Molnar Engineering Pty Ltd v Herald & Weekly Times Ltd

[1984] FCA 125

Re: MOLNAR ENGINEERING PTY. LTD.
And: THE HERALD & WEEKLY TIMES LTD. and E.J. BURNS (1984) 1 FCR 455
No. VG201 of 1982
Practice and Procedure - High Court and federal judiciary

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Northrop J.(1)

CATCHWORDS

Practice and procedure- leave for an agent, not being a legally qualified practitioner, to appear on behalf of a company - 0.4, r.14 Federal Court Rules - public interest and access to the court.

Federal Court Rules 0.4, r.14; 0.9, r.1
Trade Practices Act 1974 ss.52, 75B, 82, 87
Lifts and Cranes Act 1967 (Vic)

High Court and federal judiciary - Federal Court of Australia - Practice and procedure - Corporation seeking leave to appear other than by solicitor - Complex questions of fact and law - Issues as to admissibility of evidence - Federal Court Rules 1979 (Cth), O. 4, r. 14.

HEADNOTE

Held, that an agent not being a legally qualified practitioner ought not to be granted leave to appear for a company in legal proceedings in which it is the applicant where difficult and complex questions of fact and law would be raised and difficult questions of admissibility of evidence would arise.

Hubbard Association of Scientologists International v. Anderson (1972) V. R. 340 at 341-343, followed.

HEARING

Melbourne, 1984, May 8-11. #DATE 11:5:1984

MOTION.

Motion that pursuant to the Federal Court Rules 1979 (Cth) O. 4, r. 14 the applicant corporation to proceed otherwise than by a solicitor.

R. Merkle Q.C. with J. Judd, for the applicant.

P. Mandie Q.C. with G. Ritter, for the second respondent.

Solicitors for the applicant: Allison Hewison & Whitehead.

Solicitor for the respondents: B. M. Dennis.

B. A. G.

ORDER

Orders accordingly.

JUDGE1

This application was brought by Molnar Engineering Pty. Ltd. ("the Company"), a corporation duly incorporated in accordance with the laws of the State of South Australia. The company is seeking relief against The Herald & Weekly Times Ltd. the publisher of the Sun News Pictorial newspaper. The application is based on an advertisement published in October 1982 in the Sun News Pictorial by The Herald & Weekly Times Ltd. in which Mr. E. J. Burns. describing himself as the Chief Inspector of Lifts and Cranes, brings to the attention of owners and users of the Molnar Two Post Motor Vehicle Hoists, and to the public generally, that those hoists do not comply with the Lifts and Cranes Act 1967 and Regulations made thereunder and that in his opinion those hoists are unsafe to be used, and requiring the owners and users of those hoists to cease using the hoists immediately. The company claims that in publishing that advertisement The Herald & Weekly Times Ltd. engaged in conduct which was misleading or deceptive, or was likely to mislead or deceive, and thus was in contravention of s.52 Trade Practices Act 1974. The company is claiming damages against the publisher under s.82 of the Act and is seeking orders under s.87 of the Act requiring the publisher to publish further advertisements and to distribute letters to rectify the deceptive or misleading conduct alleged. The Herald & Weekly Times Ltd. is taking no part in the hearing of the application.

The company is seeking similar relief against Mr. Burns on the basis that he aided, abetted, counselled or procured the publisher to engage in the conduct described and thus is a person involved in the contravention by the publisher pursuant to s.75B of the Act.

The application came on for hearing on Tuesday, 8 May 1984. The company and Mr. Burns were each represented by Queens Counsel. It is true to say that Mr. Burns is opposing the application most strenuously.

From what has transpired to date, it appears that the company is the manufacturer of the Molnar Two Post Motor Vehicle Hoist. It commenced production of the hoists in 1972 and since that time has produced some 4,000 hoists in Australia and overseas. The production of the hoists forms the substantial part of the company's business. The company claims that as a result of the publication of the advertisement it has suffered a dramatic decline in its business and that sales of the hoists have dropped drastically.

Mr. Frank Molnar is the managing director of the company, which is a family company. He is the inventor of the hoist and is the owner of the patent for the hoists.

