NOT FOR GENERAL DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALTA } ) VICTORIA DISTRICT REGISTRY ) V. No. G 206 of 1984 } J GENERAL DIVISTON ETWEEN : JOHNS & LYNG GROUP PTY. LTD. (formerly known as WHITEINCH PITY. LTD. and CLA&SiCc TIMBER PRODUCTS PI?. LTD.) Applicant and ELDAWOOD ENTERPRISES PTY. LTD. (formerly known as CLASSIC TIMBER PRODUCTS (AUST.) PTV. LTD.) and CHARLES CARLYLE BRYANT Respondents COURT: NORTHROP J. DATE: 6 APRIL 1337 PLACE: MELBOURNE MINUTES OF ORDER THE COURT ORDERS THAT: - l. The application be dismissed. Ze The applicant pay four fifths of the respondents' costs. (Settlement and entry of Orders 1s dealt wath in 0.36 of Rules of Court.) IN_THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V. No. G 206 of 1384 GENEPAL DIVISION BETWEEN : JOHNS & LYNG GROUP FTY. LTD. (formerly known as WHITEINCH PTY. LTD. and CLASSIC TIMBER PRODUCTS FTY. LTD.) Applicant and ELDAWOOD ENTERPRISES PTY. LTD. (formerly known as CLASSIC TIMBER PFODUCTS (AUST. ) PTY. LTD.) and CHARLES CARLYLE BRYANT Respondents COURT: NORTHROP J. DATE: 6 APRIL 1987 PLACE: MELBOURNE REASONS FOR JUDGMENT It is most unfortunate that these proceedings came on for trial. The trial was lengthy and the costs incurred by each party must be very large. From a consideration 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 proceedings 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 issues between the parties. Thus the amended statement ta of claim was a prolix document containing 21 paragraphs. The defence to the amended statement of claim contained Zl paragraphs each paragraph of which was either a non admission or a denial of the allegations contained in each paragraph of the statement of claim. Such a pleading 15 not of a standard suitable to the practice and procedure of this Court and this matter will be mentioned later in considering the question of costs. As a result of the poor standard of pleadings, the hearing of the proceedings took on aspects of a fisning expedition. Many matters were raised which, as 1t 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 during the hearing, the Court questioned the relevance of evidence, but because the issues had not been identified by the Pleadings, I was not sufficiently certain of them at the time to be able to exclude the evidence on the ground of being irrelevant to any issue between the parties. Much time was spent on the question of the credibility of the respondent, Charles Carlyle Bryant ("Bryant"), but I should state immediately that I have formed the view that he was a witness of truth who at all relevant times was doing his best to help and assist the applicant. Because of the opinions I have formed, 1t is mot necessary for me to consider much of the evidence given at the hearing of these proceedings. «G An Gutline of the relevant facts will assist im an understanding cf thas case. In May 1381, the respondent, formerly known az Classic Timber Products (Aust., Pty. Ltd. ("the respondent company"), was carrying on the business of manufacturing stairways at 1ta factory at Clayton under the name Classic Stairways and Classic Timber Products (Aust.) Pty. Ltd... Its main business was the manufacture of spiral staircases. The best quality staircase was known as the Classic Deluxe model, but there were two cheaper models known as the Classic Fineline model and the Classic Trimline model respectively. The staircases ware said to be designed in Scandinavia and manufactured in New Zealand from rich grained natural timbers. Not all 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 Clayton. The parts required depended upon the nature of the premises in which the staircase was to he installed and matters related thereto. The use of the staircases had to be approved by municipal authorities applying building regulations. The component parts of the staircases were installed in buildings either by builders engaged by customers or by sub-contractors engaged by the respondent company to install them on behalf of customers. The respondent company was incorporated in Victoria and was controlled by Bryant and his wife, Mrs. Bryant. It took on the name Classic Timber Products (Aust.) Pty. Ltd. in August 1977. On 23 January 15980, My. and Mes. Bryant caused the Business name "Classic Stairways" to be registered under the m a Business Names Act 1362 (Vic.). The names "Classic Stairways" and "Classic Timber Products (Aust.) Pty. Ltd." were displayed prominently at the Clayton factory. Mr. Bryant caused an advertisement to be inserted in the Financial Review of Friday, 23 May 1981 announcing a business for sale. Under that heading there appeared the following:- "Established company marketing specialist imported products used in the fields of * Home renovations x New homes * Offices - new/refurbished Attractive leasehold premises in Melbourne area, includes showroom, offices, store and work area. Price $106,000. Price includes stock, fittings and plant. Apply in writing in