Artex Industries Pty Ltd (ACN 071 280 969) v Autofab (Australia) Pty Ltd (ACN 075 782 133)

[2005] FCA 589

FEDERAL COURT OF AUSTRALIA

Artex Industries Pty Ltd (ACN 071 280 969)  v  Autofab (Australia) Pty Ltd (ACN 075 782 133) [2005] FCA 589

ARTEX INDUSTRIES PTY LTD (ACN 071 280 969) and JOHN VARAGIANNIS  -v- 
AUTOFAB (AUSTRALIA) PTY LTD (ACN 075 782 133), TOYOTA TSUSHO (AUSTRALASIA) PTY LTD (ACN 056 847 315), TOYOTA TSUSHO CORPORATION and B.U.S. PTY LTD (ACN 075 311 705)

V3158 of 2003

RYAN J

11 MAY 2005
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V3158 of 2003

BETWEEN:

ARTEX INDUSTRIES PTY LTD (ACN 071 280 969)
First Applicant

JOHN VARAGIANNIS
Second Applicant

AND:

AUTOFAB (AUSTRALIA) PTY LTD (ACN 075 782 133)
First Respondent

TOYOTA TSUSHO (AUSTRALASIA) PTY LTD (ACN 056 847 315)
Second Respondent

TOYOTA TSUSHO CORPORATION
Third Respondent

B.U.S. PTY LTD (ACN 075 311 705)
Fourth Respondent

JUDGE:

RYAN J

DATE OF ORDER:

11 MAY 2005

WHERE MADE:

MELBOURNE

THE COURT ORDERS:

1.The applicants have leave further to amend the application and the statement of claim herein and that such further amended application and statement of claim be filed and served by 4.00 pm on 12 May 2005.

2.The respondents file and serve by 20 May 2005 their defences to the amended statement of claim referred to in paragraph 1 of this Order.

3.The applicants file and serve by 27 May 2005 any reply to the defences referred to in paragraph 2 of this Order.

4.Any additional affidavits on which the applicants intend to rely at trial be filed and served by 4.00 pm on 13 May 2005.

5.Any additional affidavits on which the respondents intend to rely at trial be filed and served by 4.00 pm on 1 June 2005.

6.The applicant’s motion on notice dated 27 April 2005 be otherwise dismissed.

7.The second and third respondents’ motion on notice dated 6 April 2005 be dismissed.

8.The costs of all parties of and incidental to the motions referred to in paragraphs 6 and 7 of this order including the costs of the hearing this day be reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V3158 of 2003

BETWEEN:

ARTEX INDUSTRIES PTY LTD (ACN 071 280 969)
First Applicant

JOHN VARAGIANNIS
Second Applicant

AND:

AUTOFAB (AUSTRALIA) PTY LTD (ACN 075 782 133)
First Respondent

TOYOTA TSUSHO (AUSTRALASIA) PTY LTD (ACN 056 847 315)
Second Respondent

TOYOTA TSUSHO CORPORATION
Third Respondent

B.U.S. PTY LTD (ACN 075 311 705)
Fourth Respondent

JUDGE:

RYAN J

DATE OF ORDER:

11 MAY 2005

WHERE MADE:

MELBOURNE

REASONS FOR JUDGMENT

1. On 19 April 2004, I made an order, amongst others, that;

   ‘1.The action be stayed until the applicants provide security for the second and third respondents’ costs up to and including the first day of the trial, such security to be provided in the sum of $45,000, in a form acceptable to a Registrar of the Court.’

2. In the course of extempore reasons for that order, I noted that the statement of claim disclosed a number of causes of action by the first applicant  (“Artex”) against the first respondent (“Autofab”), in which Artex had been a shareholder, and against the other respondents.  I have been told from the bar table that the applicant now proposes to abandon certain of those causes of action, which, it is said, will have the effect of reducing the time required for the trial of the action from the previously estimated seven days to two to three days.

3. In support of a motion that they be relieved from the obligation imposed by my earlier order to provide security for the second and third respondents’ costs of the action up to the first day of trial, the applicants have pointed to a handwritten “action plan” which has been discovered by the respondents since the making of my order of 19 April 2004.  The “action plan” is said to reveal a proposal for action in concert directed to achieving the forfeiture of Artex’s shares in Autofab.  If that interpretation of the document is correct, it may well strengthen the applicant’s case at trial.

4. However, I am not, as presently advised, able to make an assessment of its impact in isolation from an appreciation of all the surrounding relevant facts.  It suffices to say that the emergence of the action plan does not detract from the force of the observation in my earlier reasons that;

   ‘It may be that Artex and Mr Varagiannis have become impecunious since they became involved in the joint venture which resulted in the incorporation of Autofab but it has not been demonstrated, even prima facie, that their impecuniosity has been brought about by the conduct of the respondents, which is impugned.’

5. It may be that one of the steps contemplated in the action plan had the effect of reducing the cash flow available to Artex but it has not been demonstrated that the impecuniosity to which I referred in the earlier reasons was brought about or contributed to by the conduct of the respondents.  I am therefore not persuaded that new facts and circumstances have been disclosed which would justify the revocation or variation of my earlier order;  (see Adam P. Brown Male Fashions Pty Ltd v Philip Morris Incorporated (1981) 148 CLR 170 at 178 and Hutchinson v Nominal Defendant (1972) 1 NSWLR 443 at 448).

6. There is also an application by the second and third respondents for further security in respect of their costs after the first day of the trial, to which my earlier order was limited.  However, an order is usually made in the form of the  earlier order to enable the trial judge to make a more informed appreciation of the strengths and weaknesses of the opposing cases and of whether it is appropriate to require the applicant to provide security for the respondents’ costs of the second and subsequent days of the trial. 

7. Particularly in light of Mr Strang’s indication of a significant narrowing of the issues for trial, I am not persuaded to depart today from the practice to which I have just referred.  However, the applicants have been put on notice of an application for what can be called “top-up security” and should put themselves in the position to provide it to guard against the possibility of the action being stayed after the first day of the trial.  Accordingly, I decline to make any further order today for security.

I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan.

Associate:

Dated:             12 May 2005

Counsel for the Applicants:	Mr M Strang
Solicitor for the Applicants:	Clark & Toop
Counsel for the Second and Third Respondents:	Mr P Cawthorn
Solicitor for the Second and Third Respondents:	Hunt & Hunt
Counsel for the Fourth Respondent:	Mr C A Connor
Solicitor for the Fourth Respondent:	Banks & Associates
Date of Hearing:	11 May 2005
Date of Judgment:	11 May 2005