Young v ICM Agriculture Pty Ltd - [2009] FCA 1065

FEDERAL COURT OF AUSTRALIA
Young v ICM Agriculture Pty Ltd [2009] FCA 1065
PRACTICE AND PROCEDURE - application by a corporate applicant for leave to commence and carry on proceeding without a solicitor - company one of two applicants - other applicant sole shareholder, director and controlling mind of company - counsel representing both applicants but without instructing solicitor - proceeding brought in substance by the individual for his benefit - company an additional applicant only in case assignment of cause of action by it to the individual should be held ineffective.
Held: Leave granted.
Federal Court Rules O 4 r 14(2)
Uniform Civil Procedure Rules 2005 (NSW) r 7.1
Australian Competition & Consumer Commission v Dataline.net.au Pty Ltd [2004] FCA 1361 cited
Checked-Out Pty Ltd v Eagle Eye Inspections Pty Ltd [2002] FCA 1002 distinguished
Cytel Pty Ltd v Peoplebank Recruitment Pty Ltd [2006] FCA 985 distinguished
Silkearl Pty Ltd v Ainsworth Game Technology Ltd [2006] FCA 949 distinguished
Tobacco Control Coalition Inc v Philip Morris (Australia) Ltd [2000] FCA 131 distinguished
DARYL WILLIAM YOUNG and AUSTRALIAN AGRICULTURAL COMMODITIES PTY LTD (ACN 057 795 632) v ICM AGRICULTURE PTY LTD
(ACN 006 077 765)
NSD 874 of 2009
LINDGREN J
16 SEPTEMBER 2009
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 874 of 2009

BETWEEN:
DARYL WILLIAM YOUNG
First Applicant

AUSTRALIAN AGRICULTURAL COMMODITIES PTY LTD (ACN 057 795 632)
Second Applicant

AND:
ICM AGRICULTURE PTY LTD (ACN 006 077 765)
Respondent

JUDGE:

LINDGREN J

DATE OF ORDER:

16 SEPTEMBER 2009

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The second applicant have leave nunc pro tunc to commence and carry on this proceeding.
2.If the second applicant should cease to be represented by counsel, the respondent have liberty to apply for a termination of the leave referred to in para (1) in so far as it relates to the then future carrying on of the proceeding.
3.The parties’ costs of the second applicant’s application for leave be the respective costs of the second applicant and the respondent of the proceeding.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 874 of 2009

BETWEEN:
DARYL WILLIAM YOUNG
First Applicant

AUSTRALIAN AGRICULTURAL COMMODITIES PTY LTD (ACN 057 795 632)
Second Applicant

AND:
ICM AGRICULTURE PTY LTD (ACN 006 077 765)
Respondent

JUDGE:

LINDGREN J

DATE:

16 SEPTEMBER 2009

PLACE:

SYDNEY

REASONS FOR JUDGMENT
INTRODUCTION

The second applicant, Australian Agricultural Commodities Pty Limited (AAC), seeks leave pursuant to O 4 r 14(2) of the Federal Court Rules to commence and carry on this proceeding otherwise than by a solicitor. For the reasons that appear below, leave should be given
The applicants sue the respondent, ICM Agriculture Pty Ltd (ICM), on the causes of action which are pleaded in a statement…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] FCA 1065
Decision Date: 16 SEPTEMBER 2009

CaseChat Overview and Summary

In the case of Young v ICM Agriculture Pty Ltd, the parties involved are AAC and Mr Young, represented by counsel, who are seeking leave to commence and carry on a proceeding against ICM Agriculture Pty Ltd. The primary issue before the court was whether AAC, represented by counsel, should be granted leave to continue the proceeding without a solicitor due to financial constraints, and if so, what the implications for costs would be. The court also needed to consider the effect of this decision on the distribution of costs between the parties.

The legal issues centered on the interpretation and application of Order 4 rule 14(2) of the Federal Court Rules, which generally requires a corporation to be represented by a solicitor to commence or carry on proceedings. The court had to assess whether an exception should be made in this case given the financial circumstances of AAC and the implications for the fair administration of justice. The court also needed to decide on the appropriate costs order, considering the submissions from both parties.