first instance to: Mr P. Kerr, Chartered Accountant, 276 Waverley Road, East Malvern, 3145." mm This advertisement was brought to the aktention of Robert William Lyng ("Lyng"), a director of a mumber of companies which for many years had been engaged in the bu1rlding industry and other industries. In practical terms, Messrs. Bryant and Lyng are the opposing parties 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, discussions took place between them and other officers on behalf of both interests, as to the nature of the business of Ehe respondent company and the terms upon which that business could be sold to the Lyng interests. These discussions took place over some weeks and eventually agreement was reached concerning the sale of the business. Some tame later, an agreement in writing for the sale of the business was entered into. That agreement was dated 8 September 1981 but under the agreement settlement took place on the previous day, 7 September 1981. The negotiations between Bryant and Lyng were amicable. Each was represented by solicitors. The delay in the execution of the agreement in writing was caused by problems in drafting the special conditions contained in the agreement. The agreement was in the standard copyright sale of business form. It was made between the respondent company 45 vendor and Whiternch Pty. Ltd. of 338 Separation Street, Northcore, a5 purchaser. Whiteinch Pty. Ltd. was a shelf company acquired by the Lyng interests for the purpose of the purchase. Subsequently, 1t changed its name to Classic Timber Products Pty. Ltd. The Northcote address was the address at which the Lyng group of companies carried on their various businesses. By clause 1 of the agreement, the respondent company agreed to sell to Whiteinch Pty. Ltd. which agreed to purchase, all the raght title and interest "in the Stairway manufacturing business" heing carried on at the Clayton premises together with specified chattels valued at $7,890.00 and the goodwill of the Business valued at $18,891.00, for the purchase price of $26,781.00. Under Clause 2, the purchase price was to be paid by a deposit of $2,500 om the signing of the agreement. The balance of the purchase price, 624,281.00 plus adjustments, stock at valuation and goods in transit was to be paid on 7 September 19381, being the settlement date. The stock at valuation was of the order of $63,000.00. Under clause 5, possession was to be given on the settlement date and upon the payment of the amounts set cqut in clause 2. This was done. Under condition 2, the respondent company was required to sign all documants required to enable Whiteinch Pty. Ltd. to apply for the transfer into its name of, inter alia, the business mame used in connexion with the business. Condition 7 contained a restraint of trade provision limited to the Melbcurne Metropolitan area whereby the respondent company agreed that it would not, for a period of three years, engage in a business of like mature to that sald to Whiteinch Pty. Ltd.. Condition 13 provided that the business and chattels were sold "without any warranties or conditions other than those contained" in the agreement. The agreement cantained a number of special conditions. Under special condition 1, Whiteinch Pty. Ltd. agreed to reimburse the respondent company the sum of $3,658.04 being, in éssence, advertising expenditure incurred by the respondent company with respect to continuing advertisements for Classic Stairways. 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 directory, 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 display at the Building Centre, Albert Street, Melbourne, and brochures which had been prepared and printed by the respondent company. These brochures were of a high quality glossy Nature depicting the three types of spiral staircases manufactured by the respondent company. The brochures used the word "Classic" ina stylised script form. The amount involved for the brochures was $802.50 and at the bottom of the front page the brochures had the notation:- "CLASSIC TIMBER PRODUCTS (AUST.) PTY. LTD. OWRIOMS: 44F Winterton Road, Clayton 3168 one: S42 4121 . 543 4511 @paration Street, Northcote 3070 ephone: 489 7683." Those addresses and phone numbers referred to the Clayton premises of the respondent company and the premises of the Lyng interests respectively. The brochures were available at the August 1981 Sun Home Show, having been prepared in the expectation that the sale would proceed. Special conaiftion 2 contaired detaried xsrovisions for calculating the price of stock ain hand. The stock included components for the spiral staircase from either of two original suppliers in New Zealand being Dunlop of Invercargill and Graham of Wellington respectively. Special condition 4 contained provisions relating to stock in transit pursuant to orders placed with Dunlop, the value of which was NZ $9,000. Special conditions 8 and 9 are set out in full:- "Ss, On settlement date the Vendor shall