Supreme Court of the NT|1996-09-16

Alice Springs Abattoirs Pty Ltd v Northern Territory of Australia [1996] NTSC 69; 111 NTR 9; 134 FLR 440 (16 September 1996)

COURT IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA KEARNEY A/CJ CWDS Practice HRNG DARWIN, 29 August 1996 (hearing), 16 September 1996 (decision) #DATE 16:9:1996 Counsel for appellant: M J McK.Grove Solicitors for appellant: Ward Keller Counsel for respondent:
C C Rowe Solicitors for respondent: Solicitor for the Northern Territory ORDER Various orders made. JUDGE1 KEARNEY A/CJ

This is an appeal from two decisions herein of the Master. The first in point of time is his decision of 15�May 1996 in which he ordered that - "1. The (appellant's) summons filed on 18 March 1996 be set aside. 2. The (appellant's) defence and counterclaim filed 20 March 1996 be set aside. 3. THE APPELLANT TAKE NO FURTHER STEPS IN THE PROCEEDING EXCEPT BY A SOLICITOR." (emphasis mine) 2. The second is the Master's decision of 10 July 1996, which stemmed from his decision of 15�May; on that day he dismissed the appellant's application of 22�May to extend the time within which to appeal against his decision of 15�May. 3. Under r77.07 an appeal from the Master is "by re-hearing de novo of the application to the Master"; see generally on the nature of this appeal Southwell v Specialised Engineering Services Pty Ltd ; It involves an exercise of the original jurisdiction of this Court. The appellant is not required to establish some error by the Master in coming to his decision; the parties were at common ground on this point. In considering matters, such weight may be given to the Master's decision as appears proper. Background to the Master's decision of 15 May 1996 4. On 7�February 1996 the respondent issued a Writ against the appellant on the basis that the appellant owed it $409,917.94. The basis of the claim was as follows. The money was claimed as the balance unpaid by the appellant of a principal sum (plus accrued interest) advanced by the Commonwealth to the appellant and secured by a mortgage over Lots nos.3201 and 3202 Town of Alice Springs, comprised in Special Purposes Lease No.232. The mortgage secured the payment by the appellant of the principal sum, as the value of improvements on Lots nos.3201 and 3202 which the appellant had purchased; payment was to be made by instalments specified in the mortgage, over 45 years. Clause 2 of the mortgage provided that should the appellant default in punctual payment of the instalments, the then-unpaid balance of monies owing became immediately due and payable. 5. On self-government, the Commonwealth transferred its interest in the mortgage to the respondent. The respondent alleged that the appellant defaulted under Clause 2 of the mortgage on 12�March 1989. (A receiver and manager of the appellant had been appointed in November 1988; it appears there had been a major destructive fire on the land in October of that year). Negotiations then ensued and agreement was reached on payments. A further mortgage was later executed by the receiver in favour of the respondent; this was intended to be in lieu of the original mortgage to the Commonwealth, executed in anticipation of the appellant securing freehold title to Lots 3201 and 3202. This did not eventuate, and the original mortgage remains on the title to S.P.L. No.232, undischarged; the further mortgage remains unregistered. The respondent contends that the appellant has been in default under the original mortgage as varied by the agreement and the further mortgage, since 12�March 1991 or, alternatively, 12�March 1994. 6. One George Patrick Whitaker of Gordon, New South Wales, on 23�February personally filed a Notice of Appearance to the Writ, on behalf of the appellant, as its Managing Director. He is not a legal practitioner. On 28 February Mr�Whitaker filed an application to have the action dealt with preferably in Sydney, but, if not, in Alice Springs. His application was not in the required Form 46A. Drafts of an appropriate Form and supporting affidavit were sent to him by court staff on 5�March; he returned completed documents on 12�March. They were duly filed on 18 March. In par8 of his supporting affidavit Mr Whitaker deposed:

"8. I am the sole full time employee of the (appellant), whose affairs I conduct from Sydney, along with that of associated companies within the Wales group. The business of those companies are predominantly in Sydney and NSW. A hearing in Darwin would inflict considerable hardship upon both the Defendant and the associated businesses, in time and costs associated with my travel and accommodation, to and from Darwin, and in my absences from the Sydney office." 7. On 15�March Mr�Whitaker forwarded by mail from New South Wales a 16-page 114-paragraph document styled "Defence and Counterclaim", for filing; it was duly filed on 20�March. 8. Mr Whitaker made arrangements for a Mr Milson Hayward of Alice Springs to appear on 27�March for the appellant on its application of 18�March; he would be in Alice Springs, with the application to be heard by the Master in Darwin, by teleconference. The hearing of the application of 18�March was however overtaken by events; see next paragraph. 9. On 25�March the respondent filed an application to set aside the appellant's summons of 18�March, and its defence and counterclaim filed on 20�March, on the grounds that neither of these documents were "filed by a solicitor" as required by r1.13. Rule 1.13 provides, as far as material: "Except where otherwise provided � a corporation � shall not take a step in a proceeding except by a solicitor." 10. The respondent also sought an order that the appellant "take no further step in this proceeding except by a solicitor." This application came before the Master on 27�March, 2 and 24�April, and 10 and 15�May. 11. Mr�Hayward appeared by teleconference for the appellant by leave (and over the respondent's objection), on each of these occasions, except for the delivery of the decision on 15�May. I should say that I consider that any court, in exercising its inherent power to control its own proceedings, may allow itself to be addressed by any one it considers a proper person to be permitted audience in the circumstances; this includes hearing a lay person on behalf of a corporation, though such person generally should be a director, officer or regular employee of the corporation - see Charles P. Kinnell and Co. Ltd v Harding, Wace and Co (1918) 1 KB 405 at 413 - and the matter in issue should be of such a nature that the court does not consider it requires the assistance of a legal practitioner in order to resolve it. 12. In response to the respondent's "strike-out" summons of 25�March, Mr�Whitaker filed an affidavit dated 11�April on 15�April; in it he sought to have the obligation of the appellant under r1.13 dispensed with under r2.04, the major ground being that the appellant had "no cash resources with which it can engage legal counsel"; further, it had been unable to borrow further against Lots 3201 and 3202. Rule2.04 provides: "The Court may dispense with compliance with a requirement of (Chapter 1 of the Rules), either before or after the occasion for compliance arises." 13. Pars 5-7 and 9-11 of Mr�Whitaker's affidavit of 11�April, as far as material, were as follows: "5 � the (appellant's) request of the (respondent) in December 1993 for the (respondent's) consent to the granting of a second mortgage over the property (Lots 3201 and 3202), in order to secure a loan which the (appellant) had negotiated, was turned down by the(respondent). � 6. � the (appellant) has not been able to find another lender who is willing to advance loan funds to the (appellant) against an asset (that is, Lots 14. and 3202) which has sustained substantial damage (because of a fire), (the appellant having had) had its business licences and registrations cancelled, �no income stream, and (it) cannot provide even a second mortgage security against the asset (comprised of Lots 3201 and 3202). 7. � it is my understanding that a director of a corporation who assumes liabilities on behalf of his company in the knowledge that those debts cannot be met when they fall due is subject to prosecution under corporation law. �(This is presumably stated as a reason for Mr Whitaker not wishing to incur legal expenses). Whilst the property securing the mortgage debt to the (respondent) has been valued in excess of $1.0 million, it has not been possible to borrow against the property for the reasons set out in paragraph 5 of this document. � 9. � Mr Hayward has been appointed to the position of Secretary of the (appellant). � 10. � Mr Hayward was an executive of the (appellant) for approximately three years and was a participant in, and has extensive knowledge of, the events covered in the (appellant's) Defence and

