Molnar Engineering Pty Ltd v Burns

CATCHCJOmS

84-

Practice and procedure

leave for agent, not beinu a leually

qualified practitioner, to appear

on behalf of a company - 0.4

5	r.	14	Federal	Court	Rules	- the	nature	of the	discretion
:

pursuant to

0.4 r.14 -

considerations taken into account in

deciding whether to exercise the discretlon.

Trade Pra-ces

Act 1974

Federa-urt

Rules: 0.4 r.14

.- .: J

MOLNAR FXGINEERING PTY. LTD. v. E . J . BURNS

- -.

. .,

. .

VG No. 146 of 1984

Smithers, Sweeney and Keely

JJ.

17 July 1984

Melbourne.

)

VICTORIA	DISTRICT	REGISTRY	)	VG NO. 146 OF 1984
)

DIVISION

GENERAL

)

-_	BETNEEX: MOLNAR ENGINEERING

PTY. LTD.

!	( APPELLANT)

J~dggS-k l&l~-&&r:	Smithers, Sweeney and Keely	JJ.
Date of Order_:	17 July 1984
Where Made :	Melbourne.

2. The appellant pay the costs of and incidencal to thls

appeal.

;

BETWEEN: MOLNAR

ENGINEERING

FTY. LTD.

:	E.J. BURNS

(RESPONDSNT)

"The appiication is based

on an adwrtisement

published

October

1982 in

the

Sun

News

Pictorial

by 'The Heralrl

Weekly Tunes Ltd. in

which

Mr. E . J . Burns,

iescriblnc hlnself as the

Chief InsDector of Lifts and Cranes, Srlnas to the

attention of

owners and users or the Molnar

T-do

Post

Motor

Vehicle

Holsts, and to

the

publlc

generally.

that; those holsts do not

comply wlth

the Llfts and Crmcs Act 1967 and Regulations made are unsafe to be used, and requlring the owners

thereunder

and that in

hls opinion those holsts

and users

of those noists to cease

usmu the

hoists imnedlately. The company clalms that in publishinu that advertisement T'he Herald 5. Neekly

2 . .

-D

Times Ltd. enuaaed in conduct which was misleading or deceptive. or was likely to mislead or deceive.

and thus was in contraventlon of s.52 Trade

Practices

Act

1974.

The company is claiming

damaces

auainst the publisher under

s . 8 2

of the

Act and is seeking orders under 5.07 of the Act

requiring

the

publisher

to publish

further

advertisements

and

to distribute

letters

rectify the deceptive

misleading conduct

alleged. The Herald & Weekly Times Ltd.

is taking

no part in the hearinu of the applicatlon.

The company is seeking similar relief against Mr.

Burns on the basis that he aided, abetted,

counselled or procured the publlsher to enaaqe in

the conduct

described and

thus

a person

involved

in the contravention by the publlsher

pursuant to s.75B of the Act."

The application for leave was made by motion on

the

,third day of hearing of the action. The Court has express

power to urant the leave souuht

(0.4 r.14). Counsel

for the

respmr'ent Brirns

did not consent to leave being granted;

mtci~ c e r t z i n oDsrrvations of a qener?.l nature, b u t refrained f?:c\iT urcr<.nq chi Court t o dismiss the application saylnq that it W?: E matter fcr the Court. Tn2 Herald & Weelilj? Times is a

r'espoxient 50 t h e

initizting ?.p?lJcation in

tkese proceecXr.Ts

but has

taken no part in the application

r;he F U ~ J P C ~

of thic

appeal. On

the hearing of this appeal Mr. Burns' counsel made

submissions only on the question of

costs, the notice of

appeal

having

speciflcally

souqht

an order that "the

Respondent CBurnsl pay to the Appellant the costs	of the said
motion and of thls appeal."

His Honour accepted evidence that,

as a result of a

resolution carried by

a meeting of

the directors of the

3 .

company, Molnar,

if granted leave to appear on the company's

behalf, would

"be fully authorized to act for and bind the

Company

in the course of (the) proceedings

until

their

conclusion".

It was accepted

also that of 70,005 issued

shares of the company 70,001 are owned by Molnar, one each by

his wife and two children and one by

proprietary company

owned by him,

There was evidence also before his Honour that

the "estimated

costs of my

leual

representation

for the

balance of the expected duration of this action are in excess

of $100,000 and that the Applicant cannot

both pay those costs

and contlnue in business". As to

the

company's financial

situation his Honour

said:-

"... i~ sunmary it

seems to me that the company

the rncpent is in fir~ncial

citficulties beca~ce

the dil.Cicu!.t-J of selling the hoist, C,k:nt assets

01 the comixny are mortgaqcri 6 s securj ty f o r loans

obtaineu by the company, and. that tho present incoae of the com>,an:( is rTot sufficient to c w e r

bor;l: thc

servicinu

of the

loans

alrcady

CXlStence and to

mLke prsv~zicn

f-or erti;er a

furiher loan to pay fcr

1.eUsl

~xpenscs

end le7al

advlcz of counsel ap?e.vmcr in t k x artlon, rhrtlcularly when the businrss 1 s such that ths income comlng from the activlties of the company

is very low.

It is claimed that

the company is

operatinq at a substantial loss. It does not have

sufficient funCs or access to credit facilities

sufficient to remain in productlon and further pay

Its legal advisers."

