Multiplex Constructions Pty Ltd v Multiplex Bauhaus Pty Ltd

[2002] FCA 718

FEDERAL COURT OF AUSTRALIA

Multiplex Constructions Pty Ltd v Multiplex Bauhaus Pty Ltd [2002] FCA 718

MULTIPLEX CONSTRUCTIONS PTY LTD v MULTIPLEX BAUHAUS PTY LTD & ORS

N 431 OF 2002

EMMETT J
28 MAY 2002
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N431 OF 2002

BETWEEN:

MULTIPLEX CONSTRUCTIONS PTY LTD

APPLICANT

AND:

MULTIPLEX BAUHAUS PTY LIMITED

FIRST RESPONDENT

MULTIPLEX BAUHAUS INVESTMENTS PTY LIMITED

SECOND RESPONDENT

MULTIPLEX BAUHAUS APARTMENTS PTY LIMITED

THIRD RESPONDENT

CONSOLIDATED BYRNES HOLDINGS PTY LIMITED

FOURTH RESPONDENT

FINNBELL PTY LIMITED

FIFTH RESPONDENT

IAN PAUL WIDDUP

SIXTH RESPONDENT

JAMES WARREN BYRNES
SEVENTH RESPONDENT

JUDGE:

EMMETT J

DATE OF ORDER:

28 MAY 2002

WHERE MADE:

SYDNEY

THE COURT NOTES THE FOLLOWING UNDERTAKINGS GIVEN BY THE RESPONDENTS TO THE COURT, WITHOUT ADMISSION:

1.that by 4 pm Tuesday, 28 May 2002, the respondents, and each of them, will take all necessary steps to change the name of the first three respondents to a name that does not include the word “MULTIPLEX”; and

2.that none of the respondents will engage in conduct or carry on business using the name “MULTIPLEX”, or a name that includes the word “MULTIPLEX” or any other word that is similar. 

THE COURT ORDERS THAT:

3.        the respondents pay the applicant’s costs; and

4.        the application be otherwise dismissed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N431 OF 2002

BETWEEN:

MULTIPLEX CONSTRUCTIONS PTY LTD
APPLICANT

AND:

MULTIPLEX BAUHAUS PTY LIMITED
FIRST RESPONDENT

MULTIPLEX BAUHAUS INVESTMENTS PTY LIMITED
SECOND RESPONDENT

MULTIPLEX BAUHAUS APARTMENTS PTY LIMITED
THIRD RESPONDENT

CONSOLIDATED BYRNES HOLDINGS PTY LIMITED
FOURTH RESPONDENT

FINNBELL PTY LIMITED
FIFTH RESPONDENT

IAN PAUL WIDDUP
SIXTH RESPONDENT

JAMES WARREN BYRNES
SEVENTH RESPONDENT

JUDGE:	EMMETT J
DATE:	28 MAY 2002
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. The applicant is a well known builder and developer, having been founded in Perth in 1962.  Since that time it has expanded its operations into other states and territories of Australia including New South Wales in 1978.  During that period the applicant has also established operations internationally and in Asia.  It has been involved with a large range of construction projects in Australia and overseas.  Its name is very well known in that context.

2. Until about mid-2001, the first respondent (“Multiplex Bauhaus”), was a wholly owned subsidiary of the applicant.  At that time Multiplex Bauhaus entered into a development agreement with various entities to develop a residential apartment complex known as “Bauhaus Apartments” at Pyrmont in Sydney.  In about February or March 2002, after practical completion of the Bauhaus Apartments, a dispute arose between the applicant and the other parties involved in the development.  Those involved in the development included the sixth respondent, Ian Paul Widdup and the seventh respondent James Warren Byrnes and companies associated with them.  Negotiations ensued with a view to resolving the dispute.  Some accord was reached, which involved the transfer by the applicant to the fourth and fifth respondents, Consolidated Byrnes Holdings Pty Limited and Finnbell Pty Limited, of companies controlled by them, of the shares in Multiplex Bauhaus.

3. On 17 April 2002, Multiplex Bauhaus passed a special resolution resolving to change its name to “Bauhaus Pty Limited” or such other name as was acceptable to the Australian Securities and Investment Commission (“the ASIC”).  Notification of that resolution was given to the ASIC which, for reasons that are not entirely clear to me at this stage, rejected that name as unacceptable.  The applicant then took steps to endeavour to have Multiplex Bauhaus adopt another name that did not include the word “Multiplex”.  In the meantime, the second and third respondents were formed, including the word “Multiplex” as part of their names. 

