Evajade Pty Ltd v Cockatoo Ridge Wines Ltd (No 2)

[2005] SASC 237

SUPREME COURT OF SOUTH AUSTRALIA

(Appeal from a Master: Civil)

EVAJADE PTY LTD & ORS v COCKATOO RIDGE WINES LTD & ORS (NO 2)

Judgment of The Honourable Justice Gray

5 July 2005

PROCEDURE

APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - STAY OF PROCEEDINGS

Appeal from order of Master ordering a permanent stay of proceedings - application by personal plaintiff to represent plaintiff companies - application made under Rule 36.11 of the Supreme Court Rules 1987 (SA) - consideration of Rule 36.11 and inherent jurisdiction of the Court - consideration of section 127(1) of the Corporations Act 2001 (Cth) - neither Rule 36.11, section 127(1) of the Corporations Act or the inherent jurisdiction of the Court allow second appellant to represent plaintiff companies in the circumstances - no error in Master's approach - appeal dismissed.

Supreme Court Rules 1987 (SA) r 36.11, referred to.
Evajade Pty Ltd v National Australia Bank Ltd [2005] SASC 229; International Mutual Liability Pty Ltd & Ors v International Vineyards Pty Ltd [2005] SASC 238, considered.

EVAJADE PTY LTD & ORS v COCKATOO RIDGE WINES LTD & ORS (NO 2)
[2005] SASC 237

Civil

1. GRAY J. This was an appeal from an order of a Master that this action in so far as it has been brought by Evajade Pty Ltd (Evajade), International Vintners Australia Pty Ltd (Vintners) and International Vineyards Pty Ltd (Vineyards) be permanently stayed unless and until a solicitor files a notice of acting for those companies in accordance with Rule 36.11 of the Supreme Court Rules 1987 (SA).

2. On 8 February 2005, these proceedings were instituted in the District Court.  The action was transferred to this Court by order of a Master of the District Court on 28 February 2005.

3. The plaintiffs in addition to Evajade, Vineyards and Vintners include Andrew Garrett, Averil Garrett and their sons Nicholas and Tom Garrett.  The summons was signed by Andrew Garrett purporting to act under powers of attorney for all plaintiffs.  There is no solicitor on the record for any plaintiff.  Before the Master and before this Court on appeal, Mr Garrett sought to conduct the proceedings on behalf of Evajade, Vintners and Vineyards.

4. By their statement of claim the plaintiffs allege fraud and other misconduct on the part of the defendants in the affairs of Cockatoo Ridge Wines Limited.  The relief sought includes pre-action discovery, orders reversing various transactions and findings of fraud against two of the defendants, Edward John Shipley and Brenton William Atkinson. 

5. On 4 April 2005 Cockatoo Ridge, by application, sought to strike out the action in so far as it was an action by Evajade, Vintners and Vineyards.  It was submitted that Mr Garrett did not have authority to institute the action or to represent Evajade, Vintners and Vineyards.  The other corporate defendants made similar applications.  Cockatoo Ridge’s application came on for hearing before a Master of the Court who directed Mr Garrett to file any application and affidavit concerning his claim to his entitlement to representation of any of the parties.  The Master directed that all applications concerning Mr Garrett’s standing in the action be heard together. 

6. Similar issues arose in two other proceedings.[1]  The applications in each action were directed to be heard at the same time. 

   [1] Appeals lodged in Supreme Court Action No 247 of 2004 and No 164 of 2005 - see [2005] SASC 229; [2005] SASC 238.

7. No application or affidavit concerning Mr Garrett’s representation of any of the plaintiffs in these proceedings has been filed. The Master reasoned that any such application made in these proceedings would have failed for reasons that appear in the other proceedings. As a result the Master dealt with the application of Cockatoo Ridge on the basis that no leave to represent or appear for Evajade, Vintners or Vineyards had been or would be granted to Mr Garrett under Rule 36.11 or in the Court’s inherent jurisdiction if applications had been made.

8. In Evajade v National Australia Bank,[2] the Court concluded that Rule 36.11(1) could not be utilised to authorise Mr Garrett as a person to act or appear for Evajade. The reasons in that matter have direct application in regard to Mr Garrett’s position concerning Evajade, Vintners and Vineyards in this action.

   [2] Evajade Pty Ltd v National Australia Bank Ltd [2005] SASC 229.

9. Rule 36.11 provides:

   (1)A company may apply for leave to act in an action in person and to appear in Court or in Chambers by a managing or governing director or other person in whom by the articles of association of the company the powers of the board of directors are vested between board meetings if he is authorised by a resolution of the company so to do.

