FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Quiah v Vitalcare Pty Ltd [2023] FedCFamC2G 1070
ORDERS
MLG 516 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: CHRISTABEL QUIAH
Applicant
AND: VITALCARE PTY LTD (ABN 69 078 100 259)
First Respondent
STUART DUNCAN ROSS
Second Respondent
ORDER MADE BY:
JUDGE O'SULLIVAN
DATE OF ORDER:
24 NOVEMBER 2023#
THE COURT ORDERS THAT:
1.The application in a proceeding filed on 31 October 2023 be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
Christabel Quiah (‘the applicant’) named Vitalcare Pty Ltd (‘the first respondent’) and Stuart…
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Details
- Case
- [2023] FedCFamC2G 1070
- Decision Date
CaseChat Overview and Summary
In the Federal Circuit and Family Court of Australia, Quiah v Vitalcare Pty Ltd involved an application by Stuart Duncan Ross for leave to represent Vitalcare Pty Ltd in proceedings brought by Christabel Quiah. The dispute arose from Quiah's allegations of underpayment and contraventions of industrial instruments and the Fair Work Act by Vitalcare and Ross, who was a director of Vitalcare during Quiah's employment. The key legal issue was whether Ross should be granted leave to represent Vitalcare, considering the requirement that corporations be represented by a lawyer unless the Court grants leave.
The court examined the application under Rule 9.04 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021, which mandates that a corporation must be represented by a lawyer in proceedings, subject to the Court's discretion to dispense with this rule in the interests of justice. The court considered several factors, including the sufficiency of financial evidence, the interest of justice, and the potential conflict of interest between Ross and Vitalcare. Quiah argued that Ross failed to provide adequate financial evidence of Vitalcare's inability to afford legal representation, that it was not in the interest of justice for Ross to represent the company due to his lack of capacity and potential delays, and that there was a conflict of interest because Ross, as a director, had a separate liability that differed from the company.
The court found that there was insufficient evidence to support a finding that Vitalcare was unable to afford legal representation. It noted that Ross's assertions about the company's financial situation were not substantiated by concrete evidence such as financial statements. Furthermore, the court held that it was not in the interest of justice for Ross to represent Vitalcare because Ross's lack of legal expertise could lead to further delays and costs. The court also concluded that there was a conflict of interest, as Ross's individual interests as a director could differ from those of the company. Therefore, the application for leave was dismissed, and the matter was scheduled for a further directions hearing to allow Vitalcare to secure legal representation.
The court examined the application under Rule 9.04 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021, which mandates that a corporation must be represented by a lawyer in proceedings, subject to the Court's discretion to dispense with this rule in the interests of justice. The court considered several factors, including the sufficiency of financial evidence, the interest of justice, and the potential conflict of interest between Ross and Vitalcare. Quiah argued that Ross failed to provide adequate financial evidence of Vitalcare's inability to afford legal representation, that it was not in the interest of justice for Ross to represent the company due to his lack of capacity and potential delays, and that there was a conflict of interest because Ross, as a director, had a separate liability that differed from the company.
The court found that there was insufficient evidence to support a finding that Vitalcare was unable to afford legal representation. It noted that Ross's assertions about the company's financial situation were not substantiated by concrete evidence such as financial statements. Furthermore, the court held that it was not in the interest of justice for Ross to represent Vitalcare because Ross's lack of legal expertise could lead to further delays and costs. The court also concluded that there was a conflict of interest, as Ross's individual interests as a director could differ from those of the company. Therefore, the application for leave was dismissed, and the matter was scheduled for a further directions hearing to allow Vitalcare to secure legal representation.