deliver to the Purchaser a Statement of Change of Registered Particulars in respect to the Registered Business Name of 'Classic Stairways signed by Charles Carlisle Bryant of 28 Meredith Street, Mount Waverley who 15 a Director of the Vandor and is the registered owner of the said Name. Also at settlement date the Vendor shall pass a Special Resolution in order to change its name to a name other than Classic Timber Products (Aust.) Pty. Ltd.' or any name incorporating the words 'Classic', 'Classic Timber', 'Classic Stairways' or any like name. . Far a period of four weeks next following the ettlement date the said Charles Carlisle Bryant shall continte to work im the said business without salary and during such time shall use his best endeavours to introduce the Purchaser to customers, suppliers and others who may have dealings with the said business." 3 It should be noted that Bryant and Mrs. Bryant were registered as the proprietors of the business name "Classic Stairways." The respondent company and Bryant complied with these two special conditions. As a result of compliance with special condition 8, Classic Timber Products (Aust.) Pty. Ltd. changed its name to Eldawood Enterprises Pty. Ltd. and thereupon Whiteinch Pty. Ltd. changed its name to Classic Timber Products Pty. Ltd. Sometime after settlement, Classic Timber Products Pty. Ltd. closed its operations at Clayton when the lease of those premises expired and transferred the operations to the Northcote premises of the Lyng interests. Thereafter, the endorsement appearing at the foot of the front page of the brochures was altered to read:- "CLASSIC TIMBER PRODUCTS PTY. LTD. SHOWROOM: 338 Separation Street, Northcote 3070 Telephone: (03) 489 7688." Classic Timber Products Pty. Ltd. continued to manufacture and sell the three models of the Classic staircases - the Deluxe, the Fineline and the Trimline. The Lyng interests, through 1t5 company Classic Timber Preducts Pry. Ltd., was exhibiting its range of Classic spiral staircases at ats stall ak the Sun Home Show in late August 1982. On Friday, 29 August 1982, R.A. Graham Limited and R.A. Graham ("Graham") as applicants commenced proceedings in this Court against Classic Timber Products Pty. Ltd. and Charles Carlyle Bryant as respondents in matter V. No. G 115 of 1982. On that day, Graham obtained an ex parte interim injunction restraining those respondents until 4.15 p.m. on Monday, 23 August 1982 or further order from, in substance, using the word "Classic" in connexion with the advertising or selling of spiral staircases. The interim injunction was served on Lyng at the Home Show on Saturday, 21 August 1992. It should be noted that neither the interim injunction nor the application was served on Bryant. Eventually his name was removed from the proceedings. Bryant was never a party to the proceedings brought by Graham. The interim injunction lapsed at 4.15 p.m. on 23 August 1982. The Lyng interests engaged in frantic activity following the service of the interim 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 connexion with spiral staircases. To put this view in technical terms, Bryant believed that in Victoria, Graham had not established a reputation or goodwill in the word - 1L - "Classic" with respect to spiral staircases, that he, Bryant, had had the right to use the word and that he, Bryant, had transferred that right to the Lyng interests. Bryant took the view that the Lyng interests had a good defence to the action brought by Graham and he did everything he could to assist the Lyng interests. To that end, he had numerous telephone conversations with the solicitors for the Lyng anterests, he came to Melbourne for conferences, and he prepared long and detailed statements in which he set out his version of what had occurred. Bryant did mot seek legal advice. The U&yng interests did not join Bryant as a cross respondent in the action brought by Graham. The legal advisers of the Lyng interests had all those statements at the trial of the present proceedings. Bryant did not have a copy. The evidence Bryant gave before me was remarkably consistent 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 determination of the hearing of the Graham action or further Order they would not use the word "Classic" in connexion 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 solicitors for the Lyng interests. There were unusual features both with respect to the form of the agreement and the way in which Bryant came to sign it. I donot find it necessary to explore those aspects further. Bryant was puzzl nf das to why the action was being settled and he sought answers from the solicitors for the Lyng ainterests. Nevertheless, under the agreement, Bryant agreed to make certain payments to the Lyng aunterests. By consent orders made on 27 May 1983, the Graham action was settled. Classic Timber Products Fty. Ltd. consented to permanent injunctions restraining it from using the word "Ciassic" with respect