Industrial Mutual Liability Pty Ltd & Ors v International Vineyards Pty Ltd (No 1)

[2005] SASC 153

SUPREME COURT OF SOUTH AUSTRALIA

(Civil: Application)

INDUSTRIAL MUTUAL LIABILITY PTY LTD & ORS v INTERNATIONAL VINEYARDS PTY LTD (NO 1)

Reasons of Judge Lunn a Master of the Supreme Court

21 April 2005

PROCEDURE

Application by one defendant in person to represent all other defendants - application under R36.11 to act for companies refused because applicant was not a director of the companies and was not shown to be duly authorised by the companies - applications to represent other natural defendants refused because not in interests of justice to do so and because applicant was not shown to be duly authorised by those defendants - review of authorities on R36.11 and on where non lawyers would be allowed to appear.

INDUSTRIAL MUTUAL LIABILITY PTY LTD & ORS v INTERNATIONAL VINEYARDS PTY LTD (NO 1)
[2005] SASC 153

Reasons on Application of Defendant, Andrew Garrett, for Leave to Represent other Defendants

1. JUDGE LUNN                   This action now contains consolidated claims made in this action as originally constituted and in actions 153 and 321 of 2004.  A consolidated version of the summonses and statements of claim was filed on 9 December 2004 being FDN 54.  There are nine defendants to the consolidated action, one of whom is Andrew Garrett.

2. On 4 April 2005 Andrew Garrett took out an application that leave be granted for leave for him to represent the first defendant, International Vineyards Pty Ltd, the third defendant, Averil Garrett, the fourth defendant, Nicholas Garrett, the fifth defendant, Garrett International Investments Pty Ltd, the sixth defendant, Evajade Pty Ltd and the ninth defendant, International Vintners Australia Pty Ltd.  Mr Garrett represents himself.  There is no notice of acting on the file from a solicitor for any other defendant.

   Application to Represent Defendant Companies

3. On 30 March 2005 Gray J injuncted Mr Garrett and others from purporting to act in this action for the first and ninth defendants without leave of the Court to do so.  It is a moot point whether that injunction precludes Mr Garrett from pursuing his present application for leave to represent the first and ninth defendants.  However, I consider that I should deal with the application as the necessary leave under R 36.11 will be needed if Mr Garrett is to seek any leave under the injunction to represent the first and ninth defendants in this action.

4. Mr Garrett’s application to represent the first, fifth, sixth and ninth defendants, which are all companies, was primarily mounted under R 36.11, the relevant parts of which read:

   “36.11(1) A company may apply for leave to act in an action in person and to appear in Court or in Chambers for 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 lodged with the Registrar 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 the 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 to 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.”

5. His applications in relation to each of the four companies can be dealt with together.

6. Under R 36.11 it is for the company to make the application, and not the person who seeks to represent the company.  The application appears to be made by all defendants, including Andrew Garrett.  No point was taken by the plaintiffs about who was the proper applicant and I need not pursue it.

7. Mr Garrett submitted that he already had the necessary leave under R 36.11.  By the terms of R 36.11 the leave must be granted in respect of a particular action.  The fact that leave may have been granted for one action does not thereby mean that leave has been granted for any other action.  Mr Garrett claimed that Justice Gray had granted him leave to act under R 36.11 in other actions in the Court.  I have not confirmed whether this is so or not.  The Court record for this consolidated action does not show that any such leave has been granted to Mr Garrett in this action.  It may be that on occasions in interlocutory matters Gray J has been prepared to allow Mr Garrett to speak for other defendants.  However, the plaintiffs have now formally objected to Mr Garrett representing any other corporate defendants and the question is to be formally determined by me under R 36.11.  Nothing which has occurred previously in this action requires me to grant the leave.

8. Although the point was not taken by the plaintiffs’ counsel, I consider that the terms of R 36.11(1), as set out above, preclude any leave being granted to Mr Garrett to represent any of the four defendant companies.  Subrule (1) only empowers the Court to allow a person to appear if he is  “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”.  This was the view taken of a similar predecessor of R 36.11(1) by Sangster J in Hanson v R. Reeves Construction Pty Ltd (1982) 99 LSJS 70 where he refused leave for an official manager to represent the company under the predecessor of the Rule apparently because he was not a director of the company. Rule 36.11(1) does not empower the Court to allow the company to appear by a person who is not its managing or governing director or in whom the powers of the board directors are not vested between board meetings. It does not allow any person who merely holds a power of attorney from the company to be appointed if he or she does not otherwise qualify for appointment under subrule (1).

