Equity Access Ltd v Westpac Banking Corporation - [1995] FCA 641 - FCA 1995 case summary — Zoe

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Equity Access Ltd v Westpac Banking Corporation

[1995] FCA 641

Federal Court of Australia|1995-08-22|Before: Hill J, Beazley J, Powell J, Kiefel J, McHugh J, Lindgren J

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At a glance

Source facts

Court

Federal Court of Australia

Decision date

1995-08-22

Before

Hill J, Beazley J, Powell J, Kiefel J, McHugh J

Source

Original judgment source is linked above.

Judgment (24 paragraphs)

[1]

CATCHWORDS PRACTICE AND PROCEDURE - costs - security for - jurisdiction under s 1335 of Corporations Law and s 56 of Federal Court of Australia Act 1976 (Cth) - sufficient to deal with application for security under s 56 - whether Court should assess probability of applicant's success or failure - effect of proffering by directors of applicant of undertaking to indemnify respondent in respect of any costs of respondent which applicant may be ordered to pay - failure of applicant to discharge onus of establishing that all those standing behind it cannot provide security - therefore not established by applicant that an order for security would stultify proceedings. Corporations Law, s 1335. Federal Court of Australia Act 1976, s 56. Federal Court Rules, O 28 r 3. Equity Access Ltd v Westpac Banking Corporation (1989) 11 ATPR 40-972 (FCA/Hill J). K P Cable Investment Pty Ltd v Meltglow Pty Ltd (1995) 13 ACLC 437 (FCA/Beazley J). Harpur v Ariadne Australia Ltd [1984] 2 Qd R 523 (FC). Erolen v Baulkham Hills Shire Council (1993) 10 ACSR 441 (NSW/Powell J). Jalpalm Pty Ltd v Hamilton Island Enterprises Pty Ltd (1995) 16 ACSR 532 (FCA/Kiefel J). P S Chellaram Pty Ltd v China Ocean Shipping Co (1991) 65 ALJR 642 (McHugh J) Impex Pty Ltd v Crowner Products Ltd (1994) 13 ACSR 440 (Qld/FC). OMEGA DATA FURNITURE PTY LIMITED v EMAIL FURNITURE LIMITED No NG 869 of 1994 Lindgren J Sydney 22 August 1995

[2]

IN THE FEDERAL COURT OF AUSTRALIA) NEW SOUTH WALES DISTRICT REGISTRY) No NG 869 of 1994 GENERAL DIVISION ) BETWEEN: OMEGA DATA FURNITURE PTY LIMITED Applicant AND: EMAIL FURNITURE LIMITED Respondent EMAIL FURNITURE LIMITED Cross-Claimant OMEGA DATA FURNITURE PTY LIMITED First Cross-Respondent JAMES CAMERON Second Cross-Respondent ADRIAN LANE-MULLINS Third Cross-Respondent CORAM: Lindgren J PLACE: Sydney DATE: 22 August 1995 MINUTE OF ORDERS THE COURT: 1. ORDERS that the applicant give security in a sum of $10,000 for the payment of costs in respect of the period from 1 May 1995 to the determination of these proceedings that may be awarded to the respondent against the applicant. 2. ORDERS that the security referred to in Order 1, be given within 21 days from the date of the making of this order and subject to any order made on application by the applicant pursuant to the leave reserved in Order 5 below, be in the form of payment of the said sum to Clayton Utz, the solicitors for the respondent, upon their undertaking to the Court (which undertaking is hereby noted) to hold that amount in their trust account pending the final hearing and determination of these proceedings. 3. ORDERS that the proceeding be stayed until the applicant has complied with Orders 1 and 2. 4. ORDERS that the respondent's costs on its motion for security, up to and including 22 August 1995, be part of its costs of the proceedings. 5. ORDERS that the parties have liberty to apply generally on 3 days' notice and that such liberty shall extend to include liberty to the applicant to apply for a variation in the form of the security, and liberty to the respondent to apply for an order for the provision of further security. 6. ORDERS that upon compliance with Orders 1 and 2 above, the applicant may have the proceeding on the substantive application restored to the list upon seven days' written notice. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

