PJB v Melbourne Health and Anor
[2007] VSC 327
•5 June 2007
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 1364 of 2004
| VICTORIAN WORKCOVER AUTHORITY | Plaintiff |
| v | |
| MIDFIELD MEATS INTERNATIONAL PTY LIMITED & Ors | Defendants |
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JUDGE: | WILLIAMS J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 4 June 2007 | |
DATE OF RULING: | 5 June 2007 | |
CASE MAY BE CITED AS: | VWA v Midfield Meats International & Ors | |
MEDIUM NEUTRAL CITATION: | [2007] VSC 327 | |
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PRACTICE AND PROCEDURE – Corporations – Representation – Application for dispensation with compliance with the requirements of Rule 1.17 of Supreme Court (General Civil Procedure) Rules 2005 – Discretion to permit corporation to address court through director – Impecuniosity of corporation.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr TP Tobin SC with Mr AW Middleton | Hall & Wilcox Lawyers |
| For the First Defendant | Mr CJ Blanden SC with Mr D McWilliams | Anderson Rice Lawyers |
| For the Second Defendant | Mr C O’Neill | Minter Ellison Lawyers |
| For the Third Defendant | Mr SE Marks SC with Mr AD Clements | Ebsworth & Ebsworth Solicitors |
| For the Fourth Defendant | Ms C Boyle |
TABLE OF CONTENTS
The application................................................................................................................................... 2
The proceeding................................................................................................................................... 2
The evidence....................................................................................................................................... 3
Submissions........................................................................................................................................ 6
The law................................................................................................................................................. 8
HER HONOUR:
The application
The fourth defendant first applies under order 2.04 of the Supreme Court (General Civil Procedure) Rules 2005 (“the Rules”) for an order nunc pro tunc dispensing with the requirement under order 1.17 of the Rules for it, as a corporation, to take all steps in this proceeding (apart from entering an appearance) through a solicitor. It seeks the dispensation in relation to the filing of its defence by one of its two directors, Mr Ferdinand Uthmann. The other parties do not contest the application. They are content for the defence to articulate the fourth defendant’s response to the plaintiff’s claim. That application will be granted
The fourth defendant also seeks the right to address the Court at the trial through Mr Uthmann. The application is primarily based on the alleged impecuniosity of the fourth defendant. It is resisted by the first, second and third defendants who contend that the fourth defendant should comply with the Rules.
The plaintiff, however, supports the application. Senior counsel for the plaintiff told the Court that, as a model litigant, it submits that the fourth defendant should be granted a right of audience in the trial of the claim brought against it.
At the outset, I note that I am satisfied that Mr Uthmann is authorised to represent the fourth defendant.[1]
[1]See: Bay Marine Pty Ltd v Clayton Country Properties Pty Ltd (1986) 8 NSWLR 104.
The proceeding
In this proceeding the plaintiff makes claims against each of the defendants under s 138 of the Accident Compensation Act 1985. It seeks indemnification from them in relation to compensation it has paid, and might pay in the future, to Mr Mark Archbold who, it claims, was injured in the course of his employment at the first defendant’s premises on about 13 November 1999. The plaintiff alleges that Mr Archbold was injured by contact with hot water when a hot water tank collapsed and discharged its contents into those premises (“the incident”).
In the latest version of its amended statement of claim, the plaintiff alleges that the injuries were caused as a result of the incident by the negligence of :
(a) the first defendant, the occupier of the premises where it operated an abattoir;
(b) the second defendant, the manufacturer of the tank;
(c) the third defendant plumber who allegedly installed the tank; and
(d) the fourth defendant, the manager of the plant who was allegedly responsible for the design or installation and, or maintenance of the tank.
The first, second and third defendants each deny the plaintiff’s allegations and maintain in the alternative that defendants other than themselves were responsible for the injuries resulting from the incident. It appears that, essentially, the fourth defendant resists the plaintiff’s claim on the basis that its involvement in works at the premises did not include any relating to the tank.
The evidence in the application
Mr Uthmann gave oral evidence in the application.
He said that the fourth defendant carries on what he describes as a consultant engineering business, involving the design and construction of abattoirs and subsequent project management. Mr Uthmann’s father (“Mr Uthmann senior”) started the business in 1987. Mr Uthmann commenced working for the business some months later. Mr Uthmann senior worked as a project manager at the first defendant’s abattoir premises in 1994 and in 1997. He, however, is in poor health. He became “semi-retired” in 2000 and has not worked in the business for some time.
Mr Uthmann told the Court that he and his London based sister in law, Ms Tracey Connigan, were the present directors of the fourth defendant. He has the day to day management of the corporation. There was no evidence as to Ms Connigan’s financial situation.
Mr Uthmann senior and Mrs Theodora Maria Uthmann hold the fourth defendant’s two issued shares. They are the shareholders because the fourth defendant has a role in the administration of the superannuation fund which provides them with a joint income of $1000 per week. Mr Uthmann told the Court that he did not want to “encroach” on his parents and did not give any other evidence about their financial situation, apart from referring to their ownership of the unit in which they reside, as well as some personal property. There was no evidence given as to the value of their unit or personal property. Neither of Mr Uthmann’s parents (aged 71 and 67 respectively) is employed.