to advertising or selling i spiral staircases, It agreed also to cancel the business name "Classic Stairways" and the company name "Classic Timber Products Pty. Ltd." and to pay $2,000 damages and costs. As a result of these orders, Classic Timber Products Pty. Ltd. changed its mame to Johns & Lyng Group Pty. Ltd. ("the applicant"). The applicant has continued to manufacture and sell spiral staircases under the names Deluxe, Fineline and Trimline but has not used the word "Classic" with respect to any of them. Bryant made no payments to the applicant of any of the amounts specified in the October 1982 agreement. Towards the end of that year, he consulted his solicitors who by letter dated 30 December 1982 wrote to the solicitors for the applicant denying any liability ain Bryant under the October 1982 agreement and any liability for breach of the agreement Tor the sale of business dated 9 September 1981. This letter 1s of importance since under the Octoher 1982 agreement Bryant agreed to indemnify the applicant against all losses - 13 - and coasts incurred by the applicant as a result of the Graham proceedings and to pay to the applicant $12,000 towards the expenses of the applicant in promoting the sale of the spiral Staircases under a name other than "Classic. The consideration for those obligations was stated to Ee the forbearance of the applicant from issuing proceedings against Bryant whether by separate action or by cross action in the Graham proceedings and based ona breach of warranty of the sale agreement of September 1981. By the time of the settlement of the Graham action in May 1983, the applicant knew that Bryant was denying liability under the October 1982 agreement, but nevertheless the applicant consented to the orders made in the Graham action. The present proceedings were commenced on 13 July 1384. By its application, the applicant is seeking a declaration and damages against the respondent company based on s.52 of the Trade Practices Act 1974 with respect to conduct leading up to the sale agreement dated 8 September 1981 and a similar declaration and damages against Bryant on the basis that he aided 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 misstatement and fraud. It should be noted that there was no claim based on the October 1982 agreement. ' - ld - A reading of the amended statement of claim, which is dated 15 October 1985, leaves the wmpression that in reality the applicant's claim is based on breach of the agreement for sale of business dated 8 September 1981. The Pleading 1s prolix and repetitive. It contains many allegations which were abandoned at or before trial. The claim based upon the Trade Practices Act appears to have been added as an afterthought. In reality, the conduct complained of msists of representations which were made terms of the ia fa) n n Ww by tr gr iD 1D a ment in writing. The same representations which are said constitute conduct in contravention of 5.52 of the Trade Practices Act are said to be oral oy ampliad terms of the agreement of sale, terms of the written agreement of sale, collateral warranties, 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 applicant claimed damages in the sum of §160,664. In this context, it must be remembered that at all times since September 1981, the applicant has manufactured and sold the three models of spiral staircases, the Deluxe, the Fineline and the Trimline. It has continued to use timber components imported from New Zealand. It as continuing to manufacture and sell those staircases. The only change is that it has ceased to use the word "Classic" in connexion with the advertising, promotion and sale of the staircases. + During the opening adaress by jccunsel for the applicant, the Court raised th wD question of the accrued jJurisdicticn of the Court but was orepared to exercise that Jurisdiction. During the course of final submissions, the Court was informed that there were proceedings pending in the Supreme Court of Victoria in which the applicant was suing Bryant on the October 1382 agreement. The Court raised the issue whether, in those circumstances, it should continue to exercise its accrued jurisdiction since the proceedings in this Court would not determine finally all the issues arising out of the substratum of common facts giving rise to the dispute hetween the parties. Later, and hefore final submissions had been completed, the Court was informed that the Supreme Court proceedings had bean discontinued. During the opening address by counsel for the applicant, and om a number of occasions during the course of the hearing, the Court raised the question 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 1981, the applicant had no right to use the word "Classic" in connexion with the advertising, promotion and sale of spiral staircases. This appeared to be accepted but in order to establish that fact, the applicant called evidence from the Graham interests directed to the dealings between