent xas signed by the three negotlatora on 18 August 1 3 7 7 . Under the arrangement the proposed company would take over the liabllities of Weathermaster with respect to outstanding sales of staiccases
The terms of the letter of intent were never
carrled out. Graham provided no finance for the venture. I
do not need to make findings as to why not. Er:Jant went
ahead on his own. He Introduced the xord "Classic" into the name of the respondent company. Eryant providzd the finance
to enable that company to commence buslness and to take overthe ob l lga t lons af Weathermaster. Graham knew of the use of
the word "Classic" by Bryant and dld not oblect to that use. The respondent company purchased component parts from Graham.
The respondent company planned and develnped the Flneline an2 Trlmllne models. It provided details sf the component parts
of thos,? models tc7 Graham to enable Graham to manufacture them for sale to the respondent company. Bryant continued
the practice of providing some of the component parts from sources other than From New Zealand.
The respondent company carried on the buslness of
promoting and selling Classic spiral staircases in Victoria. It advertised widely uslng the name "Classic" with respect to the stalrcases. It exhibited the Classic staircases at the
Master Builders' dlsplay centre. There were some desultory advertisements In whlch the name of Graham appeared as the manufacturer of the Classic staircases but only in the
context where there were distributors named In Australia. By
far, the advertlslng and promotion of the name "Classlc" associated that name wlth the respondent company. The EVldence does n c t sstablish that 'Craham had established a qaodwlll or reputatmn in Victor13 xltli respect t o the xord ,, -. I-lasslt:" In asssslatlon wlth spiral staircases. p10 evldence
was bralled to establish that In the bulldlng industry or trade In Vlctorla, Graham had any such goodwill or reputatlon. Lyng hzd not heard of Graham In connexion wlth the "Classic" staircases.
The applicant contended that there was an
agreement, similar to the distrlbutorship agreement between Graham and Weathermaster, between the respondent company and Graham. I do not need to decide that issue. Any agreement,
as alleged, would not have constituted the respondent company
an agent for Graham in the sense of causing contracts to be entered into between Graham and purchasers of the staircases. In these proceedings, I am not concerned with any breach of contract clalmed by Graham aqalnst the respondent company. I
am not satisfied that in promoting the word "Classlc" the sense that any goodwlll or reputatlon attachlng to that word respondent company was actlng as aqent for Graham In t'ne was in law owned bjr Graham. All the evldence shows that the respondent company was using the word "Classlc" with respect
to Its own business. DifZxultlea 3rl;5e xlth respect to %Le rellablllty
of .dell-~ery by Zraham to thz respcndent companjr of component
parts of ths spiral staitc3sza. The respandent company comm?nced to purchase the tlmber component parts from another campany 111 NSW Zealand, namely, Dunlop of Invercaryill. A s time went by, more of the purrhasss wet-e From Dunlop and less from Graham. By August 19811, Graham was expressing concern
to the respondent company about the decline of sales. The
respnndent company was conziderlnq the sale of ;ts buslners.
By October 1920, Gt-a:-rarn was cnnslderlng purchaslng the
business. In JaKuary 1381, discuss~nns were continuing and Graham xas expt-esslnq the view that he W O L I ~ ~ be Interested In helplng Bryant to sell "the stair buslness either to R.A. Graham Limlted or to an outsider." Detalls of the busmess were sought but not supplied. In March 1361, Bryant was
advlsed that the respondent company's " s ~ l e agency for R . A . Graham Limlted prodlucts In the State of Victoria is
termlnatEd from the 31st March 1381. " In June 1381, Graham
notified the respondent company that IGraham had appointed a new sel l ing agent to handle thelr products. The new selling
agent insisted on a s o l e agency to be applied In the sense that Graham would not sell its component parts of spiral stalrcases to any other person in Victoria.
During negotiations between Eryant and Lyng, Bryant
told Lyng of some of the dlfficulties concernlng the purchase
of component parts f o r the stalrcases. He t o l d Lyng that he
was getting the component parts from Dunlop. A meetlng was
arranged between Bryant, Lyny and Dunlop. Lyng and Dunlop
T'ne applicant has lalled t o establish that between
May and September 1331, Graham had any goodwlll or reputatlon in Vlctorla In thz word "Classlc" in assoclatlon wlth splral staircases. The applicant, has falled to establish that Setween May and September 1331, the respondent company had no goodwill or reputation in Victorla In the word "Classlc" m assoclation with spiral staircases. The respondent company had been uslng that word in connexion with spiral staircases
Tor a number of gears. It was advertlslng that word
extensively. It was c a r r y i n g on buslness under a name which
used the word "rlasslc." In August 1331, It conducted a
stall at the Graham's new selling agent h a d a stall promoting
Sun Home Show ln which
it used that word.