[8]

Clause 13 provided, inter alia, that Email might terminate the Licence Agreement at any time by giving six months' written notice of termination to Omega. In fact Email terminated it as at 16 November 1994 by a letter dated 16 May 1994. The statement of claim pleads that Email's representations constituted misleading and deceptive conduct in trade or commerce in contravention of s 52 of the Trade Practices Act 1974 (Cth) and s 42 of the Fair Trading Act 1987 (NSW). As well, Omega pleads a cause of action in breach of contract, namely breach of the agreement partly oral and partly in the form of the Licence Agreement. It also pleads breach of a collateral contract, based on Email's forecast of sales mentioned earlier. Omega seeks to recover damages. In addition to numerous denials and non-admissions, Email's defence pleads that Omega failed to mitigate its loss or damage, that any loss or damage was beyond the control of Email and Omega, that Omega caused its own loss or damage, that Omega was guilty of contributory negligence, and that the amount of any liability which Email has should be diminished or extinguished by way of equitable set-off. There is a cross-claim by Email which was filed on 26 May 1995 and is brought against Omega, Mr Cameron and Mr Lane-Mullins. Email pleads that Messrs Cameron and Lane-Mullins, and through them Omega, made misrepresentations that induced Email to enter into the Licence Agreement. Causes of action founded upon various provisions of Part V of the Trade Practices Act 1974 (Cth) and upon the Fair Trading Act 1987 (NSW), in negligence and for breach of the Licence Agreement are pleaded. In addition to declaratory relief, Email seeks to recover damages under those Acts and under the general law. There are two defences to the cross-claim: one by Mr Cameron and Mr Lane-Mullins, and the other by Omega. Omega's defence concludes by pleading, by way of equitable set-off, its entitlement under its claim as pleaded in its statement of claim. Peter John Keel, the solicitor on the record for Email, has sworn to an itemised estimate of Email's taxed costs on a party and party basis from 28 April 1995 until the conclusion of the hearing in an amount totalling $109,600. The detail is as follows: "Security for costs application $ Counsel's fees Preparation (1/2 day) 1,300 Hearing (1/2 day) 1,300 Solicitor's costs Preparation (1.1/2 days) 3,000 Hearing (1/2 day) 1,000 6,600 Directions hearings 2,500 Discovery Email's discovery (80 hours) 20,000 Examination of other parties' discovery (30 hours) 7,500 Disbursements (including photocopying) 3,500

[13]

