Eastcoast Underground P/L v Insituform Technologies Inc

[1994] FCA 931

93r J 97-

JUDGMENT No. ........ . ..... , ,. ....

IN THE FEDERAL COURT OF AUSTRALIA	)
1
PEW SOUTH WALES DISTRICT REGISTRY )	No. NG 3366 of 1994

)

L DIVISION 1

BETWEEN :  EASTCOAST UNDERGROUND PTY
LIMITED

Applicant

AND :  INSITUFORM TECHNOLOGIES
INCORPORATED

Respondent

3 November 1994

REASONS FOR JUDGMENT

This is a motion for leave to appeal from a interlocutory judgment of a judge of the Court (Lindgren J.) given on 17 October 1994. The matter before his Honour was an application by the applicant, Eastcoast Underground Pty Limited, by a notice of motion dated 12 October 1994 for an order that a notice to produce filed and served by the respondent Insituform Technologies Inc., be set aside. The notice to produce was filed on 28 September 1994 and calls upon the applicant to produce documents described in some 8 categories.

paragraphs are set out on page 3 of his Honour's reasons for

The applicant, Eastcoast, did not seek to have the notice to produce set aside insofar as it comprised paragraphs 7 and 8, so the matter proceeded before his Honour on the footing that the motion related to paragraphs 1 to 6 only. Those six

judgment and they include various documents relating to the
financial position of the applicant.

The substantive application before the Court in which the motion the subject of his Honour's judgment was made was an application by Eastcoast for an order setting aside a statutory demand under S. 4593 of the Corporations Law. The basis of that application is that there is an offsetting claim within the meaning of S. 459H(l)(b). The statutory demand was served on 4 July 1994 and is in respect of a total amount of $209,695.52. According to the demand, Eastcoast is said to be indebted to Insituform in that amount for goods supplied.

The alleged offsetting claim was said to arise in various
ways which his Honour described on page 2 of his reasons for
judgment and I shall summarise them. The first was a claim

under S. 52 of the Trade Practices Act 1974 which was put in various ways. The other way in which the offsetting claim is said to arise is that EastCoast says that it is faced with claims for its customers in respect of defective liners which

were supplied to it by Insituform and in turn supplied by it	to its customers.
The claim was described by his Honour as one for an indemnity, Eastcoast saying that there is a liability on the part of Insituform to indemnify Fastcoast in respect of such liability as EastCoast incurs to its customers arising from the defective goods. His Honour stated that the key issue in the substantive proceedings apparently would be the genuineness of the alleged offsetting claim.
The case of Insituform is that the alleged offsetting claim is an after-thought which has been contrived by Eastcoast to defeat its entitlement. It is said that the assertion by Eastcoast of the offsetting claim has been made only recently and, indeed, since the statutory demand was served. His Honour said that a question was raised as to the insolvency of Eastcoast, not as a basis for winding it up, but as an element in showing the alleged spuriousness of the offsetting claim. His Honour accepted the submission of counsel for Eastcoast that insolvency as such is not an issue in the proceedings. His Honour then went on to say this, and this is the crucial paragraph in his reasons for judgment:

"The spuriousness or otherwise of the alleged offsetting claim is clearly an issue. The question is whether the insolvency of the applicant is potential1 y relevant to the alleged fabrication of a spurious claim said to be the offsetting

claim. I think that it is."

In the result his Honour held that although the relevance of the various classes of documents referred to in paragraphs 1 to 6 of the notice to produce may vary as between themselves, he said that all paragraphs should be sustained. Accordingly, his Honour ordered that Eastcoastfs motion of 12 October 1994 for an order setting aside the notice to produce should be dismissed and that Eastcoast should pay the costs of Insituform of the motion.

Counsel for Eastcoast argues in support of his motion for leave to appeal that the decision of his Honour is attended by sufficient doubt to justify a Full Court reconsidering the question. He also says that substantial injustice would result to his client if leave is refused, assuming the decision of his Honour to be wrong.

The relevant principles which govern motions for leave to appeal are plain and I need simply refer to the judgment of this Court in Decor Corporation Pty Limited v Dart Industries Incorporated (1991) 33 FCR 397.

For present purposes the relevant considerations are (1) whether in all the circumstances the decision is attended by sufficient data to warrant it being reconsidered by a Full Court and (2) whether substantial injustice would result if

leave is refused, supposing the decision to be wrong. There

is also a principle that apperas to have become established

that the Court will generally refuse to grant leave to appeal from a decision on a matter of practice or procedure unless it is shown to work a substantial injustice to a party. I prefer for present purposes to base my approach on the first two points to which I have referred.

His Honour did not hold as a matter of principle that in any or every case where an alleged offsetting claim is raised by a company on whom a notice of demand has been served under

S. 4593 insolvency is relevant. He dealt with the issue

according to the facts of the case as they appeared to his Honour. He accepted the submission of counsel for Eastcoast that insolvency as such is not an issue in this present case, but that the spuriousness or otherwise of the alleged offsetting claim is clearly an issue and therefore the question whether Eastcoast is insolvent is in this case potentially relevant to the alleged fabrication of a spurious claim said to constitute the offsetting claim.

In my opinion the decision of his Honour is not attended by sufficient doubt to warrant a Full Court examining it. Indeed, I agree, with respect, with his Honour's view of the law as expounded by him. Nor am I persuaded that substantial or indeed, any, injustice will result if leave is refused,	even if the decision be wrong.	The motion for leave to appeal
is dismissed.

I order the applicant Eastcoast Underground Pty Limited to pay the costs of the respondent Insituform Technologies Inc of the motion for leave to appeal. I note that that will therefore carry with it the costs of an earlier application to another judge of the Court, Burchett J., when his Honour ordered on 27 October 1994 that costs of the application before him be costs in the application for leave to appeal.

I certify that this and the preceding five

(5) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate:	p-&-.-
Qatea:	3 November 1994

Counsel for the Applicant	Mr P Taylor
Solicitors for the Applicant :	Brock Partners
Counsel for the Respondent	Mr C R C Newlinds
Solicitors for the Respondent :	Gadens Ridgeway
Date of Hearing	3 November 1994
Date of Judgment	3 November 1994