His Honour ohserved that

"Impecuniosity of an applican5, being

a company,

may	have effects alcoqether different from the

problem presently before the Court. Those effects

are not relevant

the

determination

of the

motion. Nevertheless, it is fairly bold to assert

that an agent, not being a legally qualified

.	, . - ' l -

4. .

practitioner, be granted leave to appear for a company in legal proceedings in which it is an applicant and which raise difficult and complex

questions of fact and law and in which, from what

has occurred

already,

difficult

questions

admissibility of evidence will arise constantly.

and concluded his observations

as follows:

"I have much sympathy for

the position of the

applicant in this

case. Much weight must be given

to a liticrant being a company,

to be able to

present its case before the Court, particularly in claims unaer the Trade Practices Act. I have

taken into account all

the submissions made by

counsel on behalf

the

company,

but

havlng

regard to the nature of these proceedings. and the

difficult questions

of fact and law which arise,

this is a

case which. in

my oplnion the Court

should have the benefit of legal practltioners

appearinu

for

the

applicant.

Accordlngly,

the

Court refuses the motion."

Mr. tierkel, vho appeared with Mr. Judd on bchnlf

of: Lhz

company,

conceded

that

the

present

appsal

is withjn

the

cateqory of

cases in 57hich apes1 ccjurts zxet-clse WitiCU;aY

caur;ion In

reviewing decisions of a Judge at first instmce.

He contended, however, that, having reaard to the findinq chat the company could not both stay in business and pay its legal advisers, the application uained support from the dictum of

the Full High Court in Adam Brown v. Philip Morrzs

(1981) 35

ALR at

629 "that the question of injustice flowing from the

order

appealed

from

would

generally

a relevant

and

necessary consideration" applied.

The principles relevant to the exercise

a court's

discretion t o urant

leave such as

that

.sought

on the

company's motion have been discussed in

a number of cases. In

McGrath v. Ds-b&

(1890) 16 VLR 646 at 649 Hlgglnbotham C.J.

delivering the judqnent of the Victorian Full Court. speaking

of proceedings before magistrates. said:-

"It cannot be contended

with any show of reason.

where the

prosecutor has no counsel or attorney.

thet the justice

1 s not to accept the aid of any

other fit

ana proper person in discharging his

duty of hearing

the evidence and dealing with the

charue.

In Qxg.~l~e-..&-&u

C19b53 AC 939 at

95'3. the Privy Council,

after reftrrlng to

a court's lnhsrent

riu~t

to regulate its

prcceedlngs . said:

In Hubbard Association of Scientoloulsts

V. Anderson C19723 vh

340, Smith. Little and Gowans

JJ. slttlnq in the

Full Court of

the Supreme Court

Victorla havlnu said (at

341)

that In

superior courts the practice had been to refuse to hear

company except throuq\ the agency of

leaally qualified

person. said (at 3 4 3 )

"It would not

be right to impose too rigid

limitation on a discretion thus conferred, but it

has

long been

regarded in

the higher courts as

proper to refuse to exercise the discretion In

favour of allowing the appearance

of non-qualified

persons (other than on merely formal matters such

as adjournments) when the assistance of qualifled

persons is available to give the courts help in

the administration

of justice.

There is no suggestion here that professional representation has been denied or cannot be

procured.

Mr.

Tampion's

avowed

ob~ect is to

establish the position

that

he be recognized as

the company's spokesman In this and all other

proceedings necessary for the prosecution of the

action to its conclusion."

Order 4 r.14 of the rules of this Court provides:-

"14.(1) Subject

to sub-rule

( 2 ) and to Order

(Ghich relates

CO disability), any person

may

proceed in the Court by

a sollcltor or in person.

( 2 )

Ercept a s provide6 h>- or under any Act, a

c:orporat!on

z~ay not, m ~ h m z

the 1ca.x of che

Court.

ccmmence

G C

c a r r y orr

any

proceeljng

otherwise than by

a solicitor.

( 3 )

Sub-rule ( 2 ) does riot 2ppl:r 1:o

orgnnlzation.

Tile rexerence to an organlzatAm in rule 14(3) is to ?.K organization registered under the Conclliation C Arbitration

Acl; 1304.

Rules

dealing

pxpressly

with

the

capacity

of a

corpcration to commence or carry on

a proceeding other than by

solicitor,

or,

to enter an appearance ar to defend

proceeding except by

a solicitor do not appear in the rules of

the Suprene Court of Victoria.

The rules of the

High Court

-c

-- I"-----.

- , ~

.. .

1 .

provide that unless the contrary intention appears therein

"person"

includes

"corporation

and

body

politic";

the

expression

"plaintiff"

includes

"a person

seeking

relief

against another person by a form of proceeding

in a Court".

and the expression "defendant" includes

"a person against whom

relief is

sought by originating processes". Rule

of 0 .4

provides that where

a plaintiff sues by

a solicitor the

solicitor shall endorse upon the writ of summons the address of the plaintiff and hls own name and place of business or the name of his flrm and its place of business. Rule 2 of 0 . 4 of

those rules provides:-

"2.

(1)

A plaintiff sulnq in person shall endorse

upon the writ

of'

su~~unons his place

of residence

and his occupation.

( 2 )	...
( 3 )	..."

The Ruies of the Suprcne Ccur:: cf ?JEW Scuth [\Tales

contain a prGnsion, c;rt

4 ( 2 1 ,

th;,rr

CXCE.?: , 5.

p r u v ~ ~ d

5y o r

under any Act,

"a corporation may not commence

or carry on any

proceedings otherwise than by

a solicitor".

In Hubbard Association of Sciento~os~sts

International

Anderson (supra) the Associatlon claimed the rlght

appear by a lay representative of its

own cholce. It was said

by the Full Cmrt that certain

cases:-

"... show that a company,

since

cannot

regarded as a litigant in person, must appear

before the court by or through

an aqent.

The

cases also

show that the

class of agents by and

through which

a company may appear before

the

court may be limited by statute or by

the practice

the court.

They show also that in superior

courts, when not inhibited by statute,

the

to	refuse to hear a company

practice has been

except through the

agency of a leually qualified

person.

The provisions of

s.5(3) of the Leual

Profession and Practice Act

1958,

conferrinq the

right to practice in and before this

Court, among

others, on persons duly admitted

as barristers and

solicitors, confer

a right of audience on the

persons

qualified

and

recognized.

