Individual Homes P/L v Commonwealth Bank of Australia

[1994] FCA 429

JUDGMENT NO. .....-,. 22w,~ 2

IN	FEDERAL COURT OF AUSTRALIA	)
I

&!STRALIAN CAPITAL TERRITORY	1
1 NO. ACT G 32 of 1994
DISTRICT REGISTRY

RAL DIVISION

QN APPEAL FROM THE SUPREME COURT

QF THE AUSTWIAN CAPITAL TERRITORY

BETWEEN: INDIVIDUAL HOMES PTY LIMITED

Appellant

AND: COMMONWEALTH BANK OF AUSTRALIA

Respondent

-a Gallop, Neaves and Beaumont JJ.

U: 7 July 1994

REASONS FOR JUDGMENT

: -

On 30 June 1994 the Court, by majority, made orders

in the following terms:

of Australia ("the Bank"), made the following orders:

l. The purported notice of appeal dated 19 May 1994 be dismissed as incompetent

2.    The supplementary notice of appeal dated 24 May 1994 be struck out as an abuse of process.

A request having been made that the reason for the making of the orders be set out, what follows constitutes those reasons.

On 4 May 1994, the Supreme Court of the Australian
Capital Territory, on the application of the Commonwealth Bank

"1. Individual Homes Pty Limited be wound up by this Court under the provisions of the Corporations Law.

2.  Barry Anthony Taylor, of Ferrier Hodgson, Level 8,

12 Moore Street Canberra City, ACT, an official

liquidator, be appointed the liquidator of the said
company.

3.  There be a stay of proceedings of this order for 21 days.

4 . The applicant's costs be taxed and reimbursed out of the property of the company in accordance with subsection 466(2) of the Corporations Law."

The Court also ordered that the leave to appear on behalf of

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-the% company granted to Anthony Gilbert Martin be withdrawn.

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j .,' On 19 May 1994, a document described as a notice of

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. -A.. appeai, was filed in this Court. By that document the company

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1. purgorted to appeal from Orders 1, 2 and 4 made by the Supreme Court on 4 May 1994. The document described the company as the appellant and stated that the document was filed on its behalf. It bore what may be taken to be the signatures of Anthony Gilbert Martin and Sue Dolores Martin, both described

Gilbert Peter Martin, both described as a shareholder. It as a director, and Sarojini Natasha Victoria Martin and Rajan

also bore an imprint of what is taken to be the seal of the company. It gave an address in Manuka, ACT as "[tlhe appellant's address for service".

On the same day, 19 May 1994, a notice of motion was
filed, purportedly on behalf of the company, seeking a
continuation until the hearing of the appeal of the stay of

proceedings granted by the Supreme Court. It also sought the
joinder of additional parties to the appeal.

On 23 May 1994, an order was made by this Court that, until judgment was given on the motion notice of which was dated 19 May 1994, there be a stay of all proceedings under the judgment of the Supreme Court given on 4 May 1994.

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On 24 May 1994, that is to say within the period of 21 days after the date of the judgment of the Supreme Court, two documents, both dated 24 May 1994, were filed in this Court. One of those documents was described as a notice of appointment of solicitor. The body of the document stated:

'TAKE NOTICE that Individual Homes Pty Limited now

retains as solicitor: Peter Waight 41 Mayo Street

Weetangera ACT 2614."

It was signed "Peter Waight", gave as the address for service

2614, and stated that it was filed "on behalf of the appellant "C/- Peter Waight, solicitor, 41 Mayo Street Weetangera ACT

by: Peter Waight Solicitor 41 Mayo Street Weetangera ACT, The other document was described as a supplementary notice of appeal. It was signed by Peter Waight who described himself as "Solicitor for the appellant". The document stated on its face that it was filed by the solicitor on behalf of the appellant and gave as the appellant's address for service	2614".
"C/- Peter Waight, Solicitor, 41 Mayo Street Weetangera ACT
2614". It further stated that the papers in the appeal were to be settled before the Registrar at the ACT District Registry of the Court on 15 June 1994 at 10.30 a.m.
On 2 June 1994, a notice of motion on behalf of the Bank was filed in this Court. The relief sought included:

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"1. A declaration that the document purporting to be an Appeal filed on behalf of the applicant [sic] and dated the 19th day of May 1994 and the Supplementary Notice of Appeal dated the 24th day of May 1994 was not validly commenced therefore should be struck out;

2. In default of order 1, the applicant [sic] be represented by solicitors with instzuctions to act in relation to the appeal."

On 22 June 1994, a notice of motion bearing that date was filed in this matter on behalf of Peter Waight, who described himself as "solicitor for the applicant", by which the following orders were sought:

prescribed for service thereof pursuant to Order 19 rule	"1. This motion be heard notwithstanding that the time
3 has not elapsed.
2. He have leave to file forthwith with the Court a notice of ceasing to act for the applicant [sic] pursuant to Order 45 rule 7(1) notwithstanding that notice of his intention to file such a notice as required by Order 45 rule 7(2) was not served on the applicant [sic] not less than 7 days before the date of such filing."

