Otta International Pty Ltd v Asia Pacific Carbon Pte Ltd

[2015] NSWSC 1818

Supreme Court

New South Wales

Medium Neutral Citation:

Otta International Pty Ltd v Asia Pacific Carbon Pte Ltd [2015] NSWSC 1818

Hearing dates:

1 December 2015

Decision date:

01 December 2015

Jurisdiction:

Common Law

Before:

Adamson J

Decision:

(1) Dismiss the fourth defendant's notice of motion filed on 9 November 2015.

 

(2) Order the fourth defendant to pay the plaintiff’s costs of the notice of motion.

 

(3) Direct each defendant to file and serve a separate verified amended defence and any cross-claim by Tuesday 5 January 2016.

 

(4) Direct the cross-defendants to file defences to any cross-claims within 28 days of service.

 

(5) Relist the matter for directions before the Registrar at 9am on 3 March 2016.

 (6) Grant liberty to any party to apply to restore the matter to the list on two days' notice.

Catchwords:

PRACTICE AND PROCEDURE – enforcement of loan agreements – allegations of misleading and deceptive conduct by husband – whether husband should be granted leave to represent wife and two companies – leave refused – potential for conflict – particular concerns associated with one spouse representing the other spouse

  LEGAL PROFESSION – policy reasons underlying need for either legal representation or representation in person

Legislation Cited:

Legal Profession Uniform Law Application Act 2014 (NSW)
Uniform Civil Procedure Rules 2005 (NSW), rr 6.9, 7.1

Cases Cited:

National Australia Bank v Garcia [1998] HCA 48; 194 CLR 395
Yerkey v Jones (1939) 63 CLR 649

Category:

Procedural and other rulings

Parties:

Otta International Pty Limited ACN 002 393 535 (Plaintiff)
Asia Pacific Carbon Pte Ltd (First Defendant)
Asia Pacific Carbon Pty Ltd ACN 146 028 140 (Second Defendant)
Julie Marjorie Kane (Third Defendant)
Peter Nicholas Kane (Fourth Defendant)

Representation:

Counsel:
M Hadley (Plaintiff)
Fourth Defendant in person

    Solicitors:
Curlington Legal (Plaintiff)

File Number(s):

2015/220270

Judgment (Ex tempore – revised)

Introduction

1. By notice of motion filed on 9 November 2015, Peter Kane, the fourth defendant, seeks leave to represent the first, second and third defendants as well as himself in these proceedings and that he be granted leave to file a submission of appearance in accordance with r 6.9 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), if required. He also seeks leave to file and serve an amended defence and cross-claims, on behalf of all of the defendants, within 28 days. Directions as to the filing of defences to the cross-claims are also sought.

2. Mr Kane is not a legal practitioner. He requires leave to appear on behalf of another party, although he may appear for himself.

Background to the application

3. The plaintiff commenced proceedings on 28 July 2015 for recovery of amounts said to be outstanding pursuant to two loan agreements entered into in 2013. The first loan agreement, dated 3 January 2013, is said to have involved an advance of $100,000 by the plaintiff to the first defendant, Asia Pacific Carbon Pte Ltd. The second, entitled "Short-term Loan Agreement”, dated 20 March 2013, was said to involve a further advance of funds from the plaintiff to the first defendant. The first defendant was a Singapore company operating in Australia; the second defendant is one of its subsidiaries.

4. The plaintiff also claims damages for loss alleged to have been caused by the Mr Kane’s misleading and deceptive conduct arising from representations made by him, including as to the nature of the businesses of the first and second defendants. It is alleged that Julie Kane, the third defendant, who is Mr Kane’s wife, aided and abetted the conduct of the first defendant and Mr Kane and was involved in the contraventions of the second defendant.

5. Mrs Kane was, at various times, a director of the second defendant. Although at the relevant time Mr Kane was an undischarged bankrupt (having filed his own petition on 27 July 2012), he is alleged to have been involved in the businesses and the day-to-day operations of the first and second defendants.