Bryant and Graham. As a result, the proceedings developed as 1f in truth the action was one between Graham and Bryant but without the benefit of the normal interlocutory proceedings such as pleadings and discovery - 16- having been had between Graham and Bryant. Graham kept producing documents which had not been discovered, many of which were documents written by Bryant. Counsel for the applicant cross-examined Bryant vigorously and at length making full use of these documents which had been written many years before. As a result of the whole of the evidence, I formed the opinion that Bryant was awitness of truth giving evidence to the best or his knowledge and recollection. aAt the same time, I formed the view that Robin Alexander Graham, the main witness from the Graham interests, Was a person whose word could not always be trusted. He presented as a rather incompetent man of business whose judgment was suspect. Although he had used the name "Classic" in New Zealand, he had not registered that name under any legislation in New G@ealand or Australia with respect to spiral staircases, or for that matter, any other product. At the request of the parties, the Court agreed to hear and determine the issue of liability before entering upon any question of damages that should be awarded if the applicant proved its case on liability. In opening his final submissions, counsel for the respondents contended that the issue in this case was whether Graham had any reputation or goodwill attaching to the use of the word "Classic" in Victoria in September 1981 ain association with spiral Staircases. This avplied to the word "Classic" whether in 1ts stylised form or not and as used by Bryant and the applicant with respect to the Deluxe, Fineline and Trimline staircasas. In my opinion, that is the issue to be decided in this case. Counsel conceded that if Graham did have a reputation of that kind, neither the respondent company nor Bryant had the right to represent 1t or he had the right ta sell that name fo the applicant and therefore would he liable, on some ground or other, to pay damages to the applicant. In my opinion, that concession was made correctly. Counsel contended further that on the evidence, the applicant had failed to astablish that in Victoria Graham had acquired at any relevant time a reputation or goodwill attaching to the use of the word "Classic" used in connexion with the advertising, promotion and sale of spiral staircases which could have been protected by action based on 5.52 of the Trade Practices Act and therefore the application must fail. I accept that contention and hold that the application has failed to prove the basic facts on which the whole of its claim rests. In the unusual circumstances of this case, I do not find it necessary to refer to the whole of the evidence relating to the dealings between Bryant and Graham. A brief outline of my findings will sufface. - 18 - Graham developed in New Zealand a spiral staircase ad oto. The NG Similar to the Deluxe model already referr sbaircase utilised attractive New Gealand timber for its ct component parts but the staircase was Supported by a metal post which was hidde fe a oO m sight by the timber. Graham developed the word "Classic" ain association with the spiral staircase. The word "Classic" was used either in a stylised form or normal printing. The relevant fact is that the word "Classic" was used. From about the middle of the 1970's, a company incorporated in Victoria, Weathermaster Pty. Ltd. (in Receivership) (""Weathearmaster"), began selling Classic staircases in Victoria. On 9 February 1977, an agreement in writing was entered into between Weathermaster of the one part and R.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 'Classic' spiral staircase" and had marketed the name in New Zealand and elsewhere and a statement that for some time Weathermaster by arrangement with Graham had been marketing, distributing and installing Classic staircases in Victoria. Under the distributorship agreement, Graham appointed Weathermaster the sole distributor of the Classic staircases in Australia. The exclusive nature of the agreement was that Graham would not sell any of the parts of the staircases to anybody in Australia except Weathermaster. Weathermaster at - 13 - undertook to market the staircases in Australia "under the name and style of 'Classic' spiral staircases" and no other brand or namz. This venture failed. There 15 no evidence to suggest that as a result of activities carried out by Weathermaster, Graham acquired a reputation or goodwill in Victoria with respect to the word "Classic" in connexion with spiral staircases. If any reputation or goodw1iil in Victoria had béen established, it was with respect to Weatnhermaster. One thing is clear, Weathermaster was not atting as the agent of Graham in the case of arranging 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, the receiver manager of Weathermaster. As 