Jurisdiction The power to order security given by s 56 of the FCA Act is available against all applicants and is not expressed to be dependent upon any condition. That given by s 1335 of the Law is available only against corporations and depends upon its appearing by credible testimony that there is reason to believe that a corporation-plaintiff/applicant will be unable to pay the costs of the defendant/respondent if successful in his, her or its defence. It was not contended that there is not "credible testimony" that there is reason to believe that Omega will be unable to pay Email's costs if Email is successful in its defence. Indeed, in a letter dated 5 April 1995 from Omega's solicitors to Email's solicitors, Omega's solicitors advised that the financial status of Omega was that it was not trading, had no assets, made no profit for the financial year ended 30 June 1994, and that the position remained the same for the financial year ended 30 June 1995. Nonetheless, in view of certain submissions with which I deal later, it is useful to note the evidence relating to Omega's financial plight in recent years. A company extract shows that Omega was registered on 27 October 1980 with a "principal activity" of "manufacturers of office furniture". According to the company extract, its directors are Adrian Lane-Mullins of 31 Eversholt Street, Tingalpa, Queensland 4173 who was appointed on 7 April 1982 and James Leslie Cameron of 7 Hunt Street, Glenbrook, NSW 2773 who was appointed on 21 May 1984. Again, according to the company extract, Omega has 46,473 issued shares of which 23,236 are held by Manili Pty Ltd ("Manili"), and 23,237 are held by Mr Cameron. The extract shows a fixed and floating charge from Omega to Westpac Banking Corporation created on 16 July 1986 and registered on 14 August 1986. Omega's registered office is care of its accountants, Saccasan Bailey Roy, Level 12, 50 Margaret Street Sydney, and its principal place of business is at 20 Peachtree Road, Penrith. The evidence shows that Manili's principal business office is at 31 Eversholt Street, Tingalpa, Queensland 4173, its directors are Mr Lane-Mullins and his wife Jane Elizabeth Lane-Mullins, and its capital comprises two shares of $1 each, of which one is held by each of Mr and Mrs Lane-Mullins. Importantly, a copy of Manili's 1994 annual return shows that it acts as a trustee, that it had incurred liabilities as a trustee totalling $42,181 for which it was entitled to be indemnified out of trust assets, and that otherwise it had no assets or liabilities. The terms of the trust are not in evidence. Apparently Omega has been experiencing financial difficulties for quite some time. It had an operating loss for the year ended 30 June 1992 of $94,141 and shareholders' equity of ($154,197). As at 30 June 1992 Omega had accumulated losses of $305,422. For the year ended 30 June 1993 it suffered an operating loss after income tax of $305,008 which took its accumulated losses as at 30 June 1993 up to $610,430. As at that date, the shareholders' equity had worsened to ($543,765). For the year ended 30 June 1994 Omega suffered an operating loss of $27,666 which took the accumulated losses as at 30 June 1994 to ($638,097). As at 30 June 1994 it had no assets but had current liabilities of $571,432 and shareholders' equity of ($571,432). There was yet further evidence of Omega's financial problems in the form of an internal memorandum dated 25 September 1992 of Omega's bank, Westpac Banking Corporation. This memorandum preceded the Licence Agreement by some three months. The memorandum contained the following: "SUBJECT . SALE OF BUSINESS . DEBT CLEARANCE Remarks: Adrian called to update on latest developments. Email have been talking to them seriously and it would appear their product range is missing what Omega have to offer. Email are producing well below capacity and have to do something to increase and justify holding all their capital equipment. For Omega it is a salvation as Adrian said sales fell in a hole last month and we're [sic] not much better this month. They cannot continue on this basis and were resigned to closing the operation down within 4 weeks prior to this possible sale coming along. They will know by Wednesday (30/9) the outcome of their negotiations with Email. If it does not result in a sale then they will close up the operation within 4 weeks. Jim has sold his home with settlement due shortly. Whatever, the outcome of sale negotiations they will have the cash to clear debt. Adrian was going to pay off from his I.B.D. when it matures 1/10 but has decided to wait and see what happens after Wednesday." I find that there is ample credible testimony that there is reason to believe that Omega will be unable to pay Email's costs if Email is successful in its defence. It follows that the Court's jurisdiction under s 1335 of the Law is activated.

[14]