4. A document submitted to the ASIC by one of the respondents on 1 May 2002, contained a statement that the current shareholder and directors of Multiplex Bauhaus had not approved any name change.  Correspondence was thereafter entered into involving the applicant, on the one hand, and various respondents, on the other, concerning the change of the name of Multiplex Bauhaus to delete the word “Multiplex”.  That correspondence ultimately led nowhere and the applicant therefore commenced this proceeding, initially by ex parte application.  The application was made returnable before me as duty judge several days after commencement of the proceeding.

5. On the return day certain of the respondents appeared and others did not.  There was some confusion as to the retainer of solicitors for certain of the respondents.  The proceeding relies on Part V of the Trade Practices Act 1974 (Cth) and, in substance, sought orders restraining the respondents from engaging in conduct that contravened Part V by carrying on business using the name “Multiplex”. The application also sought orders that steps be taken for the first three respondents to change their names to names that do not contain the word, “Multiplex”. The application also claimed damages and costs.

6. The matter was fixed for hearing today for determination of entitlement to interlocutory relief.  When the matter was called on, it became apparent that the parties were content for the matter to be dealt with on a final basis.  After the hearing had progressed a short time an undertaking was proffered on behalf of the respondents.  Senior Counsel for the applicant indicated that, in the light of that undertaking, the applicant did not wish to seek any further relief in relation to the application, but would consent to the application being dismissed apart from the question of costs.  The only question, therefore, that I have to decide is who should pay the costs of the proceeding to date.  That requires an examination of the correspondence to which I have briefly referred. 

7. On 9 May 2002 Andersen Legal (“Andersen”) acting on behalf of certain of the respondents, wrote to Minter Ellison, the solicitors acting for the applicant (“Minters”).  Andersen said:

   “We are instructed that our client is willing to change the name of the company called Multiplex Bauhaus Pty Limited to Bauhaus Pyrmont Pty Limited and also to chance the name of the two subsidiaries of this company namely Multiplex Bauhaus Investments Pty Limited…and Multiplex Bauhaus Apartments Pty Limited…in order to finalise all outstanding issues between our client Mr Widdup and Mr Byrnes and Multiplex Constructions Pty Limited. 

   As part of this finalisation and in order to compensate our client for changing the names of these three companies our client would require the finalisation to proceed on the following basis…”

8. There then followed a series of points including payment of various sums of money by the applicant to various of the respondents.  The letter finished by saying that:

   “this proposal is available for acceptance by 5.00 pm today and for settlement by 10.00 am tomorrow Friday 10 May 2002.”

9. Minters responded on the same day, saying, inter alia:

   “That ‘proposal’ is rejected, and we reserve the right to place it before the court, ASIC, and any other appropriate authority as evidence of the lack of bona fides and good faith in your client's position.”

10. On the same day Minters wrote directly to certain of the respondents saying, inter alia:

    “By continuing to use the name ‘Multiplex’ in their names, Multiplex Bauhaus Pty Ltd and the New Companies are engaging in conduct that is misleading or deceptive or is likely to mislead or deceive contrary to the provisions of section 52 of the Trade Practices Act 1974 (Cth).  Multiplex Bauhaus Pty Ltd and the New Companies are also representing that each of Multiplex Bauhaus Pty Ltd and the New Companies has a sponsorship, approval or affiliation it does not have, contrary to the provisions of section 53(d) of the Act.  By reason of their conduct, James Byrnes and Ian Widdup are aiding and abetting Multiplex Bauhaus Pty Limited to breach the provisions of section 53(d) of the Act. 

    We are now instructed to require that:

    (a)   you deliver to us on or before 12 noon on Friday 10 May 2002 the attached ASIC Form 205 duly executed by a director of Multiplex Bauhaus Pty Ltd and a director of the New Companies; and

    (b)  the attached undertakings are executed by the companies and the people named in these undertakings.

    Unless we receive these documents by 12 noon on Friday 10 May 2002 we have instructions to commence immediate proceedings against each of Multiplex Bauhaus Pty Ltd, the New Companies, James Widdup and Ian Byrnes seeking urgent interlocutory relief to prevent them from using the ‘Multiplex’ name. Our client will also be seeking damages and costs.”

