Ilford Tower Pty Ltd v Equity One Mortgage Ltd

[2014] VSCA 16

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2013 0035

ILFORD TOWER PTY LTD
(ACN 087 591 017)

and

TERESA DINC

First Appellant

Second Appellant

v

EQUITY ONE MORTGAGE FUND LTD
(ACN 106 720 941)

Respondent

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JUDGES	WARREN CJ,  TATE JA and SIFRIS AJA
WHERE HELD	MELBOURNE
DATE OF HEARING	6 February 2014
DATE OF JUDGMENT	21 February 2014
MEDIUM NEUTRAL CITATION	[2014] VSCA 16
JUDGMENT APPEALED FROM	[2013] VSC 68 (Randall AsJ)

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PRACTICE AND PROCEDURE – Application by non-solicitor for leave to represent company on appeal – Requirement that companies be represented by a solicitor – General power to depart from this requirement in an appropriate case – Where company had resources to obtain legal representation – Where complex issues of fact and law – Where granting leave would substantially increase the burden on the respondent and the Court – Where doubt as to whether non-solicitor has authority to act for the company – Leave to represent company refused – Supreme Court (General Civil Procedure) Rules2005 r 1.17(1), r 2.04(1).

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Appearances:	Counsel	Solicitors
For the First Appellant	No appearance
For the Second Appellant	No appearance
For the Respondent	Mr G Moffatt	Mills Oakley Lawyers

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WARREN CJ
TATE JA
SIFRIS AJA:

Summary

1. On 6 February 2014 this Court dismissed the appellants’ appeal on the basis that there was no appearance by either appellant. Both appellants were initially represented by solicitors, Radebe & Associates. At the commencement of the hearing of the appeal the Court granted the solicitors leave to cease acting on the basis that they had not been put in funds. The second appellant did not attend the hearing of the appeal, having notified the Court by letter that she did not oppose Radebe & Associates’ application for leave to cease acting and that she wished to discontinue her appeal. Following the withdrawal of Radebe & Associates, Anthony Bruno Strangio, a director of the first appellant company, Ilford Tower Pty Ltd (‘Ilford Tower’), who had been present in court throughout, sought leave to appear on its behalf. His application was refused. Both appeals were dismissed with costs, there being no appearance for either appellant.

Background

1. On 23 April 2009, Ilford Tower and Teresa Dinc, the first and second appellants, entered into a loan agreement with the respondent, Equity One Mortgage Fund Ltd (‘Equity One’).  The loan was supported by a mortgage over land on Ordish Road in Dandenong South.  Ms Dinc acted as guarantor.

1. A second loan agreement was entered into on 23 September 2009 by which Equity One advanced Ilford Tower a further sum of $105,000.  This agreement was also secured by a mortgage over the land on Ordish Road and Ms Dinc was again the guarantor.

1. By writ and statement of claim filed 25 May 2010, Equity One alleged that the appellants had defaulted on payment of the total amounts owing under the loan agreements. It alleged that as the requisite notices had been served and not complied with, it was entitled to an amount of $263,455 and to possession of the land on Ordish Road under the mortgage. By their defence the appellants alleged that they had no knowledge of the existence of the loan agreements. The appellants also sought to have the mortgages set aside on grounds of fraud.

1. The matter was heard by an associate justice and on 26 February 2013 the judge awarded judgment for Equity One. 

1. Ilford Tower and Ms Dinc, through their solicitors, Radebe & Associates, filed a notice of appeal on 18 March 2013 that identified 15 grounds of appeal. 

1. As mentioned in the Summary above, at the commencement of the hearing of the appeal, Radebe & Associates sought leave to cease acting on the basis that they had not been put in funds. The Court was provided with a letter sent to the appellants dated 22 January 2014 in which the firm stated that it would file a Notice of Ceasing to Act if it did not receive the sum of $7000 by 30 January to enable it to brief counsel to appear at the hearing of the appeal. No funds were provided. We granted leave to Radebe & Associates to cease acting, and they withdrew from the matter. 

1. It was at this point that Mr Strangio sought leave to appear on behalf of Ilford Tower so as to continue to advance the appeal on its behalf. 

1. The Court refused Mr Strangio’s application and indicated that it would provide its reasons at a later date. Our reasons are as follows.

Decision

1. Rule 1.17(1) of the Supreme Court (General Civil Procedure) Rules 2005 (‘Rules’) is in the following terms:

Except where otherwise provided by or under any Act or these Rules, a corporation, whether or not a party, shall not take any step in a proceeding save by a solicitor.

