Worldwide Enterprises Pty Ltd v Silberman & Anor

[2008] VSC 418

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 5129 of 2008

WORLDWIDE ENTERPRISES PTY LTD (ACN 083 154 741)	Plaintiff
v
DOV SILBERMAN and SAM CHIZIK	Defendants

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JUDGE:	HARPER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	6 OCTOBER 2008
DATE OF JUDGMENT:	6 OCTOBER 2008
CASE MAY BE CITED AS:	WORLDWIDE ENTERPRISES PTY LTD v SILBERMAN & ANOR
MEDIUM NEUTRAL CITATION:	[2008] VSC 418

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Appeal from a Master – Security for costs - Application for a stay of proceedings – Application for a person to appear on behalf of a corporation – Absence of material relevant to the financial position of the corporate plaintiff – Adjournment sought.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M. Goodman in person
For the Defendants	Ms R. Annesley	Wisewoulds (First Defendant) Frenkel Partners (Second Defendant)

HIS HONOUR:

1. This is an application to adjourn an application for leave to appeal against an order of Master Daly in order that the plaintiff, Worldwide Enterprises Pty Ltd, might put before the court admissible material going to the financial position of the company. 

1. That evidence is material because the company seeks leave to appear, on the application for leave to appeal, by a person (Mr Maurice Goodman) who is not admitted as a legal practitioner in Victoria or indeed, as I understand it, anywhere.  Mr Goodman is a director of the company.

1. The court would not normally allow a company to appear otherwise than by a legal practitioner admitted in the jurisdiction in which the court operates.  The rule against allowing an individual not a legal practitioner to represent a company may, in certain circumstances, be relaxed.  One of those circumstances - in fact the principle of those circumstances – is that the company cannot afford legal representation.  Another is that the company has a case which is at least arguable and which it ought to be allowed to argue.

1. Both propositions are contested in the matter before me.

1. There is a dispute about the company's financial position and whether or not it truly cannot afford to engage legal practitioners or a legal practitioner to act on its behalf.

1. In order to assess whether or not the company is in no position to engage a legal practitioner or legal practitioners, the court of course needs to have before it properly admissible material going to the company's financial position. 

1. That material, as anybody associated with a company must know, would be an up‑to‑date balance sheet together with up‑to‑date trading figures.  That material is not before the court. 

1. I am told by Ms Annesley for the defendants, that the only material going to either Mr Goodman’s or the company's financial position is to be found in paragraph 6 on page 4 of an affidavit sworn by Mr  Goodman on 22 May 2008.  I quote from the relevant passage. 

I agree it is not a secret that I am not flash with funds.  Two large wholesalers stole from me goods in the vicinity of $500,000.  I spent another $180,000 in local fees to chase the bad money and due to AQIS illegal action, I had to dump about $800,000 worth of goods which became out of date.

1. That is evidence going to Mr Goodman's financial position.  It says nothing about the company's financial position.  Mr Goodman has not been able to refer me to any affidavit material of any kind relating to the company's finances although he has taken the opportunity to look through his papers. 

1. He has given or made statements from the Bar table but of course they are not evidence.  Accordingly, I am not in a position to act on them.  In any event, they do not amount to the same information which I would obtain had I an up‑to‑date and properly sworn balance sheet and other relevant financial documents to consider.

1. I also take into account that the company is appealing against an order that it provide security for costs.  Such an appeal must be based upon the proposition that the company is not impecunious.  If the company were impecunious, then an order for security for costs would be appropriate given that the clear law is that those behind the company must in those circumstances put up the funds for it to litigate if it wishes to be a plaintiff.

1. Mr Goodman and the company are attempting to have it both ways.  When it suits them, they say that the company is impecunious.  When it does not suit them to say this, they assert that it is funds.  I would however be prepared to grant an application for an adjournment to enable Mr Goodman to put before the court the financial information to which I have referred.

1. On the other hand, given the position at which this litigation has now reached, it seems to me that it would be unfair to the defendants were I not to provide as a condition of granting the adjournment, that Mr Goodman pay the defendants' costs of today. 

1. Mr Goodman has indicated that he is in no position to pay those costs; and nor is the plaintiff.  That seems to me to indicate that it would be unfair for these proceedings to continue against the defendants where they, for their part, must meet the expense in time and money involved in defending these proceedings, while Mr Goodman and Worldwide Enterprises Pty Ltd do not suffer the same difficulty.  The court must be fair to both plaintiff and defendants.  Fairness in these circumstances seems to me to indicate that the adjournment should not be granted unless the costs are paid. 

1. Mr Goodman, I will give you 14 days within which to pay the costs of the defendants of today's hearing.  If you cannot pay those costs, then I will dismiss the application for an adjournment and I will dismiss the application for leave to appeal from the decision of Master Daly. 

1. (Submissions re costs.)

1. The rationale for the rule that companies provide security for costs if their financial position is in doubt, is based upon the proposition that incorporated bodies should not be allowed to sue unless they are properly funded either through their own funds or through the funds of those who are the backers of the company.  Whereas individuals are not prevented from becoming plaintiffs by reason of impecuniosity, the position is quite different for companies.  The law is quite clear that companies should not be permitted to sue others, should not be plaintiffs in proceedings, unless the company has the funds to manage and to finance those proceedings.  Here, accordingly, Mr Goodman’s proposition that the orders in relation to the payment of the costs for the adjournment are unfair is not a submission that accords with the law. 

1. I am dealing with a company that is a plaintiff; and the law clearly is that unless the company is in a financial position to prosecute its claim, then it either gives security for costs or the claim cannot be further prosecuted. 

1. (Submissions re costs.)

1. I will order that:

1.Upon the defendants' costs of this day in the sum of $3,750 being paid to the solicitors for the second defendant on or before 4 pm on Monday 20 October 2008, the plaintiff's application for leave to appeal against the order of Master Daly made on 22 August 2008 and the second defendant’s summons filed 19 September 2008 be adjourned to a date to be fixed, such date (subject to further order) to be no later than Monday 17 November 2008. 

2.In default of the payment referred to in paragraph 1 above:

(a)the plaintiff's application made this day for an adjournment be dismissed;

(b)the plaintiff's application for leave to appeal against the said order be also be dismissed; and

(c)the second defendant’s summons remain adjourned to a date to be fixed. 

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