Quiah v Vitalcare Pty Ltd
[2023] FedCFamC2G 1070
•24 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Quiah v Vitalcare Pty Ltd [2023] FedCFamC2G 1070
File number(s): MLG 516 of 2023 Judgment of: JUDGE O'SULLIVAN Date of judgment: 24 November 2023 Catchwords: FAIR WORK – PRACTICE AND PROCEDURE– Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 – Rule 9.04 – requirement that corporation be represented by a lawyer unless leave granted – relevant considerations – application for leave refused. Legislation: Corporations Act 2001 (Cth), ss.180, 181
Fair Work Act 2009 (Cth)
Federal Circuit and Family Court of Australia Act 2021 (Cth), ss.175, 190, 191
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021, rr.1.07, 9.04
Cases cited: Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2004] FCA 1361
Bay Marine Pty Ltd v Clayton Country Properties Pty Ltd (1986) 8 NSWLR 104
Damjanovic v Maley [2002] NSWCA 230
Fair Work Ombudsman v Darna Pty Ltd & Anor [2014] FCCA 595
Fair Work Ombudsman v Doll House Training Pty Ltd [2022] FCA 604
Fair Work Ombudsman v Finetune Holdings Pty Ltd and Anor [2010] FMCA 889
Fair Work Ombudsman v Siner Enterprises Pty Ltd & Anor [2017] FCCA 2583
Farmers Fruit Box & Plastics Pty Ltd v Select Carbon Pty Ltd [2021] NSWSC 563
Francis (Trustee) v Oculus Accounting [2021] FCA 448
Gold Developments Pty Ltd v Queensland Inspection Services Pty Ltd [2022] FedCFamC2G 867
Helmout v Apostoloff [2011] ACTSC 2
Molnar Engineering Pty Ltd v Burns [1984] FCA 201
Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 12) [2012] FCA 289
Slattery v Canard Consolidated Pty Ltd [2023] FedCFamC2G 198
Tanamerah Estates Pty Ltd v Tibra Capital Pty Ltd [2016] NSWCA 23
Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241
Worldwide Enterprises Pty Ltd v Silberman & Anor [2009] VSC 165
Division: Division 2 General Federal Law Number of paragraphs: 36 Date of last submission/s: 20 November 2023 Place: Melbourne (in Chambers on the papers) Solicitor for the Applicant: Clayton Utz Representation for the Respondents: Self-Represented 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 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 Evidence
3.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 Justice
5.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 Dispute
7.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 Arguable
10.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 Matter
14.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 Interest
16.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.
On 20 November 2023, the second respondent filed a further affidavit and submissions in reply. The submissions in reply (omitting formalities) were:
Response to the Applicants Objection for the Second Respondents Request for Leave to Represent the First Respondent
1.This submission is in response to the Applicant’s submission of 9th November 2023 in which the Applicant opposes the First Respondent’s (“Vitalcare”) application that I, Stuart Duncan Ross, represent them in this proceeding.
2.The following submission relies on my affidavit of 20th November 2023 “SDR-3”
3.The Applicant cites Molnar Engineering Pty Ltd v Burns (1984) 3 FCR 68 as authority setting out the relevant principles guiding the discretion to dispense with the need for legal representation. Factors discussed in that case and their application to the present application are as follows.
Financial Capacity
4.Vitalcare’s business is provision of goods and services to the aged care industry. The pandemic made it almost impossible for the company to conduct this business and the company has sustained huge losses since.
5.For years 2022 and 2023 Vitalcare’s loss before tax was $279,044 and $630,212 respectively (SDR-3 par 5).
6.In 2019 and 2022 Vitalcare received incorrect advice from employment consultants in respect to the applicable award and structure of wages payments to Vitalcare operators. As a result of a Fair Work Commission determination we have to pay staff the shortfall amounting to $294,665 (SDR-3 par 6).
7.The company currently struggles to meet payroll and to find the back-pay owed, so legal costs are a significant threat to the business.
8.Vitalcare does not have insurance which can be called on to cover legal costs of this nature (SDR-3 par 8).
Shareholding
9.Vitalcare is a small family business with only three shareholders, and I hold 40% of the shares (SDR-3 par 1).
10.I have been one of two Directors with my son since acquiring the business in 2014 (SDR-3 par 2).
