Eagle Homes Pty Ltd v LED Builders Pty Ltd

[1999] FCA 1440

FEDERAL COURT OF AUSTRALIA

Eagle Homes Pty Ltd v LED Builders Pty Ltd [1999] FCA 1440

PRACTICE & PROCEDURE – application for a stay of proceedings pending appeal – winding up threatened.

EAGLE HOMES PTY LIMITED V LED BUILDERS PTY LIMITED

N 1034 OF 1999

JUDGE:         BEAUMONT J.
DATE:           14 OCTOBER 1999
PLACE:         SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1034 OF 1999

BETWEEN:	EAGLE HOMES PTY LIMITED Applicant
AND:	LED BUILDERS PTY LIMITED Respondent
JUDGE:	BEAUMONT J.
DATE OF ORDER:	14 OCTOBER 1999
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.        Matter stood over until Tuesday, 19 October 1999. 

2.        Otherwise, no order on the notice of motion.

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	N 1034 OF 1999

BETWEEN:	EAGLE HOMES PTY LIMITED Applicant
AND:	LED BUILDERS PTY LIMITED Respondent

JUDGE:	BEAUMONT J.
DATE:	14 OCTOBER 1999
PLACE:	SYDNEY

REASONS FOR JUDGMENT

BEAUMONT J:

1. There is before the Court a notice of motion seeking a stay of proceedings on orders made at first instance (1) by Davies J on an infringement of copyright action; and (2) by Lindgren J on proceedings for an account of profits, consequential upon the finding of infringement. 

2. The final orders made by Lindgren J in August 1999 included an order that the respondent, Eagle Homes Pty Limited (“Eagle Homes”), account to the applicant, LED Builders Pty Limited (“LED”), for profits in the sum $796,645.  Eagle Homes has now appealed as of right from both judgments.  I have ordered that the hearing of the appeals be expedited in principle, and although I have not yet finally confirmed the hearing dates for the Full Court hearing, the present indications are that it is probable that the appeals will be heard by a Full Court in the last week of November this year.  The appeals are estimated to take three days.  I have seen the draft index to the appeal book, and from that one gains the impression that the appeals will raise some complex issues.  In any event, counsel for LED has, in all candour, accepted that the appeals appear to raise arguable issues. 

3. The stay application is complicated by a series of collateral considerations.  Part of these considerations may be explained by reference to earlier collateral proceedings involving the grant of Mareva injunctions, some of which have been considered on a number of occasions in the appellate hierarchy. 

4. In short, Eagle Homes says that the effect of the Mareva injunctions now in place is to significantly inhibit its capacity to discharge financial obligations of any substantial dimension, and specifically the injunctions in practical terms prohibit it from discharging the substantial judgment, the subject of Lindgren J’s order for account.

5. Another aspect is that the financial position of Eagle Homes is, on its own accounts (now in evidence), such that, unless it is successful in other litigation brought against a party at arm’s length from the present parties, it does not have the liquidity to discharge, or even to substantially reduce, the amount of the judgment in the account of profit proceedings. 

6. On behalf of LED, reliance is placed upon a further collateral aspect, that is, the circumstance that it has initiated a winding up proceedings of Eagle Homes in the Supreme Court of New South Wales.  The present position is that it is has served a statutory notice of demand upon Eagle Homes, and Eagle Homes has moved to set that notice aside.  The matter stands presently fixed before a Registrar of the Supreme Court on 18 October 1999.  The indications are that on 18 October, LED will ask the Registrar to refer the matter to the company Judge for determination.  On that occasion, there will be, and indeed there has been before this Court today, an attempt on behalf of LED to propound a case similar to that advanced in support of the earlier claims by LED for Mareva relief;  that is, that the assets of Eagle Homes have been dealt with in a way that, at the very least, calls for investigation.  I will not attempt to describe even the essence of LED’s case in this connection, but on its view of the matter, timing has now become critical.  LED says that a six year limitation period will shortly expire and, unless litigation is initiated by a liquidator forthwith, time will bar claims that may otherwise be available against those involved in respect of its claim.  LED has in short alleged a dissipation of the assets of Eagle Homes.  I say nothing, of course, of the merits of those claims and, indeed, I have only a very general understanding of their nature.

7. If it were not for these collateral considerations, it seems to me that there would not have been any practical need for the grant of a stay in any event.  As I have said, the appeals, which have only recently been lodged, have been expedited and it may be anticipated that a Full Court will shortly embark upon their hearing.  In that connection, there is no suggestion of any prospect, in practical terms, that LED would endeavour to levy execution within the processes of this Court.  Rather, as I have said, the matter arises in an entirely collateral context and, as I see it, entirely within the framework of the proceedings in the Supreme Court of New South Wales.  As I have already indicated in the course of argument, I have neither the power nor authority to interfere in that process nor, if I had any such authority, would it have been, as a matter of discretion, appropriate that I do so.  I disclaim it entirely, as I see it as a matter of comity, for practical reasons, and as a matter of principle.  The question whether Eagle Homes ought to be wound up is entirely a matter within the jurisdiction and discretion of the Supreme Court.  For the same reasons the issues that arise in connection with the statutory notice of demand lie exclusively within the province of that Court.  I therefore propose to defer to the approach that the Supreme Court takes in that behalf, so far as that may be relevant to the exercise of the discretion which I have to grant or refuse the stay application.

8. As I have indicated, the winding up matter is before the Supreme Court on Monday.  In the circumstances, the appropriate order is that I stand the notice of motion before me over until Tuesday next, 19 October at 9.30 am.  As I have already mentioned to counsel, I propose on that occasion to review the present application, and I will hear full argument on the matter then, but in the light of the approach taken by the Supreme Court.

9. For those reasons I make no order on the notice of motion at this stage other than to stand it over to next Tuesday.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont.

Associate:

Dated:             14 October 1999

Counsel for the Applicant:	Mr R Cobden
Solicitor for the Applicant:	Banki Haddock Fiora
Counsel for the Respondent:	Mr I Jackman & Mr M Leeming
Solicitor for the Respondent:	Speed & Stracey
Date of Hearing:	14 October 1999
Date of Judgment:	14 October 1999