Mr Uthmann and his wife are the joint proprietors of a property at Paradise Point in Queensland. The property is valued at approximately $800,000 and secures a mortgage loan of some $500,000. Mr Uthmann said that the couple had put the property on the market because they are having difficulty making payments under the mortgage loan and a bank credit facility which Mr Uthmann uses to meet the fourth defendant’s recurrent monthly expenses of some $3000.
Mr Uthmann said that he and his wife also had personal assets, the value of which was not stated. Their superannuation fund has a factory unit as an asset and drawings from the cheque account are used to make mortgage payments in relation to the factory. Mr Uthmann’s wife earns some $700 per week from a gift shop business. This money is used to meet the family’s living expenses.
The fourth defendant’s last project was finalised in about late 2004 or early 2005. It received the resulting income over the period of the project and for some months thereafter. Mr Uthmann said that the fourth defendant had not received any income from its principal business activity since early 2005, except for some small amounts earned in the sale of consumable items to the abattoir industry. The income from such sales was in the vicinity of $800 per month.
Mr Uthmann himself has not received any income from the fourth defendant since about mid 2006. He uses the bank credit facility of some $52,000 to keep the fourth defendant afloat. Funded by the fourth defendant, Mr Uthmann has continued to travel to put proposals to prospective clients and to work on possible projects.
The fourth defendant tendered a bundle of quarterly statements relating to a cheque account held in its name with the Bank of Queensland (“the cheque account”) by way of evidence of its financial situation. Mr Uthmann was cross-examined in relation to the movement of funds through the cheque account. He professed himself unable to answer some questions about the destination of monies paid into other nominated accounts. He explained this inability on the basis that his wife handled the account.
The fourth defendant had instructed solicitors to act for it on 5 December 2005, after having been served with the writ on 18 November 2005. The solicitors were retained until June 2006 when Mr Uthmann says the corporation could no longer afford their services. It owes the solicitors some $11,500 and is in negotiations as to payment.
Mr Uthmann was cross-examined as to his efforts to obtain a bank loan for the litigation. He said he had approached the bank, but was unable to justify a loan on the basis of income to service any accommodation. He agreed that he had not informed the bank expressly about his parents’ income, but said that he had used the same bank for a number of years.
Mr Uthmann acknowledged that he expected the fourth defendant to get work when the effects of the drought upon the meat industry had eased. He told the Court that profit from the fourth defendant’s projects varied according to the size of the job. He agreed that the profit from the Midfield Meats abattoir work and from another job it was doing at about the same time was some $180,000.
Mr Uthmann conceded that he had the fourth defendant’s taxation returns for the years up to 30 June 2004, but had not brought them to Court. He said that the corporation’s accountant had been provided with the information needed to prepare the most recent returns but that they had not yet been produced. Mr Uthmann had not been in contact with him about producing financial information for the Court.
Mr Uthmann told the Court that the corporation would not be in a position to fund the litigation at this stage, if the application were to be refused. He also said that he personally did not have the ability to pay for legal representation, but that he would endeavour to arrange legal representation for the fourth defendant if the application were unsuccessful.
Submissions
The fourth defendant makes each of the applications on the basis of the assertion that it lacks the necessary funds to defend the proceeding through a solicitor or to engage counsel to represent it at trial.
Counsel for the fourth defendant argues that it will be deprived of the opportunity to be heard if its application is unsuccessful. She refers to the evidence to the effect that Mr Uthmann and his wife live on the earnings from the gift shop business and also use that money to keep the corporation afloat, servicing a line of credit through which it funds its day to day operating costs.
Counsel refers to Mr Uthmann’s indication to the Court that he would seek to cross-examine only the representatives of the other defendants and any expert witnesses who attributed liability to the fourth defendant. This course, she submitted, would not lengthen the trial. She argues that it would be appropriate for the Court to refuse to assist Mr Uthmann, adopting the course of Gillard J in Woodworx (Aust) Pty Ltd v Woodworx Pty Ltd[2].
[2][2005] VSC 34.
Counsel cites the Full Federal Court’s decision in Molnar Engineering Pty Ltd v Burns[3], pointing to the observations of Smithers J to the effect that the objective of the just outcome at trial was not necessarily unattainable in the absence of the assistance of a qualified advocate[4]. She submits that the Court would be ably assisted by counsel for the three other defendants in this case. She urges the Court to take a more flexible approach to the application than it would adopt in the case of such a request from a plaintiff or a sole defendant. She notes that the plaintiff proposes to call Mr Uthmann as a witness, but argues that that factor should not be determinative.
[3](1984) 3 FCR 68.
[4](1984) 3 FCR 68 at 74.
