Century Metals & Mining NL v Yeomans

[1989] FCA 273

JUDGMENT No. a?2..Y.%

NOT FOR DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA )

)

VICTORIA DISTRICT REGISTRY	)	No. QG 372 of 1989
)
GENERAL DIVISION	)
BETWEEN:

BERLAZ PTY LIMITED

and

.

HOWE AND COMPANY PTY LIMITED

Respondent

MINUTES OF ORDER

COURT	:	WOODWARD J
DATE	:	11 NAY 1989

PLACE: MELBOURNE

36 of the Federal Court Rules.

THE COURT ORDERS THAT:

The respondent's notlce of motlon of 6

April 1989 be dismissed.

The respondent pay the applicant's costs.

- Note: Settlement and entry of orders is dealt with in Order

IN THE FEDERAL COURT OF AUSTRALIA

1

VICTORIA DISTRICT REGISTRY ) )

GENERAL DIVISION 1

BETWEEN: BERLAZ PTY LIMITED

Applicant

and

HOWE AND COMPANY PTY LIMITED

Respondent

COURT: WOODWARD J
DATE: 11 MAY 1989

PLACE: MELBOURNE

EXTEMPORE REASONS FOR JUDGMENT

This is an application for securrty for costs, brought pursuant to S 56 of the Federal Court Act, order 2 8 r 3 of the Federal Court Rules and S 533 (1) of the Companies Code. The principles to be applied are those set out in Tradestock Pty Ltd v TNT (Management) Pty Ltd (1977) 14 ALR

5 2 , and cases there clted.

I confess that I feel some difficulty in decidlng this application. My mind had flucuated as I have read the materials and llstened to the evidence and to the persuasive arguments of counsel on each side; but I have reached a reasonably clear conclusion that the application should be dismissed and therefore I shall not reserve my decision.

I have reached that conclusion even though I accept Mr Jopling's argument that the most recent balance sheet, of 31 March, of the applicant company 1s not particularly healthy, and may indeed show a situation of insolvency at

that date. This is so because there is a debt of $120,000 shown as owing by Fine Leather Care Limited which proves, on further examination, to be simply a potential claim for that amount against that company, which may or may not be met in whole or in part by an insurance company. And, wlthout that amount, there would appear to be a deficiency, in that liabilities would exceed assets by some $18,000.

However, I am impressed by the evidence as to the turnaround in the applicant's position in recent months, following the grant of an interlocutory injunction. It 1s clear that I am dealing with a respondent whlch is a very large and well established company, wielding considerable influence, and with an applicant which has been trying in the last year or so to establish itself as the Australian vendor of a particular competitive product which is the subject matter of the dispute between the partles. As the evidence

reputable one and that the applicant company, in spite of a	stands at present, it seems to me that that product 1s a
number of initial difficulties, has a vlable buslness on its hands and that its financial positlon is likely to Improve steadlly over the year ahead.

Turning to questions of discret~on, I am satisfied

that, so far as the applicant's action 1s concerned, it has a genuine claim with at least a reasonable chance of success. In saying that, I take lnto account both the findings of hrs Pincus J in the interlocutory proceedlngs in this case and the additional material which is before me, and which Mr Jopllng has relied upon. In spite of that material, it does seem to me, as I have said, that the applicant's action has at least a reasonable chance Uf success and I do not think that I should go beyond that in expressing a view as to the llkely outcome of the proceedlngs.

I am also satrsfred that the actions of the respondent whlch are the subject of the lltiqatlon have played a not insignificant part in the difficulties which the applicant has experienced in getting its buslness up and running. I accept that this is by no means the sole reason for those difficulties. There have been several other substantial causes of early difficulty including, it would seem, the actions of the Moran company which ran parallel to those of the respondent and which may well, at the time they occurred, have played a greater part than the respondent's

actions in causing difficult~es for the applicant.

I am not in a posltion to determine the disputed question of fact as to whether the respondent played any part at all in the actions of the Moran company; so I put that to one side. But I am satlsfled that the actions which, on the evldence before me, the respondent seems clearly to have taken by way of lssulng warnings against a product of the type whlch the applicant wlshes to distribute and 1s

distributing, dld play a qulte signlfrcant part in the

applicant's difficulties, and I bear that in mind also as
affecting any exercise of my discretion.

At the end of the day, I am not satisfied that the applicant will be unable to pay the costs of the respondent if successful in its defence; and had I been called upon to exercise a discretion - given' that there is a very real question-mark. about the applicant's present financial standing, for the reasons whlch I have given - I would have preferred to exercise that discretion in the applicant's favour. The application will accordrngly be dismissed with costs.

I certify that this and the
3 preceding pages are a true
and accurate copy of the Reasons

for Judgment herein of

The Hon Mr Justice Woodward

Associate

Dated: 31 May 1989