11. The undertaking referred to was not to use the name “Multiplex” in connection with any activity undertaken by any of the respondents.  The Form 205 was a notification of special resolution by Multiplex Bauhaus.  On 10 May 2002, Multiplex Bauhaus responded to the letter from Minter Ellison saying as follows:

    “Regarding your letter of 9th instant these veiled threats mean nothing to me.  There is an old saying: Those who come to Court, come with clean hands.  Should you wish to commence any proceedings, go right ahead.  In fact, I invite you, indeed I dare you to commence proceedings.  For then and only then will you see that you have kicked the lid completely off Pandora's Box.

    ………………………

    I hope the Managing Director and the previous directors of Multiplex Bauhaus Pty Limited and the shareholders all have plenty of spare time.  In fact some of them may need a couple of years. 

    I wonder what value will be placed on the name, Multiplex, after the directors have been dragged through the mud, tarred, feathered and held out to be liars, cheats and parties not fit to hold the role of directors.

    For the record, I am happy to accept service by facsimile of any documents.  Please give me the required sufficient notice so that Counsel can be present.
     I eagerly await receipt of your first application to the Court.”

12. I might observe that that letter is quite unequivocal in its invitation to the applicant to commence proceedings as threatened in Minter’s letter.  On 10 May, Andersen also wrote to Minters referring to their letter.  Andersen responded on behalf of Mr Widdup, Finbell Pty Limited, Consolidated Byrnes Holdings Pty Limited and Mr Byrnes.  After saying that there were a number of assertions in the letter that were disputed, Andersen then said:

    “We are instructed by each of the parties on whose behalf we respond, that they undertake that they will not use the name Multiplex in relation to any company in which they have an interest with which they have an association until after we reply further to the matters stated in your letter dated 9 May 2002 and until you have a reasonable and appropriate opportunity to respond to the matters in our further letter to you, except only to enforce rights under the Bauhaus Completion Deed.”

13. Minters replied on the same day, saying:

    “We note that you were responding on behalf of Mr Widdup, Finbell Pty Limited, Consolidated Byrnes Holdings Pty Limited and Mr James Byrnes.

    We note also that the terms in your letter are somewhat different to the letter sent to us from Multiplex Bauhaus Pty Ltd which was faxed to us some 33 minutes before your other fax.  You may wish to seek a copy of that letter from Mr Byrnes.

    The fact that your client’s companies continue to use ‘Multiplex’ in their names is a great and ongoing concern.  In the light of your undertakings our clients have instructed us to await a response from you until 5.00 pm on 13 May 2002.  If that response does not include the undertakings and documents contained with the letter dated 9 May 2002, we anticipate receiving instructions to make an immediate application to the Court.”

14. The letter of 10 May 2002 from Multiplex Bauhaus to Minters was signed by Mr Byrnes.  Later on the same day another letter was sent to Minters signed by Mr Byrnes but on the writing paper of Consolidated Byrnes Holdings Pty Limited.  In that letter Mr Byrnes said, amongst other things, as follows:

    “I note that you act for Multiplex Constructions, and advise that Andersen Legal acts for Multiplex Bauhaus Pty Limited, under instructions from Mr Widdup.  As a director, I also try to deal with various issues in which the companies of which I am a director are embroiled, rather than wasting substantial time and money continuing to engage the legal profession.  Therefore I have authority to write you on the company's behalf.
    ……
    It is correct that Consolidated Byrnes Holdings (‘CBH’) and Finnbell have acquired the shares in Multiplex Bauhaus.  It is not correct to say that we have without approval, continued to trade with the name Multiplex.  This company was and is known as Multiplex Bauhaus Pty Limited.  We do not pass it off as being part of Multiplex Constructions or Multiplex Constructions (NSW) Pty Limited.  Clearly in some parts of the world, Bauhaus is a far more important  name than Multiplex.  We do not believe that we need consent to trade the company whose name is Multiplex Bauhaus.  However, it would be fair to say that we would not seek Multiplex' [sic] acknowledgment that it is our name, and we have the right and entitlement to use that name.
    ……

    I note your request for undertakings and feel that it is more appropriate that the matter be dealt with through the Courts.  I have also advised your Insolvency Partner, that such action will be of great delight to the current directors of Multiplex Bauhaus Pty Limited……Through the Courts, we will have a more equal bargaining position, as the Court will determine the truth, the facts, and the Court can make the appropriate recommendations to the appropriate bodies, and the Court will determine who shall be disciplined.

    The only issue which seriously concerns me that the name, Multiplex Bauhaus may become so tainted when the directors and senior staff of Multiplex are proven to be completely and utterly untrustworthy, proven to be people who should not have the authority to be directors of companies, to be people who engage in false, misleading and deceptive conduct and who have engaged in activities to enable them to obtain a financial benefit by deception, that the stigma attached to Multiplex Constructions may rub off on to Multiplex Bauhaus.  This is of great concern to us.