Counsel for the fourth defendant points to the fact that, notwithstanding Mr Uthmann’s representation of the corporation to date, the defendants have only recently taken the point. She refers, too, to Mr Uthmann having been given leave to address the Court in relation to costs after the dismissal of Mr Archbold’s own proceeding against the defendants.
Counsel for the other defendants resist the application. They submit that there will be complex legal and factual issues to be addressed at trial. They mention questions relating to proportionate liability, the liability of an occupier and non-delegable duties. They contend that they will be prejudiced by the likely lengthening of the trial if Mr Uthmann is permitted to represent the limited liability corporation through which the business has been carried on. They point out that it is a consequence of that choice on behalf of those carrying on the business that the Rules require that the corporation be represented.
Whilst the defendants acknowledge his likely expertise in matters relevant to the factual issues, they nevertheless submit that Mr Uthmann will lack the ability of a legal practitioner, both in relation to the fashioning of submissions as to factual issues and with regard to addressing the contentious legal questions as to contribution and the like in the case. They also point out that, if it were to grant the application the Court would be deprived of the assistance of counsel acting on behalf of the fourth defendant.
The defendants refer to the lack of evidence about the financial affairs of the corporation and its shareholders. They note Mr Uthmann’s failure to take up the opportunity, inferentially offered to him under cross-examination, to produce the corporation’s documents which his evidence suggested might be available to him. Counsel for the defendants argue that the bank statements proffered as the only evidence as to the corporation’s situation raise more questions than they answer.
The other defendants also point to evidence as to Mr Uthmann’s interest in property as tending to suggest that he has access to funds which could be used to obtain representation for the fourth defendant. The defendants refer to cases in which similar applications have been refused: on the grounds of the lack of independent information as to the financial situation of the applicant corporation and its shareholders.
Finally the defendants point to Mr Uthmann’s evidence to the effect that if the fourth defendant’s application were to be refused, he would endeavour to obtain representation for it.
The law
There was no disagreement as to the relevant applicable legal principles.
A number were stated by the members of the Full Court in Hubbard Association of Scientologists International v Anderson and Just (No 2)[5]. It was there held that a step taken in a proceeding by a corporation, without a solicitor, is irregular.
[5][1972] VR 577.
In Hubbard, their Honours explained that the prohibition, now found in order 1.17 of the Rules, is based on the policy consideration that the opportunities for those untrained in the law need to be restricted in the interests of justice[6]. The court held that the court has a discretion to allow any person to address it. This discretion is distinct from the power under order 2.04 to waive compliance with the Rules[7].
[6][1972] VR 577 at 580 per Adam, Little and Gowans JJ.
[7]Ibid.
It is fundamental to the working of the justice system that the courts be accessible to all. It follows that, when deciding whether to exercise the discretion to allow a corporation to be represented by someone other than a legal practitioner, a court is concerned with factors such as the financial situation of the applicant and its shareholders and the effect of requiring it to utilise its own funds or obtain funds for representation by a solicitor.[8] The number of shareholders, size of the company’s operation and its ability to carry on business if it were required to fund litigation are relevant to the exercise[9].
[8]Molnar Engineering Pty Ltd v Burns (1984) 3 FCR 68 at 74 per Smithers J.
[9]Ibid.
The court will also take into account the degree to which the director who seeks audience can conduct the case effectively with the complex issues before the court without its assistance[10].
[10]See: VN International Video Pty Ltd v West End HK TVB Video & Ors (1996) 14 ACLC 1308.
It has been held, with reference to the power of the Federal Court to grant leave under order 4.14(2) of the Federal Court Rules 1979 (Cth) to commence or carry on a proceeding other than through a solicitor, that the possibility of a denial of natural justice is a powerful consideration but that it cannot control the application[11] .
[11]Clout (as trustee in bankruptcy of the estate of Dexter) v Anscor Pty Ltd [2001] FCA 604 at [23] per Drummond J.
Conclusions
In my view, the fourth defendant has failed to adduce evidence as to its impecuniosity or that of its shareholders or directors which persuades me to exercise the Court’s discretion in its favour.
The bundle of statements in relation to the cheque bank account is quite insufficient for the purpose. Further, notwithstanding that the statements raised questions which Mr Uthmann was unable to answer, he did not call his wife or adduce other evidence to explain the movement of funds through the account. Further, Mr Uthmann did not avail himself of the opportunity to produce even the material provided to the corporation’s accountant in relation to the preparation of the taxation returns.
There was insufficient evidence in this case, relating to the financial position of the corporation, its shareholders or the directors to satisfy me that it, or those who stood behind it, lacked the wherewithal to fund its legal representation at trial. I note that I do not disregard Mr Uthmann’s assertions in reaching that conclusion. It remains the case that there was insufficient frank disclosure of relevant material.
Ultimately, taking into account Mr Uthmann’s statement that he would take steps to have the corporation represented in the event of the refusal of the application, as well as the deficiencies in the evidence, I am not satisfied that there would be a denial of natural justice if the application for him to be permitted to represent the fourth defendant at trial were to be refused.
The application is refused.
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