Qanbari v Roumeliotis (No 2)
[2021] VCC 1115
•13 August 2021
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-21-01965
| POYA QANBARI | Plaintiff |
| v | |
| JOHN ROUMELIOTIS | First Defendant |
| and | |
| ROUQAN PTY LTD (ACN 637293031) as trustee of the Rouqan Family Trust | Second Defendant |
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JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 15 July 2021, the parties subsequently filed further written submissions on 16 and 19 July 2021 | |
DATE OF RULING: | 13 August 2021 | |
CASE MAY BE CITED AS: | Qanbari v Roumeliotis & Anor (No 2) | |
MEDIUM NEUTRAL CITATION: | [2021] VCC 1115 | |
RULING NO 2
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Subject:COSTS
Catchwords: Costs – notice of appearance – jurisdictional issue
Legislation Cited: Corporations Act 2001 (Cth); Civil Procedure Act 2010 (Vic); County Court Civil Procedure Rules 2018 (Vic)
Cases Cited:Foss v Harbottle (1843) 2 Hare 461
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | No appearances | Stenta Legal |
| For the Defendants | Mr T Sowden | Zervos Lawyers |
HIS HONOUR:
Introduction
1I heard the application in this matter on 15 July 2021. By its summons filed 8 June 2021, Qanbari sought orders setting aside the notice of appearance filed by Rouqan Pty Ltd (“Rouqan”) on 31 May 2021, default judgment against Rouqan, recovery of possession of the property at 58 Armstrong Street, Colac from Roumeliotis and his wife and an order for sale of that property. Qanbari also sought costs against Roumeliotis’s solicitors, Zervos Lawyers, or alternatively Roumeliotis himself for filing a notice of appearance on behalf of Rouqan without instructions and proper authority.
2I decided that the notice of appearance filed on behalf of Rouqan should be set aside. Although Zervos Lawyers were on notice that if the Court made this determination, they faced an order for costs, they did not appear at the hearing or seek to orally address the Court. Through an abundance of caution, I gave Zervos Lawyers a further opportunity to be heard on the matter and ordered that the solicitors file any written submissions on the matter by a nominated date.
The position of Zervos Lawyers
3In essence, the submissions from Zervos Lawyers argued that:
(a) they served a conditional notice of appearance in order to stave off a default judgment by Qanbari;
(b) the notice of appearance was served on the basis that it was conditional upon either Qanbari consenting to Roumeliotis providing instructions on behalf of Rouqan or the making of an application under the Corporations Act 2001 (Cth) seeking leave to defend the proceeding on behalf of the Rouqan;
(c) the letter from Zervos Lawyers dated 31 May 2021 serving the notice of appearance also raised jurisdictional issues with respect to Qanbari’s claim;
(d) once the conditional notice of appearance was served and the jurisdictional issues were raised in the letter from Zervos Lawyers dated 24 June 2021, it was not appropriate to take any step in the proceeding until the question of jurisdiction was determined;
(e) Roumeliotis should not have first applied to the Supreme or Federal Court under the Corporations Act 2001 (Cth) for leave to act on behalf of Rouqan. This was especially so where Qanbari materially changed the statement of claim and Roumeliotis had sought to file a summons testing the jurisdiction point, such summons to be heard at the same time as Qanbari’s summons;
(f) the original statement of claim filed by Qanbari clearly breached the rule in Foss v Harbottle (1843) 2 Hare 461;
(g) Zervos Lawyers acted reasonably by filing the notice of appearance pending the determination regarding the Court’s jurisdiction; and
(h) Qanbari did not identify any breach of the Civil Procedure Act 2010 (Vic) which justified an order for costs against the lawyers.