Counterclaim. I submit that Mr Hayward is an appropriate person to appear on behalf of the (appellant) in these proceedings. 11. � The Supreme Court of the Northern Territory permitted Mr�Hayward and myself to appear for the (appellant) in the 1995 proceedings between Robert Walter Paech and the Defendant - A/S 34 of 1986". 15. Mr Rowe for the respondent filed an affidavit in reply on 29�April. He annexed the results of various searches in the records of the Australian Securities Commission and of the Supreme Court. He deposed that these searches revealed that the appellant had instructed a firm of solicitors to conduct its defence to a different and current proceeding in this Court. 16. Mr Whitaker filed an affidavit in reply on 1�May. He deposed in par2 that the appellant's legal costs in the other proceeding, referred to by Mr�Rowe, were "being funded to its conclusion by a party other than the (appellant)." 17. On 15�May the Master published written reasons for his decision on the respondent's application of 25�March. He granted the relief sought by the respondent. I turn to that decision. The Master's decision of 15 May 1996 18. The Master noted that the respondent's application of 25�March founded on r1.13. He noted that he had given leave to Mr Hayward to appear for the appellant on the hearing of the respondent's application of 25�March, and that the appellant had explained its non-compliance with r1.13 by reference to "its inability to fund legal representation". The Master then referred to certain authorities on the proper application of r1.13, viz: "The equivalent rule (to r1.13.) in New South Wales (that is, Pt.4. r.4) was considered in Bay Marine Pty Ltd v Clayton Country Properties Pty Ltd (1986) 6 NSWLR 19. It was held that there must be exceptional circumstances to justify a dispensation. There appear to be two predominant considerations: (1) the requirement that persons appearing before the Court have the requisite authority and may be bound by its orders; and (2) the Court's need for competent assistance (see also Hubbard Association of Scientologists International v Anderson and Just (No.2) [1972] VicRp 66; (1972) VR 577 and Molnar Engineering Pty Ltd v Herald and Weekly Times Ltd 20. [1984] FCA 126; 1 FCR 455)." 21. The Master considered that the first of these "two predominant considerations" might "be capable of resolution" in this case. The Master's refusal to hear Mr�Hayward on 10 July is not in issue in these proceedings. There were three considerations peculiar to the appellant which in the Master's opinion determined the outcome, viz: "(1) I am not satisfied as to the inability of the (appellant) to pay for legal representation. The land owned by the (appellant) is valued at $1,000,000; and, while there is evidence of the (appellant's) inability to obtain a loan, there is no evidence as to the means of the shareholders who

may benefit from the proceeding. In particular there is no evidence as to the capacity of Wales Australian Resources Pty Ltd, the holding company (of the appellant), to finance this litigation. (2) Further, there is evidence that the (appellant) is being legally represented in another proceeding before this Court. There has been no explanation as to how this (other) proceeding is being funded. (3) Another consideration is that the (appellant's) counterclaim is for a substantial sum (it appears to be for $15,501,922.45 plus interest) and appears to raise difficult issues. This claim, and the application (by the appellant of 28�February) to transfer the proceeding (to Alice Springs), would appear to be of sufficient substance to necessitate properly qualified assistance (that is, the assistance of a legal practitioner) to the Court." 22. In the light of the conclusions he had expressed on these three matters, the Master held that he was "not satisfied that there are exceptional circumstances which warrant a dispensation (under r2.04) of the requirements of O.1.13". He proceeded to make the three orders the subject of this appeal (see pp1-2), and ordered the appellant to pay the respondent's costs of the application of 25 March. 23. Rule 77.06(4) required that any appeal against this decision be filed "within 7 days" after that date - that is, no later than 22�May. No appeal was lodged by that date. The appellant applies to extend the time to appeal; the Master's decision thereon of 10 July. 24. On 22�May the appellant by Mr�Whitaker filed an application under r77.05(6) to have the time to appeal against the Master's decision of 15�May extended for 30 days, to enable it "to prepare and lodge its appeal" against that decision. An affidavit by Mr�Whitaker of 23 May was relied on in support. This application eventually came on for hearing before the Master 7�weeks later, on 10�July. Mr�Hayward once again appeared for the appellant, by teleconference from Alice Springs. The transcript discloses that the Master drew to Mr�Hayward's attention that the application of 22�May by Mr�Whitaker to extend time, itself constituted the taking by the appellant of "a step (in the proceeding) not by a solicitor", contrary to r1.13 and contrary to order no.3 made by the Master on 15�May (see p2).� Further, Mr�Rowe for the respondent objected to Mr�Hayward being heard for the appellant on this application, on the basis that he was not a legal practitioner. On 10�July the Master declined to hear Mr�Hayward, and dismissed the appellant's application of 22�May, with costs, stating: "� in the circumstances, bearing in mind Order 1.13 � and my ruling (no.3 on p2) made on 15�May 1996, I find that the application before me - that is the summons taken out on 23�May 1996 (sic, 22�May) - was brought in breach of the Rules and in breach of my order (of 15 May); and the application is therefore dismissed." 25. The time to institute an appeal against the decision of 10�July (refusing to extend time) expired on 17�July; see r77.05(4). No appeal was lodged within that time. The appeal against the Master's decisions of 10�July and 15 May 26. On 19 July the appellant by its solicitors Messrs Ward Keller filed a Notice of Appeal against the Master's decisions of 10�July and 15�May. The document set out the grounds of the appeal, though it was unnecessary to do so because of the nature of such an appeal (see p2) and because r77.06 (and Form 77A) were repealed in 1992; on this aspect see the observations in Southwell (supra) at p8. 27. As to the order of 15�May, the appellant's ground was that the Master had erred in making discretionary order no.3 (see p2) because - "There was sufficient evidence before the Master that the Appellant was so impecunious that the Master should have granted (pursuant to r2.04)

