FEDERAL COURT OF AUSTRALIA KD Kanopy Australasia Pty Ltd v Insta Image Pty Ltd [2007] FCA 812 KD KANOPY AUSTRALASIA PTY LTD, TREVOR HUDSON DAND, KD KANOPY INC AND INSTANT MARQUEE SYSTEMS PTY LTD v INSTA IMAGE PTY LTD AND RICHARD WALDEN WALLACE AND BRENDA MARGARET WALLACE QUD 18 OF 2004 AND INSTA IMAGE PTY LTD, RICHARD WALDEN WALLACE AND BRENDA MARGARET WALLACE v KD KANOPY AUSTRALASIA PTY LTD, TREVOR HUDSON DAND, KD KANOPY INC, INSTANT MARQUEE SYSTEMS PTY LTD QUD 105 OF 2007 KIEFEL J 24 May 2007 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QUD 18 OF 2004 BETWEEN: KD KANOPY AUSTRALASIA PTY LTD First Applicant/Cross Respondent TREVOR HUDSON DAND Second Applicant KD KANOPY INC Third Applicant INSTANT MARQUEE SYSTEMS PTY LTD Fourth Applicant AND: INSTA IMAGE PTY LTD First Respondent/Cross Claimant RICHARD WALDEN WALLACE AND BRENDA MARGARET WALLACE Second Respondent/Cross Claimants JUDGE: KIEFEL J DATE OF ORDER: 24 may 2007 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The respondents have leave to appeal the orders made on 3 April 2007. UPON THE RESPONDENTS, BY THEIR COUNSEL, UNDERTAKING: a. to prosecute their appeal from the judgement and orders made in proceeding QUD 18 of 2004 with all reasonable expedition; b. to keep full and proper accounts sufficient to readily enable an assessment of all imports and sales made, profits generated in relation to, and stocks held, of the products referred to in paragraph 2 of the order made in proceeding number QUD 18 of 2004 made on 24 April 2007, including the Caravan Instant Shelter product A or B, for the period from 3 April 2007 until the hearing of the appeal, such accounts to be made available on request to the applicants upon reasonable notice in writing. IT IS FURTHER ORDERED: 2. Until the hearing of the appeal, the respondents are not to divest themselves of any valuable assets or retained profits, or to encumber their assets or profits save in the ordinary course of business, and save insofar as it is necessary to provide the security herein ordered, without the leave of the Court. 3. Until the hearing of the appeal, the orders made in paragraph 2 of the order in proceedings QUD 18 of 2004, made 3 April 2007, be stayed. 4. Until the hearing of the appeal, the orders made in paragraphs 1 to 7 of the orders made in proceeding number QUD 18 of 2004 and QUD 105 of 2007, made on 24 April 2007, be stayed. 5. On or before 22 June 2007 each of the first respondent, and the second respondents jointly, provide to the Registrar of the Court an unconditional bank guarantee, in terms to the satisfaction of the Registrar, in favour of the applicants, in the sum of $250 000, securing the payment of any compensation ordered pursuant to the undertakings recorded and any sum ordered to be paid in respect of an account of profits or damages and costs in the event that the appeal does not succeed. 6. In the event that the security referred to herein is not provided by the date required, the stay on the operation of the orders provided in paragraphs 3 and 4 shall cease to operate. 7. The applicants have liberty to apply in the event that the appeal is not prosecuted with due diligence, or in relation to access to the books of account. 8. The respondents pay the applicants' costs of this application including any reserved costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QUD 105 OF 2007 BETWEEN: INSTA IMAGE PTY LTD First Appellant RICHARD WALDEN WALLACE AND BRENDA MARGARET WALLACE Second Applicant AND: KD KANOPY AUSTRALASIA PTY LTD First Respondent TREVOR HUDSON DAND Second Respondent K D KANOPY INC Third Respondent INSTANT MARQUEE SYSTEMS PTY LTD Fourth Respondent JUDGE: KIEFEL J DATE OF ORDER: 24 may 2007 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The respondents have leave to appeal the orders made on 3 April 2007. UPON THE RESPONDENTS, BY THEIR COUNSEL, UNDERTAKING: a. to prosecute their appeal from the judgement and orders made in proceeding QUD 18 of 2004 with all reasonable expedition; b. to keep full and proper accounts sufficient to readily enable an assessment of all imports and sales made, profits generated in relation to, and stocks held, of the products referred to in paragraph 2 of the order made in proceeding number QUD 18 of 2004 made on 24 April 2007, including the Caravan Instant Shelter product A or B, for the period from 3 April 2007 until the hearing of the appeal, such accounts to be made available on request to the applicants upon reasonable notice in writing. IT IS FURTHER ORDERED: 2. Until the hearing of the appeal, the respondents are not to divest themselves of any valuable assets or retained profits, or to encumber their assets or profits save in the ordinary course of business, and save insofar as it is necessary to provide the security herein ordered, without the leave of the Court. 