My Thai Kitchen v Dom's Electrical and Air Conditioning and Hill

[2014] QMC 8

MAGISTRATES COURTS OF QUEENSLAND

CITATION:

My Thai Kitchen v Dom’s Electrical and Air Conditioning and Hill [2014] QMC 8

PARTIES:

MY THAI KITCHEN PTY LTD ACN 144 469 876
(Plaintiff)

V

DOM’S ELECTRICAL AND AIR CONDITIONING PTY LTD ACN 156 116 059
(Defendant)

and

DOMINIC HILL

(Second defendant)

FILE NO/S:

11743/13

DIVISION:

Magistrates Courts

PROCEEDING:

Breach of Agreement

ORIGINATING COURT:

Magistrates Court at Brisbane

DELIVERED ON:

21 March 2014

DELIVERED AT:

Brisbane

HEARING DATE:

25 February 2014

MAGISTRATE:

The Honourable Judge Carmody QC

ORDER:

1.     The claim and statement of claim filed in this proceeding on 18 October 2013 are declared to be effectual nunc pro tunc.

2.     The plaintiff’s application for leave to conduct the proceeding and appear by its secretary is refused.

3.     The proceedings be permanently stayed except for when the plaintiff appoints a legal practitioner within Legal Profession Act 2007(Qld) to act for it.

4.     The defendant’s application filed 31 January 2014 otherwise is dismissed.

5.     The defendant file an unconditional notice of intention to defend and a defence in compliance with the rules.

6.     The defendant pay the plaintiff’s costs of an incidental to the application fixed at $205 per Magistrates Courts Scale of Costs, item 6(j).

CATCHWORDS:

PRACTICE- PROCEDURE – ORIGINATING PROCESS – COURTS SUPERVISORY ROLE – Uniform Civil Procedure Rules, rr16, 367(1), 371(2)(d) - company plaintiff signed and issued a claim by its unqualified secretary – whether irregularity warrants setting aside the document or proceeding as incompetent or should be excused – whether pleadings deficient - whether leave should be granted for secretary to conduct the proceedings generally and appear on behalf of the plaintiff.

COUNSEL:

Otto J for the plaintiff

Brennan for the defendant

SOLICITORS:

Quadrio Lee Lawyers for the defendant

The application

1. This is a motion to either set aside the originating documents as incompetent pursuant to UCPR 16(e) or to stay the entire proceeding under UCPR 16(g) because the plaintiff company has not appointed a solicitor to act under r17(1)(b) and signed and issued the claim through the agency of its secretary (not a director).

1. There is an alternative application to strike out all or part of the statement of claim under UCPR 171(1)(a). The alleged defects in statement of claim are –

(a)   it is obtuse; and

(b)   pleads conclusions of law rather than material facts.

1. The plaintiff opposes the application on the basis that -

(a)  any formal defect is curable under UCPR 367(1) and or 371 (2)(d); and

(b)  the statement of claim is sufficiently compliant with procedural requirements.

The contentions

1. The plaintiff submits that the court should exercise its discretionary power to enable the plaintiff to conduct the litigation appearing by its secretary and argues that it would be inconsistent with the philosophy and purpose of the UCPR (r 5) to insist on the plaintiff retaining a lawyer to conduct the litigation because

·     the amount claimed is less than $15,000

·     the issues are straight forward and turn on simple questions of fact

·     the costs incurred by a lawyer would quickly become disproportionate to the amount in issue

·     the plaintiff is entitled to have its claim heard and determined “justly and expeditiously” and “at a minimum expense” and

·     having to retain a lawyer would have the practical effect of shutting out the plaintiff’s litigation rights.

1. The defendant contends that the irregularity should not be excused because

·     the company is a plaintiff not a defendant

·     a director is not a co-plaintiff

·     the proceeding is in its early stages

·     there is no evidence to suggest the plaintiff cannot afford legal representation

·     the trial is likely to turn on conflicting expert evidence and be heavily dependant on cross examination

·     the secretary of the company will be a witness a the hearing and

·     the importance of lay advocates or agents not being subject to the ethical precepts that bind a legal practitioner.

1. This case highlights the practical tension between the fundamental importance of a company’s freedom to litigate on the one hand, (Tomasevic v Travaglini (2007) VSC 337 at [84]) and the need to protect members of the public, other parties and the court itself from unqualified people providing legal services, on the other.

The originating process rules

1. A civil proceeding begins when the originating process (usually a claim) is issued by the court (rr 8(1),9). A claim must be in the approved form and filed in the registry (r 22).

1. While not specifically precluded by legislation or the rules of court from acting “personally” in court proceedings (as in some other jurisdictions) Queensland procedures do not contemplate a corporate plaintiff initiating proceedings by a non legal agent.[1]

   [1]Section 236 of the Corporations Act (2001) (Cth), permits a member of a company with the leave of the court under s237, to bring proceedings on behalf of the company in the name of the company but only in the circumstances in s237 which do not apply here.

1. UCPR 19(1), for example, requires the originating process to be signed by the plaintiff “personally” or “the person’s solicitor”.

