FEDERAL COURT OF AUSTRALIA

Intellec Development Group Pty Ltd v 3D Funtimes Ltd [2011] FCA 797

THE COURT ORDERS THAT:

1.    The applicant be granted an extension of time until 13 May 2011 in which to seek leave to appeal from the interlocutory judgment of the Court pronounced by Justice Siopis on 21 April 2011 at Perth in WAD 348 of 2010.

2.    The applicant have leave to appeal from the interlocutory judgment of the Court pronounced by Justice Siopis on 21 April 2011 at Perth in WAD 348 of 2010.

3.    The application for a stay pending the appeal be dismissed on the undertaking of the respondent (now Tier Toys Ltd) in these terms:

                      (a)    in the event that the respondent forms an intention to sell the tooling or remove it 
                               from Western Australia it will not do so without first giving the applicant 
                               21 days written notice of its intention to do so;

                      (b)    in the event that the applicant succeeds on appeal the respondent will return the 
                               tooling to the applicant; and    

                      (c)    if the same appeal succeeds the respondent will not plead or rely on any argument
                              that any unpaid seller’s lien enjoyed by the applicant has been lost by reason of the 
                              applicant’s delivery of the tooling to the respondent.

4.    Costs be reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

APPLICATIONS BEFORE THE COURT

1    There are two applications before the Court. One is a notice of motion of the applicant for two substantive orders, the first being a grant of extension of time until 13 May 2011 in which to seek leave to appeal from the interlocutory judgment of Siopis J on 21 April 2011 in proceeding WAD 348 of 2010, and the second the substantive leave to appeal from that decision. The other notice of motion before the Court is the applicant’s notice of motion for a stay pending the determination of the application for leave to appeal and any appeal if allowed.

EXTENSION OF TIME

2    During the course of submissions, it became clear that it was appropriate to grant the extension of time for the application for leave to appeal until 13 May 2011.

3    Counsel for the applicant, Intellec Development Pty Ltd (Intellec), admits it was an error to believe that 12 May 2011 was the date for lodging the appeal when, under the Federal Court Rules, that was not so. This is not an issue pressed in any real way on behalf of the respondent, 3D FunTimes Limited (3D), a company which I note has changed its name and is now called Tier Toys Limited.

4    In these circumstances, I make an order in terms of paragraph 1 of the notice of motion dated 13 May 2011 that the applicant be granted an extension of time until 13 May 2011 in which to seek leave to appeal from the interlocutory judgment of the Court pronounced by Siopis J on 21 April 2011 at Perth in WAD 348 of 2010.

LEAVE TO APPEAL

5    The primary question is then whether leave to appeal the interlocutory decision of Siopis J should be granted. The proceeding has its own interesting history, that is, the proceeding in WAD 348 of 2010, in which 3D was the applicant for relief and Intellec was the respondent. Intellec seems to have done very little by way of actually instructing lawyers, although lawyers initially went on the record on behalf of the company.

6    The matter was listed for a summary judgment application on 31 January 2011. Intellec did not attend and summary judgment was entered. By notice of motion dated 11 February 2011, Intellec applied to have the judgment set aside. Intellec’s motion was dismissed and it is this decision of Siopis J that was handed down on 21 April 2011 and found at 3D Funtimes Limited v Intellec Development Group Pty Ltd (No 2) [2011] FCA 407, which is the subject of this application for leave. His Honour was unimpressed with suggestions that Mr McHutchison, the officer of Intellec, did not know that the summary judgment objection had been listed for hearing on 31 January 2011, and having read his Honour’s reasons I can see why he would have been unimpressed with the arguments put forward on behalf of Intellec.

7    However, his Honour essentially put all of that to one side in order to determine whether there was a good defence to the claims in respect of which the summary judgment had been entered, and whether any injustice would flow to Intellec if it were not to be set aside. In the end, his Honour took a view of the facts that led him to form the view that even if, as Intellec contended, there were invoices remaining unpaid by 3D in respect of tooling done by Intellec, 3D was entitled to an equitable set-off in respect of other moneys paid by 3D on behalf of Intellec during a period in which the two companies were in merger discussions. It is this issue that raises itself in the present application in relation to the question of substantial injustice and the defence that might be run if an appeal were successful.

8    It is contended on behalf of the applicant, Intellec, that the evidence of Mr McHutchison that was before his Honour for the purposes of setting aside the summary judgment application has not sufficiently been noted. In particular, the applicant emphasises [7] of the affidavit made by Mr McHutchison, previously sworn 25 March 2011, in which he said that the payments totalling the $1.4 million or so were not tooling-related payments and were not treated by Intellec as such payments. Against that it is argued, not unreasonably by the respondent, 3D, to this leave application that it is neither here nor there so far as his Honour’s finding is concerned that there is an equitable estoppel available in respect of the $1.4 million, generally speaking.

9    The argument, however, put by the applicant, is that the materials also raised the question of whether there can be an equitable estoppel in circumstances, on the reading of the facts it would press on an appeal, namely that there was no present obligation by Intellec to repay that $1.4 million or so to 3D, the time for payment had not arrived and no equitable estoppel could arise to take account of those amounts in such circumstances. It seems to me that in relation to that particular question of fact and law, there is sufficient doubt raised in respect of the judgment that is sought to be appealed from, but in weighing these sorts of factors up for the purposes of a leave application, one both considers the ground of the defence that would be argued together with the extent of the injustice that might be perpetrated if an appeal were not allowed but might succeed.

10    So it is consideration of both of those factors, identified in the authorities such as DÉcor Corporation v Dart Industries Incorporated (1991) 33 FCR 397, that leads me to consider that on balance it is appropriate that leave to appeal be granted.

STAY PENDING THE APPEAL

11    The parties indicated to the court during the course of submissions that if leave to appeal were granted, an undertaking on behalf of 3D would be acceptable to the parties and there would be no need to grant an injunction.

12    The application for a stay pending the appeal should be dismissed, therefore, on the undertaking of the respondent, now known by the name of Tier Toys Ltd, in these terms:

1.    in the event that the respondent forms an intention to sell the tooling or remove it from Western Australia it will not do so without first giving the applicant 21 days written notice of its intention to do so;

2.    in the event that the applicant succeeds on appeal the respondent will return the tooling to the applicant; and

3.    if the same appeal succeeds the respondent will not plead or rely on any argument that any unpaid seller’s lien enjoyed by the applicant has been lost by reason of the applicant’s delivery of the tooling to the respondent.

13    As far as the costs are concerned on the hearing of the two applications, they can be in the appeal.

Orders

14    The Court orders that:

1.    The applicant be granted an extension of time until 13 May 2011 in which to seek leave to appeal from the interlocutory judgment of the Court pronounced by Justice Siopis on 21 April 2011 at Perth in WAD 348 of 2010.

2.    The applicant have leave to appeal from the interlocutory judgment of the Court pronounced by Justice Siopis on 21 April 2011 at Perth in WAD 348 of 2010.

3.    The application for a stay pending the appeal be dismissed on the undertaking of the respondent (now Tier Toys Ltd) in these terms:

                     (a)    in the event that the respondent forms an intention to sell the tooling or remove it
                              from Western Australia it will not do so without first giving the applicant 21 days 
                              written notice of its intention to do so;

                     (b)    in the event that the applicant succeeds on appeal the respondent will return the
                              tooling to the applicant; and

                     (c)    if the same appeal succeeds the respondent will not plead or rely on any argument
                              that any unpaid seller’s lien enjoyed by the applicant has been lost by reason of the 
                              applicant’s delivery of the tooling to the respondent.  

 4.    Costs be reserved.

Associate:

Dated:    18 July 2011