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, for the purpose of manufacturing and marketing the Classic staircase in Victoria. A letter of intent was signed by the three negotiators on 18 August 1977. Under the arrangement the proposed company would take over the liabilities of Weathermaster with respect to outstanding sales of staircases and to purchase the component parts cf the staircases which were being held by Weathermaster. What 13 clear, the company ta be formed was nat ta purchase the business o£ Neathearmastecr. The terms of the Jlettler of intent were never carried out. Graham provided no finance for the venture. T do not need to make findings as to why not. Bryant went ahead on his own. He introduced the word "Classic" into the name of the respondent company. Bryant provided the finance to enable that company to commence business and to take over the obligations of Weathermaster. Graham knew of the use of the word "Classic" by Bryant and dad not object to that use. The respondent company purchased component parts from Graham. The respondent company planned and developed the Fineline and Tramline models. It provided details of the component parts of those models to 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 business of promoting and selling Classic spiral staircases in Victoria. It advertised widely using the name "Classic" with respect to the staircases. It exhibited the Classic staircases at the Master Builders' display centre. There were some desultory advertisements in which 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 advertising and promotion of the name "Classic" associated that name with the respondent company. The evidence does not astablish that Graham had established a goodwill or reputation in Victoria with respect E-o the word in assoclation with spiral staircases. No evidence was called to establish that in the building industry or 1ctoria, Graham had any such goodwill or reputatizon. Lyng had not heard of Graham in connexion with the "Classic" staircases. The applicant contended that there was an agreement, similar to the distributorship 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 he entered into between Graham and purchasers of the staircases. In these proceedings, I am not concerned with any breach of contract claimed by Graham against the cespondent company. I am not satisfied that in promoting the word "Classic" the respondent company was acting as agent for Graham in the sense that any goodwill or reputation attaching to that word was in law owned by Graham. All the evidence shows that the respondent company was using the word "Classic" with respect to its own business. Difficulties arose with respect to the reliability of delivery by Graham to the respondent company of component Parts of the spiral staircases. The respondent company commenced to purchase the timber component parts from another company in New Zealand, namely, Dunlop of Invercargill. As time went by, more of the surchases were from Dunlop and less from Graham. By August 1380, Graham was expressing concern to the respondent company about the decline of sales. The respondent company was considering the sale of its business. By October 1980, Graham was considering purchasing the business. In January 1381, discussions were continuing and Graham was expressing the view that he would be interested in helping Bryant to sell "the stair business either to R.A. Graham Limited or to an outsider." Details of the business were sought but not supplied. In March 19651, Bryant was advised that the respondent company's "sole agency for R.A. Graham Limited products in the State of Victoria is terminated from the 3lst March 1981." In June 1981, Graham notified the respondent company that Graham had appointed a new selling agent to handle their products. The new selling agent insisted on a sole agency to be applied in the sense that Graham would not sell its component parts of spiral staircases to any other person in Victoria. During negotiations between Bryant and Lyng, Bryant told Lyng of some of the difficulties concerning the purchase of component parts for the staircases. He told Lyng that he was getting the component parts from Dunlop. A meeting was arranged between Bryant, Lyng and Dunlop. Lyng and Dunlop Made their own arrangement with respect to the supply of the component parts. This arrangement has continued and the applicant has received and 15 receiving the camponent parts For its sgiral staircases from Dunlop of Invercargill. The applicant has failed to establish that between May and September 1981, Graham had any goodwill or reputation in Victoria in the word "Classic" in association with spiral staircases. The applicant has failed to establish that between May and September 1381, the respondent company had no goodwill or reputation in Victoria in the word "Classic" ain association with spiral staircases. The respondent company had been using that word in connexion with spiral staircases For