Orders
Orders of the court
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Background
Background to the litigation
Christabel Quiah (‘the applicant’) named Vitalcare Pty Ltd (‘the first respondent’) and Stuart Duncan Ross (‘the second respondent’) as parties to proceedings that she commenced in March 2023. These reasons concern an application in a proceeding filed by the second respondent for leave to represent the first respondent. For the following reasons that application should be refused.BACKGROUND The first respondent operates a personal emergency response service called 'Rosie' which provides operator support for elderly clients who wear wireless alarm devices. The service runs continuously and is staffed by employees of the first respondent. When customers need help, they press a button to connect to a Rosie operator who then follows a triage process and provides support. Operators work from home and are managed remotely. The applicant worked for the first respondent between April 2019 and June 2022. During that period the second respondent was a director of the first respondent and was involved in its operations. In her statement of claim the applicant made allegations of various contraventions during her employment of applicable industrial instruments and the Fair Work Act 2009 (Cth) (‘the FW Act’) by the first respondent and for which the second respondent was liable as an accessory. The applicant sought various declarations, compensation, and the imposition of pecuniary penalties. The respondents (who were then both represented by the same solicitor) in their defence denied many of the allegation made by the applicant. After the proceedings had been the subject of an unsuccessful mediation and directions had been made for the filing of material for trial the matter was transferred into my docket to provide an early trial date. However, before a directions hearing could be convened for that purpose the respondents’ former solicitor filed a notice of ceasing to act and the second respondent attempted to file the application in a proceeding, the subject of these reasons.DIRECTIONS HEARING At the directions hearing on 31 October 2023, the following orders were made:THE COURT ORDERS THAT:1.The name of the Second Respondent be amended from ‘Duncan Ross’ to ‘Stuart Duncan Ross’.2.The Second Respondent have leave to file in Court this day an application in a proceeding for an order that the Second Respondent have leave to represent the company (‘the First Respondent’) for reasons set out in his affidavit filed 26 October 2023.3.By 4:00pm on 9 November 2023, the Applicant file and serve a response to the application in a proceeding along with any affidavit in support and submissions of no more than five (5) pages.4. By 4:00pm on 20 November 2023, the Second Respondent file and serve any further affidavit and submissions in reply (of no more than five (5) pages).5.The decision on the application in a proceeding filed in Court filed this day be thereafter reserved and considered on the papers in Chambers…SUBMISSIONS As provided for in the above-mentioned orders, the applicant filed material which addressed the orders sought in the application in a proceeding. On 9 November 2023, the applicant filed a response to the application in a proceeding along with an affidavit of Ms Alana Hudson, Solicitor, and submissions. The applicant’s submissions were:1.The Applicant objects to the Second Respondent's Application for an order that the Second Respondent have leave to represent the First Respondent (Company) filed in Court on 31 October 2023 and supported by the Affidavit of Stuart Duncan Ross affirmed on 26 October 2023 (Ross Affidavit).2.The Applicant's objection is made in three parts. First, the Second Respondent has failed to provide sufficient evidence of the Company's financial circumstances and its ability to engage legal representation. Second, it does not serve the interest of justice for the Second Respondent to represent the Company given his lack of capacity to do so and the corresponding delay and cost that will be borne by the Applicant as a result. Finally, the interests of the Company and the Second Respondent are sufficiently different such to create a conflict of interest which is untenable for the Second Respondent in light of his obligations to the Company in his capacity as one of its Directors. These matters are outlined in turn below.A. Insufficient Financial Evidence3.The requirement that corporations be represented in legal proceedings is not a mere technicality,[1] it is a serious constraint, and leave must not be granted in the absence of a sufficient explanation for a decision not to retain a lawyer.