Pan Pacific Solutions P/L (trading as Gupta Asia Pacific ACN 007 021 016) v Jarra Technologies P/L ACN 001 690 231

[1993] FCA 833

833    , 9 3

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

IN THE FEDERAL COURT OF AUSTRALIA	) )
VICTORIA DISTRICT REGISTRY	1 No. VG 174 of 1993
1
GENERAL DIVISION	)
B E T W E E N :

PAN PACIFIC SOLUTIONS PTY LIMITED

(trading as GUPTA ASIA PACIFIC

ACN 007 021 016

Applicant

JARRA TECHNOLOGIES PTY LTD

ACN 001 690 231

Respondent

JUDGE :  Heerey J

4",

DATE:  4 November 1993

RECEIVED

-- - -- - - -.

In my opinion, this application for security for costs should

be dismissed. Section 1335 of the Corporations Law provides:

"Where a corporation is plaintiff in any action or any other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given."

Counsel were agreed that there is a threshold test prescribed by the statute and that even if the respondent satisfies that test there remains a discretion in the Court.	achieved. With respect, I am not totally persuaded that I	I am not satisfied that the threshold standard has been
should adopt what was said by Von Doussa J in Beach Petroleum v Johnson (1992) 7 ACSR 203 at 205 when his Honour spoke of credible evidence establishing

"... that there is reason to believe there is a real

chance that in events which can fairly be described as reasonably possible the plaintiff corporation will be unable to pay the costs of the defendant on service of the allocatur, if judgment goes against it."

There is always risk in paraphrasing statutory provisions and I would prefer to approach this task simply in the terms of the statute.

The evidence satisfies me that the applicant company is presently solvent. Indeed, counsel for the respondent accepted this was so. I do not accept his alternative submission that the company is "precariously positioned financially". The fact remains that despite what must be the disruptive effect of this litigation, as far as the evidence discloses the applicant is able to meet its liabilities as

they fall due. The respondent sought to rely on the failure of the applicant	to pay the costs ordered by Northrop J on 19 May 1993. The
short answer to that is that the respondent never attempted to have those costs taxed. It made an initial demand of $16,000 and finally on 20 October agreed to a sum of $10,000, which has since been paid.
The statute requires an exercise in estimation as to the ability of the applicant to pay the respondent's costs at some future time. All I can say is that I am not satisfied that the evidence shows that such a liability, if it occurs, will not be met. There may or may not be default in such payment. To take but one possibility, the applicant may be able to arrange finance from its bankers or from some other source to meet a liability for the respondent's costs. Non-payment of such costs is on the evidence no more than a speculative possibility.
There are, moreover, discretionary factors which to my mind weigh against granting the order sought. A major part of the material relied on by the respondent as showing a worsening of the applicant's financial condition is the decline in the value of the applicant's stock in trade from - I use approximate figures - $650,000 as at the end of 1992 financial year to $450,000 as at the end of 1993 financial year to $250,000 today. The applicant however contends that this
decline is due to the very conduct that is complained of, namely, the respondent telling customers that they should not
purchase the applicant's products and that if they do they will be charged an additional fee for any upgrades which will wipe out the difference in price. Further, it is said that the respondent has told customers the applicant will not be able to service the requirements of the customers in respect of these products.
I appreciate of course that these are hotly disputed issues, but they are sufficiently verified for the purposes of the present application. I think the result is that this case falls within that category of cases where any financial doubt that may exist about the applicant (if it exists at all)
is due to the very conduct complained of in the proceeding.
Further, I think this case attracts the principle that claims under Part IV of the Trade Practices Act 1974 raise questions of public interest which go beyond the immediate concerns of the parties and weigh against the.making of an order which might prevent the matter being litigated; see Jet Corporation of Australia Pty Limited v Petres Pty Limited (1983) 8 ACLR 334 at 336, and Ilat Nominees v Murragong Nominees Pty Limited (1980) 48 FLR 385 at 387.
A further discretionary factor against the success of the application is that there has been significant delay on the part of the respondent. The proceeding was commenced on 10
May this year. There were contested interlocutory injunction proceedings and it was not until 16 August that the issue of
security was raised by the respondent. That request was resisted and it was not until 21 October that the present notice of motion was filed. It is well established that delay is a factor which tends against granting security for costs: see Smail v Burton 119751 VR 776 at 777.
The application for security for costs is dismissed. I order that the applicant pay the respondent's costs of the motion for further and better particulars, that the respondent pay the applicant's costs of the motion for security for costs and that in the case of each motion there will be an order that costs be taxed and paid forthwith, notwithstanding 0.62 r.3, sub-rule 3.

I certify that this and the

preceding four (4) pages are a true copy of the reasons for judgment of his Honour M r Justice Heerey.

Dated

Appearances	QLzZ:
Counsel for the applicant:	Mr W S Peters
Solicitor for the applicant:	Gadens Ridgeway
Counsel for the respondent:	Mr J D Elliot
Solicitor for the respondent:	Gilbert & Tobin
Date of hearing:	4 November 1993

JUDGES' CHAMBERS
FEDERAL COURT OF AUSTRALIA
450 LITTLE BOURKE STREET

MELBOURNE. 3000

Sonia Cornale
Federal Court of Australia
Principal Registry
Law Courts Building
Queens Square

SYDNEY NSW 2000

19 November 1993

Dear Sonia,

Pan Pacific Solutions Ptv Ltd v Jarra

No. VG 174 of 1993

I enclose a copy of the judgment delivered by his Honour m

Justice Heerey in the above matter on 4 November 1993

This judgment is not for general distribution.

Regards,

L. David Brennan &-.

Associate to Heerey J