The

provisions of the sub-section do not grant that

right of audience to any other class of persons.

CBy way of aside it is noted this ~7as an appeal

from a judgment of McInerney J.1 McInerney, J.'s

opinion was that when these statutory provlsions

were read with 5.111 of the Act it was 'clear that

in the Supreme Court the riqht of audieme on

behalf of

other

persons,

i.e. the riaht

'appear' for them,

1s confined to barristers and

solicitors'. Thls cannot be questioned. But it

i5 necessary to bear In mind that what is being

dealt with is the 'rlght' to appear or the 'riuht' power of the Court to permit persons to apprar."

OS the cases mentioned Tritcnia L&- D r s . V . Zqul+:{ I z s

Life Assurance Societv El5433 AC 524, i.r-.alt w l t h the Fr&c+:lcc,

of the House cf Lords. It

\;as

po in ted out :-

"When an appeal is aruued before

the House of

Lords,

EO one has any right of audience except

counsel instructed on behalf of a

party or (when

the

litiuant

a natural

person)

the

party

himself. In the case of

a corporation, Inasmuch

as the artificial entity cannot attend and aruue

personally, the riuht

of audlence is necessarlly

limited to counsel instructed on the corporation's

behalf.

and that it was:-

81 ... the well-established rule

that araument at

your Lordships'

bar on behalf of

one individual by

another is only permitted if that other is briefed

as counsel.

Such a rule, limiting a right of

audience

on behalf of others to members of the

English or Scottish

Northern

Irish

Bars,

secures that

he House will

served

barristers or

advocates who observe the rules of

their p ofession, who are subject to a disciplinary code, and who are familiar with the methods and scope of advocacy which are follows in

presentinu arguments to this

House.“

In	Frinton and Walton Urban District Council v. Walton and

District Sand and Mineral Co. Ltd.

& Anor t19383

1 All E.R.

649 the defendant corporation‘s managing director sought to

appear in person. Morton

J., having had London Countv Council

v. London Tramways CO (1897) 13 TLR 254, and Scriven v.

Jescott

(Leeds) Ltd.

(1908) 53 S o l . Jo. 101 drawn t o his

attention, said:-

”The lanquacre of RSC Ordsc 4

r . 2 6025 not

contevplcte that a corpany c211 SLI? m yzrson ar.6

the points to which my ettenr1o;l h.;s ix31? d r a m

are s u f f i c i e n t to satisfy me tnat E COKE^?.^^^ can.ict

appear in pcrssn.

‘I

The terms

of 0.4 r.2 resembled. the Hiqh Court Rules set

cut

above,- save that no definitions of person, plalntiff or defendant were contamed therein. In London County C o u n c i u London Tramways Co. (supra) Cave and Wright JJ. held, without

argument. that the chairman of

a corporation which was

a party

could not

appear for it. It was also

so held

by Bray J. in

Scriven v. Jescott (Leeds) Ltd. (supra).

Thus the situation in the Hiqh Court of

the United

10. .

Kingdom before 1962 was that under rules containing nothing

express terms concerning the right or grant of leave to a company to sue or defend without a solicitor, it was firmly established that 0.4 r.2 did not apply to a company. A

company attempting to commence

or conduct proceedings other

than by

a solicitor was not regarded as a

litigant suing or

defending in person.

In 1962 when the rules of the Supreme Court of the High

Court of

the United Kingdom were revlsed 0.4 r.2 became 0.5

r.6 in the following form:-

car-ry on any such proc2ell;Ts

~ t i i e i - m s o

than by a

sollcitor.

A note to that rule states, "A body corporate." -- This Rule embodies the previously existing practice (see Re L.C.C. etc. (1897), 13 T.L.R. 264; Scriven v. Jescott (1908), 53 S.J. 101).

But In this Court the presence

of r.14(2) of 0.4 and r.3

of 0.9

introduces a new element. Those rules proceed on the

h 3 1 8

t h a t there

is d

discretion in the

Court to permit

company to commence and carry on any proceedings other than by

a solicitor and to enter

an appearance or defend any proceed-

ing without

a solicitor and, it would seem, it I s a discretlon

to be exercised by reference to

all relevant considerations.

There may well have always been a discretion to permit the appearance on behalf

of a party of a non-quallfled person

but, as stated

Hubbard

Assoclation

of Sclentolouish

International v.

Andecsa (supra), it has lonu been regarded

in the

hiuher courcs as proper, where the assistance

qualified persons I s available to uive the courts help in the administration of Iustlce to refuse to exerclse the discretion

in favour of allowlnq such

an appearance, other than on

merely

formal natters such

as ad~ournments.

It is my oplnion that the

inflexibiiity qf

the practice

in E n q l a x l L o t h before

;:tc'L

the promulgstion

ot the EK-rlish

rJ.5 r . 6 . could

n o t

tss

ZT.

influence aCainst the

Pxnrci:e

01 that dlscreilcln by reLerr-n:?

to all

relevant clpcumsLXices.

k 6 . t'ne discreticjn rr:?.aini.L:

in the face of a rule such as @.S r.6 can hardly be other than

essentially residual.

Having this in mind, the discretion introduced in

0.4

r.14 and'0.9 r.3 does introduce an element dlfferent

fron! that

which might have been expected when the Federal Court of Australia was established in 1976, had it been intended that the discretion of that Court should be but a similarly

12.

residual

discretion.

Certainly

a change of emphasis

appears

to be involved.

The discretion introduced in the express

provisions of the rules is, in the absence of other guidance,

to be

exercised judicially according to the requirements of

justice.

The discretion is as to a matter of procedure but it

may

well affect matters of substance.

The

consequence of

permitting a non-qualified person to appear will be to deprive

the

Court of

assistance In respect of matters of law. It

might also,

according to circumstances, render difficult the

proper assessment of fact.