1. In addition rule 17 directs what contact and service details are to be included on the claim before issue. The nature of this information depends on whether the plaintiff intends to “act personally” or has appointed “a solicitor…to act”.

1. Nor is there any provision allowing an unqualified agent to assume the conduct of proceedings on a plaintiff’s behalf at any later stage of a proceeding.

1. The longstanding practice in England (from which our own procedures derive) is that a body corporate cannot self act in litigation (cf Arbuthnot Leasing International v Havelet Leasing Ltd (1992) 1WLR 455 at 809 per Scott J) and, as a general rule, the only acceptable agent in superior court civil actions is a qualified lawyer (Hubbard Association of Scientologist International v Anderson and another (1971) VR 788).

1. The same principle has been held to apply in Magistrates Courts (see O’Toole v Scott (1965) AC 939).

1. The rule against self acting companies is regarded as central to the proper administration of justice and protection of other parties to litigation in the higher courts. (Suh v Cho (2013) VSC 491 at [95]).

The rationale

1. In Bay Marine Pty Ltd v Clayton Country Properties Pty Ltd (1986) 8 NSWLR 108 the court (Kirby P, Samuels and Mahoney JJA) identified the main reasons for the practice against self acting companies as including the control which courts exercise over those having audience before them and the privilege afforded to legal representatives because of their training and experience but also stressed the importance of ensuring that those who speak and act for a company have authority to bind it and may therefore be subjected to orders of the court including as to the costs of the litigation.[2]

   [2]The court, of course, does have exceptional power to award costs against a non party such as a company director who has effective responsibility for the conduct of litigation.

1. Kirby P, noted (at 580) that the requirement that a corporate plaintiff not suing in person must act through a solicitor and not through some other agent was primarily for the benefit of the defendant who has the implied right to have the litigation conducted to its conclusion by a (not necessarily the same) solicitor. It ensures that where a litigant is not suing in person his agent has professional responsibilities to the court and is subject to disciplinary action.[3]

   [3]Accordingly, a court will more readily permit a defendant company to be represented by an unqualified agent than a plaintiff.

1. Nonetheless, Kirby P (Samuels and Mahoney JJ not deciding) considered that an appeal court has inherent power to allow a corporation to carry on proceedings otherwise by a solicitor.[4]

   [4]A corporation appeared by an unqualified agent (apparently, without objection) in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising and Addressing Co Pty Ltd (1974) 133 CLR 72 at 73).

1. Samuels JA (at 111) said that any power to dispense with non-compliance under the rules or general law should only be exercised with “the most meticulous care” in “sufficiently exceptional” circumstances.

1. This, no doubt, includes the “requirement” (expressed or implied) that a corporation to carry on proceedings by a solicitor.

1. In Abse v Smith (1986) 1QB 536 at 554 the Master of the Rolls of the English Court of Appeal said:

“…the public interest requires that there shall be known general practices and procedures…and that these shall not be changed or departed from piecemeal by individual judges on the basis of their personal view of what those practices and procedures should be.”

1. However, courts do not, of course, always insist on strict observance of procedural practices and may enforce compliance or excuse it (with or without imposing a sanction) depending on which is the most just and likely to avoid injustice or prejudice and meet the main objectives of the UCPR (see rr 5(1),(2), (6), 371(1), (2), 16(1), 367 (1)(2), and (4)(c)).

The exceptions

Commencing proceedings

1. While failure to comply with a procedural rule or requirement (including the form of an originating document) is an irregularity it does not necessarily invalidate the proceeding document, step or order (r 371(1)).

1. Contraventions should be dealt with in a way that seems most appropriate in the circumstances consistently with the stated purpose and philosophy of the rules the overall interests of justice and the role and function of the court of summary jurisdiction.

1. Notably, there is no fixed procedure for refusing to accept or issue a defective claim and no provision for setting aside a proceeding just because it was commenced by the wrong form or an originating or originating process (r 373) but the court retains control over a flawed originating process after issue. It can correct formal defects (rr 12-13), set aside the process under r 371(2), stay or amend proceedings or documents, impose a sanction (rr 374) or make such other order as is appropriate (rr 16(1), 376) including declaring a challenged document or step to be effectual (subrules 371(2)(a),(d)).

1. A procedural order or direction by the court under any of these rules overrides a contrary provision of the rules to the extent of any inconsistency (r 367(5)).

1. The court may also waive any non-compliance of the rules under UCPR 371(2) in the interests of justice consistently with the stated philosophy and purpose in UCPR 5.

1. Overall the UCPR aims at the “curing of that which is capable of cure, to saving rather than destroying” (Pontin v Wood (1962) 1 QB 594 at 610 per Holroyd Pearce LJ).

1. In Hubbard Association of Scientologist International v Anderson and Anor (1972) VR 577) a writ in the name of a company plaintiff was signed by its authorised agent who was not a solicitor. It was issued without any address for service. The Full Court of the Supreme Court of Victoria held that although irregular the writ was not a nullity.

1. In dispensing with strict compliance with the originating process rule but refusing ongoing representation the Court said:  

Although the irregularities which have occurred cannot not now be prevented, if, by an order short of the extreme step of setting aside all prior proceedings, the irregularities can be cured in the sense that the interests of the defendant can be sufficiently protected, the demands of justice indicate that such an order would be an appropriate exercise of the courts discretion.