11.The company has passed a resolution that I should represent it in these proceedings (SDR-3 par 3).
12.This is akin to the “one man company” alluded to in Molnar which is a consideration in favour of permitting me to represent the company.
Qualifications
13.Another consideration in Molnar is that “advantageous educational and technical qualifications, may be significant.”
14.I am qualified in electronics and radio engineering and have studied business and accounting at university. I have spent over 20 years in the financial markets co-founding a world-leader in wireless financial information distribution and more recently in investment banking in the field of mergers and acquisitions. I have been largely self-employed for over 30-years and have either founded or worked in a wide range of businesses in electronics, software, security, engineering, healthcare, music and media. I am a graduate member of the Australian Institute of Company Directors and have served on boards of both public and private companies in Australia, Africa and the Middle East (SDR-3 par 9).
15.Why I have little formal legal training, I have represented myself or my company on many occasions over many years. Of particular relevance to the present application, I have represented Vitalcare in several Fair Work Ombudsman proceedings as set out in (SDR-3 par 10).
16.I represented myself in a 5-day Supreme Court of NSW hearing which resulted in His Honour Rein J noting at the conclusion his appreciation of the way the case was conducted “in a fashion that I think you can take credit in” (SDR-3 par 11).
Complexity
17.The Court might refuse leave in matters involving complex legal issues which require a trained legal representative to argue effectively.
18.The issues in dispute in this matter are straight forward questions of fact. Vitalcare does not deny that the Applicant was underpaid during her tenure with the company, but this was rectified following a related determination by the Fair Work Ombudsman. The only issue in dispute is whether or not the Applicant performed the duties of a supervisor according to the award definition.
19.There are no complex questions of law that might require a legally qualified person to argue.
Distinguishing features
20.The present case is distinguished from Molnar in the following significant ways.
21.In Molnar, the application was brought several days into the hearing. This application is made early in the proceeding.
22.In Molnar, $300,000 had already been expended on legal costs when the application was made, so the saving was not as significant as in the present case where modest legal cost has been incurred.
23.In Molnar, “difficult and complex legal questions of fact and law arose”. In this case, the issues are simple (see para 18 above).
24.Mr Molnar, who applied for leave to appear for his company, was the plaintiff. In the present case, it is the Respondent who is not before the court of its own volition, who seeks leave. The court should take a more liberal approach to granting leave to a Respondent.
25.In Molnar, it was the Plaintiff who sought leave. As Second Respondent, I will be defending myself irrespective of whether the company is legally represented, so it is arguably more efficient that I also represent the company.
Conflict Of Interest
26.I am a Graduate of the Australian Institute of Company Directors and well aware of my duties as a Director.
27.I disagree that there is a conflict of interest between myself and the company as Respondents in this matter, and will continue to be vigilant to avoid placing my own interests ahead of those of the company.
28.In any event, any such conflict would be the concern of myself or the Company, not the Applicant. This is not an issue that goes to the exercise of the discretion.
Conclusion
29.There is sufficient reason for the court to exercise the discretion to grant me leave to represent Vitalcare.
30.As the Court observed in Molnar, granting leave “… may operate to the detriment of a company appearing without a solicitor but such a consequence would be of the company's own making.”
In accordance with the orders made 31 October 2023 a decision on the second respondent’s application in a proceeding was thereafter, reserved and considered on the papers.
RULES GOVERNING WHETHER TO GRANT LEAVE
Given the order sought by the second respondent it is important to note that section 175 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (‘the FCFCOA Act’) provides as follows:
Representation
A party to a proceeding before the Federal Circuit and Family Court of Australia (Division 2) is not entitled to be represented by another person unless:
(a)under the Judiciary Act 1903 , the other person is entitled to practise as a barrister or solicitor, or both, in a federal court; or
(b)under the regulations, the other person is taken to be an authorised representative; or
(c)another law of the Commonwealth authorises the other person to represent the party.
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 represented
Except 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.
The parties’ submissions referred to many decisions, all of which addressed rules in other courts. Both parties’ submissions referred to the decision in Molnar Engineering Pty Ltd v Burns [1984] FCA 201. Both that decision and the decision in Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 are authorities dealing with the approach to the relevant Federal Court Rules from before the turn of the century.