a number of years. It was advertising that word extensively. It was carrying on business under a name which used the word "Classic." In August 1981, aut conducted a stall at the Sun Home Show in which it used that word. Graham's new selling agent had a stall promoting "Classic" Staircases. Lyng attended that Home Show. At the = same Home Show, the new distributor appointed by Graham had a stall promoting "Classic staircases. Lyng saw that stall. I find it incredible that Lyng did not see the word "Classic" used in relation to the spiral staircase used at that stall. This was ata time before the contract of sale of business had been signed. Graham attended that Home Show in August 1981. He knew that the respondent company was carrying on business using the word "Classic" and was selling spiral staircases under that - 24 - y name. He said ha spoke to Bryant who, he said, told him he was just selling the surplus component parts. T do not accept the evidence of Graham on this point. Bryant said he told Graham he had sold or was in the process of selling the business. I accept that evidence. From earlier correspondence and meetings, Graham knew Bryant was attempting to sell the business. If Graham had believed that Bryant had no right to use the name "Classic" I would have expected him to take much more interest and possinly have taken action against Bryant as a result of the activities of Bryant at the 1531 Home Show. Graham said that he saw the "Classic" brochures prepared by the respondent company and distributed at the Home Show but did not read any of them. A model of the Deluxe model was on display. The brochures complemented the model staircase. The brochures had heen newly developed. They had not bean seen previously by Graham. They were attactive and appealing. They depicted the three models manufactured by the respondent company. They invited closer examination. They showed the two addresses, at Clayton and at Northcote. I find it incredible that Graham did not study the brochure. Graham took no steps to try to stop Bryant from using the word "Classic" ain relation to his business, his company or with respect to spiral staircases. One would have expected a person who claimed to have a goodwill or reputation in the name "Classic" in association with 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, without prior warning, took legal action all fhe circumstances, T am nok satisfied, = against Lyng. cl all on the balance probabilities, that the respondents had no eight ro use th it au word "Classic" in Vactoria with respect ta Ssplral staircases hetween May and September 19a1. In the Circumstances of this case, T do not need to make a finding that Bryant had a goodwill or reputation with respect to the word "Classic" and I make no finding on that issue. It is sufficient to find the negative, namely that the applicant has not proved that Bryant did not have that goodwill or reputation. I find that Graham did not, in Victoria, have that goodwill or reputation in Victoria, at that time. This finding 15 supported by the failure of Graham to take any action until the expiration of one year from the 1981 Sun Home Show. That failure is consistent with the findings I have made. In his final submissions, counsel for the applicant sougnt to use the admissions against interest made by Bryant in the October 1982 agreement to support a contention that neither Bryant nor the respondent company had any right to sell the name "Classic" an connexion with the spiral staircases. I reject that contention. The validity of the October 1982 agreement is disputed by Bryant's solicitor. The applicant 15 not suing on that agreement. The unusual facts by which the October 1982 agreement was signed suggest care should be taken in relying upon the terms of the agreement. - 26 - Counsel attempted to rely upon expressions of opinisn contained in H.P. Bulmer Ltd and Showerings Ltd. v. cd. Bollinger S.A. and Champayjne Lanson Pere et Fils (1578) 935 R.P.C. 79 to support the contention that Graham had 4 sufficient interest in the use of the word "Classic" to support an order preventing Bryant from using that word in connexion with the promotion and sale of spiral staircases and thus the respondents were liable to the applicant with respect to the sale of that word to the applicant. That authority makes 1t clear that before the proprietary right can be enforced, the right in the reputation or goodwill sought to be protected must be with respect to a particular person in the area in which the right 1s 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 the word "Classic" in connexion with the promotion or sale of spiral staircases. This authority does not assist the applicant. Earlier in these reasons, reference is made to the contention made on behalf of the applicant, that there existed an agreement between Bryant and the respondent company of the one part, and the Graham interests on the other, similar in form to the distributorship