Industrial Mutual Liability Pty Ltd & Ors v International Vineyards Pty Ltd & Ors (N0 2)

[2005] SASC 238

SUPREME COURT OF SOUTH AUSTRALIA

(Appeal from a Master: Civil)

INDUSTRIAL MUTUAL LIABILITY PTY LTD & ORS v INTERNATIONAL VINEYARDS PTY LTD & ORS (N0 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 second defendant to represent other defendants - neither Rule 36.11, section 127(1) of the Corporations Act nor the inherent jurisdiction of the Court allow second defendant to represent other defendants in the circumstances - no error in Master's approach - appeal dismissed.

Supreme Court Rules 1987 (SA) r 36.11; Corporations Act 2001 (Cth) s 127, s 206, referred to.
Evajade Pty Ltd v National Australia Bank Ltd [2005] SASC 229, considered.

INDUSTRIAL MUTUAL LIABILITY PTY LTD & ORS v INTERNATIONAL VINEYARDS PTY LTD & ORS (N0 2)
[2005] SASC 238

Civil

1. GRAY J                 This is an appeal from an order of a Master dismissing an application that Andrew Garrett be permitted to represent parties in the action.

2. In the proceedings claims are brought against the defendants arising from a vineyard operation in Victoria.  Mr Garrett is a defendant.  He sought to represent other defendants in the proceedings - International Vineyards Pty Ltd, Averil Garrett, his wife, Nicholas Garrett, his son, Garrett International Investments Pty Ltd, Evajade Pty Ltd and International Vintners Australia Pty Ltd.  No solicitor acts for any defendant in the proceedings.

3. Mr Garrett relied on Rule 36.11 and the inherent jurisdiction of the Court in seeking leave to represent other defendants. This appeal was argued at the same time as two other appeals.[1]  In the matter of Evajade v National Australia Bank[2] consideration has been given to Rule 36.11. The findings, reasoning and conclusions reached in that appeal have direct relevance to this appeal and are incorporated by reference into these reasons.

   [1] Supreme Court Action Nos 164 of 2005 and 253 of 2005 - [2005] SASC 229, [2005] SASC 237.

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

4. In the present proceedings, the Master concluded:

   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) [of 36.11]. 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.

   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. 

   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. 

   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.

   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.

5. Arguments were advanced by Mr Garrett in Evajade v National Australia Bank about his authority to act for Evajade pursuant to the terms of a purported power of attorney.  In this matter the same arguments were advanced in respect of similarly worded and executed powers of attorney.  The powers of attorney said to give authority with respect to the corporate defendants in these proceedings and the circumstances of their signing give rise to the same concerns as identified in Evajade v National Australia Bank.  The Master in these proceedings reached the conclusion that he could not find on the balance of probabilities that the powers of attorney were either valid or effectual.  Mr Garrett submitted, as in Evajade v National Australia Bank, that notwithstanding those findings and those reasons he should still have been granted leave as requested.

6. Mr Garrett did not challenge the Master’s primary findings.  On appeal, he submitted that notwithstanding those findings he should have been permitted to represent the corporate defendants in the proceedings.

7. Even if Mr Garrett was a person within the category of persons referred to in Rule 36.11, for the reasons identified in Evajade v National Australia Bank, this appeal should be dismissed.  It was open to the Master to exercise his discretion to reject Mr Garrett’s application to represent the corporate defendants.  Further, the Master exercised his discretion appropriately. 

8. In rejecting Mr Garrett’s application to represent Mrs Garrett and Nicholas Garrett, the Master reasoned:

   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, [Galladin Pty Ltd v Aimnorth (1993) 60 SASR 145 at 147] 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. 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.

9. No error of principle has been identified.  It has not been shown that the Master had regard to any irrelevant material or failed to have regard to any relevant consideration.  The Masters order was open on the material before him.  It was an appropriate order in the circumstances.

10. The Master considered the inherent jurisdiction of the Court and reached the conclusion that even if that inherent jurisdiction existed he would not exercise it in favour of Mr Garrett.  Again for reasons identified in Evajade v National Australia Bank that was an appropriate conclusion to reach.

11. This appeal should be dismissed.