In Fair Work Ombudsman v Doll House Training Pty Ltd [2022] FCA 604 at [24] relation to analogous rules in the Federal Court it was noted a convenient summary of the principles to the approach to the current Federal Court Rules on this issue was set out by Derrington J in Francis (Trustee) v Oculus Accounting [2021] FCA 448 at [35]-[47] which for the sake of brevity will not be rehearsed in these reasons.
The principles underlying the predecessor provision to the current rule in this Court were considered by Judge Lucev in Fair Work Ombudsman v Siner Enterprises Pty Ltd & Anor [2017] FCCA 2583 at [8]-[9].
More recently the decisions in Gold Developments Pty Ltd v Queensland Inspection Services Pty Ltd [2022] FedCFamC2G 867 at [8] to [9] and Slattery v Canard Consolidated Pty Ltd [2023] FedCFamC2G 198 at [43] to [46] considered the approach to the current rule and in the latter decision at [46] said:
46The many authorities on the exercise of the discretion to dispense with compliance with rule 9.04 disclose that the following considerations, among others, are relevant: the complexity of the case; the manner in which the case has progressed at the time application is made and the manner in which it may proceed in the future; financial considerations that would inhibit a company from obtaining representation (noting the onus is on an applicant seeking to dispense with the requirement of legal representation to provide evidence of incapacity); the ability of the representative to exercise the objectivity of a practitioner; whether the matter can be conducted in an orderly manner without a solicitor; whether the person seeking to represent the company is likely to be a principal witness in the trial particularly if credit is an issue and the effect, if any, that a grant of leave will have on the Court resources and the effect upon other litigants in the Court.
Finally, “the guiding principle in the exercise of the discretion is the public interest in the attainment of the ends of justice. The public has an interest in the effective, efficient and expeditious disposal of litigation in the courts. As a general rule this can best be achieved by parties employing qualified lawyers” (see Damjanovic v Maley [2022] NSWCA 230 at [83]) That is not inconsistent with section 190 and 191 of the FCFCOA Act and the Rules.
CONSIDERATION
The second respondent swore two affidavits in support of the application in a proceeding to represent the first respondent. In the affidavit filed 26 October 2023 the second respondent deposed to the following:
1. …
2. I am a Director of Vitalcare, the First Respondent (the Company).
3.I have the authority required to make this application and to appear for the Company.
4. I am also the Second Respondent.
5.I have been representing the Company in Fair Work Commission proceedings related to this case, including some to which the Applicant was a party, since June 2022 and am fully acquainted with the circumstances and facts of the present claim by the Applicant.
6.The Company services the aged care industry and struggled to survive years of disruption due to COVID and has had to compensate employees (including the Applicant) who the Fair Work Commission ruled were short paid.
7.The Company's insurance policy does not include legal costs for litigation such as this. To conserve the Company's scarce funds, the Directors have decided not to retain legal representation and that I should represent the Company.
8.This is a preferable course because I will be representing myself in any event and am intimately familiar with the issues in dispute, having conducted the proceedings in the FWC myself.
There were no supporting documents annexed to that affidavit. In his further affidavit filed 20 November 2023, the second respondent deposed:
1.Vitalcare is a small family business with only three shareholders, and I hold 40% of the shares.
2.I have been one of two Directors with my son since acquiring the business in 2014.
3.The company has passed a resolution that I should represent it in these proceedings, a copy of which is annexed hereto and marked "A".
4.Vitalcare's business is provision of goods and services to the aged care industry. The pandemic made it almost impossible for the company to conduct this business and the company has sustained huge losses since.
5.For years 2022 and 2023 Vitalcare loss before tax was $279,044 and $630,212 respectively.
6.In 2019 and 2022 Vitalcare received incorrect advice from employment consultants in respect to the applicable award and structure of wages payments to Vitalcare operators. As a result of a Fair Work Commission determination we have to pay staff the shortfall amounting to $294,665.
7.The company currently struggles to meet payroll and to find the back-pay owed, so legal costs are a significant cost to the business.
8.Vitalcare does not have insurance which can be called on to cover legal costs of this nature.