It appears that one of the ultimate issues of fact to be determined in these proceedings is whether the hoist is unsafe; another is whether the hoist does not comply with the Lifts and Cranes Act 1967 and Regulations made thereunder. In addition, Mr. Burns has raised a defence based on a claim that the Trade Practices Act has no application to him, in that he has the benefit of the sheild of the Crown in the right of the State of Victoria.

For present purposes it is apparent that very difficult and complex questions of fact and law are raised by the application and the defences. The questions of fact will need to be decided on evidence given by a number of expert witnesses in a highly technical area of engineering design. In addition, difficult questions of law are raised in relation to construction of Acts, Regulations and other documents.

The company claims that the hearing of the application will take much longer than anticipated and could last at least one month, and that in excess of twenty witnesses have been subpoenad by Mr. Burns. It claims that a large sum of money has been expended already in preparation for the hearing of the case and in the early stages of the hearing. In an affidavit sworn 10 May 1984. Mr. Molnar deposes as follows, and I read paragraph 11:

"As a consequence of the now expected duration of the hearing the Applicant is neither able to nor prepared to expend the large amount of money immediately required to enable payment for legal fees to my Solicitors and Counsel and accordingly my only option is to withdraw from the case or seek leave of the Court to conduct the hearing myself on behalf of the Applicant. I believe that the hoist is safe to operate and seek to establish that fact before this Court."

Counsel for the company has moved the Court that, pursuant to 0.4, r.14 of the Federal Court Rules, Mr. Molnar be granted leave to appear on behalf of the company. The motion is based on the assumption that the solicitors and counsel presently appearing for the company will withdraw from the case and that the solicitors will no longer appear on the record as acting on behalf of the company.

Order 4, r.14 is as follows:

"14.(1) Subject to sub-rule (2) and to Order 43 (which relates to disability), any person may proceed in the Court by a solicitor or in person.

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

(3) Sub-rule (2) does not apply to an organization."

It should be noted that in this rule the reference to an organization is a reference to associations of employers or employees registered as organizations under the Conciliation and Arbitration Act 1904 and that Act contains special provisions relating to appearances on behalf of organizations.

Reference should be made also to complementary provisions contained in 0.9, r.l of the Federal Court Rules. sub-rules (1) and (3) of which are as follows:

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

. . .

(3) Notwithstanding sub-rule (1) and subject to any Act, a corporation may not without the leave of the Court or a Judge enter an appearance or defend any proceeding except by a solicitor."

Those rules are but statements of a general principle of law of general application. A company is not a natural person and can act only through agents. The general principle is stated in Hubbard Association of Scientologists International v. Anderson (1972) V.R. 340 in a joint judgment of the Full Court of the Supreme Court of Victoria comprising Smith, Little and Gowans JJ. At p.341 and after, referring to a number of authorities, the Court said:

"These cases show that a company, since it cannot be regarded as a litigant in person, must appear before the court by or through an agent. 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 of the court. They show also that in superior courts, when not inhibited by statute, the practice has been to refuse to hear a company except through the agency of a legally qualified person. The provisions of s.5(3) of the Legal Profession and Practice Act 1958, conferring 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 so qualified and recognized. The provisions of the sub-section do not grant that right of audience to any other class of persons. (By way of aside it is noted this was an appeal from a judgment of McInerney J.) McInerney, J.'s opinion was that when these statutory provisions were read with s.111 of the Act it was 'clear that in the Supreme Court the right of audience on behalf of other persons, i.e. the right to 'appear' for them, is confined to barristers and solicitors'. This cannot be questioned. But it is necessary to bear in mind that what is being dealt with is the 'right' to appear or the 'right' of audience, of the persons concerned, not the power of the Court to permit persons to appear."

The Court then referred to another passage of what McInerney J. had said and disagreed with the statement of law therein contained, and at p.342 the Full Court said:

"The true position would appear to be that the general rule is that any court can, in the exercise of control over its own proceedings, allow itself to be addressed in a proper case by any person it considers a proper person to be allowed audience."

The Court then referred to a number of other authorities and said at p.343:

"In some fields the principle of allowing audience to non-professional advocates has been sanctioned, as is the case in proceedings under the Commonwealth Conciliation and Arbitration Act, but the classes of questions that arise in the Supreme Court - and this is particularly so in proceedings coming before the Full Court - demand that full technical assistance be provided for the Court in its task of administering justice according to law. There are other considerations which were adverted to by the House of Lords when reaffirming its rule of practice in Tritonia Ltd. v. Equity and Law Life Assurance Society, (1943) A.C. 584, at p.587. Lord Simon, L.C., said: 'Such a rule, limiting a right of audience on behalf of others to members of the English or Scottish or Northern Irish Bars, secures that the House will be served by barristers or advocates who observe the rules of their profession, who are subject to a disciplinary code, and who are familiar with the methods and scope of advocacy which are followed in presenting argument to this House'."