"Classic"
staircases. Lyng attended that Home Show.
At the same Home Show, the new distributor
appointed by Graham had a stall promnting "Classic"
staircases. Lyng saw that stall. I find it incredible that
Lyng did not see the word "Classlc" used in relation to the spiral staircase used at that stall. This was at a tlme before the contract of sale of business had been slgned. Graham attended that Home Show In August 1981. He knew that the respondent company was carrylng on buslness uslng the
word "Classic" and was sellmg spiral staircases under that
t .
name. He sald h? spoke to Bryant who, he sald, told hlm he
was lust selllng the surplus component parts. I do not
a+cept the C-Jldence of Graham on thls point. Bcjrant s 3 x l he
toll1 Graham he had = o l d azr was In the process of selllng the businzss. I accept that ev idence . From earlier correspondence and meetings, [Graham knew Bryant was attemptlng to sell the buslness. If Graham had believed that Bryant had no rlght to use the name "Classic" I W G U ~ ~ have expected him to take much more interest and possloly have taken action aqalnsc Eryant as a result of the activities of Bryant at tire 1521 Home S h c ~ . Graham said that he saw the "C1ass;s" brochures prepared by the rezpondent company and distributed at the Home Show but did not read any of them. A model of the Deluxe model was on display. T h e brochures complemented the model staircase. The bruchures had been
newly developed. They had not been seen previously by Graham. They were attactive and appealing. They depicted the three models manufactured by the respondent company. They lnvlted closer examlnation. They showed the two
addresses, at Clayton and at Northcote. I flnd it lncredlble
that Graham dld not study the brochure. Graham took no steps
to try to stop Bryant f r o m using the word "Classic" In relation to hls buslness, hls company or with respect to
spiral stalrcases. One would have expected a person who
claimed to have a goodwlll or reputation in the name
"ChssiC" i n aasociatlon wlth spiral staircases to have taken
some formal steps to warn Bryant; not to continue using that
word. Graham did not do this. It wasn't until one year
later that Graham, wlthout prior warning, took legal actlon
r .
agalnst Lyng. in 311 the circumstances, 1 am n17t satlsfled, on the balance nl probabllltles, that the respondcnts had no
I, - 1
t-lyl-rt r g U ~ E the ;lord CLasslc" In Vlstncla w l t h r e z p e c t k~
splrai staircases between May and September IClSi. In the clrcunstances of this iase, 1 do not need to make a finding that Bryant had a gondwill or reputation wlth respect to the word "Classlc" and I make no flndlng on that Issue. It is
sufficlent to iind the negative, namely that the appllcant has not proved that Bryant did not have that goodwill or
reputation. I find that Graham did not, in Victoria, have that yoodwlll or reputaticn in Vlhtot-la, at that time. Tnis findlng 1s suppot-ted by the fallure of Graham to take any action until the expiration of one year from the 1331 Sun
Home Show. That fallure is conslstent with the flndings I have made. In his final subrnisslons, counsel f o r the applicant
sought to use the admisslons against interest made by Bryant
in the October 1332 agreement to support a contention that
nelther Eryant nor the respondent company had any right to
sell the name "Classlc" in connexion with the spiral staircases. I re~ect that contention. The validity of the October 1332 agreement 1 s disputed by Eryant's solicitor. The applicant 1s not sung on that agreement. The unusual
facts by which the October 1382 agreement was signed suggest
care should be taken in relying upon the terms of the agreement.
Counsel attempted to r e l y upon expressions of
o p l n l z n contalned l n H.P. Eulmer Ltd and Sliowerlnqs Ltd. v.
J. 9olllnqer S.A. and Champa-me Lanscn Fere $t C ~ l s ( 1 3 7 8 ) 35
R.F.C. 79 to suppor-t the contentlon khat Graham had 3
suffrclent Interest I n the use of the worad "Classic" to
support an order preventlng Sryant from uslng that word In
connexlon wlth the promotion and sale of splral stalccases
and thus the respondents were liable to the applicant with
respect to the sale of that word to the applicant. That
authority makes lt clear that before the proprletary right
can be enforced, the right in the reputatlon ~r goodwill sought tc7 be protected must be wlth respect to a particular person I n the area In which the rlght 1 s sought to be protected. In the present case, Graham does not, in Victoria, have the proprietary right with respect to the
reputation or goodwill of tine wor-d "Classic" in connexlon
with the promotion or sale of splral staircases. Thl S authority does not asslat the applicant.
