W & K No 1 Pty Ltd v Great Outdoors Company Ltd

[1983] FCA 227

IN THE FEDERAL COURT OF AUSTRALIA	)
1
NEW SOUTH WALES DISTRICT REGISTRY )
)
GENERAL DIVISION	1 No. G148 of 1983

BETWEEN :	W. & K. NO. 1 PTY. LIMITED
Appllcant
-	AND :	THE GmAT OUTDOORS COMPANY LIMITED '
Respondent

ORDER

Judge making order: Beaumont, J.

Date of order:	26 July, 1983
Where made:	Sydney.

THE COURT ORDERS THAT:

1. Order that the applicant shall provide withln twenty

one days of the date hereof security in the sum of $5,000

by way of bank bond In the form acceptable to the Court for

the goods of the respondent of these proceedings up to the

close of pleadings.

2. Order that these proceedings be stayed until the

provision of the security aforesaid. h

3. Direct that the said bond be held in safe custody by

or on behalf of the Reglstrar of the Court subject to the

further order of this Court.

- 2 -

4 . Order that the respondent have liberty to apply

from time to time for further security f o r rts costs of the

proceedmgs after close of pleadings.

5 . Order that the applicant pay the respondent's costs

of the motion for security up to and includrng today.

6. Order that the motlon for securlty stand over generally

with liberty to the respondent to resolve by leave of the

Court to be applied for on two days' notice to the applicant.

>

IN THE FEDERAL COURT OF AUSTRALIA	)
1
NEW SOUTH WUES DISTRICT REGISTRY	)
)
GENERAL DIVISION	) No. G148 of 1983

I.

BETWEEN :	W. & X. NO. 1 PTY. LIMITED
Applicant
-	AND :	THE GREAT OUTDOORS COMPANY LIMITED Respondent

CORAM:

Beaumont , J.

(ex tempore)

DATED :

21 July, 1983.

REASONS FOR JUDGMENT

This 1 s an applicatlon made under s.533 of the

Companies Code of New South Wales. Under that provlslon,

where a corporation 1s a plaintiff in any legal proceedings,

the Court, having jurisdlction In the matter may, If lt

appears by credible testlmony that there 1 s reason to belleve

that the corporation wlll be unable to pay the costs of the

defendant if successful in his defence, requlre sufficient

security to be given for those costs and make consequential

orders.

The applicatlon arlses in the context of proceedlngs

in thls Court based, amongst other thlngs, upon alleged

breaches of s.52 and s.53 of the Trade Practlces Act, 1974.

- 2 -

The evidence adduced by the respondent In the pro-

ceedlngs, the applicant in this appllcatlon, in the first

instance, refers the Court to accounts filed wlthln the

Corporate Affairs Commission In South Australia for the

year ended 30 June, 1 9 8 2 . It appears from those accounts

I

that the respondent to the appllcatlon 1 s a trading trust.

So much IS stated in the directors report accompanying the

accounts. The accounts, therefore, throw httle llght upon

the ultimate financial position of the company. For example,

it shows as current assets the sum of $60.00, being cash at bank, and current liabilities are shown as nil. However,

notes to the accounts make it clear that the real actlvlty

of the company 1s to act as trustee of the Grlfflth Hospital

Trust and the Grlffith Private Hospital Superannuation Fund.

In that respect, the notes to the accounts indicate that the

llabilities of the hospital trust total a sum in excess of

$2.4 million. However, there is a statement at the end of

the notes to the accounts In these terms, and I quote:

"The company as trustee as at 30 June, 1 9 8 2 had

a right of indemnity against the assets of the

Griffith Hospital Trust which was valued by

the directors In excess of $2,405.404.00."

It thus appears that it was the opinion of the

directors that the right of indemnity would have more than

satisfied the liabilltles incurred by the trustee company

in the course of its trading activities.

However, it 1s signiflcant, In my oplnlon, that no

attempt was made on behalf of the respondent to this applic-

ation to call any director of the company, nor, Indeed, to

adduce any evidence of its flnancial position; rather, the

respondent to the application was content to rest with the

positlon that the accounts, to which I have referred, would

be sought to be tendered. They say In thls connectlon that

lnltially an ob~ectlon was taken to that tender on the basis

that there was no proper evidence as to the source of the

material. That objection was later withdrawn after certaln

further documents were tendered.

The apphcant in the appllcation further relies upon a

telex dated 13 May, 1983 passing from the respondent to the

applicatlon to the applicant. In that telex there is a state-

ment in these terms and I quote:

"Due to unexpected acqulsition o f Boots Camping

Sydney. plus large outlay required, we were not

able to rneet year payments in May. These

payments wlll be made as soon as posslble but

not later than 3 August, 1983."

There 1s a further statement In the telex that "certain

money problems belng overcome prevlously explained". It 1s

sald that these problems were caused by a number of matters

there speclfled. In my oplnlon, the telex alone constltutes

evidence upon which I could reasonably form the vlew that the

respondent to the application wlll be unable to pay the costs

of the other side If successful in its defence.

However, the matter does not rest there. Without

going into further detail at thls stage, it is sufficient

to say that there is other evldence in the form of conver-

I sations that various parties deposed to by Yx. Roberts in

his affidavit sworn 7 July, 1983.

I must say that In the case of two paragraphs, namely,

paragraphs 8 and 9 of that affidavit, I am lnclined to the

view that the evidence is of little weight. However, in

paragraph 4 of that affidavit Mr. Roberts deposes to a con-

versation with Mr. Kellie in whlch Mr. Kellie apparently said

in October last that the business carried on under the name

of Kellie Davis had not made a profit in its trading.

W . Roberts was also informed at the tlme that trading

from the hospltals was subsidising the losses of Kellie Davls.

In my opinlon, it' is significant that the respondent to the

application has made no attempt of any consequence to estab-

lish what its up-to-date flnancial position is. I am therefore

left in a situation where I must accept the evidence tendered

on behalf of the applicant in the appllcation.

I am therefore of the view that In the words of the

section there is reason to belleve that the respondent to

the appllcation would be unable to pay the costs of Its

opponent if successful in its defence. I so hold.

1 certify that this m A the 3 preceding

pages are 8 truc cc;;/ of :':2 reas3Gs for

jL!egmmt h c r m of 7::~ I-jDnsgi-Gble