In support, an affidavit of Peter Waight sworn on 22 June 1994 was filed. That affidavit contained the following paragraphs:

"1. I am the solicitor for the applicant Individual
Homes Pty Ltd ('the company')

2. I was consulted by a Mr Gil Martin on 24 May 1994. He told me that he was a director of the company and that the company had been wound up by order of the Supreme Court of the Australian Capital Territory.

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3. He told me that the company wished to appeal against

this order but had only until the close of business the
next day to do so.

4. I told Mr Martin that I did not handle work of this nature but that in the urgent circumstances I would be prepared to file a Notice of Appeal on behalf of the company provided that it retained another solicitor to prosecute the appeal as soon as practicable. Mr Martin signed a document to this effect and a copy of this document is annexed hereto and marked with the letter 'A' .

5. I have spoken to Mr Martin subsequently but he has told me that he has been unable to secure the services of a solicitor prepared to act in accordance with his instructions. The last such conversation was on 21 June 1994 when he told me that he was considering filing a notice pursuant to Order 45 rule 6 to have me removed as solicitor for the company. I told him that I was uncertain if this would be possible unless done through a

solicitor."

The document annexed and marked with the letter 'A', which was dated 24 May 1994 and signed by Martin, was in the following terms:

"I agree that Peter Waight will only act as Solicitor for INDIVIDUAL HOMES P/L for the purposes of filing the Federal Court Appeal, and will not further act or take any step in the Appeal. I also agree that he will not be required to do any court appearance in the appeal, and I will pay for the costs of counsel appearing to ask for leave of the court to withdraw, and I realise those costs

may be $1,000.00."

Contrary to what was stated in par.5 of the affidavit, that document did not refer to the engagement of another solicitor to proeecute the appeal.

The affidavit also stated that on 22 June 1994 Mr Waight sent to Mr Martin by facsimile a notice of intention to file a notice of ceasing to act pursuant to Order 45, rule 7(1) of the Federal Court Rules.

On 24 June 1994, the motion notice of which was dated 19 May 1994, the motion notice of which was dated 2 June 1994 in eo far as that motion sought the orders numbered 1 and 2, and the motion notice of which was dated 22 June 1994 were directed to be heard by a Full Court of this Court.

The hearing before the Full Court commenced on 29 appeared for the Bank. Mr C.P. McKeown, instructed by Mr

June 1994. Mr I.J. Nicol of Blake Dawson Waldron, Solicitors,

Waight, appeared for the company and informed the Court that he wae appearing solely for the purpose of seeking the orders eought in the notice of motion dated 22 June 1994 filed on behalf of Mr Waight and that he had no instructions in relation to any other issue before the Court. The hearing continued on 30 June 1994. On that day, Mr McKeown informed the Court that, as the seven days' notice required to be given by Order 45, rule 7(2) of the Federal Court Rules had then expired, he sought leave to file in Court a notice dated that day that Mr Waight had ceased to act for the company. Leave was granted and Mr McKeown and Mr Waight withdrew.

The Federal Court Rules provide by Order 4, rule 14:

"(l) Subject to subrule (2) and to Order 43 (which relates to disability), any person may proceed in the Court by a solicitor or in person.

l

(2) Except as provided by or under any Act, a corporation may not, without the leave of the Court, commence or carry on any proceeding otherwise than by a solicitor.

(3) Subrule (2) does not apply to an organization."

"Organization" is defined in Order 1, rule 4 to have the same meaning as in the Industrial Relations Act 1988 (Cth). Clearly, Individual Homes Pty Limited is not an "organization".

Order 9, rule 1 relevantly provides:

"1. (1) A respondent may enter an appearance and may defend a proceeding by a solicitor or in person.

(3) Notwithstanding subrule (1) and subject to any

Act, a corporation may not without the leave of the Court

or a Judge enter an appearance or defend any proceeding

except by a solicitor.

We were satisfied that the expression "proceeding" in those rules is to be given the same meaning as that given to the expression in 9.4 of the Federal Court o f A u s t r a l i a A c t 1976 (Cth) which provides:

"'proceeding' means a proceeding in a court, whether between parties or not, and includes an incidental proceeding in the course of, or in connexion with, a proceeding, and also includes an appeal."

The rule thua applies whether the proceeding is a proceeding in the original or the appellate jurisdiction of the Court.

As the proceeding by way of appeal purported to be

commenced on behalf of the company otherwise than by a aolicitor and leave to commence the proceeding without the intervention of a solicitor was not sought or given, the

notice of appeal dated 19 May 1994 was not effective to inetitute an appeal. Consequently, the notice of appeal of that date was struck out as incompetent.

