. \A% IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NOT FOR DISTRIBUTION GENERAL DIVISION FOX J. FOX J. 9 MARCH 1987 ) ) ) No.G 502 of 1986 ) i BETWEEN : ERA POLYMERS PTY. LIMITED First Applicant GEORGE PAPAMANUEL Second Applicant AND: UNIROYAL AUSTRALIA PTY. LIMITED First Respondent SCHENECTADY CHEMICALS AUSTRALIA Pry .LIMTTED Second Respondent UNIROYAL AUSTRALTA PTY. LIMITED Cross-Claimant ERA POLYMERS PTY. LIMITED First Cross-Respondent GEORGE _PAPAMANUEL Second Cross—Respondent REASONS FOR JUDGMENT (EX TEMPORE) I am hearing together two applications for security for costs, brought separately by the two respondents to the principal proceedings. The proceedings have been on foot for some time and in December last were the subject of interlocutory applications. No 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 45(2), 46(1) and 47(5) of the Trade Practices Act 1974, while the cross-claim alleges breaches of confidence in relation to 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, or claim relief against it. On any view this is not quite accurate, but, by joining, or being joined, as an 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. The applicants for security relied upon s.533 of the Companies Code, although reference was also made to s.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 an investment, valued at $100,000, which was mortgaged toa 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 persons or companies of means to bring litigation, without the latter incurring any risk as to costs. In such a case an order for security has to be met by the principal, that is to say the guiding hand. On the other hand, as has so ofter been said, care is to be taken not to prevent a litigant from proceeding with its, or his, case simply because it, or he, is poor. The line is a difficult one to draw, and involves an examination of many circumstances concerning the case. The fact that a claim has the public interest aspect of reliance on Part IV of the Trade Practices Act, is doubtless a factor against risking the stifling of proceedings. The present case has the unusual feature that the person who would have to provide any security ordered against the first applicant is the co-applicant Mr Papamanuel. In that situation he can be ordered to pay costs directly. The rationale of the rule, therefore, is largely displaced. It has been submitted that Mr Papamanuel could discontinue at will, and thus escape primary liability. I do not think this could be done go readily, or without an obligation to pay costs, and if and when it did happen, the matter of security could be re-examined. It is my view, therefore, that there should be no order as to security for costs. I should say that the amount of security sought by the first respondent is $209,000 and by the second respondent $80,000. The evidence is that the applicants are likely to incur costs in these amounts. The costs already incurred are said to be in total $117,000. It does seem to me to be appalling that to prosecute a trade practices matter in reliance on the sub-sections mentioned, ina case not of a wide importance, the total burden of costs contemplated, according to conservative calculations, should be nearly half a million dollars. I dismiss the applications. I certify that this and the four (4) preceding pages are a true copy of t for Judgment Honour Mr. J. Associate Dated: 9 Mar Counsel for the Applicant: J. M. Ireland with Ms .A. Bowne Solicitors for the Applicant: Corrs Pavey Whiting & Byrne Counsel for the First Respondent: Jd. J. Garnsey Solicitors for the First Respondent: R. B. Kandy & Co. Counsel for the Second Respondent: M. Waiton Solicitors for the Second Respondent: Sly & Russell Date of hearing: 6 March 1987