9.I am qualified in electronics and radio engineering and have studied business and accounting at university. I have spent over 20 years in the financial markets co-founding the world-leader in wireless financial information distribution and more recently in investment banking in the field of mergers and acquisitions. I have been largely self-employed for over 30-years and have either founded or worked in a wide range of businesses in electronics, software, security, engineering, healthcare, music and media. I am a graduate member of the Australian Institute of Company Directors and have served on boards of both public and private companies in Australia, Africa and the Middle East.
10.I have represented Vitalcare in several Fair Work Ombudsman proceedings, including U2022/6539, U2022/6573 and U2023/7354.
11.I represented myself in a 5-day Supreme Court of NSW hearing which resulted in His Honour Rein J commenting on my conduct, see transcript annexed hereto and marked “B”.
Aside from the annexures referred to in that affidavit (which had been filed by the second respondent having had notice of the issues raised in the applicant’s submissions which were critical of the evidence base for the orders sought) there were no financial documents substantiating the claims made nor evidence of the ability of those associated with the first respondent to obtain finance. The second respondent did not seek to file any further documents substantiating the claims made about the first respondent’s financial position. There was no other evidence. The submissions of each of the parties (such as they were) have been set out above.
The second respondent is not entitled to represent the first respondent except by leave of the Court (pursuant to s.175 of the FCFCOA Act and r.9.04 of the Rules). The applicant opposed the second respondent’s application for leave which can only be dealt with on the basis of the material filed (which the second respondent was given every opportunity to put before the Court).
It is evident from the pleadings (and despite the claims in submissions by the second respondent at least) that there remains some complexity to the factual disputes between the parties and these could be increased by the fact that there are disputes as to legal issues, or disputes concerning mixed questions of law and fact.
Both respondents had been represented by a legal practitioner in the past (who has ceased to act). Whilst the second respondent points to his involvement in proceedings in the Fair Work Commission (although that is not a court) and there was no information about the NSW proceedings he referred to.
The applicant notes in submissions that since the former solicitor ceased to act the respondents' material 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 and additional time has been spent by the applicant in seeking to resolve this non-compliance and to narrow the issues in dispute.
These proceedings are less likely to be resolved justly efficiently and economically and without undue delay and the incurring of greater expense than is necessary if the second respondent were to appear for the first respondent. Technicality (such as interpretation of industrial instruments etc) cannot be avoided in these proceedings because of their nature. At a trial, which is the next stage for these proceedings, the interests of justice would be better served if a lawyer, with appropriate legal knowledge and ability, as well as ethical duties to the Court, were to represent the first respondent.
A corporation that is impecunious is not automatically entitled to be represented by a non-lawyer. Mere assertions of impecuniosity will also not suffice. Incorporation confers many benefits on those connected with a corporation and also imposes some corresponding burdens one of which is that a corporation must normally be represented by a lawyer (see Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 at [14]). As the authorities set out earlier make clear where an application such as this is made it is incumbent upon the party seeking leave to produce sufficient evidence of financial incapacity and I am not satisfied there is such evidence.
Whilst the second respondent points to his professional and corporate experience he could not be said to have the objectivity of a legal practitioner. There is also the issue that the second respondent who is seeking to represent the first respondent is likely to be a witness in the trial where the applicant says credit will be an issue. Then there is the issue of the impact on court resources and other litigants where a non-lawyer such as the second respondent is a witness in his own defence and also making submissions and presenting evidence for the first respondent with the potential for increased delay and longer hearings.
With no disrespect to the second respondent I am not satisfied that first respondent should be represented by him, for the following reasons.
I am not satisfied that the second respondent, despite his professional and business background and experience gained in other proceedings, has the skills necessary to effectively and efficiently represent the first respondent. This would likely have an associated effect upon the conduct of any hearing as quickly, inexpensively and efficiently as possible. Given some of the matters that he raised about what he said were the legal issues there is also a lack of the objectivity that would be expected of a legal practitioner.
It is apparent from the pleadings and the parties’ submissions that the second respondent may be a witness at any hearing and there is a possibility that the veracity of his evidence may be in issue. In that case the second respondent would effectively be a witness in his own defence and also making submissions and presenting evidence for the first respondent, a situation described in Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2004] FCA 1361 at [3] as “hardly….a satisfactory state of affairs”.
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.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of Judge O'Sullivan. Associate:
Dated: 24 November 2023
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