6. It can thus be seen there is at least a potential conflict between Mr and Mrs Kane which arises from the allegations made by the plaintiff in the statement of claim.

7. A single defence to the statement of claim was filed on 25 August 2015 by Mr Kane who purported to be authorised to do so on behalf of all defendants, as appears from the front page of the document.

8. David Sigler, the solicitor for the plaintiff, raised issues in correspondence with the defendants with respect to the form of the defence and its contents, which were said to make embarrassing. It is not necessary to determine the merits of such complaints since the parties agree that directions be made concerning the filing of amended defences.

The evidence

9. The evidence adduced by the parties largely comprises correspondence between Mr Kane and Mr Sigler. Mr Kane also read, over the objection of Mr Hadley of counsel, who appears on behalf of the plaintiff, an affidavit apparently sworn by his wife. Mr Hadley objected to the affidavit on the grounds that Mrs Kane was not present to read the affidavit or to be cross-examined about its contents. I noted the plaintiff’s objection but nonetheless allowed the affidavit to be read. Mrs Kane deposed that she had authorized her husband, the fourth defendant, to appear and conduct these proceedings on her behalf.

10. Although I permitted Mr Kane to read his wife’s affidavit in which she deposed that she had authorised him to act on her behalf, I do not accept that she has done so on the basis of the affidavit. When I asked Mr Kane why Mrs Kane was not present in Court today, he explained that she saw no reason to be here. There may be many reasons why she did not appear in court today. It is not for me to speculate why she was not present. I am not satisfied that the explanation Mr Kane gave is the one Mrs Kane would have given, if asked.

The submissions

The fourth defendant’s submissions

11. Mr Kane, who is the only defendant who appeared today, explained why he sought to represent all four defendants. He submitted there had already been an agreement as to the way in which documents would be served on the defendants and that this amounted to a concession on behalf of the plaintiff. He told me he had been married to the third defendant for 41 years and they had known each other for a significant period before that. He said it was not in their interests that he act otherwise than in accordance with the interests of his wife. However, he confirmed that she would be present at any substantive hearing in the matter. He submitted it would be a waste of time for each defendant to have to file separate defences and that it would achieve a great saving of time and cost for the defendants if he were permitted to represent each of them.

12. As to his qualification to represent all defendants, he said he had a Master of Research. I understood him to submit that because he had expertise in research he was capable of undertaking legal research for the benefit of all four defendants. Mr Kane submitted further that he wished to represent all defendants only for the early part of the proceedings and contended it would be a “waste of time and money” for the defendants to have to engage legal representatives at this stage. He accepted that a legal practitioner would be instructed for the substantive hearing.

The plaintiff’s submissions

13. Mr Hadley noted that the fourth defendant was not a legal practitioner and that the defence filed on behalf of all defendants was embarrassing and would have to be struck out. He did, however, confirm that the plaintiff did not move to strike out the defence but would prefer that the defendants have an opportunity to file separate amended defences in the hope that the amended versions would be in better form.

14. Mr Hadley took me through the statement of claim to explain the plaintiff's allegations; the various causes of action; and remedies which the plaintiff maintains it has against all four defendants. His explanation is reflected in the summary referred to above. Mr Hadley sought dismissal of Mr Kane’s notice of motion and directions for the further conduct of the proceedings.

Consideration

15. It is a fundamental aspect of the rules of this court (UCPR 7.1), and of the Legal Profession Uniform Law Application Act 2014 (NSW) and its statutory predecessors, that only legal practitioners are entitled to represent parties to legal proceedings. In the absence of legal representation, parties are expected and entitled to represent themselves. Part of the rationale for the rules and provisions that enshrine this fundamental principle is that legal practitioners are subject to ethical rules. Those rules govern the way in which practitioners are bound to act in the interests of their clients and also the duties owed by the practitioners to their clients and to the court. Knowledge of such rules and provisions is a condition of their admission to practice. This training is designed, in part, to enable practitioners to identify conflicts of interest, whether actual or potential, in order that they may fulfil their duties in accordance with the law. Further, legal practitioners must have annual practising certificates with associated professional indemnity insurance, for the protection of their clients and others.

