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Arnold v Queensland

Arnold v Queensland

Case [1987] FCA 148 9 March 1987

Civil Litigation & Procedure

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NOT FOR DISTRIBUTION

IN THE FEDERAL COURT

OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY	)	No.G 502 of 1986
)

DIVISION

GENERAL

)

BFJlWEEN :

ERA POLYMERS PTY.

LIMITD

First Applicant

GEORGE PAPAMANUEL

Second Applicant

UNIROYAL AUSTRALIA PTY.

LIMITD

First Respondent

SCHENECTADY CHEMICALS AUSTRALIA

PTY. LIMITED

Second Respondent

UNIROYAL AUSTRALIA PTY. LIMITED

Cross-Claimant

ERA POLYMERS PTY. LIMITED

First Cross-Respondent

GEORGE PAPAMANUEL

Second Cross-Respondent

CORAM: FOX J.

9 MARCH 1987

REASONS FOR JUDGMENT

(EX TEMPORE)

FOX J.

I am hearing together two applications for security for

costs, brought separately

by the t w o respondents to the principal

2 .

proceedings.

The proceedings have been on foot for some time and in

December last were the subject of interlocutory applications.

point has been taken concerning the lateness of the applications,

but many documents have been filed over the period, and there

have been several Court hearings. usually of short duration.

Some time after the proceedings had been commenced, the first

respondent.

Uniroyal

Australia

Pty.

Limited,

cross-claimed

against the first and second applicants, the latter apparently

being added as

an applicant as a result of the cross-claim.

The	principal proceedings allege breaches of sections

4 5 ( 2 ) , 4 6 ( 1 )

and 4 7 ( 5 ) of the Trade Practices Act

1974, while the

cross-claim

alleges

breaches

confidence

relation

confidential material. Against the respondent Schenectady there is a further claim for breach of s.52 of the Act. The subject

matters of

claim and cross-claim are associated, but the latter

does not arise by way of defence to the former.

It was contended on behalf of the second respondent that

the second applicant, George Papamanuel, did not allege anything

against it, OK claim relief against it.

On any view

this is not

quite

accurate,

but,

joining,

being

joined,

applicant, George Papamanuel becomes party to all allegations

against the respondents. He

is in fact the managing director of

the first applicant as

well as being, with his wife, owner of

half the paid-up capital of the company which is

$4.00 .

3 .

The applicants for security relied upon

s.533

of the

Companies Code, although reference was also made to

5.59 of the

Federal Court of Australia Act	1976.	No security was sought
directly against Mr Papamanuel.

Evidence was produced that the first applicant,

ERA

Polymers Pty. Limited was worth little, in net terms something of

the order of $3000 - $4000.

It nevertheless had had, and largely

retained, a substantial volume of trade in pre-polymer compounds.

Mr Papamanuel was, and seemingly

is, of some means, having, apart

from any other property, fairly valuable accommodation in which

he resided, and another property, apparently

investment,

valued at $100,000, which was mortgaged to

bank to obtain

funds, as necessary, for the first applicant.

The main purpose of the legislation relied upon is to

ensure that companies of little or no worth are not used by

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Arnold v Queensland

Details

AGLC: Arnold v Queensland [1987] FCA 148
Case: [1987] FCA 148
Decision Date: 9 Mar 1987

CaseChat Overview and Summary

The case of Arnold v Queensland involved two respondents, Uniroyal Australia Pty. Limited and Schenectady Chemicals Australia Pty. Limited, who brought separate applications for security for costs against the applicants, ERA Polymers Pty. Limited and George Papamanuel. The applicants were involved in principal proceedings alleging breaches of sections 45(2), 46(1), and 47(5) of the Trade Practices Act 1974. Uniroyal Australia Pty. Limited also cross-claimed against the applicants for breaches of confidence in relation to confidential material. The applicants sought security for costs under section 533 of the Companies Code and section 59 of the Federal Court of Australia Act 1976. The court was required to decide whether the applicants, who were of limited means, could be ordered to provide security for costs, and if so, the appropriate amount.

The court considered the purpose of the legislation to ensure that companies of little or no worth are not used by persons or companies of means to bring litigation without incurring any risk as to costs. However, the court also needed to balance this with the need to not prevent a litigant from proceeding with their case simply because they are poor. The court examined the circumstances of the case, including the fact that the person who would have to provide any security ordered against the first applicant was the co-applicant, Mr. Papamanuel. The court concluded that the rationale of the rule was largely displaced in this situation, as Mr. Papamanuel could be ordered to pay costs directly if he chose to discontinue the proceedings. The court also noted that the amount of security sought by the respondents was substantial, with the first respondent seeking $209,000 and the second respondent seeking $80,000. The court considered the total burden of costs contemplated in the case to be nearly half a million dollars.

The court dismissed the applications for security for costs, stating that it was appalling that such a large burden of costs would be incurred to prosecute a trade practices matter in a case not of wide importance. The court found that there should be no order as to security for costs, as the applicants were likely to incur costs in the amounts sought by the respondents, and the costs already incurred were said to be in total $117,000. The court emphasized the need to balance the interests of the parties and the public interest in ensuring that litigation could proceed without undue financial burden on the applicants. The court's decision ensured that the applicants could continue to pursue their claims without being financially crippled by the prospect of having to pay substantial security for costs.

Orders