1. Hubbard is authority for the proposition that what has been irregularly done can not be undone but may be allowed to continue on conditions ensuring future compliance especially in the absence of any actual or likely detriment.

1. Despite the procedural non-compliance the originating process should be treated as being effectual.

1. No real prejudice is asserted or apparent here. Setting the claim and subsequent steps aside is not warranted. Remedial action is available in the form of requiring the plaintiff to appoint a solicitor and give an address for service to ensure that, despite the irregularity, the proceedings will be conducted properly from now on.  

1. There is, of course, a difference between “initiating” a proceeding, “representing” it in proceedings, and “appearing” for a company at a hearing (interlocutory or final).

1. In Act General Cleaning Co Pty Ltd v Con Naoum [1996] FCA 1560 (19 June 1996) for instance, a director of a family company was allowed to commence proceedings in the name of the company and appear on interlocutory applications but not at the trial (see also Molnar Engineering Pty Ltd v Byrnes (1984) 3FCR 68 at 80-81).

Ongoing representation

1. The public interest in ensuring that litigation is commenced and conducted by competent, insured, fully qualified and accredited legal practitioners who are overriding professional duties of fidelity to the court and submit to demanding professional standards and disciplinary action normally precludes representation by unqualified persons except in exceptional circumstances.

1. Allowing litigation by a company to be conducted by its secretary on an ongoing basis is undoubtedly within the court’s discretion if the circumstances of the case are sufficiently exceptional and the interests of justice call for it.

1. The fact that the proposed representative is authorised, has a direct financial interest in the outcome and having to fund legal representation may mean that the litigation option is not economically viable or worth pursuing are relevant but not decisive considerations.

1. Overall I have decided that the potential disadvantage to the defendant of departing from the general rule of practice is not outweighed by the balance of considerations against enforcing it.

1. I am not satisfied the interests of summary justice require that the plaintiff should be at liberty to conduct the proceedings by its secretary.

1. For the reasons identified at [12]-[13] it is inappropriate, as a general proposition, for a plaintiff company conduct litigation otherwise than by a solicitor.

1. I note the plaintiff was legally (and ably) assisted in resisting this application.

1. The proceedings will be permanently stayed except for when the plaintiff has a solicitor appointed to act.

Audience

1. All courts of record have implied power to regulate their own procedures and s18 Magistrates Courts Act¸ 1921 expressly provides for appearance in person, by a lawyer or, with leave another person (cf s209 Supreme Court Act (1995) (Qld) which refers to “special” leave).

1. As Sir Robin Cooke pointed out in GJ Mannix Ltd (1984) 1 NZLR 309 and 314:

“In general, and without attempting to work out hard and fast rules, discretionary audience should be regarded, in my opinion, as a reserve for occasional expedient, for use primarily in emergency situations when counsel is not available or in straightforward matters where the assistance of counsel is not needed by the court or where it would be unduly technical or burdensome to assist on counsel.”

1. Lack of means to pay for lawyers and an apparently good claim are relevant but not decisive considerations (Radford v Freeway Classics Ltd (1994) 1BCLC 445).

1. Other factors relevant in a typical case in which a director seeks to appear as an advocate at trial are discussed by Blue J in Winn v Stuart Brothers Constructions (2012) 114 SASR 149 at [38].

1. Having regard to the refusal to allow the plaintiff to be represented by the company secretary generally this is clearly not the time to finally consider or decide the question. Even if leave were granted as an occasional expedient it would be inappropriate to give general leave of the kind sought by plaintiff not least of all because it would have a generally undesirable practical effect of binding other magistrates in the future.

1. Leave will, therefore, not be granted for the plaintiff’s secretary to appear on its behalf under s18 of the Magistrates Court Act. Application can be renwed as, when, and if the issue arises again. It will then be decided on the basis of all relevant circumstances as they exist at the time.

The Statement of Claim

1. There is nothing in the pleading point.

1. It is clear that the plaintiff’s primary claim is for a breach of contract between identified parties on pleaded terms. The alleged breach is adequately stated as is the resultant loss.

1. Likewise the alternative negligence claim identifies the alleged breach of a stated duty of care with sufficient particularity.

1. Thus, the function of pleadings (to coherently articulate the nature and alleged material facts supporting of the case against a part) is fulfilled and the issues adequately defined to ensure procedural fairness.

Orders

7.   The claim and statement of claim filed in this proceeding on 18 October 2013 are declared to be effectual nunc pro tunc.

8.   The plaintiff’s application for leave to conduct the proceeding and appear by its secretary is refused.

9.   The proceedings be permanently stayed except for when a legal practitioner within the Legal Profession Act 2007(Qld) is appointed to act for the plaintiff.

10.  The defendant file an unconditional notice of intention to defend and a defence in compliance with the rules.

11.  The defendant’s application filed 31 January 2014 otherwise is dismissed.

12.  The defendant pay the plaintiff’s costs of an incidental to the application fixed at $205 per Magistrates Courts Scale of Costs, item 6(j).