3. Until the hearing of the appeal, the orders made in paragraph 2 of the order in proceedings QUD 18 of 2004, made 3 April 2007, be stayed. 4. Until the hearing of the appeal, the orders made in paragraphs 1 to 7 of the orders made in proceeding number QUD 18 of 2004 and QUD 105 of 2007, made on 24 April 2007, be stayed. 5. On or before 22 June 2007 each of the first respondent, and the second respondents jointly, provide to the Registrar of the Court an unconditional bank guarantee, in terms to the satisfaction of the Registrar, in favour of the applicants, in the sum of $250 000, securing the payment of any compensation ordered pursuant to the undertakings recorded and any sum ordered to be paid in respect of an account of profits or damages and costs in the event that the appeal does not succeed. 6. In the event that the security referred to herein is not provided by the date required, the stay on the operation of the orders provided in paragraphs 3 and 4 shall cease to operate. 7. The applicants have liberty to apply in the event that the appeal is not prosecuted with due diligence, or in relation to access to the books of account. 8. The respondents pay the applicants' costs of this application including any reserved costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QUD 18 OF 2004 BETWEEN: KD KANOPY AUSTRALASIA PTY LTD First Applicant of Cross Respondent TREVOR HUDSON DAND Second Applicant KD KANOPY INC Third Applicant INSTANT MARQUEE SYSTEMS PTY LTD Fourth Applicant AND: INSTA IMAGE PTY LTD First Respondent of Cross Claimant RICHARD WALDEN WALLACE AND BRENDA MARGARET WALLACE Second Respondent of Cross Claimants AND: IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QUD 105 OF 2007 BETWEEN: INSTA IMAGE PTY LTD First Appellant RICHARD WALDEN WALLACE AND BRENDA MARGARET WALLACE Second Applicant AND: KD KANOPY AUSTRALASIA PTY LTD First Respondent TREVOR HUDSON DAND Second Respondent K D KANOPY INC Third Respondent INSTANT MARQUEE SYSTEMS PTY LTD Fourth Respondent JUDGE: KIEFEL J DATE: 24 may 2007 PLACE: BRISBANE REASONS FOR JUDGMENT 1 It seems to me that two issues arise on this application for a stay of orders pending appeal. The respondents say that their businesses will be adversely affected if the injunctions are allowed to operate. This is stronger in the case of the first respondent, where it may be inferred that the business might be lost. The position is less clear with respect to the second respondents. Each of the respondents, however, intend to use the income from their business to pay for the appeal, and that has the potential that the applicants' rights to damages, to be assessed or an account of profits, might be lost. 2 The first respondent has no assets of value, save for some retained profits. The second respondent's position is, as I have said, less clear. They both have contracts to fulfil and goods in the process of importation. It does not seem to me that a partial stay would be practicable. In any event, it is the potential for the loss of the first respondent's business which suggests to me that a stay is necessary. I am persuaded to the view that a stay should be granted with respect to the first respondent because no interlocutory injunction has been made to this point, and the matter has been on foot for some years without any apparent significant deleterious effect to the trading applicants' business. The appeal should be heard by a Full Court by November 2007 or February 2008, at the latest. The stay must necessarily, I consider, also be made, with respect to the second respondent, for consistency, although if they had brought an application on their own account, such an order might not have been made. A stay should, however, be subject to conditions protecting the applicants' rights to damages and costs. Without the provision of security, it seems to me that a stay would have the potential itself to deprive the applicants of significant sums by way of profits. 