1. As J Forrest J observed when considering the operation of this rule in Worldwide Enterprises Pty Ltd v Silberman,[1] r 1.17(1) is not absolute. It is expressed as being subject to other provisions of the Rules, which necessarily includes r 2.04, which enables the Court to dispense with compliance with the requirements of the Rules.[2] It follows that the Court can dispense with the requirements of r 1.17(1) in an appropriate case.[3]

   [1][2009] VSC 165 [19].

   [2]Rule 2.04(1) provides that ‘The Court may dispense with compliance with any of the requirements of these Rules, either before or after the occasion for compliance arises.’

   [3]See, eg Lettieri v Strangio [2008] VSCA 205 where a director was permitted to represent the company in order to oppose an application for security for costs.

1. However, the starting point is that a company will not usually be permitted to appear without a legal representative and will require leave to do so. As Mahoney AP observed in Scotts Head Developments Pty Ltd v Pallisar Pty Ltd,[4] the adherence to this rule of practice is not grounded in technicalities but rests on broad common law principles of long-standing. His Honour explained:

It has long been regarded as based on considerations central to the proper administration of justice and the protection of the parties in the litigation. First, the Court has emphasised the importance, for the administration of justice, of the fact, that those permitted to appear before it owe a responsibility to the Court to ensure that the Court is properly informed and not misled: see Meek v Fleming (1961) 2 QB 366. In Ex parte Browne: at 597; Pring J referred to the importance of having, as the party before the Court, a person ‘who was responsible to the Court, responsible to his client and responsible to the other party to the litigation’. See also Ex parte WA Grubb Pty Ltd; Re Johnstone and Anor at 226, Tritonia Ltd v Equity and Law Life Assurance Society.

Second, the Court has regard to the possibility of unqualified or untrained advocates interfering with the course of a proceeding before the Court and causing loss to the parties involved. Reference was made to considerations of this kind in Hubbard Association of Scientologists International v Anderson and Anor and in Abse and Ors v Smith and Ors. Experience has shown that a proceeding conducted by a person unskilled in advocacy tends to last longer and to cost more. In determining whether to allow such an advocate to appear, the Court must have regard not merely to the position of the party for whom he seeks to appear, but also to that of the other party. The interest of the defendant in having the proceeding dealt with without unnecessary delay and cost is one which, in my opinion, is to be borne in mind.

Third, there remains the public interest in the effective, efficient and timeous disposal of litigation. The administration of justice requires that full assistance be available to the Court in determining the issues of fact and law which come before it. The isolation of issues and the presentation of the consideration which support one answer rather than another are things best done by a person experienced in such matters.[5]

[4]Unreported, New South Wales Court of Appeal, 6 September 1994. This decision is cited with approval by the Victorian Court of Appeal in Worldwide Enterprises Pty Ltd v Silberman & Anor (2010) 26 VR 595, 601.

[5]Ibid, 3-4.

1. Separately, and before turning to consider these matters, the Court must be satisfied that the person proposed to represent the corporation has the authority to act for the corporation.[6] Mr Strangio did not provide evidence that he had the express authority of the company to act on its behalf, but relied on the fact that he is the company’s sole director, which he demonstrated by means of an ASIC extract of current and historical information in relation to the first appellant company. Whilst the extract disclosed that Mr Strangio was the sole current director, it also showed that the vast majority of shares in the company were not owned directly by Mr Strangio, but by the entity ‘Trustees for the Strangio family’ which has a different registered address from Mr Strangio. No further information about this entity was before the Court.

   [6]See Molnar Engineering Pty Ltd v Herald & Weekly Times Ltd (1984) 1 FCR 455, 458; VN International Video Pty Ltd v West End HK TVB Video (1996) 14 ACLC 1,308.

1. Several additional matters were raised by the respondent which further complicated Mr Strangio’s position. It was brought to the Court’s attention that the ASIC extract listed a property in Malvern as a former registered address of the company. A National Personal Insolvency search dated 5 February 2014 revealed that a Mr Bruno Strangio of the same Malvern address was an undischarged bankrupt. A notice of disqualification from managing corporations sent by ASIC to Mr Bruno Strangio, dated 12 October 2010, was produced to the Court which stated that Mr Bruno Strangio was disqualified from managing corporations without the leave of ASIC for a period of five years.

1. Although Mr Strangio neither conceded nor denied that it was him to whom these documents referred, the inference that these documents referred to him was compelling.

1. On the evidence presently before the Court, we have some reservation in accepting Mr Strangio’s authority to act for the first appellant company. However, even if we were to accept that Mr Strangio had the requisite authority to represent the company, we are nevertheless of the view that the circumstances in this case do not warrant departing from the rule that a company will not be permitted to appear without a legal representative.