In its reasoning, the court noted that while AAC was not insolvent, it had limited ready cash. The court acknowledged the financial constraints faced by AAC but emphasized the importance of adhering to procedural rules to maintain the integrity of the legal process. The court rejected the argument to align the Federal Court Rules with the New South Wales Uniform Civil Procedure Rules, stating that such a rule is not common in Australian courts. The court granted leave for AAC to continue the proceeding represented by counsel but stipulated that if AAC ceased to be represented by counsel, ICM could apply for a termination of that leave. The court also ruled that the costs of AAC's application for leave would be borne by the respective parties according to their costs of the proceeding.

The final orders of the court were that AAC has leave nunc pro tunc to commence and carry on the proceeding, with the condition that if AAC ceases to be represented by counsel, ICM may apply for a termination of that leave. Additionally, the costs of AAC's application for leave are to be the respective costs of AAC and ICM in the proceeding.

Orders

Orders of the court

1. The second applicant have leave nunc pro tunc to commence and carry on this proceeding.

2. If the second applicant should cease to be represented by counsel, the respondent have liberty to apply for a termination of the leave referred to in para (1) in so far as it relates to the then future carrying on of the proceeding.

3. The parties’ costs of the second applicant’s application for leave be the respective costs of the second applicant and the respondent of the proceeding.

Note:

Background

Background to the litigation

AAC has been included as second applicant in this proceeding, and was included as second plaintiff in the former District Court proceeding, only against the contingency that the assignment may be held not to have been effective. In order to succeed, either AAC or Mr Young would have to prove the subsistence of AAC’s cause or causes of action and entitlement to the relief sought, but in the case of Mr Young he would have to prove in addition the effectiveness of the assignment.FACTS There is in evidence a resolution of Mr Young as sole director of AAC dated 12 August 2009 authorising him to act on behalf of AAC and to represent it in this proceeding. It is common ground that Mr Young’s personal financial position is that he is insolvent if one leaves out of account his claim against ICM. It follows that absent that claim, he does not have the ready means with which to pay for a solicitor or satisfy an adverse costs order. The evidence shows that AAC has contracts with growers of seed lines and that it employs seven staff plus two to three casual staff in peak periods of operation. According to the evidence, AAC’s business is that of researching, developing and distributing new and existing crop types and varieties, including storing, grading and cleaning to market specification various types of grain, and marketing and developing a range of summer and winter crop types for domestic and international markets. AAC commenced its business activities in 1996 as a seed tender company. AAC has successfully tendered for, and has under licence or contract, twelve different chickpea lines and several Brassicas. According to an affidavit of Mr Young, these seed lines are at various stages of development from seed selection to commercial release. AAC attempted to lead evidence as to its financial position. Much of it was rejected. Admitted evidence shows, however, that Mr Young is employed by AAC on a gross wage of $1,192.69 per week, and that as at 31 August 2009 AAC had a credit bank balance of $17,640.21. The admitted evidence also shows that:·for the year ended 30 June 2007, AAC made a net profit of $266,493.71;·as at 30 June 2007, AAC had net assets of $1,266,499.71;·for the year ended 30 June 2008 AAC made a net profit of $71,098.00; and·as at 30 June 2008 AAC had net assets of $1,371,104.50.There is no suggestion in the evidence that AAC is insolvent, but apparently in terms of ready cash it has only the sum of $17,640.21 mentioned above. Counsel for AAC submitted that I should accept that this would not be sufficient to retain both solicitor and counsel if the amount was to cover all of the work to be done for the applicants in the proceeding.CONSIDERATION There are unusual and important features of the present proceeding. AAC is not a sole applicant and both Mr Young and AAC are represented by counsel. Mr JT Svehla of counsel who appears for them settled the form of the application and statement of claim. He intends to continue to represent both applicants, but without an instructing solicitor because of lack of funds. Accordingly, counsel, not Mr Young, will represent AAC on the final hearing if the proceeding goes so far (whether it does might or might not depend on the outcome of the Sequestration Proceeding as to which outcome I have not yet formed any view).