   (2)Where a company seeks to issue a summons other than through a solicitor such summons shall be filed together with an application for leave under subrule (1), but the summons shall only be issued if the Court gives leave under subrule (1) upon a hearing of the application.

   (3)     On the hearing of an application the company must satisfy the Court:

   (a)     that the person seeking to represent the company is authorised by the company to do so and has power to bind the company;

   (b)     that that person has authority to make admissions and give undertakings which will bind the company;

   (c)     that that person has power on behalf of the company to sign originating process or notices to defend or set aside process as the case may be;

   (d)     that it is otherwise proper that the order be made.

   (4)Any signature to any process or document filed in the Registry by a person in whose favour an order is made under subparagraph (1) hereof shall be valid and shall bind the company.

   (5)Any document filed under this Rule shall state the capacity in which the party signed the document signs it and that he has the authority of the company to do so.

10. It is to be observed that Rule 36.11(2) addresses the circumstances for companies seeking to issue a summons other than through a solicitor. A summons may only be issued if the court gives leave to the person who seeks to represent the company in the proceedings pursuant to Rule 36.11(1).

11. It is also relevant to note that Rule 36.11(3), on such an application, requires the company to satisfy the court of the four matters mentioned in sub-paragraphs (a), (b), (c) and (d) of Rule 36.11(3).

12. The Master, in his reasons for ordering a permanent stay, noted that there had been non-compliance with Rule 36.11(2). He concluded that the summons should not have been issued by the District Court. At the very least the issue of the summons should have been conditioned on leave being granted to Mr Garrett under Rule 36.11(1). The Master reached the conclusion that, had leave been sought under Rule 36.11(1), it would have been refused. He was correct in reaching this conclusion. The reasons in Evajade v National Australia Bank have direct relevance and are incorporated into these reasons.

13. The Master went on to conclude, however, that the non-compliance with the rules did not render the action void or a nullity.  He said:[3]

    Under R 36.11(2) this summons should not have been issued by the District Court. Its issue should have been conditional upon leave being granted to Mr Garrett under R 36.11(1). As stated above, if that leave had been sought, it would have been refused. However, under R 3.05(1) this non-compliance with the Rules does not render the action void or make it a nullity: Hubbard Association of Scientologists International v Anderson (No 2) [1972] VR 577.

    [3] Evajade Pty Ltd v Cockatoo Ridge Wines Pty Ltd [2005] SASC 152 at [10].

14. The Master referred to decisions in other jurisdictions where express rules existed to the effect that a body corporate could not issue proceedings other than through a solicitor.  He observed:[4]

    A number of the cases cited came from other jurisdictions which had an express Rule to the effect that a body corporate could not institute proceedings other than through a solicitor: Crescent Oil and Shipping Services Ltd v Implrantang UEE [1977] 3 All ER 428; Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd (2000) 22 WAR 372; Bay Marine Pty Ltd v Clayton Country Properties Pty Ltd (1986) 8 NSWLR 104. At common law a company was not permitted to sue other than by acting through a solicitor. (See the historical survey of cases in Arbuthnot Leasing International Ltd v Havelet Leasing Ltd [1991] 1 All ER 591). There is a strong inference that R 36.11 lays down the only way in which a company can institute an action in the Court, and particularly when viewed against the older common law on the point.

    In this jurisdiction Rule 36.11 contemplates that a summons sought to be issued by a company can, with the leave of the Court, be issued other than through a solicitor.

    [4] [2005] SASC 152 at [11].

15. Once it is concluded that Mr Garrett was not within the category of persons referred to in Rule 36.11(1) it follows that leave to issue the proceedings should not have been given under Rule 36.11(2) as leave to issue a summons is predicated on leave also being given for representation pursuant to Rule 36.11(1).

16. For these reasons the Master could have ordered that the action be struck out. However, he adopted the alternative course and ordered a permanent stay. The advantage of the latter course is that if the conditions for granting leave under Rule 36.11 are later satisfied or alternatively, if a solicitor is appointed to act, the action can proceed at the instance of Evajade, Vintners and Vineyards. In those circumstances the order made by the Master was one within his jurisdiction and was appropriately made.

17. There is one aspect of the Master’s order that causes concern and should be varied. The present stay should be conditioned on terms broader than those ordered by the Master. In the event that Mr Garrett, in changed circumstances, or some other person is qualified to represent Evajade within the terms of Rule 36.11 or within the inherent jurisdiction of the Court, it may be appropriate to discharge the permanent stay order.

18. Subject to the above variation to the order of the Master, this appeal is dismissed.