These considerations

to the

ability of the Court ideally to reach the correct decislon on

the matters of law and fact involved in the litigation. This

may operate to the detriment of a company appearing without a

solicitcr but such

a consequence would be of the company's

own

nakina.

The

epp1:cation

the

Court

of the ccrrert

prjnc~pl.cs of 1277 and the correct assessiflent

of the facts m a

psrticular

cdse are important objectlces, but they

are m'c

ncccssarily unatLajnable without the assistance

of quolirlcd

advocetes.

Thr? attainment of theEe objectives,

so far a5

possible

without

qualified

assistance,

accepted

appropriate where a party sues or defends in person.

The discretion

being

reposed

the

Court

inevitable that it be exercised in favour of a company where there is sufficient reason. According to the strength of the

case made as to the existence of such reason,

so the weight to

be given to the consideration that the Court might lack

13.

qualified legal assistance, will decline.

The problem

is to recognize what

sufficient reason

for

the purpose in hand.

The common reason for a company

seeking to proceed without qualified assistance is. no doubt,

that the company does not have

the funds ts engage such

asststance.

One

would

suppose

that

company

might

successfully support an application to sue or defend without

qualified assistance, not only where the company is bereft

funds,

but also where having reqard to

tne necessary or

reasonable commitments of the company the appropriation of

funds to

mgage qualified assistance for

the

litigatlon in

question would create financial difficulties

with

which the

ccnps.n:r COLA& not cspc, or with which it

ought

nct

requircd to

zcsc.

The class of cor.$z-ny

involved, the t?atUrE

of its

undertaking, its financial structure, LtS ab!lity

retain and pay its staff and no doubt otiner lactors niqht	1 3 ~
relevmt in pzrt?.cular cases.

Similarly

the

identity

the shaFeholders

and

the

spread of the shareholding bould be relevant.

So also would

the capacity

a person by whom the litigation mlght be

commenced and carried on. In this case

Mr.

Molnar is, from

the

point

vlew of substance,

one

man

company.

addition he is the inventDr of the

hoist in question and

unlerstands the technical factors relating to its safety. It

could no doubt be urged that,

in the case of

a one man company

14.

which seeks leave to carry on the proceedings without

solicitor and which proposes that it be carried on by the one

man of the company the situation approximates, in substance,

that of a litigant in person. If

Mr. Molnar were carrylng on

business

as personal proprietor thereof he would have

the

privilege of conducting litigation himself without qualified

legal assistance.

The accessibility of the

courts

any

citizen

unconditionally, in this respect, is regarded as fundamental

the

system

justice

under

the

Croxm.

That

ready

accessibility to the courts should be available to a juristic person is no doubt similarly fundamental. However, it has

been regarded as aFpropriate that when

a trader decides to use

the corporare forn in

which to c;::-ry an his business for the

adv-jntsces flowing tlxrefrm hls accessibility to the courts 83 plaintiff arrd bls appzardncc >.S :I deiendxt should he nade

conditional as 3Ct forth in 0 . 5 r . 6 cf C,\e rules of the Uni t e c %lrlgdom and the practice which it reilecLs. gut where a discretlon is conferred on the Court, and where a case is presented that there is sufficient reason to permit a company

sue

or defend

without

qualified assistance,

the

circumstance that the company is

a one man company and that

that man is proposed as the agent by whom the company seeks to

be represented, and t'nat he has advantageous educational and

technical

qualifications, =lay be

significant.

With

these

considerations in mind

I turn to the situation before the

- ,

15.

Court.

I do not read his Honour's comments as indicating that

because of

the financial difficulties referred to by

him, he

would. but for considerations affecting the convenience and

efficiency of the administration of justice, have granted this

application. Had

his Honour not given the weight

he did to

the inconvenience of not having qualified legal assistance,

questions such

those referred to below would have remained

€or further consideration

by him.

So far 5 5

his Honour was

concerned the matter was concluded

by the view that, assuminu

impecunlosity, it was a bold assertion thar: in proceedings

where difficult and complex legal questtons

of fact and law

arose

leave should be aranted for

a non-qua!ified

eqent to

aFpe&r for t h e coml:any.	It WC+.:,	~.n	his l-;or:~ur ' 5	-glciJ. COO
bold an assertion.

AY the colr.pany had the tar- :< clf ??rrad.irI7

the

Col-~rt t h ~ t

there is gocd reason for the excrcj-e

of the dlszrFtjon

?;- th?

Court In

its favour and

Ferfornlng that task in

circurn-

stances in which there may well not be any

cross-exammation,

it was essential

that

the

material

presented

should

be directed

to those matters in respect

of whlch questions may

well arise in

the mind of the Court.

The

financial position

of the company was and is not

clearly established by the evidence of Mr. Molnar.

Why he

Vauid ehaoue t a abandon his action rather than reduce the

company's losses by carrying on the business In a way which

involves continuing the losses is certainly not explained. It

seems that until the third day

the trial it

was thought

within the capacity of the company to conduct the trial with

senior and ]unlor

counsel appearinu

on behalf of the company.

Until then it was thouuht that a hearinu over two weeks was probable. At that staue it appeared that the duration of the

trial might extend to one month, that

for twice the

previously

anticipated

duration.

apparent

that

financial resources which would have supported two counsel for

two weeks would support

a lesser representation

for twlce that

time. On this basls It is 2ifflcult to lnfer that, in the

relevant sense. legally qualified assistance

t o r the trial is,

for Iin<Lnci:Ll rcazczz , not rczx?ns.bi:; vALhiri

tbe cal.':tc1t'.' of

L ; L ~

clmalny.