Discretion Omega submits that where those standing behind a company offer to accept responsibility for costs so that the opposing party is in the same position, no better and no worse, than it would be in if the proceedings had been commenced in the names of those individuals, an order for security will not, or in the alternative should not, be made. This submission is addressed to s 1335 of the Law. It seems to be well accepted that the raison d'etre of s 1335 and its predecessors (such as s 533 of the Companies Code, s 363 of the Companies Act 1961 (NSW), s 447 of the Companies Act 1948 (UK) and s 69 of the Companies Act 1862 (UK)), is the legislative policy that the individuals who stand behind a corporation should not enjoy the chance of benefiting from litigation brought by the corporation without being exposed to the risk of being ordered to pay the costs of a successful defendant/respondent: see, for example Pacific Acceptance Corporation Ltd v Forsyth (No 2) [1967] 2 NSWR 402 (Moffitt J) at 407; Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301 (NSW/CA) at 303-304 (Street CJ); Harpur v Ariadne Australia Ltd [1984] 2 Qd R 523 (FC) ("Harpur v Ariadne") at 532 (Connolly J with whom Campbell CJ and Demack J agreed); Ford and Austin's Principles of Corporations Law (Butterworths, 7th ed) at para [4.050], pp 86-87. But it has also been accepted that although relevant to the exercise of the Court's discretion under s 1335, the fact that those who stand behind a plaintiff/applicant corporation proffer their personal undertakings to pay to the defendant/ respondent any costs of the latter which the corporation is ordered to pay but fails to pay, does not fetter that discretion: see Erolen v Baulkham Hills Shire Council (1993) 10 ACSR 441 (NSW/Powell J) at 456; Jalpalm Pty Ltd v Hamilton Island Enterprises Pty Ltd (1995) 16 ACSR 532 (FCA/Kiefel J) at 534; and, in particular, the review of the authorities on the point by Beazley J in K P Cable Investment Pty Ltd v Meltglow Pty Ltd (1995) 13 ACLC 437 at 444-445. Section 56 of the FCA Act is available as a source of jurisdiction in the present case. That section is not located in a statute dealing with a particular class of plaintiff/ applicant and cannot be limited in any way by considerations which might affect a section so placed. This makes it unnecessary for me to consider the question whether the location of s 1335 in the Law signifies that the range of the considerations relevant to an exercise of the discretion under that section differs in any way from the range of those which are relevant to an exercise of the discretion under s 56. I also note, in passing, that the Court's power under s 56 of the FCA Act is not limited by O 28, r 3 of the Federal Court Rules referred to earlier: Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 (FC) ("Bell Wholesale"). It suffices for me to consider the present application as one founded upon s 56. In Bell Wholesale the Full Court said that the "discretion to make orders under s 56 must be exercised judicially, but that is the only relevant limitation" (at 3). In Harpur v Ariadne, Connolly J (with whom Campbell CJ and Demack J agreed) said this (at 530) in the context of an application for security founded on s 533 (1) of the Companies (Queensland) Code: "I do not find in the books any statement in general terms of the reason why security for costs is ordered. It seems plain enough that the object is to protect the party who is brought to court against the possibility that the plaintiff, if unsuccessful, will be unable to meet an order for costs. Against this had to be set the long-standing principle to which I have already referred that the door of the court should not be barred to a prospective plaintiff, resident within the realm, because he is impecunious. Thus as between residents within the jurisdiction, prosecuting what could properly be described as their own suits, the law required the defendant to accept the risk that the plaintiff might not be able to satisfy the order as to costs."

[17]