The position of Qanbari
4In responding submissions, Qanbari contended that:
(a) the notice of appearance was not conditional. It purported to be, and was in fact, filed in accordance with Rule 8.05(1) of the County Court Civil Procedure Rules 2018 (Vic) (“the Rules”) and was a Form 8A. It was not Form 8B, the form used for a conditional appearance. In any event, even a conditional appearance must be properly authorised by the corporate entity on whose behalf it was served. In the present case, this did not occur;
(b) the letter from Zervos Lawyers dated 31 May 2021 did not raise jurisdictional issues. These issues were not ventilated until the letter dated 24 June 2021 which was sent two weeks after Qanbari filed his summons in this proceeding;
(c) notwithstanding multiple demands by Qanbari and the knowledge which Zervos Lawyers had regarding Qanbari’s lack of agreement to it acting on behalf of Rouqan, Zervos Lawyers did not withdraw the notice of appearance;
(d) again, notwithstanding the knowledge which Roumeliotis and Zervos Lawyers had, they had at no time made any application to the Victorian Supreme Court or the Federal Court of Australia to obtain leave for Roumeliotis to act on behalf of Rouqan in this proceeding;
(e) Roumeliotis did not contend in correspondence from Zervos Lawyers that the notice of appearance was “contingent upon first determining whether the proceeding was issued in the correct jurisdiction”;
(f) the defendants did not file a summons for a permanent stay of this proceeding and the Court has made no determination on that issue; and
(g) the usual position when a company is improperly made a plaintiff is to stay or dismiss the proceeding and require the solicitor who purported to act for the company to pay the costs. This principle applies by analogy in the present case.
Analysis
5I have decided that it is appropriate for Zervos Lawyers to pay the costs of Qanbari’s application to have the notice of appearance set aside.
6First, I note I have the power to make a costs order against a non-party such as Zervos Lawyers. Such an order is unusual. However, it can be justified where a solicitor files an application without instructions and proper authority.
7Secondly, notwithstanding the assertions to the contrary, Roumeliotis and Zervos Lawyers did not file a conditional appearance on behalf of Rouqan. Zervos Lawyers filed a Form 8A which is an unconditional appearance. Order 8 of the Rules enables a party to object to the Court’s jurisdiction by filing a conditional appearance. Generally, filling an appearance, whether conditional or unconditional, prevents a plaintiff from entering default judgment. A defendant who seeks to object to the jurisdiction of the Court should either file a conditional appearance under Rule 8.08 and then apply to the Court for an appropriate order, or apply for the order without first filing an appearance. The first alternative has the advantage that the plaintiff cannot enter judgment in default of appearance.
8Thirdly, though aware of the problem with the notice of appearance, Roumeliotis and Zervos Lawyers took no effective action to protect their position by applying for leave from a relevant Court to represent Rouqan in this proceeding.
9Fourthly, while Zervos Lawyers might have had concerns about the Court’s jurisdiction, they did not raise them in their letter dated 31 May 2021 (as they asserted) but only referred to them in the later correspondence dated 24 June 2021. This was about two weeks after Qanbari had issued his summons. I accept that approximately 24 hours before the hearing of the plaintiff’s summons, Zervos Lawyers sought to file and serve a summons on behalf of the defendants so that they could raise issues concerning jurisdiction. The Court refused the late application. This was partly because of the late attempted filing of the application and the consequent disadvantage which such late service might pose for Qanbari and also the additional time which might be required in hearing the application. At the time, the Court already had listed approximately 6.5 hours of hearings and, especially in circumstances where there was no explanation for Roumeliotis’s delay in making the application, the Court was not prepared to grant the indulgence sought.
10Fifthly, although Qanbari put Roumeliotis and Zervos Lawyers on notice about the lack of authority to serve the notice of appearance and asked several times that they recall the notice of appearance, Roumeliotis and Zervos Lawyers failed to withdraw the notice of appearance.
11Finally, Zervos Lawyers knew that Qanbari did not consent to them acting for Rouqan and did not authorise Zervos Lawyers to act. Zervos Lawyers also knew, or should have known, that as a company, Rouqan could participate in this legal proceeding only through legal representatives. An appearance filed by a solicitor without authority may be set aside under the Rules.[1]
[1] See the commentary in Williams Civil Procedure Victoria at paragraph 8.03.15.
Conclusion
12For the above reasons, I order that Zervos Lawyers pay the plaintiff’s costs of and incidental to the plaintiff’s application to set aside the notice of appearance filed on behalf of Rouqan Pty Ltd.
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