Case: FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd [2000] WASCA 69 ; (2000) 33 ACSR 739
Outcome: distinguished
The respondent relies particularly on the reasons of Pidgeon and Owen JJ in FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd [2000] WASCA 69 ; (2000) 33 ACSR 739 to the effect that the legislative intent of s 1335 was that, in permitting the incorporation of a limited liability entity, it was necessary to ensure that persons who might have dealings, whether voluntary or involuntary, with such an entity should have a measure of protection from prejudice resulting from the limited liability character of a corporation. 10 In that case the anticipated costs of the moving party were $44,000; the plaintiff company's paid up capital was $4,001; it had no land registered in its name; from 1990 to 1995 (the last date on which it was required to file financial returns) it suffered operating losses after tax, save in 1995; and it did not file any answering affidavit. I would note, as well, that the pleadings were not before the court. Nor, it would seem, was there evidence of the relationship of the parties other than that the litigation concerned a contractual dealing. 11 Pidgeon and Owen JJ considered that the absence of land combined with the low share capital gave rise to an appearance that there was reason to believe that there were no assets to meet the costs. 14 For the reasons given by Heerey J to which I earlier referred I do not consider that the capital structure of Olivaylle provides reason suggesting it may not have either assets in excess of half a million dollars or else the capability to accommodate liabilities in such a sum. There is no credible testimony before me to suggest that it does not. It has been able to acquire a very expensive machine and it is the owner of what appears to be a significant business. I infer this both from the property holding it has and has from the size and pleaded capacity of the machine purchased from Flottweg. The character and duration of the prior business relationship of the parties and the fact that Olivaylle conducts a business on substantial land that it owns places the circumstances of this matter in a quite different field of discourse from those in FFE Minerals Australia Pty Ltd . 15 I would add, though, that while the respondent relies as a discretionary factory in support of its application upon its bringing the application promptly there is, in my view, something to be said for the proposition that it may have been excessively prompt and pre-emptory in the circumstances. I would say that its ready resort to this procedure might be said to invite some suspicion that it is at least a litigation tactic. The spectre held out of seeking indemnity costs, even if unsuccessful in the application for security, betrays either a misunderstanding of Olivaylle's obligations in this respect or else it was simply a high handed gesture. 16 There is no credible evidence establishing that there is reason to believe there is a real chance that could suggest there is reason to believe that Olivaylle will be unable to pay Flottweg's costs if successful in its defence. I simply am in a position of being asked to speculate about this matter, speculate in the absence of testimony providing any basis for suspicion that it will not, in the event of being unsuccessful, be able to pay those costs. I do not consider that the threshold requirement of s 1335(1) has been satisfied. I will dismiss the motion for security for costs with costs. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn J . Associate: Dated: 5 February 2007 Counsel for the Applicant: Mr J Teague Solicitor for the Applicant: Wallmans Lawyers Counsel for the Respondent: Mr S Doyle Solicitor for the Respondent: Baker &amp; McKenzie Date of Hearing: 2 February 2007 Date of Judgment: 5 February 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/56.html