The s',l:esent

t h a t It i,? thcz:o%t

,-ise t o

contlrlue the

crr1pxl.y's

~ j p z r ~ t i g n s

at f u l l s:ren@l;L lr,voi;.:n.;i

thc f u l l

employment 3f twenty two

employees, ac a loss, inevltably

raises questions

to whether that course

snould be reuarded

as reasonable for the purposes of t h ~ s

applicatlon and at the

same

time

suquests

the

existence

of resources

some

significance. There

is not, in the evidence,

a sufficiently

particularised relationship between the cost

of maintaining

the

action

with

legal

ropresentation

and

the

available

resources of the company.

In an application of thls k m d the

17.

applicant should take the Court fully into its confidence.

On the evidence, Molnar's statement that the company's financial situation was

such that unless

he was granted leave

to conduct the hearing

behalf of the company it would have

withdraw from the

proceedings unrealistically limits the

alternatives open to the company. The company is carrying on

a large business at

a loss.

It is apparently contemplated

that that situation will continue until this litigation comes

to an end.

That may be well into the future. And

on what has

been stated all those losses will be irrecoverable unless this

case

fought

and

won.

Clearly,

therefore,

as far

appears, choices available to the company include reducing

the

scale of its current buslness onerations or redllcing the sccle of the lezai reprFaencation erqzqed. There may be reasons for not adopting the forncr of those cl:o?ces but they do not at present appear, and indeed havmy regard tu the ln2ortance of the case CO the ccmpa!?:? or?e would think thcre may he gocd reason for not adopting the latter.

In this case it is said that some $300,000 has already' been expended in preparations for the case, apparently in

legal assistace and

the engagement of technical experts. In a

situation where

much has already been spent, and

the

continuance for some indefinite time of buslness losses are

recrarded as tolerable, it is difficult to see that the change

in the anticipated length of the hearing of this case had real

- ,

18.

significance

in relation

to the financial situation of the

company and the anticipated allocation of its resources to the

litigation.

This is not

to say that according to the progress of the

litigation,

or on the submission of material dealing with

particularity as to the economic policy which

may be

incumbent upon the company to adopt, a sacisfylng case could

not be made, upon

an application pursuant to the existing

liberty to apply, that there is good reason to grant the ieave

which is

sought.

Certainly

circumstances

which

company's finances are such that

refusal to exercise the

discretion in its

favour would actually cause the abandonment

prcceedings

by a company, the ?-os: of sk?lled leTa:

assictarxe t o the

Court

should

carry no welghl:.

fundanental that the courts be accessible to a coxpmy

a s an

entity accoiding to law

an4 subjecl; cu

tFe lab-.

T h s , the

observations of Higqins

J. in Federz;:cJ

C:.=!r,e

____

Drlv2t-s

n~.*-f!

- -

Firemen's

A sociation

of Australasia

Broken

HllL

Proprietarv Co. Ltd. (1913) 16 CLR 245 are in point. In that

case an organization registered under the Conclliatlon

Arbitration Act 1904 sought to be represented in

a proceedings

the

High Court by its secretary.

His

Honour said at

p. 250 :

"I	should like to reserve my opinion as to the

right of the secretary to appear in this

Court;

but,	of course, no one can contend that sec.27

gives

him

the

rlght.

litiqant

under

19.

obligation

employ counsel; the organization

cannot appear before the Court physically; and to

say that

a duly authorized secretary cannot put

its views before the Court seems to involve a denial of justice to an impecunious organization. In this case the rules of the assoclatlon provide

that 'The

General Secretary shall be the officer

to sue

and

sued

behalf

othis

assocatiation.'

I am not

prepared, however, to dissent from

brethren on this point, especially as they see

their way to

allow, in this case, the secretary to

express

the

views of the organization without

expense.

On the question of the impecuniosity of the company

draw the inference from the observations of the learned Judge

thzt he accepted the general thrust of che statements made by

Mr. Mclnar concerning his company's financial position. It may

be that but

for the &elg!lt t:h-,c:h his Hmodr

accorded t c r rkc-

desirabiiity of

there being a-~allable

t'nc Court qcz i l i i ?d

legal assistance

would heve Fwmted 1e:ivz as souqnt; but-. r.5

Indicated above, this does :lot clearly z!;pc?r.

But if, as

sugu?sted

ir. that Tenera1 rhrusl;. rcfusil

oi t3e appllcz.?lo11

would

really

operate

effectlve

barrler

the

continuance

of the company's proceedings In this

Court,

would, as prevlously stated, regard the situation as one in

which too much weight we.s given to the

loss of qualified legal

assistance. However, if it were the view of thls Court that it is required to exercise the relevant discretion then, for

reasons stated

above, I could

not

satisfied,

the

materials submitted with respect to the company's financial

2 0 .

situation, that

good reason I s shown for

the exercise of the

discretion under 0.4 r.14 in favour of the company.

Accordingly I would dismiss the application

with costs.

c c

i’

IN THE FEDERAL COURT

)

OF AUSTRALIA

)

VICTORIA DISTRICT REGISTRY

)	VG No 146 of 1984

)

GENERAL DIVISION

)

On appeal from	a single judge of the Federal Court	f
Australia
aetween:

M;)LNA1I ENGINEERING

PTY.

LTD.

Appellant

and

E. J. BURNS

Respondent

Coram: Sluthers, Sweeney,

& Keely JJ

Place:

Melbourne

Date : 17 July 1984

Reasons for Judgment

Sweeney, J.

In October 1982 the respondent

E.J. Burns, Chlef

Irlspector of Lifts and Cranes	of the State of Victorla,
caused to be published in the	Sun News Pictorial by The

Herald & Weekly

Times

Ltd.

