IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION No NSD 842 of 2012

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1 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION No NSD 842 of 2012 FAST TYRES PTY LIMITED Applicant GETUP PTY LIMITED Respondent OBSERVATIONS TO COUNSEL Counsel is briefed to appear on the motion brought by the Respondent for an order for security for costs and consequential orders. You will be able to identify your opponent from the Court schedule. If you consider it appropriate to take objection to any part of the other side's affidavit, would you please provide Counsel on the other side as soon as possible with a list of objections (setting out the particular passage objected to and the basis of the objection) so they can consider how they wish to proceed? Regards, DATED: 14 March 2012 DEANES Lawyers 10 Alfred Street Tel: Fax: DX: 828 Sydney Ref: SHD:310765/l

2 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION No NSD 842 of 2011 FAST TYRES PTY LIMITED Applicant GETUP PTY LIMITED Respondent AFFIDAVIT On 5 March 2011 I, Samantha Grey of 21 Point Street, Point Piper NSW 2027, say on oath: 1. I am a director of the Applicant, Fast Tyres Pty Limited, that conducts a retail tyre business called Fast Tyres (the Business ). The Applicant has commenced the proceedings to recover costs incurred and loss of profits arising from the supply by the Respondent of two defective hoists, details of which are set out below. 2. From 1995 to June 2010, I conducted a similar retail tyre business in Tempe. I sold that business in June 2010, purchased my current home in Point Piper and retired for about a year. 3. In May 2011, I decided that there was a need for a similar business, but a more stylish one, in the upper North Shore. The Business commenced operations in July The Business was a one-stop shop for people needing new tyres or wheels. 4. I developed a "drive through" system where customers could drive in and their cars were immediately driven onto a hoist. A team of 4 people would attend to the changing of the wheels or tyres depending on what needed to be done. Each car was then lowered and driven through to the other side of the work area ready for collection. The process took 10 to 15 minutes. The customers were able to wait in a coffee shop on the other side of the work area. An independent company unrelated to the Applicant ran the coffee shop. 5. To establish the business, the Applicant advertised its opening, leased premises at Wahroonga and bought stock. The stock included a large selection of wheels and tyres. 6. From my previous business interests I was aware that the Respondent was a supplier of plant and machinery to the tyre industry. In June 2011I contacted the Respondent and arranged for the purchase of two hoists suitable for the Business. The combined cost was $500,000 and they were installed by the Respondent in late June DEANES Lawyers 10 Alfred Street Tel: Fax: DX: 828 Sydney Ref: SHD:310765/l

3 7. The Business then commenced. However, by the sixth week one of the hoists started jamming. Soon afterwards, the second hoist started to be affected in a similar manner. 8. At first, the hoists stopped working only once or twice a week. However, this caused significant disruption, because the fault only occurred when lowering a vehicle. This meant that a customer's car was stuck on a hoist and could not be lowered. Further, no other cars could be attended to. 9. Each time this occurred, a representative of the Respondent would attend to fix the problem. 10. The problem with the hoists gradually increased to occurring once a day. The Business was losing clients - we were not able to live up to the name of Fast Tyres. 11. In late October 2011, I rang the Respondent and spoke to Mr Wilton, who I believe is the Managing Director of the Respondent. I said words to the following effect: "/ want these hoists removed from the premises and for you to replace them with new, suitable hoists". He replied to the effect of: "Those hoists are suitable for the purpose you requested. You did not require hoists that could manage the very large number of 4WDs that you are now servicing. If we had known that was the case we would have changed the specifications. I will arrange for the hoists to be removed and will see what we can do with them to assist you, but as this is your problem, we won't be making new ones for you." 12. The problem with the hoists progressively became worse until, in early December 2011, both hoists were out of action. At that time the Applicant leased two more hoists on an urgent basis and placed them in the parking area so that the Business could carry on. 13. Eventually, in late January 2012, the Defendant removed the original hoists. I refused to allow them brought back again. In early February 2012, I had alternative hoists installed (in place of the temporary ones in the parking area) and the Applicant is now in a leasing agreement in relation to those hoists. The new hoists come from a different supplier from the Respondent. 14. The records of the Applicant show that in the six months to 31 December 2011, the Applicant made a profit of $10,000. I am told by my accountant and verily believe that the Applicant s profit is projected at least to exceed $10,000 in the six months to 30 June Indeed, now that there are two effective hoists, I anticipate this figure to be higher. SWORN at Sydney DEANES Lawyers 10 Alfred Street Tel: Fax: DX: 828 Sydney Ref: SHD:310765/l