agreement between Graham and Weathermaster. Before the letter of intent was signed on 18 August 1977, there had been prepared adraft of a distributorship agreement between the Graham interests and Bryant and the respondent company. Bryant saw that draft agreement before he signed the letter of intent. Classic Timber Preducts Fty. Ltd. was named as a party ta that agreemenc =o an inference can be drawn that before then Graham had agreed to the use of the word "Classic" in the name of the respondent agreement. The draft agreement was never executed. Tne terms of the letter of intent were never implemented. Counsel for the applicant contended that Graham supplied the component parts of the spiral staircases pursuant to implied terms being the terms contained in the draft agreement. The recitals to the draft agreement include a recital referring to the letter of intent (but undated). Another recital stated that 1t was the intention of the parties to enter into the draft agreement in order to adopt and confirm the letter of intent "and to record facilitate and extend the arrangements under which the spiral staircase and other products of Graham are to be marketed distributed and installed" by the respondent company. The draft agreement was in a form similar to the Weathermaster distributorship agreement. Under the draft agreement, the respondent company was to purchase certain components of a Spiral staircase from Graham in accordance with 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, including the exclusive right during the term of this Agreement to purchase the components for resale in Australia upon the terms and conditions" contained in the draft agreement. Under the draft agreement the respondent agreed that it would use its best endeavours to promote and extend the sales of Classic spiral staircases and would not, - 22 - "without the prior consent in writing of Graham be concerned in the manufacture, promotion, aimportation oar sale ar advertisement of goods in Australia whether made of wood or other materials which are like or similar cto or which either alone or in conjunction with some other product perform se are designed to perform the name or a samilar function to or which might otherwise compete or interfere with the sale of any of the spiral staircases." It was to act as a principal and not as the agent of Graham. Under the draft agreement, Granam agreed, subject to some minor exceptions, not to sell Hy ny of the spiral 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 exclusive rights granted to the respondent company. Counsel for the applicant contended that the avidence astablished that the Court should find that there was by implication an agreement between Graham and the respondent company containing all the terms contained in the draft agreemant and that as a result thereof, any reputation or goodwill arising from the word "Classic" in Victoria attached to Graham and not to the respondent company. Those contentions are rejected, The draft agreement was never executed. The terms of the letter of intent wera never implemented. Bryant provided the whole of the moneys, except some small amount which was paid by Graham by way of book entry with respect to a straight stairway, necessary to anable 1t to carry on its business. It carried nF on its business under extensively in its own name. that Graham did not acquire Victoria with respect to the Spiral staircases. Further, if there similar to that contained in action have had a cause of based upon breach of the Hospital Products Ltd. v. 1ts United States Surgical name. It advertised On the evidence, I have fsund any reputation or goodwill in word "Classic" in connexion with was any agreement of a kind the draft agreement, Graham may against the respondent company terms of thak agreement; see Corporation and others (1984) 156 C.L.R. upon by counsel for different from the upon any claim inter alia, breach of agreement. earlier in these respects, this and the second respondent. Even 1f there between Graham and itself, would not against the respondents. of a right by Victoria, the applicant. present and Hased upon passing off. case took on aspects of a case between had been a the respondent entitle the the respondents to 41, am authority strongly relied That was acase very on its face, does not rely It was based upon, It is in this respect that reasons the comment was made that in many Graham breach of agreement company, that breach, by applicant to claim damages That claim depends upon the absence the word "Classic" in an connexion with spiral staircases. Cid ra Lal hearing was extended unnecessarily y the form the defeanc ft] . Accordingly, the respondents should receive no more than four fitths of therr costs. Orders accordingly. en a van} Maat this aod the derity - nine (29) '25 pages are a true copy of the t Judgment herein of the cenowable Mz, justiea R Mm Northrep) Asseciate Sham UUUasn) Mert: © Opni (487 0000 To MESES 2 Re eee