9. Mr Garrett does not qualify as a person in the class of potential appointees to be allowed to appear for the companies under subrule (1).  He does not currently hold an office of managing or governing director of any of the four companies.  He is not a person “in whom by the articles of association of the company the powers of the board of directors are vested between board meetings”.  He was declared bankrupt on 24 September 2004, and remains an undischarged bankrupt.  By s 206B(2) of the Corporations Act as an undischarged bankrupt he is disqualified from acting in the management of any company.  He would commit a criminal offence under s 206A(1) of that Act if he did so act in the management of the company by being a director.

10. Mr Garrett referred to himself in relation to some companies as “a director of record”.  By that he apparently meant that the ASIC records for the company still showed him as a director.  As I presume he is not committing any criminal offence by acting as a director while an undischarged bankrupt, I infer that the companies in question have not notified ASIC that he has ceased to be a director.  That he is described in the records of ASIC as a director, if he is not, cannot give him any status under R 36.11(1).

11. This ground in itself is sufficient for me to dismiss his applications under R36.11 for leave to appear for any of the four defendant companies.  However, I deal below with some, but not all, of the other submissions made on why his application should fail.

12. Mr Garrett primarily relied upon powers of attorney from each of the four defendant companies which he claimed authorised him to act on their behalf.  I do not find on the balance of probabilities that any of the four companies have given a valid and effectual power of attorney to Mr Garrett which would authorise him to act on its behalf in this action. 

13. The powers of attorney in question bore dates of 25 February 2004 for the first defendant, 16 December 2003 for the fifth defendant, 4 December 2004 for the sixth defendant and 19 March 2004 for the ninth defendant.  Each of the four powers of attorney bore the signature of a solicitor, Michael Hegarty.  He filed an affidavit deposing to his not having signed any of the powers of attorney until various dates in early 2005.  His affidavit was not challenged.  In explanation Mr Garrett submitted that there were earlier versions of the powers of attorney executed on the dates which they bore, but they have not been put in evidence or otherwise proved. 

14. Each of the four powers of attorney in the names of the defendant companies purported to be executed by being “SIGNED SEALED AND SIGNED DELIVERED”.  No seal appears on any of the four powers of attorney, but only various signatures.  While such documents may not have to be executed under seal, the fact that their terms purport to refer to them being executed under seal, but no seal appears, suggests that their execution was incomplete, and therefore ineffectual. 

15. Under s 127(1) of the Commonwealth Corporations Act a company may execute a document without a common seal if the document is signed by a two directors of the company or a director of the company and the company secretary.  The documents each bear two signatures, apart from that of Mr Hegarty.  One of the signatures is identified on the face of the document as that of Andrew Kenneth Sandow.  The other signature is not identified on the face of the document.  In the case of the three defendants apart from Evajade Pty Ltd the other signature appears to be that of Andrew Garrett.  However, if they were signed in 2005, as is deposed to Mr Hegarty, Mr Garrett could not have signed as a director as by then he was an undischarged bankrupt.  The other signature on the Evajade Pty Ltd power of attorney appears to be that of Averil Garrett, but she also was an undischarged bankrupt after 24 December 2004 and thus also could not have signed it in 2005 as a director. 

16. In the context of these substantial doubts about the validity of the four powers of attorney it is significant that there is no evidence before the Court from whoever, if anyone, is a current office holder in the companies deposing to Mr Garrett’s authority to act for the companies. 

17. Under R 36.11(d) no leave is to be given unless the Court is satisfied that it is proper that the order be made.  There is authority in the Federal Court that leave should not be given to a person to appear where that person could not be expected to act as advocate for the company with the objectivity required of a legal practitioner:  Pacific Air Freighters Pty Ltd v Toller (2000) 171ALR 519. I am not aware of this authority having been previously applied in this Court, but there is good reason to do so in the circumstances of this case. Mr Garrett’s personal credibility is very much in dispute on the central issues in the case. It is undesirable that a person whose credibility is in issue should act as an advocate, although this factor is not necessarily decisive: ACT General Cleaning Co Pty Ltd v Naoum (1996) 67 FCR 361.

18. Under s 206A(1) of the Commonwealth Corporations Act it is an offence for an undischarged bankrupt to “make, or participate in making, decisions that affect the whole, or a substantial part, of the business of the corporation”.  If Mr Garrett was to be granted leave under R 36.11 to appear for a company, there is a potential for him to commit an offence under this section.  This Court should not grant leave under R 36.11 where there is such a potential for the person appointed to commit an offence by appearing for the company.