16. A person who is not a legal practitioner is only permitted to appear on behalf of another person by the leave of the court. Such leave may be granted, but generally only in circumstances where there is no conflict and the court is otherwise satisfied that the interests of the party to be represented by the non-legal practitioner will be sufficiently protected by that course.

17. In the present circumstances, irrespective of Mr Kane’s relationship with his wife or his other qualities, it would not, in my view, be appropriate to permit him to appear on behalf of Mrs Kane, having regard to the potential conflict which is apparent on the statement of claim. However, in the present case, there is a further matter for consideration.

18. As the High Court has indicated in cases such as Yerkey v Jones (1939) 63 CLR 649 and the National Australia Bank v Garcia (1998) 194 CLR 395, it is common that the ties of love and affection between wife and husband may incline a spouse to act in a certain way by reason of the relationship, irrespective of the interests of that party. For this reason, it is particularly incumbent on persons who are dealing, as here, with both a husband and a wife to ensure that they do not regard the husband (typically) as the wife’s agent. Although these two cases concerned the enforcement by a mortgagee of its rights against wives, who were relevantly volunteers, they are instructive as they illustrate the particular vulnerability associated with spouses and, for historical reasons, wives, in particular. The potential for injustice is, in my view, a fortiori in the case of legal proceedings where, as here, the husband and wife are both defendants and have conflicting interests in the proceedings. For that reason, I would, in any event, refuse leave for Mr Kane to appear on behalf of Mrs Kane.

19. In respect of the first and second defendants, there is a different, but similar, conflict or potential for conflict between their interests and that of Mr Kane. Accordingly I am not satisfied that it would be appropriate for them to be represented by Mr Kane or indeed other than by legal practitioners. I do not, however, wish to foreclose any application by any natural person who is not a party to the proceedings to appear on their behalf in due course. In these circumstances Mr Kane’s notice of motion ought be dismissed.

Costs

20. Mr Kane resists an order that he pay the costs of his notice of motion. First, he submits it was incumbent on the plaintiff to bring a notice of motion to clarify the position of the representation of the defendants since it permitted the matter to continue knowing that he purported to act on behalf of all four defendants. Secondly, he submits that the plaintiff's solicitor did not make it sufficiently clear in correspondence what the plaintiff's position was in relation to the representation of all four defendants.

21. In my view it was always incumbent on Mr Kane, if he wished to represent the other defendants, to file such a motion for that purpose. Although directions will been made today for the filing of an amended defence and cross-claim, these could have been made by consent and filed in the Registry or made by the Registrar and would not have required a notice of motion to come before me today.

22. As Mr Kane has been unsuccessful (apart from the agreed leave with respect to amended defences and cross-claims) in the relief sought in his notice of motion, I see no reason why costs ought not follow the event. Accordingly, I will order the fourth defendant to pay the plaintiff's costs of the notice of motion.

Directions for the further conduct of the proceedings

23. As to the further conduct of the proceedings, I note that the plaintiff does not object to a direction granting leave to the defendants to file and serve amended defences. The plaintiff contended two weeks was sufficient for each defendant to file and serve such documents. However, Mr Kane, on his own behalf, has contended 28 days would be required in order for amended defences and cross-claims to be prepared. I am disposed to allow the defendants 28 days to file amended defences and cross-claims.

Orders

24. For the foregoing reasons I make the following orders and directions:

1. Dismiss the fourth defendant's notice of motion filed on 9 November 2015.

2. Order the fourth defendant to pay the plaintiff’s costs of the notice of motion.

3. Direct each defendant to file and serve a separate verified amended defence and any cross-claim by Tuesday 5 January 2016.

4. Direct the cross-defendants to file defences to any cross-claims within 28 days of service.

5. Relist the matter for directions before the Registrar at 9am on 3 March 2016.

6. Grant liberty to any party to apply to restore the matter to the list on two days' notice.

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Decision last updated: 02 December 2015