"The chances of success of the applicant; whether the applicant's claim is bona fide or a sham." Properly, Email's application for security for costs is brought at an early stage of the proceedings. The affidavits relating to the substantive issues in the case have not yet been filed. Apart from this, it is often not appropriate, in my view, on an application such as the present, in the absence of special circumstances, to attempt to determine whether a plaintiff/applicant will probably succeed or fail; cf Porzelack KG v Porzelack (UK) Ltd [1987] 1 WLR 420 at 423; Appleglen Pty Ltd v Mainzeal Corporation Pty Ltd (1988) 79 ALR 634 (FCA/Pincus J) at 635; Equity Access at 50,636; Interwest Ltd (receivers and managers appointed) v Tricontinental Corporation Ltd (1991) 9 ACLC 1,218 (Vic/Ormiston J) at 1,223-1,224; Skase v Abbott and Sun Newspapers Pty Ltd, unreported, FCA/Cooper J, 30 July 1992 at 12-13. It is a different matter if a defendant/respondent applying for security wishes to go further by establishing and having it accepted that "no reasonable cause of action is disclosed" or that the proceeding is "frivolous or vexatious" or is "an abuse of the process of the Court" (Email did not seek to go so far), but in such a case it seems to be more appropriate for the defendant/respondent to apply for a stay or summary dismissal under such a rule as O 20 r 2 of the Federal Court Rules. If a defendant/respondent merely wishes to make some submission such as that there are "serious question marks over the likely prospects" of the plaintiff/applicant (Email so submitted) I would not usually find it useful to inquire and determine whether such a submission should be upheld. The reason is that at the early stage of proceedings when applications for security must be brought, such a conclusion can be no more than tentative and contingent, and a conclusion of that character would be of little persuasive force. The present case illustrates the common inutility of such an inquiry. Email points to what it submits is a substantial obstacle to Omega's succeeding on the causes of action under the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW), namely that there is strong evidence that Omega did not enter into the Licence Agreement in reliance on any misrepresentation by Email. It will be recalled that Omega pleads that the Licence Agreement was entered into on or about 1 January 1993 in reliance on, inter alia, a representation made on 23 September 1992 by Ron Newman on behalf of Email to Mr Lane-Mullins on behalf of Omega, that a reasonable sales expectation of the Omega range of products to be manufactured, promoted and sold by Email was $6,960,000 per annum. Yet by a memo dated shortly before or shortly after the Licence Agreement was entered into, Mr B L Bailey, Omega's accountant advised Messrs Cameron and Lane-Mullins that the Licence Agreement should provide income in the way of royalties starting at an amount of $70,000. On the basis that this represented 7.5% of "net sales value", the understanding of Messrs Cameron and Lane-Mullins must have been, according to the submission, that the net sales value would start at $933,000 per year rather than $6,960,000 as alleged in the statement of claim to have been represented. In addition, Mr Bailey wrote a letter dated 27 April 1993 to Mr Lane-Mullins which contains the following: "4. Your best estimate of the royalty flows from Email is $75,000 per annum for the next 3 years payable monthly in arrears. Such royalty payments should commence by July 1, 1993"

[19]

"Whether use of the power would shut out a small company from making a genuine claim against a large company, i.e. is the power being used oppressively?" Omega submits that the effect of an order for security would be to stultify its claim. It is established by the authority of a Full Court of this Court and of the New South Wales Court of Appeal that it is incumbent upon a corporation which makes that assertion to prove not only that it lacks the means to provide the security but that "those who stand behind it and who will benefit from the litigation if it is successful (whether they be shareholders or creditors or, ..., beneficiaries under a trust) are also without means": Bell Wholesale at 4; P S Chellaram & Co v China Ocean Shipping Co (1991) 65 ALJR 642 (McHugh J) at 643; Hession v Century 21 South Pacific Ltd (1992) 28 NSWLR 120 (NSW/CA) at 123E,F (Meagher JA with whom Kirby P and Cripps JA agreed); Impex Pty Ltd v Crowner Products Ltd (1994) 13 ACSR 440 (Qld/CA) at 446 (Macrossan CJ). Who are those persons in relation to Omega? One half of the issued share capital of Omega is held by Manili. The 1994 annual return of Manili shows that it acts as a trustee. It is conceivable that the trust is for the benefit of persons other than Mr Lane-Mullins. It is conceivable that the trust is for the benefit of his wife, Jane Elizabeth Lane-Mullins and/or members of his family. There is no evidence before me of the terms of the trust, of the identity of its beneficiaries or of the capacity of the beneficiaries to provide security for costs. Clearly, in this respect alone Omega has not established that those who stand behind it are unable to provide security. I am therefore not satisfied that the making of an order that Omega provide security will have the effect that the proceedings will be stultified. In addition, there are unsatisfactory aspects of the evidence in relation to the capacity of Messrs Cameron and Lane-Mullins to provide security. It may be that this arises from a failure on the part of Omega and its directors to appreciate that the onus rests upon Omega to prove that those standing behind it cannot provide security. One might have expected that there would be detailed affidavits from both directors as to their assets and liabilities, income and outgoings. In fact, the only evidence on which Omega relied was an affidavit on information and belief by its solicitor, Ronald William Winter sworn on 2 August 1995, the day prior to the hearing. The course of the correspondence between the solicitors for Email and for Omega show that Omega and its directors have not accepted the burden of showing positively their inability to provide security. On 9 February 1995, Clayton Utz, the solicitors for Email, after referring to Email's understanding that Omega no longer operated a business in Australia and that its principals were no longer resident in Australia, asked for the following three pieces of information: "1. up to date information regarding the financial status of your client; 2. the basis upon which your client proposes to meet any costs order made against it, in light of the financial information in our possession; and 3. whether or not your client is prepared to provide our client with an amount by way of security for costs."

