Whitsaim Pty Ltd v Toms Tyres Corporation Pty Ltd

[1996] FCA 1016

IN THE FEDERAL COURT OF AUSTRALIA  )

)

VICTORIA DISTRICT REGISTRY     )   No. VG 470 of 1996

)

GENERAL DIVISION              )

BETWEEN: WHITSAIM PTY LTD

(ACN 062 784 463)

(First Applicant)

AND:     IAN GORDON WHITAKER

(Second Applicant)

AND:     ANNE THERESA WHITAKER

(Third Applicant)

AND:     TOMS TYRES CORP PTY LTD

(ACN 009 101 768)

(First Respondent)

AND:     TOMS TYRES (VIC) PTY LTD

(ACN 006 858 617)

(Second Respondent)

CORAM:   Ryan J

DATE:    7 November 1996

PLACE:   Melbourne

REASONS FOR JUDGMENT

RYAN J:  In this application the respondents seek an order for security for costs.  They have demonstrated that the applicant company, Whitsaim Pty Ltd, has ceased to trade and is insolvent.  However, Mr and Mrs Whitaker, the principals of that company, are also joined as applicants in the application and will be personally liable for the respondents' costs if an order for those costs or an order for an amount by way of balance under two orders for costs is ultimately made in favour of the respondents.

The Court has a very wide discretion on applications of this kind and I have decided that I should not exercise that discretion in favour of the respondents.  In coming to that conclusion I have had regard, without pretending that the following catalogue is exhaustive, to several considerations.  As I have already mentioned, the individual applicants have exposed themselves to a liability for costs, and although their means are not extensive there is evidence that the male applicant, at least, is in receipt of regular income from which, over time if necessary, he could defray the joint liability for costs of himself and the other applicants.

It is not possible on the evidence to characterize the application as hopeless.  Moreover, its nature supports the suggestion that the respondents' conduct complained of may have contributed to, if it did not bring about, the impecuniosity of the second and third applicants.  In this context I accept the submission of Mr Cosgrave of Counsel for the respondents that the evidence indicates that the corporate applicant from its formation has not had much capital to speak of.

I have also paid some regard to the fact that these proceedings involve a cross-claim by the respondent against the first applicant and the second applicant personally.  In that sense the second applicant is in the position of a respondent which, on the authorities, including Sydmar Pty Ltd v Statewise Developments Pty Ltd (1987) 11 ACLR 616 to which I was referred by Ms Ryan of Counsel for the applicants, is a matter which, in appropriate cases, of which I consider this to be one, can be taken into account in exercising a discretion not to make an order for security.

I have not been uninfluenced by the respondents' delay, albeit not of long duration, in making this application.  Notice of the application for security, or a request for security, was first given to the applicants at the end of August 1996, notwithstanding that the proceedings had been instituted on 29 July this year.  However, the motion for security was not filed until 25 October 1996, and in the meantime considerable costs of interlocutory steps had been incurred by both sides, including a request for, and provision of, particulars of both the statement of claim and the defence and cross-claim.

No explanation has been given for the fact that some two months were allowed to elapse since the respondent first considered it appropriate to request security.  The suspicion cannot be ignored that the motion for security was instigated in response to an order for mediation made essentially, as I understand it, on the Court's own initiative on 23 October 1996.

For these reasons the motion for security is refused.  In the circumstances I regard it as appropriate to order that each party's costs of that motion be that party's costs in the cause.  I shall further order the directions hearing fixed for
15 November 1996 be vacated, and the next directions hearing occur on a date to be fixed after the completion of the mediation ordered by Marshall J on 23 October 1996.

I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment of his Honour Justice Ryan.

Associate:

Date:

Counsel for the Applicants   :    Mr P.J. Cosgrave

Solicitors for the Applicants     :    Anthony Kelly & Associates

Counsel for the Respondent   :    Ms A.M. Ryan

Solicitors for the Respondent     :    Frank Dennis & Associates

Date of Hearing                  :    7 November 1996

Date of Judgment            :    7 November 1996