Martin, L. v Linda Martin Pty Ltd (formerly known as Horseless Carriages Pty Ltd)

NOT CONSIDERED SUITABLE

FOR CIRCULATION

IN THE FEDERAL COURT OF AUSTRALIA

)

NEW SOUTH WLES DISTRICT REGISTRY

)	No. 8 of 1984

)

GENERAL DIVISION

)

LINDA MARTIN

Applicant

Respondent

MINUTE OF ORDER OF

THE COURT

Judqe Makinq Order:	Burchett J.
Date of Order:	14 March 1986
Where Made:	Sydney

THE COURT ORDERS

THAT:

(1) No

order

made

respect

the

examination

Malcolm Nelson

. .

Johns.

( 2 )

Linda Martin Pty. Limited (formerly known

as Horseless

Carriages Pty. Limited) pay one-half	of the applicant's
taxed costs of the application.

(3)

"here be no other order as to the costs of any party.

Note:

Settlement and entry of orders

is dealt with by Order 36

of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

)

NEW SOUTH KALES DISTRICT REGISTRY

)

No. 8 of

1984

)

GENERAL DIVISION

)

BETWEEN:

LINDA MARTIN

Applicant

Respondent

REASONS FOR JULGMENT

BURCHECT J.

This motion arises in circumstances which, fortunately, are unusual. The applicant is the judgment creditor pursuant to

a judgment given by Wilcox

J. on 28 September

1984 in proceedings

brought under 3.52 of the Trade Practices Act 1974.

A motion was

filed on

8 July 1985, on behalf

of the applicant, which named, as

respondent, Horseless Carriages Pty. Limited. and was headed with

the number of

the original action and a reference to the Trade

Practices Act 1974. This Notice of Motion sought orders for

examination of "the Respondent"

(sic), and also its directors and

Malcolm Nelson Johns, a solicitor who acted for the company in

the action and in respect of an appeal

which was lodged on its

2 .

behalf.

The Notice of Motion was served upon at least one former

director and upon Mr.

Johns.

However, on the day before the

return date, notice was given that the applicant would not

proceeding on that motion, and when the matter

was called on

before me the applicant's counsel, Mr. Libling, indicated that it

was intended to proceed upon

a fresh motion. The original motion

was accordingly dismissed, and I

reserved the costs of it.

The

applicant then moved upon a fresh Notice of Motion, filed in Court. That Notice of Motion named no respondent, and had not

been served on anyone.

By it, orders were sought that certain

persons, including directors and former directors of the company

and

Malcolm

Nelson

Johns,

attend

before

the

Court

for

examination.

Mr. Einfeld, QC and

Mr. Jones sought leave to appear for

the company, for Malcolm Nelson

Johns and for another person, Eve

Hunter, who though not alleged to have been a director of the company, nor referred to in either notice of motion, had been

served with the original notice

of motion.

I granted the leave

sought to appear for the company and for Mr. Johns, but

as no

application was being pressed

which could affect the person Eve

Hunter, I refused leave to appear for her.

The facts

which

were

evidenced

may

briefly

summarised. Following the delivery of judgment by Wilcox

28 September 1984,

a notice of appeal was filed and served by

Mr.

Johns on behalf of the company on

19 October 1984, and the appeal

3 .

index was settled on

22 November 1984. Thereafter, a long period

of delay ensued. No stay of the judgment was obtained, but,

not uncommonly happens, the solicitors for the plaintiff treated

the proceedings as in abeyance pending the decision of the Full

Court upon the appeal. However, after the delay had continued

for some time,

a series of enquiries were directed to Mr. Johns'

firm, most of

which were simply ignored. On two occasions,

solicitor in Mr. Johns' office gave excuses which, having regard

to all of the circumstances, and not having heard from

him, I am

not prepared to characterise

as disingenuous or misleading at the

time they were given, but which certainly became

so later when

left

uncorrected

(and

there

suggestion

they

were

corrected). What was implicitly suggested was that the appeal

was being genuinely pursued. On 11 April

1985 Mr. Johns' firm

wrote to the applicant's solicitor a letter claiming that there

had been "some delay

by the Court", but

that the applicant's

solicitors had already been advised that the company's solicitors

"would... attend to the further preparation of the Appeal Books",

a statement plainly having a tendency to lead the recipient of

the letter to believe that the appeal was proceeding. The letter

concluded:

"We are currently awaiting our client to provide

sufficient funds to cover the preparation of the Appeal Books, whereupon the Books will be printed and a copy forwarded to you

for inspection.