19. Counsel for the plaintiffs raised a number of other grounds upon which he submitted that Mr Garrett should not be permitted to appear.  Some of these involve contested issues of fact.  They appear in his outline of argument.  As this, and a number of other actions involving Mr Garrett, are being held up pending the resolution of Mr Garrett’s right to represent parties other than himself, I do not intend to delay the matter by dealing with these further issues.

20. There is some authority that over and above the Rules the Court has an inherent jurisdiction to permit a corporation to carry on proceedings other than by duly retained legal representatives, but it is confined to exceptional circumstances:  Bay Marine Pty Ltd v Clayton Country Properties Pty Ltd (1986) 8 NSWLR 104; Arbuthnot Leasing International Ltd v Havelet Leasing Ltd [1991] 1 All ER 591; Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd (2000) 22 WAR 372. Assuming for present purposes that there is such an inherent jurisdiction in this Court, it is not to be exercised in favour of Mr Garrett because he has not shown sufficient exceptional circumstances. The mere fact that a company cannot afford legal representation is not in itself a sufficient exceptional circumstance: Radford v Freeway Classics Ltd [1994] 1 BCLC 445. In any event such inherent jurisdiction could not be exercised in Mr Garrett’s favour unless he showed he was duly authorised by each company to represent it. For the reasons given above he has not shown this.

21. (There is some authority that the discretion of the Court to allow a non lawyer to represent a company by dispensing with a rule to the contrary can be exercised where sufficient reason is shown and it is in the interests of justice to do so, and it is not necessary to show exceptional circumstances: Alice Springs Abattoirs Pty Ltd v Northern Territory (1996) 111 NTR 9. Even if the test was this low, for the reasons stated I would not have found on the evidence before me that there was sufficient reason, or that it was in the interests of justice, that Mr Garrett should be allowed to represent, or speak for, the four companies.)

    Application to Represent the Third Defendant, Averil Garrett, and Fourth Defendant, Nicholas Garrett

22. Averil Garrett is the wife of Mr Garrett and Nicholas Garrett is his son.  Nicholas is an adult and was referred to as a university student.

23. The law in this State on the situations in which a person other than a lawyer will be permitted to represent another natural person in an action is set out in the following passage from the judgment of Perry J in Galladin Pty Ltd v Aimnorth (1993) 60 SASR 145 at 147:

    “It is true that s 51 of the Legal Practitioners Act deals in general terms with rights of audience, but that is in the context of persons entitled to practise, and that again carries with it a connotation of carrying on a practice or business or profession, which is not what Mr Brenton Lovering in this case seeks to do. Even if I am wrong in that view, I would not read s 51 as excluding the inherent discretion to allow representation other than by a member of the classes of practitioner referred to in the section.

    I hold that I have a discretion to permit non-legal representation if in the interests of justice that appears to be necessary or convenient.

    The situation is unusual, however, and I am not aware of any precedent in this Court.  Certainly the exercise of the discretion must be carefully controlled, as the Court must be jealous to ensure that the safeguards which follow from proper legal representation are not eroded by allowing for representation by unqualified persons who do not have the responsibilities and duties of counsel.  If a stranger to an action sought leave to represent a litigant, in ordinary circumstances it would be difficult to see how that could be entertained.  It is true that occasionally somebody is allowed to give assistant to another lay person in the conduct of litigation by taking a role which has come to be described as that of a McKenzie’s friend. ….. But the McKenzie’s friend has not, as I understand it, a right of audience, but only a right to advise and assist.”

24. In that case during a part-heard trial where the legal representatives for the defendants had been permitted to withdraw Perry J allowed one defendant, who appeared in person, to represent two other defendants, who were his brother and sister, who had a common interest with him in the litigation.  In McGregor-Day v SA College of Advanced Education 10 February 1994 Judgment no S4406 unreported, Debelle J allowed a lay person to represent an appellant who was in poor health.  His order was based in part on the lay representative not being required to call any witnesses and the appellant being present during the hearing and the Judge reserving the right to communicate with her directly if the need arose.  In Petracca v Fitzgerald (2002) 219 LSJS 67 Wicks J refused to allow a lay representative of an insurer to appear for a party to litigation. In Groundwater v Territory Insurance (2004) 183 FLR 437 leave was refused to a father of an applicant to appear for him in the Human Rights and Equal Opportunities Commission and to conduct his son’s case where there was medical evidence that the son was not fit to attend Court. In Damjanovic v Mally (2002) 55 NSWLR 149 it was held a plaintiff should not be permitted to be represented by an unqualified friend in an action against his former lawyers because he no longer trusted any lawyers.