[2][1] See Farmers Fruit Box & Plastics Pty Ltd v Select Carbon Pty Ltd [2021] NSWSC 563, [30] - [31].[2] See Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241, [13] - [14], Tanamerah Estates Pty Ltd v Tibra Capital Pty Ltd [2016] NSWCA 23; Helmout v Apostoloff [2011] ACTSC 2, [44] citing Molnar Engineering Pty Ltd v Burns [1984] FCA 201.4.The matters raised in paragraph 7 of the Ross Affidavit are insufficient to evidence the impecuniosity or scarcity of funds of the First Respondent. Rather, the Second Respondent's evidence is that the Directors made a decision not to retain legal representation, which does not speak to the Second Respondent's capacity or lack thereof to afford legal representation. This falls well short of the level of information required to evidence genuine impecuniosity and leave should be refused on this basis.B. Interest of Justice5.Although rule 9.04 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) allows for the representation of a company by a director in some circumstances,[3] the guiding principle for the Court to exercise its discretion to dispense with compliance with rule 9.04 is the “interest of justice”.[4] There are a number of separate issues that go to this point.[3] See also Molnar Engineering Pty Ltd v Burns (1984) 3 FCR 68.[4] See Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021, r 1.07; Gold Developments Pty Ltd v Queensland Inspection Services Pty Ltd [2022] FedCFamC2G 867, [9]; Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 12) [2012] FCA 289, [20], Damjanovic v Maley [2002] NSWCA 230, [76] - [77], [83]-[86].6.Those who chose to carry on their business through a corporate structure enjoy advantages that those carrying on business on their own account do not, however this also carries disabilities and obligations.[5] One of which is the requirement that a company be represented in legal proceedings.[6] This basic rule operates to protect the public interest in the administration of justice that the company's proceedings not be conducted by an unqualified person unless there is a proper basis to grant such leave.[7][5] Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241, [14].[6] Ibid.[7] See Farmers Fruit Box & Plastics Pty Ltd v Select Carbon Pty Ltd [2021] NSWSC 563,[32]; Worldwide Enterprises Pty Ltd v Silberman & Anor [2009] VSC 165, [16]Matters in Dispute7.Despite the extensive history of the interactions between the Applicant and Respondents in respect of the Applicant's employment, the remaining matters in dispute in this proceeding are confined to a technical question of the Applicant's correct classification under the Clerks - Private Sector Award 2022 (Award), namely, whether she was or was not a supervisor, and the application of that Award in respect of relevant penalty rates.8.The matters raised in paragraph 5 of the Ross Affidavit display a lack of understanding on the part of the Second Respondent as to the difference between the Unfair Dismissal proceedings involving the First Respondent and Applicant in 2022, and the unrelated underpayment matter presently before the Court.9.Simply put, the matters raised in paragraph 5 of the Ross Affidavit and the affidavits filed by the Second Respondent on 26 October 2023 seek to address a number of matters not the subject of this dispute. Moreover, a large degree of the evidence submitted by the Respondents appears on its face to be inadmissible, and therefore does not support a conclusion that the Second Respondent is capable of providing appropriate representation to the First Respondent in these proceedings.Properly Arguable10.A key aspect of the restriction on the conduct of legal proceedings on behalf of a company is the focus on ensuring that proceedings are conducted by someone whose actions are the subject of ethical obligations owed to the Court,[8] one such obligation being the requirement to not take points on unless satisfied, in good faith, that such points are properly arguable.[9]11.Critically, despite the lack of sufficient evidence of the Company's impecuniosity, the authorities are clear that even if the Court were to accept the Second Respondent's evidence about the Company's impecuniosity, this is insufficient reason to dispense with the representation rule if in fact a company's position is so lacking in merit that no lawyer could properly act for it.[10]12.Notwithstanding that we submit that a large degree of the evidence filed by the Respondents constitutes inadmissible hearsay, from the materials presently before the Court, it is clear that despite the Respondents' pleaded position that the Applicant was not a supervisor, documents prepared by and belonging to the Company, together with the Company's own evidence proves exactly the opposite.