Professional Comp. Res. Inc. v Professional Comp. Res. Australia Pty Ltd

[1987] FCA 42

LIMITED DISTRIBTJTION

IN THE FEDERAL COURT OF AIJSTRALIA I

NEW SOIJTH WALES DISTRICT REGISTRY	I	No.G 169 of 1985
I
GENERAL nIVISION	-	\
BElW3ZN :

PROFESSIONAL COMPUTEF RESOURCES

INC.

Applicant/Cross-Respondent

m:

pROEESSIONAL COMPUTER RESOURCES

(AUSTRALIA) PTY. LIMITED

First RespondentlCross-Claimant

m:

GRAHAM BROGDEN

Second Respondent

C m : FOX J.

This is an application for securitv for costs made in

respect of a cross-claim by the cross-respondent auainst the

cross-claimant who is the first respondent to the primarv

proceedtngs. The primarv proreedinas were commenced by the

present applicant. The application for s ? c u r i t v is made under

5.533 of the Cgmpanles Code 1991 ( N . S . W . I . althouuh s.56 of the

L .

Federal Court of Australia Act 1976 has a provision which is in

respects in Wider terms. The interrelation of these sections was

dealt with in Bell Wholesale Pty Limited v. Gates Export

Corporation (1984) 8 ACLR 588.

The primary proceedinus. as I have called them, relv on

5.52 of the Trade Practices Act 1974. The respondents thereto are

the present cross-claimant, and an individual. who is sued in

reliance on s.75B nf the Act. The latter has also filed a

cross-claim but no application for securitv has been made in hls

case.

The case has had a lonu history with many steps, and

with many documents filed. The primary proceedinus were

initiated by an application on 8 July 1985. and an interlocutory

injunction was granted against the two respondents to prevent them carrying out a certain course of conduct, upon an

undertaking as to damaues which I understand is still subsisting.

At a relatively earlv stage an application was made for an order

for security for costs against the applicant. which I understand

is a United States companv, and an order was made whlch still

subsists. The cross-claim in question was filed on 8 November

1985 and was amended in minor respects in the following year.

Since the primary application was filed some four or

five directions hearinss have taken place. some after the

rross-claim in question was filed. " h e applicant has on several

nccasions been seriously behind in complyina with some	of	the
Orders made. There have not been any formal pleadinus in the

3.

principal matter, but there have been statements of claim and

defence in the cross-claims. h order has been made that the

whole matter proceed bv way of affidavit evidence. The case

proceeded to a hearina before Jenkinson J. last year, but.

without reachinu finality. was adjourned to enable the second

respondent to cross-claim auainst the applicant. This was done,

but the case is not vet ready to proceed.

An important element in the dispute is whether a licence

aqreement made between the applicant and the respondents. or one

or both of them, still subsisted at the time the application was

brought. The applicant contends it had been terminated whereas

the respondents say that it was current at that time and perhaps

it is said that it is still current.

The injunction which was uranted and the relief wh ch is

souuht in the principal proceedinus relate to the conduct which

would be justified under the aareement were it is existence. and

in that event the applicant could not succeed. The cross-claim

with which I am dealing contains, in addition to the contention

that the agreement subsisted, a clam for damages for its breach.

The evidence in support of the application for security

discloses that the respondent company is virtuallv without

assets. It has balanced its buduet by brinqinu in an assumed

amount for uoodwill and deductinu accumulated losses, which

amount to some $26.000. while showinu unsecured debts owinq to it

of some $13,000. It is submltted bv crwnsel on behalf of the

respondent that if the matters had procwded in some other wav

4.

fuller information about the assets of the respondent could have

been provided. However, we have to proceed now on the basis of

the evidence which has been adduced. As I have said, this says,

virtually, that the first respondent is without means. It is

said by counsel that if the aureement to which I have referred

has not been wronuly terminated the company miuht	now be in a
very much more prosperous position.

In my view the case is not one. whether one turns to

s.533 of the Companies Code or to s.59 of the Federal Court Act,

in which an order should now be made for security for costs. The

position is doubtless a highly unusual one but I base my decision

larqely upon the fact that the cross-clam in respect of whlch

security is now sought for the most part constitutes a defence to

the proceedings as brought, and raises matter directly concerned with the aureement. the existence or non-existence of which must

be at the heart of the proceedinus. Put shortly, I see the

cross-claim as larqely a matter of defence.

There are two other matters which affect my decision:

m e is the lonu time for which the proceedinas have been under

way, the lonq time that has elapsed since the cross-claim was

filed, and the many steps that have been taken. It is more

customary to cast this consideration in terms of delay but, to

say the least. it would be very difficult to arrive at any real

estimate of where preiudice would mostly fall flowins from the

lateness in makina the application. The proceedinus were

commenced in July 1985 and the cross-claim in question was filed

in November 1985. Since then there have been many documents

filed. some directions hearinus and the start of a hearina.

Another matter concerns a difficulty which confronts

courts not infrequently in this type of application. and that is

whether impecuniosity should be a basis for ordering security to

be qiven. I do not need to say much about that in the present

case because basically one returns to the consideration already

mentioned, namely, that the cross-claim arises out of the

oriqinal application. Apparently in July 1985. a notice was

given under s.364 of the Companies Code bv the applicant but no

further steps have been taken in reaard to it.

I am therefore of the view that the present application

should be dismissed with costs.

(Discussion ensued)

The only further order I make is that the matter be

listed for hearinu or for further directions before Jenkinson	J.
at a date to be determined.

1 certify that this and the

four (4) preceding paqes are

a true copy of the Reasons

for Judsment herein of his

Honour Mr. ustice Fox.

Associate

Dated: 2 Fehruary 1987

6 .

Counsel for the Applicant/Cross-Respondent: Mr L G Foster

Solicitors for the Appllcant/Cross-Respondent: Baker & McKenzie

Counsel for the Respondents/Cross-Claimant: Mr W Hoduekiss

Solicitors f o r the RespondentsICross-Claimant: Schrader Cogle

Date of hearinu: Sydney; 2 February 1987