[20]

On 5 April 1995, Reimer Winter, solicitors for Omega, replied as follows: "1. The financial status of our client is that it is not trading, it has no assets and has made no profit for the financial year ended 30th June 1994 and during this current financial year the situation remains the same. 2. The directors of our client company propose to meet any costs order made against the company from their own assets. 3. Our client is not prepared to provide your client with an amount by way of security of costs and we are instructed to oppose any application by your client in that regard on the following grounds:- (a) The financial position of our client has been caused by the actions of your client and this is indeed the subject of the litigation; (b) Any order made by the Court for security for costs would have the effect of stultifying the litigation to the extent that our clients could not proceed to prosecute their claim." On 18 April 1995, Clayton Utz wrote, inter alia, as follows: "Considering your client's admission that the directors of Omega propose to meet any costs order made against Omega personally out of their own assets, we are instructed to request the following information from your client: 1. Who are the directors of Omega? 2. What are the current addresses of the directors of Omega? 3. Do the current directors of Omega own any assets? If so what assets and what is the current estimated net values of those assets? 4. Do the current directors of Omega owe money to any financial institution(s) or other persons? If so, what are the amounts of these borrowings and to whom is the money owed? 5. Are the current directors of Omega employed or otherwise currently earning income? If so, what is the level of income earned by those directors and what are the sources of that income? 6. What is the current estimated level of expenses being incurred by each of the current directors of Omega (including the funding of Omega's prosecution of these proceedings)? Once your client has provided us with a response to these questions our client will be in a better position to determine whether or not it intends to proceed with its application for security for costs. Considering your client's delay in providing us with information in respect of your client's financial position, and the orders of the court that our client commence its application (if any) by 18 April 1995, we require your client's response to these questions no later than 5.00pm on Wednesday, 26 April 1995." On 26 April 1995, Reimer Winter replied as follows: "In answer to your facsimile correspondence of the 18th April 1995, we are instructed to make the following responses: 1. The directors are James Cameron and Adrian Lane-Mullins. 2. We are instructed that this is not relevant and our clients refuse to provide those details. 3. Yes. Adrian Lane-Mullins owns a property in Queensland having a nett value of $115,000. Jim Cameron is one of the registered proprietors of a property in New South Wales having a nett equity of $10,000. 4. As to Lane-Mullins, no. As to Cameron, yes. The financial institution being the mortgagee of the property of which he is one of the registered proprietors. We are instructed not to provide details of the mortgagee or the amount owed to the mortgagee other than to advise you that the funds are secured by registered first mortgage for a sum of money which is at least $10,000 less than the current market value of the property concerned. 5. Yes. Lane-Mullins earns $60,000 per annum and Cameron earns $37,000 per annum. We are instructed that we are not to disclose details of our clients [sic] employers. 6. We are instructed not to provide these details." The affidavit sworn 2 August 1995 of Ronald William Winter, the solicitor for Omega and for Messrs Cameron and Lane-Mullins included the following paragraphs: "7. The Second Cross-Respondent James Cameron I am informed and verily believe is employed as a manager and his salary is presently $37,000 but he expects to obtain a more remunerative position shortly. 8. The Third Cross-Respondent Adrian Lane-Mullins is an employee of a large Queensland Insurance company and I am informed by him and verily believe that he recieves [sic] a salary of $60,000 per annum. 