A co-founder of raunchy lingerie chain Honey Birdette has lost a court battle with rich-lister Brett Blundy over her departure from his business.
A co-founder of raunchy lingerie chain Honey Birdette has lost a court battle with rich-lister Brett Blundy over her departure from his business.

Lingerie queen fails to win in claim against rich-lister

A co-founder of raunchy lingerie and sex toy chain Honey Birdette has lost her court battle against rich-lister Brett Blundy and his companies after a judge rejected her claim she was short-changed when she was forced to leave the business in 2014.

Janelle Barboza, who co-founded the lingerie chain in 2005 with then-partner Eloise Monaghan, took civil damages action against retail kingpin Mr Blundy, his company BB Retail Capital, Honey Birdette and the company's owner Bras N Things, claiming they engaged in oppressive and unconscionable conduct in relation to her exit from the business.

Ms Barboza launched the Supreme Court action in 2019, claiming Mr Blundy imposed an accelerated domestic expansion plan on Honey Birdette against her wishes which included taking over some of the shop leases and staff of the crumbling Diva jewellery franchises.

She said the expense of that expansion disadvantaged her because it reduced the amount she was paid when Mr Blundy exercised his call option to buy her shares in the business in 2014.

After a trial in the Brisbane Supreme Court in August last year, Justice John Bond today delivered his judgment in the case, rejecting the allegations the conduct of Mr Blundy and his companies was exploitative and finding Ms Barboza was not a reliable witness.

"I had the clear impression that she was couching her evidence to suit the case she was advancing at trial, rather than attempting to recite an actual recollection of what was said," Justice Bond said of Ms Barboza's testimony

 

Honey Birdette co-founders Eloise Monaghan (left) and Janelle Barboza
Honey Birdette co-founders Eloise Monaghan (left) and Janelle Barboza

Honey Birdette was founded by Ms Barboza and Ms Monaghan in 2005, and in 2011 it came to the attention of successful businessman Mr Blundy, whose company BBRC invested in the company via its business Bras N Things which became the 55 per cent majority share owner while the co-founders became minority shareholders.

Ms Barboza claimed she and Ms Monaghan were unhappy with a plan raised by entrepreneur Mr Blundy in late 2013 to have Honey Birdette take over some of the leases and staff of the struggling Diva jewellery and accessory franchise owned by BB Retail Capital.

Ms Barboza gave evidence the women were strongly opposed to transferring retail employees from Diva to Honey Birdette because they were not suitable for a number of reasons, including that many were minors whose employment would not be suitable given the mature range of products sold.

They were also concerned that Honey Birdette "was pitched at a high-end market and the staff employed in the retail stores had been carefully selected to support the image cultivated for the business and… Diva's retail staff did not necessarily match that image".

Ms Barboza claimed she expressed concerns the costs of the expansion, which also included plans to expand internationally into the United Kingdom, would put the co-founders at a financial disadvantage because their shares would be worth less in the first year that Bras N Things was entitled to exercise its call option to buy out their stake in the company.

However Justice Bond accepted the evidence of the defendants that Ms Barboza had supported the plans for expansion and was actively involved in selecting the Diva locations that Honey Birdette would take over.

 

Eloise Monaghan and Janelle Barboza
Eloise Monaghan and Janelle Barboza

"The plaintiff sought to characterise her conduct as acquiescence to decisions imposed by Mr Blundy rather than her enthusiastic participation," Justice Bond said.

"I did not find her evidence to be persuasive in that regard.

"The notion that Mr Blundy was imposing decisions was inconsistent with the tenor of the evidence of Mr (Anthony) Frzop, whose evidence was straightforward and honest."

Justice Bond found Ms Barboza's version of events had "inexplicably but clearly, altered over time" and he did not find her to be a "reliable witness".

The court heard Ms Barboza and Ms Monaghan had been in a long-term romantic relationship but had broken up in mid-2013

"The breakdown in their personal relationship led to an acrimonious working relationship, which played out in front of staff and to the detriment of the company's business," Justice Bond said.

"It caused great concern to the other directors of the company and … proved to be the catalyst for Mr Blundy making a decision which led to the plaintiff's exit from the company consequent upon the acquisition of her shares and the termination of her employment as one of the joint managing directors."

After the breakdown, Ms Monaghan began overseeing the Australian arm of the business while Ms Barboza travelled to the UK to begin the expansion there but it came to a standstill.

In September 2014, Mr Blundy made a decision that Bras N Things should exercise the call option over Ms Barboza's shares.

"He had hoped that the UK move would allow things between the plaintiff and Ms Monaghan to improve, but it had not," Justice Bond said.

"Although he held each of them in high regard, he felt that their relationship was toxic, was having an effect on their performance, and ultimately was having an adverse effect on the company.

Honey Birdette Valentine's Day collection. Photo: Florian Semanaz
Honey Birdette Valentine's Day collection. Photo: Florian Semanaz

"He felt that their behaviour was such that they had put him in a position in which he had to choose between them, in the best interests of the company.

"His judgment was that because the company was a products business and Ms Monaghan had always been the products person and had been continuing to run the Australian side of the business successfully, the call option should be exercised over the plaintiff's shares rather than Ms Monaghan's shares."

In December 2014, Ms Barboza challenged the termination in the Fair Work Commission and sought the reinstatement of her role but she was unsuccessful.

Justice Bond found Ms Barboza's claim that Mr Blundy imposed the Diva takeover despite her objections was a "false narrative".

"What really happened was that Mr Blundy correctly identified that the problems being encountered by his Diva business presented an opportunity to the company," he wrote in his decision.

"All relevant decision makers agreed. In particular, the plaintiff and Ms Monaghan were enthusiastic."

Justice Bond said the Diva takeover decision was a "decision properly taken in the company's best interests" and the expenses associated with the expansion did reduce Honey Birdette's net profit and therefore Ms Barboza's call option value and subsequent payout.

"But none of that makes the conduct which the plaintiff complains of commercially unfair as at the time the conduct occurred," Justice Bond said.

The matter will return to court for an argument in relation to costs later this month.

Originally published as Lingerie queen fails to win over judge in claim against rich-lister



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