3 As I have said, the purpose of the stay is to preserve the businesses for a short period. It is not intended to suggest to the respondents that they are entitled to their income from the sale of the infringing products. The first respondent has provided no material as to their assets or financial position of those who benefit from its income; and the second respondents are silent as to their position. It is not suggested that the shareholders of the first respondent, or the second respondents are not persons of substance. They have businesses having a reasonably high turnover. I note in particular that the first respondent would have made significant profits but for the legal costs which have been expended in recent years on this litigation and the significant sums paid by way of salary. In any event if the respondents, and in the case of the first respondent those who stand behind it, are not in a position to provide security they should not have a stay order in their favour. 4 The amount of a stay should, in my view, be in the sum sought by the applicant, which is to say $250 000 in the case of the first respondent. The same sum should be provided jointly by the second respondents. That sum can be justified by reference to the proportion of gross profits shown from the books of account of the first respondent and the substantial costs that the applicants would have incurred in these proceedings. For consistency it should be applied to the second respondents. 5 The orders I will then make are as follows: 1. The respondents have leave to appeal the orders made on 3 April 2007. Upon the respondents, by their counsel, undertaking: (a) to prosecute their appeal from the judgment and orders made in proceeding (b) to keep full and proper accounts sufficient to readily enable an assessment of all imports and sales made of, and profits generated in relation to, and stocks held of the products referred to in paragraph 2 of the order made in proceeding number QUD 18 of 2004, including the caravan instant shelter product A or B, for the period from 3 April 2007 until the hearing of the appeal, such accounts to be made available on request to the applicants upon reasonable notice in writing. It is further ordered that: 2. Until the hearing of the appeal, the respondents are not to divest themselves of any valuable assets or retained profits, or to encumber their assets or profits, save in the ordinary course of business, and save insofar as it is necessary to provide the security herein ordered. 3. Until the hearing of the appeal, the orders made in paragraph 2 of the order in proceedings QUD 18 of 2004, made 3 April 2007, be stayed. 4. Until the hearing of the appeal, the orders made in paragraphs 1 to 7 of the orders made in proceeding number QUD 18 of 2004 and QUD 105 of 2007, made on 24 April 2007, be stayed. 5. On or before 22 June 2007 the first respondent, and the second respondents jointly, each provide to the Registrar of the court an unconditional bank guarantee in terms to the satisfaction of the Registrar, in favour of the applicants, in the sum of $250 000, securing the payment of any compensation ordered pursuant to the undertakings recorded and any sum ordered to be paid in respect of an account of profits or damages and costs in the event that the appeal does not succeed. 6. In the event that the security referred to herein is not provided by the date required, the stay on the operation of the orders provided in paragraphs 2 and 3 shall cease to operate. 7. The applicants to have liberty to apply in the event that the appeal is not prosecuted with due diligence, or in relation to access to the books of account. 8. The respondents pay the applicants' costs of this application including any reserved costs. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel. Associate: Dated: 24 May 2007 Counsel for the Applicant: Mr D Logan Solicitor for the Applicant: Macrossans Lawyers Counsel for the Respondent: Mr A Franklin SC Solicitor for the Respondent: Carter Newell Lawyers Date of Hearing: 24 May 2007 Date of Judgment: 24 May 2007