( t h e

p u b l i s h e r )

a n

a d v e r t i s e m e n t

s t a t i n g tha t Molnar

Two

Post Motor

Vehicle

Hoists d i d

n o t

comply wi th the L i f t s & Cranes A c t 1974 o f

t h a t

S ta te

and

Regula t ions

made

t h e r e u n d e r ,

a n d

t h a t

i n

h i s

o p i n i o n

t h o s e

hoists were unsafe t o be used

and

requir ing

the

owners

and

u s e r s

them

t o c e a s e u s i n g t h e h o i s t s i m m e d i a t e l y .

T h e s e

h o i s t s

were

manufac tu red

and

so ld

Molna

E n g i n e e r i n g

P t y .

L t d .

( t h e

c o m p a n y )

w h l c h

i n s t i t u t e d

p roceed ings

th i s

Court

wnlch

c l a l m e d

t h a t

p u b l l s h i n g

t h a t

a d v e r t i s e m e n t

h e

p u b l i s h e r

e n g a g e d

1 1 1

conduct

which

was

misleading

d e c e p t l v e

was

l i k e l y

t o

mis lead or deceive

and

thus

contravened

5 . 5 2

the

Trade

P rach lces

AcC

1974

( t h e A c t ) .

The

p u b l i s h e r

h a s

t a k e n

p a r t

l n

the

hea r ing

o f

t he

p rocced ings

I n s t i t u t e d .

The

company

has

a l l eged

t ha t

r e sponden t

a lded

and

abe t t ed ,

counse l led or procurfd the publ i sher to engage

111 the co r ld~ lc t

descr lbed

and

was

t h u s ,

p u r s u a n t

t o

s.75B

t h e

A c t ,

pzrson

i volved

i n

t he

con t r aven t ion

o f

t he

Ac t

p u b l i s h e r .

The

respondent has embarked on

v igo rous de fence o f t he

a p p l i c a t l o n a n d t h e q u e s t i o n s o f t h e s a f e t y o f t h e h o i s t s a n d

whether

they comply w l t h

t h e

V i c t o r l a n

A c t

and

Regulat

lons

a r e c e n t r a l

issues

i n t h e c a s e .

I n a d d i t i o n t h e r e s p o n d e n t h a s r a i s e d

d e f e n c e t h a t t h e

Act has no application to him, in that he has the benefit of

the shield of the Crown in right of the State

of Vic oria.

After a number

interlocutory hearings the trlal

commenced before Northrop J. on 8 May 1984 when the company

was represented, as

It was before us, by Queen's Counsel.

The case was cbpened, as counsel for the company sald.

"at some length" and the maln expert wltness for the company

gave evidence in chief. It became apparent o hls Honour, to

use his own words, "that very dlfflcult and complex questlons

of fact

and

law are ralsed by the application and

the

defences. The questlons of fact will need to be declded on evldence given by a number of expert witnesses in a hlghly technical area of engineerlng. In addition, difficult

questions of la!w

are raised in relation to Construction of

Acts Regulations and other documents .'I "From what has occurred already," his Honour said, "difficult questions of admissibility of evidence will arlse constantly".

On the third day

of the hearlng, senior counsel for

the

company moved the Court that, pursuant

to Order 4 R.14 of the

Federal Court Rules,

Mr Molnar be granted leave to appear on

behalf of the company.

Mr Molnar 1 s the managing director of

the company and its principal shareholder, owning

all but

four of its

7 0 , 0 0 5

issued shares.

Hls

wife is the other

director of the company.

He was duly authorised by

the

company to act on its behalf in the application.

Order 4 r.14(1)

and ( 2 ) read as follows:

"(1) Subject to sub-rule ( 2 ) and to Order 43 (which relates to disabllity), any person may proceed in

the Court by a solicltor

or in person.

( 2 ) Except as provided by

or under any Act, a

corporation may not, without the leave

the

Court,

commence

carry

any

proceeding

otherwise than by

a sollcitor."

Order 9 r.(l) and

( 3 ) are as follows:

" (1) A respondent may enter

an appearance and may

defend a proceeding by a	sol~-cltor	or In person.
....

(3) Notwithstandlng sub-rule

(1) and sub~ect

any Act, a corporation may not wlthout the leave

the Court or a Judge enter

an appearance or defend

any proceeding except by a solicltor."

Having set out these rules,

his

Honour then cited

passages from the judgment of the Full Codrt

of the Supreme

Court of Victoria in Hubbard Assoclatlon

of Sclentologists

International v Andcrson (1972)

V.R. 340 In support, amongst

other thlngs, of the proposltlons that in superior courts,

when not inhibited by statute, the practice

has been to

refuse to hear a company except through the agency of

legally qualified person, but that any court can,

the

exercise of control over its own proceedings, allow itself

be addressed in a proper case by any person It considers a

proper person to be allowed audience. His Honour refused the

motion with costs,

ad~ourned the further hearing

of the

application to a date

to be

flxed, ordered that the costs

thrown away as a consequence of the adjournment	be costs In
the cause and reserved liberty to apply.

The company sought orders that his Honour's orders

set aside and that the motion be granted with costs below and

on appeal. The respondent submltted to us,

as he had to hls

Honour, that whlle he did not consent to the orders sought, the matter was one for the Court and he wished to be heard only on questlons of costs.

Accordlng to Mr Molnar, the company had embarked

on the

hearing In the belief that It would occhpy in the order of

about one or two weeks. Counsel for the respondent sald tnat

in earlier inCerlocutory proceedings before

his Honour the

respondent's estlmate was stated as in excess

of two weeks.

Mr Molnar at some time after the hearing began concluded that it would take at least a month.

Molnar

deposed

that

the

company

"does

not

have

sufficient liquid funds currently

at lts disposal or through

credit facllitles to pay its solicitors and counsel to contlnue to act on Its behalf until the conclusion of this

action.

This is an appeal from the exercise of discretion by a

trial judge in the course of a part heard case. His Honour

had marked advantages over

an appeal court. He had heard the

case opened, he had had a vlew

of the operation of the hoist

which was the

sub~ect

of the application and

he had heard the

evidence in chief of the main expert witness for the

company.