    However, these issues should be put to the test, to make good men better.  Fortune favours the brave.  So I look forward to the final outcome.”

15. Again, the letter is uncompromising in its attitude. 

16. This proceeding was commenced on 14 May 2002.  On 16 May 2002, the applicant wrote to certain of the respondents attaching a document referred to as “Bauhaus Supplementary Completion Deed”.  The facsimile communication requested that the deed be executed by 9.00 am the following day.  The facsimile said that if the deed was not received by that time:

    “We will have no option but to commence the proceedings that are before the Court.”

    That is presumably a reference to an intention to continue to prosecute the proceeding that had been commenced two days earlier. 

17. The first return day of the proceeding was 17 May 2002.  On that day I granted an injunction, up to and including today, and fixed today as the date for the hearing of applications for interlocutory relief as I have already indicated.  On 23 May 2002, Landerer and Company, solicitors, who were then acting for all respondents, wrote to Minters.  The letter is headed, “Without Prejudice as to Costs”.  The letter says relevantly:

    “In a final effort to settle this matter and to save the considerable legal costs on both sides associated with the extensive preparation of this matter for hearing with Counsel, we advise that our clients would be prepared to consent to orders 2(b), 2(c) and 2(d) of the application filed 14 May 2002 subject to and conditional upon the following:

    (a)      the application being dismissed by consent with orders to costs;

    (b)the applicant acknowledging that the costs in these proceedings or in any other existing proceedings between the parties do not fall within the definition of ‘secured money’ and The Deed of Charge and Mortgage between the applicant and first respondent dated 20 April 2002;

    (c)the parties release each other from all claims, demands, suits, actions or proceedings arising out of or relating to the claims, the subject of the application filed 14 May 2002 in these proceedings.

    We advise that this offer is open for acceptance until 1.00 pm on Friday 24 May 2002.”

18. Minters replied on the following day, in effect rejecting the offer.  The letter went on to say:

    “Our client sees no reason why it should not be entitled to the relief that it seeks in these proceedings, and in the circumstances of your clients’ conduct, and order that they pay our client’s costs on a full indemnity basis.”

19. The reference to the deed of charge is a reference to an instrument entitled, “Deed of Charge and Mortgage” between the applicant and Bauhaus Pty Limited.  That is, in fact, a reference to Multiplex Bauhaus as appears from the Australian Company Number contained in its name.  The deed charges the assets of Multiplex Bauhaus with the payment to the applicant of “the secured money”, which is defined as all money that Multiplex Bauhaus is or may at any time be liable to pay to the applicant on any account or in any way whatsoever including by way of principal, interest, fees, costs, charges, duties, expenses, indemnity, guarantee obligations or damages.  There is other litigation on foot between certain of the parties to this proceeding.  Accordingly, a requirement that the costs in those proceedings would not be treated as secured money within the meaning of the deed of charge could well have significant commercial consequences. 

20. It is against the background of those communications that I am called upon to exercise the discretion as to whether to order the respondents to pay the applicant’s costs of the proceeding.  It is unfortunate that this proceeding has reached the stage that it has.  There appear to me to be substantial costs that have been incurred unnecessarily.  Nevertheless, it is necessary to decide who should bear them.

21. Having regard to the unequivocal attitude evinced in Mr Byrnes’ letters, notwithstanding the tempering effect of the communication from Andersens of 9 May 2002, I am satisfied that the applicant was well justified in commencing and pursuing the proceeding in the circumstances in which it did.  Had there been an unequivocal undertaking to consent to Orders 2(b), 2(c) and 2(d) of the application on 23 May 2002, it may have been appropriate that the applicant not be given any costs after that time. 

22. However, as I have said, the qualification contained in the letter from Landerer & Company appears to me to be capable of having significant commercial consequences.  It follows that one could not conclude that the result following the undertakings that have now been given is more favourable to the respondents than the proposal that would have arisen from acceptance of the offer of 23 May 2002.  In all the circumstances, I consider that the appropriate order is that the respondent should pay the applicant’s costs of the proceeding up to and including today. 

I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated:             4 June 2002

Counsel for the Applicant:	Mr T. Bathurst QC & Mr A. Franklin
Solicitor for the Applicant:	Minter Ellison
Counsel for the Respondent:	Mr M. Pesman
Solicitor for the Respondent:	Landerer & Company
Date of Hearing:	28 May 2002
Date of Judgment:	28 May 2002