25. I am not satisfied that it has been shown here to be in the interests of justice to permit Mr Garrett to appear and speak for his wife and son.  There are no affidavits from the wife or the son.  Mr Garrett informed me that his wife did not like attending at Court, and thus wished him to represent her.  I am not in a position to know whether the interests of Mr Garrett personally in the proceedings are identical to those of his wife and his son.  His wife was declared bankrupt on 22 December 2004 which may be a complication in the proceedings against her.  There is no evidence that the wife and the son cannot afford legal representation for themselves, although I am prepared to assume that that is not the case.  There is nothing in the circumstances of this matter which takes it out of the ordinary run of cases where a person who is not a legal practitioner wishes to appear and speak for parties in an action.  The safeguards which follow from proper legal representation, which are referred to by Perry J in the passage quoted above, will not be present if Mr Garrett is allowed to represent his wife and son. This factor outweighs any other consideration in allowing Mr Garrett to represent them.

26. In lengthy written submissions handed up as part of his submissions on 6 April, Mr Garrett maked it clear that he personally, his family members and many companies with which he has been associated wish to bring a joint counterclaim against the plaintiffs and many other proposed defendants to counterclaim.  The effect of any leave given to Mr Garrett to represent other parties will be not merely be so that they can defend the proceedings, but also so that they can attempt to introduce many other far reaching issues into the action.  While it may be permissible for the Court to exercise its discretion to allow lay representation for a defendant, such a discretion is not to be so readily exercised to allow the defendants to attempt to pursue a counterclaim which, if permitted, will go far beyond the scope of the plaintiffs’ action.

1. Unlike under R 36.11 it is probably not open to me to grant Mr Garrett leave, even if I was disposed to do so, to represent his wife and son for all hearings in the course of the action.  I am probably confined to granting any leave for hearings before me.  It will be for any Justice or Master who hears other applications or the trial to consider what leave they might give Mr Garrett to represent his wife and son before them.

2. In any event I am not satisfied that it has been shown on the balance of probabilities that either Mrs Garrett or Nicholas Garrett have duly authorised Mr Garrett to represent them for the purpose of this action.

3. Mr Garrett relied on a power of attorney from his wife which was purportedly dated 20 September 2004.  The affidavit of Mr Hegarty, referred to above, establishes that this document was not executed until about 24 January 2005.  By then, Mrs Garrett had become bankrupt.  The document also refers to Mrs Garrett having set her “hand and seal” to it, but no seal appears on it.  As stated above in respect of the powers of attorney by the companies this suggests that the execution of the document is incomplete.

4. The power of attorney allegedly given by Nicholas Garrett was dated 4 December 2004.  There is no evidence that this date is not correct.  However its terms are nonsensical.  It states:

   Nicholas Samuel Morton Garrett ….. HEREBY APPOINTS ANDREW MORTON GARRETT ….. to be the company’s attorney and to do on the company’s behalf anything that the Company may lawfully authorise its Attorney to do”.

5. It purports to be an enduring power of attorney under the Powers of Attorney and Agency Act 1984. but the signature of Nicholas Garrett is not witnessed by a person authorised in law to take affidavits as required by s 6(2) of that Act. It also states that it is “signed sealed and signed delivered”, but no seal is affixed to it which suggests that its execution is incomplete.

6. Mr Garrett also sought to claim the right to represent other defendants under the following Rules:

   Rule 28.02.  This Rule has nothing to do with the representation of parties.

   Rule 29.01.  This Rule is confined to proceedings relating to the administration of an deceased estate, property subject to a trust or the construction of a written instrument.  While part of the cause of action relates to the subject of a trust, this Rule does not apply because action is also concerned with additional subject matter.

   Rule 30.01.  This Rule does not give the right to appoint other representatives.  It merely allows an action to be pursued without having to join the beneficiaries of a trust.  Mr Garrett claims that Evajade is sued as the trustee of his Family Trust but this is contrary to paragraph 19 and other parts of the consolidated statement of claim.

   Rule 30.02(2).  This Rule does not allow representation of another party but rather allows the Court to join a person claiming a beneficial interest as an additional defendant.

7. Rule 32.    This Rule is not concerned with representation.

8. Accordingly the leave sought in paragraph 1 of the defendants’ application of 4 April 2005 is refused.  I will hear the parties on what other orders should now be made.