9. I am informed by each of the Second and Third Cross Respondents that the principal income that they derive is from their respective salaries earned in their occupations and that neither the Second nor Third Cross-Respondents have any other significant form of income. Both the Second and Third Cross Respondents have sold their residential homes in Sydney to repay loans obtained to meet the capital and cashflow requirements of the Applicant. 10. I am instructed on behalf of the Second and Third Cross Respondents to undertake to this Honourable Court that in lieu of an order for security for costs, the Second and Third Cross Respondents are prepared to be responsible, as far as they are able, for the payment of the Respondent's costs in the event of its successfully defending the application. Further that the Second and Third Cross-Respondents will undertake not to dispose of any asset except in the ordinary course of meeting their normal expenditure. 11. On the information given to me by the Second and Third Cross-Respondents I am informed and verily believe that they do not have the financial resources to meet an order for Security for costs in the amount claimed or any substantial amount. 12. I am informed by Adrian Lane-Mullins and verily believe that Manili Pty Ltd is a company owned and controlled by Adrian Lane-Mullins and his wife and that it has no significent [sic] assets other than it's [sic] shareholding in the Applicant. 13. This affadavit [sic] is made on information and belief to reduce costs and expense by reason that Adrian Lane-Mullins lives in Queensland and James Cameron is presently in Thailand." On the hearing, Email submitted that I should infer that between the writing of Reimer Winter's letter dated 26 April 1995 and the swearing by Mr Winter of his affidavit dated 2 August 1995, Mr Lane-Mullins had disposed of a property in Queensland having a net value of $115,000. In response, it was put that a fair view of the matter is that the figure of $115,000 did not take into account the fact that the two directors had mortgaged their assets to Westpac Banking Corporation as security for Omega's indebtedness to that Bank. In my opinion, on a fair reading of them in the light of the inquiries to which they were responding, the paragraphs numbered "3" and "4" in Reimer Winter's letter dated 26 April 1995 noted earlier conveyed the meaning that Mr Lane-Mullins owned a property in Queensland having a net value of $115,000 which was available to satisfy any order for costs and owed no money to any financial institution or other person. Omega asks me to infer from certain documents put into evidence by Email as part of a bundle of documents that Mr Lane-Mullins has no equity in a property in Queensland. The documents are less than clear and I am not prepared to draw from them the inference contended for. Neither director has seen fit to swear an affidavit. There are other matters. I have before me evidence that Messrs Cameron and Lane-Mullins have between them a combined income of $97,000 per year and no evidence of their outgoings. Far from establishing that they cannot provide security, this evidence suggests that they can. Three other matters merit mention. First, Omega's evidence does not establish the source of funding of the present proceedings. Secondly, there is no evidence as to the reason for Mr Cameron's presence in Thailand, the period of his visit or the source of funding for it. Thirdly, Mr Winter's affidavit goes only so far as to say (in para 11) that Messrs Cameron and Lane-Mullins cannot provide security in the amount of $109,600 claimed or in "any substantial amount", suggesting that they may be able to provide security in a not "substantial" amount. For these further reasons also, I am not satisfied that those who stand behind Omega cannot provide security. Accordingly, I am not satisfied that an order that Omega provide security would stultify its claim. 4. "Whether the impecuniosity arises out of the act in respect to which relief is sought?" Omega submits that its impecuniosity arises out of Email's conduct which is attacked in the statement of claim. However, I accept Email's submission that prior to the earliest alleged representation dated 5 August 1992, Omega was already impecunious. I have referred previously to its financial position as at 30 June 1992. The only evidence before me on the point is against Omega's submission in this respect, which I therefore reject.

Equity Access Ltd v Westpac Banking Corporation

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