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

LINDGREN J

On the question of costs, AAC sought a concession in the form of an exemption from the ordinary operation of O 4 r 14(2). ICM’s opposition to the granting of the leave was reasonable, being based on the inconvenience and additional costs to which it is being exposed. The costs of AAC’s application for leave should be the respective costs of the proceeding of AAC and ICM.CONCLUSION There will be orders:·that AAC have leave nunc pro tunc to commence and carry on this proceeding;·that, if AAC should cease to be represented by counsel, ICM have liberty to apply for a termination of the leave in so far as it relates to any then future carrying on of the proceeding; and·the parties’ costs of AAC’s application for leave be the respective costs of AAC and ICM of the proceeding.

Ratio Decidendi

Legal Principle Established

Established by: LINDGREN J

AAC attempted to lead evidence as to its financial position. Much of it was rejected. Admitted evidence shows, however, that Mr Young is employed by AAC on a gross wage of $1,192.69 per week, and that as at 31 August 2009 AAC had a credit bank balance of $17,640.21. The admitted evidence also shows that:·for the year ended 30 June 2007, AAC made a net profit of $266,493.71;·as at 30 June 2007, AAC had net assets of $1,266,499.71;·for the year ended 30 June 2008 AAC made a net profit of $71,098.00; and·as at 30 June 2008 AAC had net assets of $1,371,104.50.There is no suggestion in the evidence that AAC is insolvent, but apparently in terms of ready cash it has only the sum of $17,640.21 mentioned above. Counsel for AAC submitted that I should accept that this would not be sufficient to retain both solicitor and counsel if the amount was to cover all of the work to be done for the applicants in the proceeding.CONSIDERATION There are unusual and important features of the present proceeding. AAC is not a sole applicant and both Mr Young and AAC are represented by counsel. Mr JT Svehla of counsel who appears for them settled the form of the application and statement of claim. He intends to continue to represent both applicants, but without an instructing solicitor because of lack of funds. Accordingly, counsel, not Mr Young, will represent AAC on the final hearing if the proceeding goes so far (whether it does might or might not depend on the outcome of the Sequestration Proceeding as to which outcome I have not yet formed any view). Order 4 r 14(2) of the Federal Court Rules provides:Except as provided by or under any Act, a corporation may not, without the leave of the Court, commence or carry on any proceeding otherwise than by a solicitor.Counsel for the parties referred me to the following authorities in relation to the approach to be taken on an application for leave under the rule: Tobacco Control Coalition Inc v Philip Morris (Australia) Ltd [2000] FCA 131 (Tobacco Control); Checked-Out Pty Ltd v Eagle Eye Inspections Pty Ltd [2002] FCA 1002 (Checked-Out); Silkearl Pty Ltd v Ainsworth Game Technology Ltd [2006] FCA 949 (Silkearl) and Cytel Pty Ltd v Peoplebank Recruitment Pty Ltd [2006] FCA 985 (Cytel). I will return to these authorities below. As I understood his submission, Mr Svehla urged me to construe O 4 r 14(2) in the light of r 7.1 of the Uniform Civil Procedure Rules 2005 (NSW). That rule provides that a company within the meaning of the Corporations Act 2001 (Cth) may commence and carry on proceedings in the New South Wales courts in which the rule operates, by a solicitor or by a director of the company, but, in the case of a proceeding in the Supreme Court of New South Wales, only if the director is also a plaintiff in the proceeding. I reject the submission. At one stage Mr Svehla seemed to suggest that the New South Wales rule reflected “the modern approach” to the issue of the representation of companies in litigation in Australia. He conceded, however, that he did not know how common in Australian courts a rule like that of New South Wales is.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 874 of 2009

JUDGE:	LINDGREN J
DATE OF ORDER:	16 SEPTEMBER 2009
WHERE MADE:	SYDNEY

JUDGE:	LINDGREN J
DATE:	16 SEPTEMBER 2009
PLACE:	SYDNEY