Earller in these reasons, reference is made to the
contentlon made on behalf of the applicant, that there
exlsted an agreement between Brjrant and the respondent company of the one part, and the Graharn interests on the
other, similar In form to the distrlbutorship agreement
between Graham and Weathermaster. Before the letter of lntent was signed on 18 August 1977, there had been prepared
a draft of a dlstrlbutorshlp agreement between the Graham
interests and Bryant and the respondent company. Bryant saw that draft agreement before he signed the letter of Intent.
I .
Classic Timbec P r c d u c t s Fty. L t d . ;as named as a party to that agr?emenc EO an Inference can be drawn that before then
Graham had agt-?ed to the us? of the word "Classic" ~n the
name nf the respondent agreement. The draft agreement was
never executed. Tne terms of the letcer of intent were never
implemented. Counsel for the applicant contended that Graham
supplied the component parts of the spiral stalrcases
pursuant to implled terms being the terms contalned in the
draft agreement. T'ne recltals to the #draft agreement Include
a recital referrlng to the lettsr of intent (but undated). Another recltal stated that It was the intention of the parties to enter l n t u the draft agreement in order to adopt and conElt-m the letter of intent "and to record facilltate and extend thz 3rrangements under whvh the spiral stalt-case
and other produccs of Gt-aiham are to be narketed distributed
and installed" by the respondent company. The draft
agreement was I n a form similar to the Weatheemaster distributorshlp agreement. Under the draft agreement, the respondent company was to purchase certain components of a sprral staircase from Graham in accordance wlth the terms of
the draft agreement. Under the draft agreement, Graham
appointed the respondent company "to be the sole distributor
of the spiral staircases in and for the Commonwealth of
Australia, lncludlng the exclusive rlyht durlng the term of this Agreement to purchase the components for resale In Australia upon the terms and condltlons" contalned ln the draft agreement. Under the draft agreement the respondcnt
agreed that It xnuld u s e its best endeavours to promote and extend the sales of Classic spiral staircases and would not, "wlthout th? prlor s m s c n t In xrltlng ~f Graham be concerned
in thr2 manufacture, promotlon, lmportatlon tor sale o r
advertlsemrnt of g s d s 11-1 Australia xhether made of wnnd n c
o t h e r materlals xk,ich are like rJt- slmllar L O .at- which elthec
alone Dr I n con~unction w ~ t h some other product perform ,jt- are deslyned to perform the name or a slmilar functidn t o o r whlch mlaqht othsrwise compete ar Interfere wlth the sale of
any of the splral staircases." It was to act as a prlnclpal
and not as the aqent of Graham. Under the draft agreement, Graham agreed, sublect to some minor exceptions, not to sell
any of the splral staircase components to any other person
within Australia with a view to the resale of the spiral
staircases and to use Its best endeavours to safeguard the
sole and excluzive rights granted to the respondent company.
Counsel f o r the appllcant contended that the
evidence established that the Court should find that there
was by implication an agreement between Gralham and the
respondent company contalnlng all the terms contained in the draft agrsement and that as a result thereof, any reputation or goodwlll arising from the word "Classic" in Victorla attached to Graham and not to the respondent company.
Those contentions are relected. The draft
agreement was never executed. The terms of the letter of intent were never implemented. Bryant provided the whole of
the moneys, except some small amount which was paid by Graham by way of book entry wlth respect to a straight stairway,
necessary to enable It to carry on ~ t s buslness. It carried Further, if there was any agreement of a kind
simllar to that contalned In the draft agreement, Graham may
have had a cause of action agalnst the respondent company based upon breach of the terms of that agreement; see Hospital Products Ltd. v. Unlted States Surqical Corporation and nthers (1984) 156 C.L.R. 41, an authorlty strongly relied
upon by counsel f o r the applicant. That was a case very
different from the present and on its face, does not rely upon any claim based upon passlng off. It was based upon, inter alia, breach of agreement. It is in thls respect that earlier in these reasons the comment was made that in many respects, thla case took on aspects of a case between Graham and the second respondent.
between Graham and the respondent company, that breach, by Even If there had been a bceach of agreement itself, would not_ entitle the applicant to claim damages agalnst the respondents. That clam depends upon the absence
of a r;ght by the respondents to the word "Cla--. ==1c" in
V l c t n r l a , ~n connexion with splral staircases.
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