He was of opinion that difficult and complex questions

of fact, law and the

admissibility of evldence would arise in

the course of the case. The evldence before

him was that the

company lncked the sblllty to pay

“Its solicitors and counsel

to continue to act on Its behalf

until. thc concluslon of this

action.

“

It was not establlshed that

ths: company was unable

to continue to meet

~ t s

own legal costs in respect of the

balance of the period for which ~t had orlymally budgeted, on the scale of contlnuing to retaln both nenlor and ]unlor counsel. If lt had chosen to proceed without senior counsel

it would plalnly have been able, wlthln its origlnal budget,

to have been legally represented for a longer period.

Some light may be thrown upon the sudden chanye

attitude by the company towards lts own legal rcpresentatlon

by Mr Molnar’s words in his original affldavit

in support of

the	motion that “as a consequence of the now expected

duration of the hearlng the appllcant is neither able

nor

prepared to ex2end the large amount

of money immediately

r e q u i r e d

t o

e n a b l e

p a y m e n t

l e g a l

f e e s ”

( e m p h a s i s

s u p p l i e d ) .

M r

Molnar

swore

l a te r

a f f i d a v i t

i n

w h i c h

g a v e d e t a i l s

the

company’s

f inanc ia l

pos i t ion

b u t

no th lng

was

sa id

way

any

a t tempt

wi thdraw

the

words

“nor

prepared . I’

B e

t h a t

a s

it may,

i n my

o p l n i o n

t h e

r e f u s a l

o f

t h e

motion made a t

t h e s t a g e

wh ich

t he

t r i a l

had

r eached

shou ld

n o t

b e

d l s t u r b e d .

assumed,

wi thout

dec id ing ,

tha t

t h e

l e a r n e d

t r i a l

~ u d g e ’ s

e x e r c i s e

d l s c r e t l o n

s h o u l d

for

any

reason

pu t

one

s lde ,

t h a t

t h e

q u e s t l o n

becomes

one

fo r ou r dec i s ion ,

would

regard

Che

a p p l i c z t l o n , a t b e s t

from the company‘s

polnt

VLOV:,

as ~ c i n g

premature.

Any

l a t e r

a p p l i c a t l o n

w o u l d

b e

m a t t e r

f o r

h l s

H o n o u r ’ s

c o n s i d e r a t l o n

t h e

l i g h t

t h e

c i r c u n l s t a n c e s

t h e n

e x i s t i n g .

L i b e r t y

t o

a p p l y

was

r e se rved

unde r

t he

o rde r

s u b ~ e c t t o a p p e a l .

would

d l smls s

the appea l

wlth

c o s t s .

c e r t l f y

t h a t

h i s

a n d

t h e

s l x ( 6 )

preceding

pages

a re

t rue

copy

o f

t h e

R e a s o n s

f o r

J u d g m 3 n t

h e r e i n

of The Honourable Mr.

J u s t i c e Sweeney

A s s o c m t e

Dated:

J u l y

1 9 8 4

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

) NO. VG 146 of

1984

GENERAL DIVISION

BETWEEN :	MOLNAR ENGINEERING PTY.
LTD.
-

Appellant

AND : E.J. BURNS

Respondent

CORAM: SMITHERS, SWEENEY and KEELY JJ.

17 JULY, 1984

KEELY J.

REASONS FOR JIJDGEENT

In thls appeal I have had the advantage

of reading,

in draft form, the reasons for

~cdgment

prepared by Smithers

J. and

need not repeat

the

factual

background,

the

nature

the history of the litigation,

or the terms

proceedings,

the

of Order 4 r.14

of the Federal Court rules under which the

motion was made.

Even

that

rule

did

not

give to the Court

expressly the power to grant leave to the appellant to be represented by Mr. Molnar, it is clear that the Court would

have the power

to grant leave. As Griffith C.J. said in

Federated

EnGne-Drivers and Firemen’s Association

Australasia v. Broken Hill Proprietary Co. Ltd.

(1913)

c.L.R. 245 at 249 "every Court can allow anyone to appear"; that opinion was shared by Barton, Isaacs and Higgins

JJ..

As to what principles apply

to the exercise of the

power, two matters may be noted immediately. Firstly, in

that case the Full High Court permitted the Association

to be

represented by its secretary although it would appear from

the report that there was no evidence whatever before the

Court to support the grant

of such permission by reference to

any financial difficulties

of the Association or any other

reason. Secondly, the exercise of the power is not confined

cases where strict necessity is shown.

the Privy

Council said in O'Toole

v. Scott (1965) A.C. 939 at 959,

referring to a magistrate's discretionary power to permit a

person, other than the informant or a legal practitioner, to

conduct the case

for the ir.formant, the discretion:-

"..can be exercised either on general grounds common

to many cases or on special grounds arising in a

particular case. Its exercise should not be

confined to cases where there is

a strict necessity;

it should be regarded as proper far a magistrate to

exercise the discretion

lti order to secure or

promote convenience and expedition and efficiency	in
the administration of justice."

The Victorian Full Court in Hubbard Association Scientologists v Anderson (1972) V.R. 340 (Smith, Little and

Gowans JJ.) said

(at 341) that in

superior

courts

the

practice has been to refuse

to hear a company except through

the

agency

a legally qualified person. However that

practice can not be applied in this Court in the light

of the

power expressly conferred by Order

4 r.14 of the rules; that

rule clearly contemplates that a corporation may be given

leave and, therefore, will be given leave in an appropriate

case.

Nor

would it be consistent with that rule, in my

opinion for

a single Judge

of the Court in hearing an

application for leave to apply the "long established rule" in

the House of Lords "that an appeal cannot be argued on behalf

of a party by any one except the party himself

(if not a

corporation) or by counsel" (cf. Tritonla Limited and others

V Equity and Law Life Assurance Society (1943) A.C.	584 at
586).