1. Justice J Forrest held that in determining whether there are circumstances which warrant a departure from the rule, the following matters are relevant:

i.      the manner in which the case has progressed at the time that the application is made;

ii.      the manner in which the case can proceed in the future without a solicitor;

iii.      the complexity of the issues involved in the case;

iv.      whether the lack of disciplinary measures in relation to the person seeking to represent the company will affect the administration of justice;

v.      whether the case can be conducted in an orderly and responsible fashion without a solicitor;

vi.      whether there are financial considerations which would inhibit a company from obtaining legal representation;

vii.      the stage which the case has reached;

viii.      whether the defendant is likely to expend more funds in defending the claim absent a solicitor acting for the company; and

ix.      what effect, if any, permitting a company to appear without a solicitor will have on Court resources and, particularly, the effect upon other litigants in the Court List.[7]

[7]Worldwide Enterprises Pty Ltd v Silberman [2009] VSC 165 [20]. These principles were cited on appeal in Worldwide Enterprises Pty Ltd v Silberman & Anor (2010) 26 VR 595, 602 which upheld the trial judge’s reasoning.

1. Mr Strangio’s application was made at the commencement of the hearing of the appeal. By their notice of appeal, the appellants take issue both with the core factual findings of the judge, in particular whether the loan agreement documents were signed by the appellants, and with various points of law. These included the correctness of the legal test his Honour employed when deciding whether the fraud exception to indefeasibility was engaged due to the wilful blindness of the respondent, and whether the judge had jurisdiction to hear the matter at all unless and until the parties had an opportunity to make submissions on the proposed referral by a judge of the Court. It is not appropriate here to address the question of the merits of the appeal, however it is clear that the appeal raises complex issues of law and fact.

1. During the course of Mr Strangio’s application he was invited to put to the Court the matters he wished to advance in addition to those contained in the written submissions prepared by Ilford Tower’s solicitors.

1. It was apparent that Mr Strangio had had little involvement in the preparation of the notice of appeal and the submissions in support of it. He did not address his oral submissions to the grounds in the notice of appeal. The matters raised in Mr Stangio’s submissions were various. Whilst many of his submissions were clearly the product of significant endeavour and were produced under the constraint of limited time, they were often difficult to follow. His references to legislation involving powers of attorney under the Instruments Act 1958 and provisions of the Legal Profession Act 2004 in relation to the execution of documents by legal practitioners, though of substantial length, were of little assistance and contained much that was irrelevant to the matter before the Court. Furthermore, many of his submissions sought to rely on factual material that could have been placed before the judge but was not. His explanation for why this material and the points it was said to support were not raised was that his lawyers had misunderstood the significance of these facts, or failed to adequately inquire into them. Effectively, he foreshadowed seeking leave to introduce fresh evidence on the appeal.

1. Mr Strangio also advanced an allegation of bias on the part of the judge and submitted that there had been inappropriate communication between the judge and somebody associated with the respondent. No evidence beyond Mr Strangio’s assertion was offered in support of this claim.

1. It was apparent that Mr Strangio had little grasp of how to present factual material in a way admissible to the Court. It highlights the significant difficulties he would face in prosecuting the appeal himself. The task of distinguishing what of this material can legitimately be advanced on appeal from what cannot now be advanced would take an inordinate amount of time. In addition to being burdensome to the Court, it would be unfair to the respondent to require it to confront submissions presented in this form. This unfairness, and the costs likely to be incurred by the respondent if the appeal were to proceed without the first appellant obtaining legal representation, are increased by the fact that Mr Strangio’s submissions departed to such a large degree from those offered to support the grounds set out in the notice of appeal and also from those advanced at trial. The submissions outlined by Mr Strangio in support of the grounds of appeal were of no utility.

1. The question whether the company had the resources to enable it to brief alternate solicitors and counsel was directly put to Mr Strangio. Significantly, though no material illustrating the financial position of the company was before the Court, Mr Strangio informed the Court that the company had sufficient funds to obtain representation. He submitted that its reluctance to obtain alternative representation was not due to financial considerations, but rather because he had doubts about the willingness of solicitors and counsel generally to follow the company’s instructions in relation to the conduct of the appeal. He believed he could do it himself better.

1. The rule that a company will not usually be permitted to appear without a legal representative is clear. There are sound reasons of policy that support this rule.[8] Here, it was conceded that the company has the resources to obtain alternative legal representation. There is some doubt as to Mr Strangio’s present authority to act on behalf of the company. The complexity of the issues involved and the significant challenges it is apparent Mr Strangio would face in prosecuting the appeal, and the fact that the burden on the Court and the respondent would be substantially increased if he were given leave to do so, means that, in our view, it is not appropriate to depart from the rule in this case.

   [8]Lettieri v Strangio [2008] VSCA 205 [18].

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