[11]13.The remaining issue in dispute relates to whether the Applicant was always a shiftworker for the purpose of the Award, or was in fact both a shiftworker and a non- shiftworker depending on the time of the relevant shift worked.Efficient Conduct of the Matter14.Another key principle underpinning the representation rule is the avoidance of untrained advocates interfering with the course of the proceeding before the court and causing loss to the parties involved.[12]The Respondents' materials were filed some four and a half weeks after the date set by the Court in the orders of Registrar Curnow dated 19 July 2023. Significant additional time has been spent by the Applicant in seeking to resolve this non-compliance and to narrow the scope of the discussions to only the issues in dispute.15.The Applicant was made redundant in July of 2022 and has remained (it is alleged) underpaid since that time. The Applicant is a sole parent of a school-aged child. In the absence of clear evidence of the Company's inability to afford legal representation, it is prejudicial to the Applicant for the matter to be further delayed, as is often the case where proceedings are conducted by an unskilled advocate and as has certainly been the case in this matter.[13][8] Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 12) [2012] FCA 289, [20], citing Damjanovic v Maley [2002] NSWCA 230, [76] - [77].[9] See Farmers Fruit Box & Plastics Pty Ltd v Select Carbon Pty Ltd [2021] NSWSC 563, [31]; Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015, r 21.3.[10] Farmers Fruit Box & Plastics Pty Ltd v Select Carbon Pty Ltd [2021] NSWSC 563, [36].[11] See for example annexures "CQ-1", "CQ-2", "CQ-3" and "CQ-4" of the Affidavit of Christabel Quiah sworn 24 August 2023, annexures "MM-2", "MM-3", "MM-5", "MM-6" and "MM-7 of the Affidavit of Dr Mernoush Mashipour affirmed 25 October 2023, annexures "DR-1", "DR-4", "DR-5", "DR-6" and "DR-14" of the Affidavit of Stuart Duncan Ross affirmed 26 October 2023.[12] Worldwide Enterprises Pty Ltd v Silberman & Anor [2009] VSC 165, [16], citing Scotts Head Developments Pty Ltd v Pallisar Pty Ltd, Unreported, New South Wales Court of Appeal, 6 September 1994.[13] Ibid.C. Conflict of Interest16.There is a clear conflict between the interests of the First and Second Respondent in these proceedings, rendering it inappropriate for the Second Respondent to represent the Company.17.The Second Respondent is a joint Director of the Company with his son Logan Ross.[14] Accordingly Mr Logan Ross and the Second Respondent are the real force behind the Company.[15] As a named respondent, who it is alleged was involved in the preparation of the employment contracts and discussions with employees regarding underpayment issues dating back to January 2021, the Second Respondent is a key witness in this matter whose credit will be in issue.[16]18.The credit issue arises in three key areas:(a)Paragraph 4(a) of the Defence filed on 9 May 2023, denies that the Applicant supervised other Rosie Assistants. Yet Annexure 4 of the Ross Affidavit indicates that the exact opposite argument was made before the Fair Work Commission in respect of the Unfair Dismissal proceedings relating to the Applicant's employment.(b)Paragraph 47 of the Defence filed on 9 May 2023 denies inter alia that the Second Respondent was involved in the preparation of the First Respondent's employment contracts. Indeed Annexure "CQ-9" of the Affidavit of Christabel Quiah affirmed 24 August 2023 strongly suggests that this is not true.(c)Paragraph 48(a) of the Defence filed on 9 May 2023 denies that the Second Respondent was aware that employees of the First Respondent had raised concerns of incorrect payment under the Award both to himself directly and to the Fair Work Ombudsman, and that even though he had reached the conclusion by January 2020 at the latest that payments to Rosie staff had not complied with the First respondent's legal obligations under the Award, had failed to take any steps to rectify the non-compliance in respect of the Applicant. Indeed the Defence pleads that the Second Respondent became aware of the issue on or about July 2022. However Annexure "CQ-9" of the Affidavit of Christabel Quiah affirmed 24 August 2023 strongly suggests that this is not true.19.Despite being the real force behind the Company, The Second Respondent's alleged involvement in and separate and individual liability for the alleged contraventions differs from the Company's.[17] Acting on his own behalf and on behalf of the Company may place the Second Respondent in a position where he is in breach of his obligation as Director of the First Respondent, to act in the First Respondent's best interests and avoid any actual potential or actual conflict between the obligations owed to the Company and his own personal interests.