The same can be said with respect to the proceedings before the Federal Court. The present case is one which demands "that full technical assistance be provided for the Court in its task of administering justice according to law".

In addition to the principles already referred to it should be noted that a company is not to be equated to a natural person. When a company is a party to an action the Court accepts the authority of the legal practitioner appearing for that company. Except in special circumstances, which are not relevant for present purposes, the Court does not enquire into the authority of the legal practitioner who is acting for the company. The legal practitioner has obligations to the Court apart altogether from the skills necessary to present his client's case. The legal practitioner is bound by ethical principles in the conduct of the case. Many of these features may be absent when the agent of the company is not a legal practitioner. The extent of the agent's authority is not always known. It might be unwise for the Court to assume an authority.

Counsel for the company has supported the motion on a number of grounds. He contended that a litigant should not be penalized by reason of the fact that through circumstances beyond its control the hearing will take much longer than anticipated. In my opinion, that by itself is irrelevant to deciding the present motion. Secondly, he relied upon the public interest aspect arising from proceedings alleging a breach of s.52 of the Trade Practices Act particularly where, as in this case, it is claimed that the conduct in contravention of s.52 has adversely affected the financial position of the company. Thridly, he contended that unusual features of this case supported the motion, namely, that because of the technical nature of the application and defence the case expanded beyond all expectations and that Mr. Molnar had a sound knowledge of the technical matters involved and thus would be able to assist the Court. He said also that, having regard to the purpose behind the Trade Practices Act, a litigant should not be denied access to the Court because of reasons similar to those which have arisen in this case. In addition, counsel relied upon a number of grounds which can be described as hardship grounds and this is illustrated by the fact that it claims that if the company is forced to discontinue its application, Mr. Molnar and his family will suffer financial loss and some twenty employees of the company will be forced out of employment.

In substance, counsel for Mr. Burns did not consent to leave being granted but said that it was a matter for the Court.

During the course of submissions the Court drew attention to two matters. First, the nature and extent of the authority of Mr. Molnar to act on behalf of the company, and secondly, the inherent ambiguity contained in paragraph 11 of Mr. Molnar's affidavit which has been read out. This morning a further affidavit by Mr. Molnar was filed. This affidavit was sworn this morning, 11 May 1984. In that affidavit it is made clear that Mr. Molnar has the substantial, if not the whole, financial interest in the company and has control of the company as far as voting is concerned. The shareholders of the company include members of his family and a company controlled by Mr. Molnar plus some other people. He and his wife are the directors of the company.

It is said, and I accept, that Mr. Molnar has control of the company and in support of this a motion which was passed yesterday whereby it was resolved that Mr. Molnar, if given leave to do so, do represent the company in the Federal Court of Australia in its application against The Herald & Weekly Times Ltd and E. J. Burns and that he be fully authorized to act for and on behalf of the company in the course of those proceedings until their conclusion, was tendered.

Accordingly, one of the doubts which I had concerning the authority of Mr. Molnar has been resolved and I proceed on the basis that he would have the appropriate authority from the company to act on its behalf as its agent in the absence of legal representation.

The same affidavit contained facts relating to the financial position of the company. I do not propose to read the whole of that affidavit into the reasons of my judgment, but 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 provision for either 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 remain in production and further pay its legal advisers.

Impecuniosity of an applicant, being a company, may have effects altogether different from the problem presently before the Court. Those effects are not relevant in the determination of the motion. Nevertheless, it is fairly bold to assert that an agent, not being a legally qualified 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 of admissibility of evidence will arise constantly.

I have much sympathy for the position of 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, particularly in claims under the Trade Practices Act. I have taken into account all the submissions made by counsel on behalf of the company, but having regard to the nature of these proceedings, and the difficult questions of fact and law which arise, this is a case which, in my opinion, the Court should have the benefit of legal practitioners appearing for the applicant. Accordingly, the Court refuses the motion.