' I

There would, in the normal course, be nothing remarkable

about such a letter. But the evidence reveals that on

March

1985, that is more than two weeks before the letter was written,

the company had, by

special resolution, changed its name to

Linda Martin Pty. Limited, and that it was Mr.

Johns' firm which

later lodged, at the Corporate Affairs Commission, the necessary

notice of that special resolution. The special r-esolution is

drafted

legal

language,

and

both

the

drafting

and

the

procedure involved in passing such

a resolution would be expected

to entail professional assistance. "he resolution was required,

as the circumstances now make clear,

as part of a plan to dispose

of the business of the company, enabling the purchaser to carry

on business under the company's established name "Horseless

Carriages", with the result, as

Mr.

Johns himself alleged well

afterwards in

a conversation with the applicant's solicitor, that

the company is now entirely without assets.

No motive has been

suggested, or occurs to

me. for the choice of the applicant's

own

name, as the new name

of the company, but that it was intended as

a jeering intimation that she could enforce her judgment in any

way she liked against its valueless shell. Mr. Einfeld, in

argument, conceded that the adoption of the name was	a piece of
"misplaced smartness".

Khat is significant is that the decision to change the

name must have occurred prior to

25 March

1985, that it is

probable

the

company's

solicitors

drafted

the

resolution

effecting the change of name, and that in any case the evidence

shows that Mr.

Johns'

firm, which acted on the sale of the

business, lodged an application for registration of the business

name "Horseless Carriages"

in the new company name "Linda Martin

Pty. Limited" on 26

March 1985.

that at latest by 26

March

1985, I conclude that Mr.

Johns was aware of

his

client's

intention, upon completion of the sale of the business, to

abandon both the appeal and the empty shell that would then be

the company. If he was not

party to the formation of the

intention, it is not credible, as a matter of probability, that

he did not appreciate the significance of the change of the

company's name. Yet he acted on the sale and on the appeal, and

the letter to which

have referred of 11 April 1985 was

permitted

sent

the

applicant's

solicitor.

In the

circumstances, I

can only regard that letter as calculated to

mislead the applicant's solicitor into taking no action in the belief that the appeal would be proceeding in the normal way, when in fact there was no prospect that it would. At the time

the

letter was written, there was,

am satisfied on

the

probabilities, no intention of printing and forwarding appeal

books.

In the event, the sale

of the business was completed

1 May 1985.

or about the same day, Mr. Johns advised the

applicant's solicitor that the appeal would be discontinued, and

that the

company

had

no assets.

Lodgment

the

special

resolution changing the name of the company was effected, and

effected late, on

6 May 1985.

The applicant's solicitor first

became aware that the company's business had been sold on

4 July

1985, whereupon, almost immediately,

he took out the first notice

of motion to which

I have referred.

During argument, it was suggested that

I might consider

the institution of contempt of court proceedings, on

own

motion, arising out of the circumstances which

I have outlined.

It did not seem to me that this

was an

appropriate course to

take, upon affidavit evidence revealing a very partial picture, without the benefit of cross-examination. I have considered the probable complexion of the facts, and the inferences that arise,

because costs orders have been sought, to which those inferences

may be relevant. But, bearing in mind the weightier onus of

proof applicable In contempt proceedings, it does not necessarily

that

the

same

conclusions

would

drawn

such

proceedings, even assuming an unchanged state of the evidence.

Moreover, it seemed

me to be premature to consider this

question before the holding of the examinations which were the express object of the motion. On the material before me, there is no evidence that the original ‘institution of the appeal was

not completely bona fide.

Mr. Libling asked me to make orders for the examination

of certain directors or former directors of the company and of

Mr. Johns.

Under s.53 of the Federal Court of Australia Act and

Order 37 Rule 7 of the Federal Court Rules, provision is made for

the enforcement of

a judgment or order of the Court by the making

of any order, Issuing of any writ, or

taking of any other step

that would be open,

the Supreme Court of the State

Territory In

which the judgment or order is to be enforced, if it

had been made by that Supreme Court. It is therefore necessary

to turn to Part 43 of the Rules of

the Supreme Court of New South

Wales, under which provision

is made for an order for examination

on the motion of

a person entitled to enforce

a judgment or

order. Rule 1 of that part permits an order to be made requiring

person bound by the judgment or order"

to ,attend

for

examination and to produce relevant documents. Rule	2	provides
as follows:

"Where the person bound is

a corporation the

Court may make orders as mentioned

in rule 1

for the examination

of, or production by, an

officer or former

officer

the

corporation.