[18]20.Accordingly we submit that the Second Respondent's Application should be rejected by the Court.[14] See paragraph [2] and Annexure "AMH-1" of the Affidavit of Alana Margaret Hudson sworn 9 November 2023.[15] Helmhout v Apostoloff [2011] ACTSC 2, [46].[16] Bay Marine Pty Ltd v Clayton Country Properties Pty Ltd (1986) 8 NSWLR 104, 113.[17] For example the Second Respondent's involvement in the preparation of employment contracts and discussions with employees and the Fait Work Ombudsman regarding underpayment concerns.[18] See Corporations Act 2001 (Cth), ss180(1), 180(2), 181.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
Beyond the bare assertions about financial loss and lack of insurance coverage there is no cogent evidence of the financial position of the first respondent which would suggest that it cannot afford legal representation. No financial statements have been tendered. There is also no evidence as to the financial position of those who stand behind the first respondent. In particular, there is no cogent evidence as to the second respondent’s or his son’s financial position. Given the limitations within the documents that were relied on, I am unable to be satisfied on the basis of this material as to the financial position of the first respondent.CONCLUSION In my view it is not in the interests of justice that compliance with rule 9.04 be dispensed with. For these reasons, I dismiss the application in a proceeding. There will be a further directions hearing in February 2024 by which time the first respondent at least will have had sufficient time to engage and instruct another legal practitioner.
Ratio Decidendi
Legal Principle Established
Additionally, Rule 9.04 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (‘the Rules’) provides:Corporation must be representedExcept as provided by or under an Act or regulations made under an Act, or with the leave of the Court, a corporation may not start or carry on a proceeding otherwise than by a lawyer. Of course, pursuant to rule 1.07, the Court may, in the interests of justice, dispense with compliance with the Rules:Court may dispense with rules(1)The Court may in the interests of justice dispense with compliance, or full compliance, with any of these Rules at any time.(2)If, in a proceeding, the Court gives a direction or makes an order that is inconsistent with any of these Rules, the direction or order of the Court prevails in that proceeding. In considering and applying the Rules, it is important to note the obligations contained in section 190 and 191 of the FCFCOA Act. Section 191 requires the parties to a civil proceeding to act consistently with the overarching purpose in section 190 of the FCFCOA Act. Section 190 requires, inter alia, the civil practice and procedure provisions to be exercised in a way that best promotes the overarching purpose. Section 190 provides as follows:Overarching purpose of civil practice and procedure provisions(1)The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes:(a) according to law; and(b) as quickly, inexpensively and efficiently as possible.Note 1: See also paragraphs 5(a) and (b).Note 2:The Federal Circuit and Family Court of Australia (Division 2) must give effect to principles in the Family Law Act 1975 when exercising jurisdiction in relation to proceedings under that Act.(2)Without limiting subsection (1), the overarching purpose includes the following objectives:(a)the just determination of all proceedings before the Federal Circuit and Family Court of Australia (Division 2);(b)the efficient use of the judicial and administrative resources available for the purposes of the Court;(c) the efficient disposal of the Court's overall caseload;(d) the disposal of all proceedings in a timely manner;(e)the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.(3)The civil practice and procedure provisions must be interpreted and applied, and any power conferred or duty imposed by them (including the power to make Rules of Court) must be exercised or carried out, in the way that best promotes the overarching purpose.(4)The civil practice and procedure provisions are the following, so far as they apply in relation to civil proceedings:(a) the Rules of Court;(b)any other provision made by or under this Act or any other Act with respect to the practice and procedure of the Federal Circuit and Family Court of Australia (Division 2). Rules similar to Rule 9.04 are to be found in other courts and there are numerous authorities dealing with the matters a court is to consider.