To comply with Order 4, rule 14 of the Federal Court Rules, a corporation must, in the absence of an order granting	leave to do otherwise, appoint a solicitor to commence and to
carry on a proceeding in the Court. Where a company has been ordered to be wound up by a court, the directors of the company have a residual power to instruct solicitors and counsel to commence and carry on an appeal from the winding-up
order: In re Union Accident Insurance Co. L t d (1972) 1 WLR
640; R e Rick Wilson S Company P t y L t d (1982) 1 ACLC 566 at
p.569.
The supplementary notice of appeal and the notice of change of solicitor purported to convey to the Court and the
Bank that the requirements of that rule had been satisfied and
that Mr Waight was retained to commence and carry on the
appeal and had authority to accept service of documents on
behalf of the company. It was also implicit that Mr Waight
would prepare and file the necessary documents to enable the
papers in the appeal to be settled by the Registrar on 1 5 June

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1994 and that he would attend upon the Registrar for that

purpose. However, as appears from Mr Waight's affidavit and the document annexed thereto and marked with the letter "A" I that was not, in fact, the position, Mr Waight having been given no authority in that regard beyond the filing of the notice of appeal. In fact, Mr Waight filed no documents relating to the settlement of the appeal papers and did not attend before the Registrar at the appointed time.

We also took into account that there was no material

before the Court to suggest that Mr Martin had taken any steps

notwithstanding that he had had ample time between 24 May 1994	to arrange for a solicitor to carry on the proceeding
and 29 June 1994 to do so. We concluded that he had no intention of having the proceeding carried on by a solicitor. Nor had he taken any step to seek the leave of the Court to have the proceeding carried on otherwise than by a solicitor.
In the light of those circumstances, we concluded that the supplementary notice of appeal was an abuse of the process of the Court and ordered that it be struck out.

I certify that this and the preceding 9

pages are a true copy of the Reasons for Judgment herein of their Honours Mr

Justice Gall0~ and Mr Justice Neaves.

- w-g'y@bf! Associate

Dated: 7 July 1994 V

E FEDERAL COURT OF AUSTRALIA

)

-1AN	CAPITAL TERRITORY	1
)

DISTRICT REGISTRY ) )

RAL DIVISION )

BETWEEN: INDIVIDUAL HOMES PTY.

LIMITED

Appellant

AND: COMMONWEALTH BANK 01

AUSTRALIA

Respondent

!X!iiw	GALLOP, NEAVES AND BEAUMONT JJ.
L!A!Jx:	30 JUNE 1994

REASONS FOR JUDGMENT

T J.

In my opinion, a different course should be taken.

The general position, in terms of the procedures to be followed in an appeal from a winding-up order, are described in the reasons for judgment of McLelland J. in &

Pick Wilson and Com~anv Ptv Limited (1982) 1 ACLC 566.

His Honour, however, does not deal with the particular problem which arises here. This is that the notice of appeal that was first filed was not filed by a solicitor contrary to the provisions of 0.4 r.14(2) of the Federal Court Rules. By that provision, except as otherwise provided:

". . .a corporation may not without the leave of the

Court commence or carry on any proceeding otherwise than by a solicitor. "

In my opinion, that prohibition operated in the present case, but I think it is a moot question, and one upon which I would wish to hear argument from both points of view before expressing a final opinion, whether failure to comply with that direction leads to the consequence that a notice of b appeal filed on behalf of the corporation, but not filed by a solicitor, is a nullity.

I note that r.14 is located, in terms of context, in an Order which deals with the commencement of proceedings, and prima facie, does appear to deal with proceedings at first instance. However, the definition of proceeding given in the

a1 Court Acf extends to an appeal, and I am prepared to accept that 0.4 r.14(2) applied in the present case. Yet, even if, as I am presently inclined to think, the provisions of that rule are merely directory, in the sense that failure

nullity in the present case, it is still appropriate that the	to comply with them does not mean that the document is a
Court should stay any proceedings brought in prohibition of the rule.
It may be noted that the prohibition is not merely upon the commencement of proceedings, but also upon the proceedings being further carried on. To meet that mischief, I think it is proper and appropriate in the present case that
there should be a stay of proceedings and that this stay should be until further order. The purpose of granting stay limited in that way is to deal with the possibility that a solicitor may be retained at a later stage. It would then, of course, be a matter of a subsequent application being made to the Court to lift the stay for the purpose of enabling the proceedings to go forward, but under the conduct and with the

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retainer of a solicitor.

In those circumstances, I would order that all proceedings in the appeal be stayed until further order.

I certify that this and the preceding two

(2) pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Beaumont.

Associate &&J" f17

U: 30 June 1 9 9 y