There is

a similar rule in the Rules of the Supreme

Court of Victoria (Order

42, Rule 3 2 ) , and both rules are clearly

based upon Order

48 Rule

1 of the Rules of the Supreme Court

(contained in the "White Book").

far as my researches have

revealed, none of these rules has been construed

as extending to

permit,

the

case

a judgment

against a corporation,

examination of anyone who

not strictly to be described as

officer or former officer of the corporation. There

express

authority that "there is

no power under (such

a rule) to make an

order for the examination

of any person other than the judgment

debtor, or in the case of

a corporation other than

an officer of

the defendant corporation" (per

A.L. Smith L.J. in Hood Barrs v.

Heriot; Ex

parte: Blvth C18963

Q.B.

338 at 341-2; and see

Irwell v. Eden C18873 18 Q.B.D.

588; Jeffris v. Tomlinson C18873

3 T.L.R. 193; Societe Generale

Du Commerce Et De L'industrie

France v. Johann Maria Farina

& Co. C19043

1 K.B.

794).

reliance, in particular, on Irwell v. Eden and Hood Barrs v.

Heriot,

Williams,

Supreme

Court

Practice

of Victoria,

2nd

Edition, Volume

2, page 2088 states that "only the debtor liable

in a judgment

or order for the recovery

or payment of money or,

in the case of

corporation, an officer of the corppration can

be examined.

' I

It was faintly suggested that Order 37 Rule

8 of the

Federal Court Rules might assist the applicant, but in my opinion

this rule only authorises directions which are otherwise within

power, and cannot provide an independent authority to order the

attendance of Mr.

Johns.

It was then suggested that Order 33

Rule 13 enables the Court to make orders for the attendance of any person. However Order 33 is concerned with evidence, not the

enforcement of judgments. and

I do not think Rule 13 has any

relevance

the

present

problem.

Finally,

there

was

contention that, under companies legislation,

a solicitor may for

some purposes be deemed

officer of a company, but it is

sufficient to say that the purposes for which

he may be deemed

officer are irrelevant to any question arising in this matter.

At the conclusion of the hearing

I made orders, pursuant

to s.53 of the Federal Court Act, Order 37 Rule

7 of the Federal

Court Rules, and Part

43 of the Rules of the Supreme Court of New

South

Wales

applied

those

provisions,

requiring

the

attendance for examination of certain officers

or former officers

of the company and the production of documents by them. But

reserved the question whether any similar order would be made in

respect of Mr.

Johns, and all questions of costs in respect of

the two notices of motion.

now deliver judgment on those

matters. In the light of the authorities which

I have mentioned,

I decline to make any order

for the examination of Mr.

Johns. I

do not think any such order would be within power.

I have given careful consideration to the question of

costs. As

have pointed out, the original notice of motion

named only the company as respondent, and the second notice of

motion did not nominate any respondent. Although the original

notice of motion was, in

fact, served on the persons

have

mentioned, the procedure under Part

of the Rules of the

Supreme Court of New South Wales, as Rule

makes clear, is

essentially an ex parte procedure, and there is much to be said

for the view that the proper time for

a person to object to being

required to attend for

examination is when, if ever,

examination order is served upon him. Although notified,

Mr.

Johns did not become

a party, except by leave, upon his

own

application.

unusual

for

a witness

have

legal

representation at

a hearing.

So far as the company is concerned, the proceedings were

partly successful against

it. and partly unsuccessful. So far as

Mr. Johns

is concerned, I

have referred to circumstances, not

unconnected with the litigation, which ought, in my opinion, in	a
balanced exercise of judicial discretion, to be taken into

10.

account.

The fact that those circumstances gave rise to

suggestion by the applicant's counsel that

a contempt of court

may have been committed does not, in itself, entitle Mr.

Johns to

order for his costs

the motion, as is made clear by

McLelland J. in Jendell Australia Ptv. Ltd.

Kesbv C19833

N.S.W.L.R.

127 at 137, and Moffit

P. in Killen v. Lane C19833 1

N.S.W.L.R. 171 at	177-8, a judgment with which Hutley and Samuels
JJ.A. agreed.

It is clear that under s.43 of the Federal Court of

Australia Act the award of costs is in

discretion. The

principles applicable to that discretion are set out

some

length in Trade Practices Commission v. Nicholas Enterprises Ptv.

Ltd. (1979) 28 A.L.R. 201 at 206 et seq. Having regard to all

the circumstances, I

think I

should make no order as to costs

other than that the applicant should have an order	for one-half
of her taxed costs against the company.

I	certify that this and the

preceding nine (9) pages are a

true copy of the Reasons for

Judgment herein of his Honour

Mr. Justice Burchett.

c L . A @ -

Associate

Dated: 14 March, 1986.

[1986] FCA 75

14 Mar 1986