I agree with Smithers J. that the discretion is to

be exercised judicially according

to the requirements of

justice and that it must be exercised in favour

of a company

where there is sufficient reason; further that one reason

likely to be advanced is that the company neither

has, nor

has access to, the

funds

required

to engage

legal

I	practitioners. I also	agree	with	im	that	leave	should	be
I

granted where, having regard .to the necessary or reasonable

commitments of the company, the appropriation of funds to

engage legal practitioners for the litigation in question

would create financial difficulties with which the company

could not - or with which it ought not be required

to - cope

and that in this connexion the ability of the company

retain and pay its staff may well be relevant. I also agree that in the present case it is relevant that Mr. Molnar is

the inventor of the hoist under consideration

the

proceedings, but I would prefer not to express an opinion as

to whether, in considering the grant of leave to a company,

the identity

of the shareholders or the spread

of the

shareholdiny is relevant.

The learned trial ~udge

accepted evidence that Mr.

Molnar, if granted leave to appear

on the company's behalf

would "be fully authorized to act for and bind the company in

the course of (the) proceedings until their conclusion". Xis

Honour also accepted the affidavit evidence placed before him

as to the

financial

difficulties

the

company.

The

passages quoted from those affidavits were cited by his

Honour in such a manner and in such a context as to show an

acceptance of them as being true statements; certainly no

comment appears in the reasons for judgment which suggests In

any way any doubt either as to the truth of the statements or

as to whether they sufficiently disclose the company's

financial position.

In my opinion his Honour accepted

true the following sworn statement by Mr. Molnar, quoted in

his reasons for judgment:-

"accordingly my only option

is to withdraw from the

case or seek leave

of the Court to conduct the

hearing myself on behalf

o the Applicznt."

His Honour also

said:-

“In summary, it seems to me that the company at the

moment is in financial difficulties because of the

difficulty of selling the hoist, that assets of the

company are mortgaged as security for loans obtained

by the company, and that the present income of the

company is not sufficient to cover both the

servicing of the loans already in existence and to

make provisim for .. a further loan

to pay for

legal expenses and legal advice

of counsel appearing

in the action, particularly when the business is

such that the income coming from the activities of

the company is very low. It is claimed that the

company is operating at a substantial loss.

It does

not have sufficient funds or access to credit

facilities sufficient to remaln in production and

further pay its legal advisers.“

In my opinion the last sentence is

a finding of

fact by

his Honour. Had it been intended as a reference

merely to a claim by the company, doubtless his Iionour would

have so described it and, If his Honour had refused to accept

such a claim by the company, would have expressly said	so in
his reasons.

Giving full welght to the principle that an appeal

court should exercise particular caution in reviewing such a

discretionary decision, in my opinion his

Honour‘s discretion

miscarried by attaching too much importance to the fact that

the Court would be deprived

of the assistance

of a legal

practitioner appearing for the company, when that fact is

considered in the light of the findings which his Honour

had

made in favour of the company’s application as to its

6 .

financial difficulties.

In this connexion

his

Honour said in his reasons

for	judgment that it was "apparent that very difficult and

complex questions of fact

and

law are raised by the

application and the defences", and that the case

"is one

which demands that full technical assistance be provided for

the Court in its task of administering justice according to

law". His Honour also said that

"it is fairly bold to assert

that an agent, not being a legally qualified practitioner,

granted leave to appear for a company in legal proceedings in

which it is an applicant

and

which raise difficult and

complex questions

of fact and law and in

which, from what

has

occurred already, difficult questions

of admissibility of

evidence will arise constantly". Lastly, at the conclusion

of his reasons for ludgment,

his

Honour said that "having

regard to the nature of these proceedings, and the difficult

questions	of	fact and law which arise, this is a case in
which, in	my	opinion, the Court should have the benefit of

legal

practitioners

appearing

for

the

applicant.

Accordingly, the Court refuses the motion".

The

emphasis

placed

by his Honour in those four passages upon the

"difficult and complex questions of fact and law" show, in my

opinion, that his Honour attached too much weight

to that

matter and insufficient weight to the financial difficulties

the company which were found to exist.

am satisfied

that, by reason of that matter, the judicial discretion

miscarried.

In reaching that conclusion I have not overlooked

I 1	that his Honour said:-

"I have much sympathy for

tine

position

the

applicant in this case. Much weight must be given

to a litigant being a company,

to be able to present

its case before the Court, particuiarly

in claims

1 .

un&r

the Trade Practice Act".

If I were not satisfied that the discretion miscarried in the

manner described,

I would nonetheless "infer that in some way

there has been a failure properly to exercise the discretion

which the law reposes in the coar'c of flrst instance" (House

v The King (1936) 55 C.L.R. 499 at 5 0 5 ) . When satisfied that

the exercise of the discretion has miscarried, it

is for the

appellate Court to exercise its own discretion. Upon the

flndings of the learned Judge on the evidence before him as to the financial difficulties of the company in m opinion it

should exerclse that discretion in favour of the appellant	by
granting the leave sought.

Accordingly, I would

al ow

app al,

the

a ide

set

the order made by the learned trial Judge refusing the leave

sought

and

make

order

granting

such

leave.

that

opinion is not

to prevail, it is not necessary

for me to

consider the question of costs, as to which counsel for the

second-named respondent advanced submissions.

I certify that this and the preceding

pages are a true copy of the Reasons for

Judgment herein of the Honour le

4 - ,I

Mr.

Justice Keely.

! %--d.

Asso iate:

Date: n

/ 71-35

_I_r

- - .

- I- .-._--.

--, '-------W,--

-----=--a--

- r

. < ~~.~

--.....'?I

,p--- -.,. --, . ^-- . 1 . - .- . -

[1984] FCA 201

17 Jul 1984