4 On this 5 th day of March 2012 Before me: DEANES Lawyers 10 Alfred Street Tel: Fax: DX: 828 Sydney Ref: SHD:310765/l

5 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION No NSD 842 of 2012 FAST TYRES PTY LIMITED Applicant GETUP PTY LIMITED Respondent AFFIDAVIT On 23 February 2012 I, Jessica Mary Stewart, solicitor, of 180 Elizabeth Street, Sydney NSW 2000, say on oath: 1. I am the solicitor for the Respondent in these proceedings and I have the day-today carriage of this matter. 2. I am informed by Peter Wilton, the Managing Director of the Respondent, and verily believe that in June 2011 the Respondent sold to the Applicant two vehicle hoists, model VHII, for use at the Applicant's premises at the business known as Fast Tyres. 3. On or about 12 February 2012, the Applicant commenced proceedings against the Respondent for the sum of $1.5 million alleging that the VHII hoists supplied were defective and not fit for the purpose for which they were purchased. The proceedings are defended by the Respondent on the basis that the hoists were not defective and were selected by the Applicant as suitable for its purposes. 4. I undertook an ASIC search of the Applicant in the first week after I received the Applicant s claim. This search did not cause me to consider that there was any need to make this application at that time. 5. The Applicant s evidence in this matter was served on 10 March At this time the Applicant provided a copy of its profit and loss statement and its balance sheet for the six months ending on 31 December Annexed and marked "Al and "A2" are copies of these documents. 6. I wrote to the Applicant on the same day as follows: "The financial information you have provided in these proceedings discloses that the Applicant made minimal profit in the six months to 31 December Could you please provide details of your asset base in order show that you are in a position to pay a costs order in the event the Respondent is successful at trial."

6 7. On 27 March 2012, the Applicant replied by sending me a copy of a letter from its accountant setting out the projected income for the 2012 financial year, disclosing a full-year profit of only $20, On 9 April 2012, I then wrote to the Applicant in response to the Applicant s letter. The following is an extract from that letter: "The evidence you have provided thus far is not sufficient to determine that you are in a position to meet any costs order that might be awarded. Please confirm that you have sufficient assets to pay such order, if you fail to do so, the Respondent shall make an application for security." 9. I have received no response to that request. 10. I have been a solicitor for 10 years and, in my experience, a hearing of this nature will take 15 hearing days and will cost in the order of $300,000. In my experience the Respondent would expect to recover $200,000 of this. To date our costs are in the vicinity of $100,000. SWORN at Sydney On this 23 rd day of April 2012 Before me:

7 Annexure "A1" Fast Tyres Pty Limited Balance Sheet for the six months ending 31 December 2011 Current Assets $ Cash 1,000 Receivables 400,000 Total Current Assets 401,000 Non Current Assets Investments Property, plant and equipment 100,000 Total Non Current Assets 100,000 Total Assets 501,000 Current Liabilities Creditors and borrowings 485,000 Total Current Liabilities 485,000 Total Liabilities 485,000 Net Assets $16,000

8 Annexure "A2" Fast Tyres Pty Limited Profit and Loss Account for the six months ending 31 December 2011 $ Operating profit 15,000 Income Tax attributable to operating profit 5,000 Operating profit after income tax 10,000 Retained profits 10,000

9 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION No NSD 842 of 2012 FAST TYRES PTY LIMITED Applicant GETUP PTY LIMITED Respondent NOTICE OF MOTION The above named Respondent will, at 4.30pm on Thursday, 10 May 2012 at Law Courts Building, Queen s Square, Sydney, move the Court for orders that: 1. The Applicant provide security for costs in the sum of $200, These proceedings be stayed pending the security for costs being lodged in a form acceptable to the Court. 3. The Applicant pay the Respondent's costs of and incidental to this motion. DATED: 23 April 2012 Jessica Mary Stewart Solicitor for the Respondent To: The Applicant Fast Tyres Pty Ltd

Observations to counsel

Bar Practice Course Federal Court of Australia District Registry: New South Wales Division: General No. NSD8429 of [CURRENT YEAR] Fast Tyres Pty Ltd Applicant Getup Pty Ltd Respondent Observations to counsel