dispensation of the requirement (in r1.13) that the Appellant must take steps in the proceeding by a solicitor." 28. As to the order of 10 July the appellant's ground was that the Master had erred when exercising his discretionary power under r77.06(b) in relation to an extension of time to appeal, because he "had sufficient evidence before him justifying an extension of time." I noted earlier that it is unnecessary in an appeal under r77.07 to establish that the Master erred; see p2. 29. In the Notice of Appeal the appellant sought the following relief: that time be extended under r77.05(6) by the 2 days necessary to enable the appeal of 19�July against the order of 10�July to have been properly instituted; that that appeal be allowed and the order of 10�July (refusing to extend time) set aside; that in lieu, time be extended under r77.05(6) to the extent necessary (some 8 weeks) to enable the appeal of 19�July against the orders of 15�May to have been properly instituted; that the appeal against those orders (see pp1-2) be allowed, and the orders set aside; that in lieu, it be ordered that compliance by the appellant with r1.13 be dispensed with under r2.04, and the appellant "be able to take all steps in the proceeding" (presumably, by Mr Whitaker); and that the appellant have its costs. 30. On 2�August pursuant to r20.02 Messrs Ward Keller filed notice that it had been appointed the appellant's solicitors "for the sole purpose of the appeal � filed 19�July 1996." 31. On 12�August the appellant by Messrs Ward Keller filed affidavits by Mr�Whitaker of 23�July, and by Mr�Hayward of 30�July, for the purposes of the appeal. Mr�Whitaker's affidavit of 23�July explained the reasons for his delay until 18�July in instructing solicitors to institute an appeal against the decisions of 18�May and 19 July, and reiterated the appellant's impecuniosity, viz: "� the (appellant) has no form of income and his (sic, its) only asset is the land and improvements which is the subject of these proceedings" and stated - "If the (appellant) is not granted leave to appear

through its officers, then the prospects are that the (appellant) will not be able to resist the (respondent's) claim which in turn means that the (appellant's) counter claim will not be capable of prosecution, thereby denying the (appellant) the opportunity of having the merits of (its) claims determined by this Court." The submissions 32. (a) General: Mr Grove of counsel for the appellant sought to rely on pars2-8 of Mr�Whitaker's affidavit of 23�July, to obtain the necessary extension of time to appeal. This application was not opposed and leave was granted under r77.05(7)(b). Pars2-8 of that affidavit are as follows: "2. Earlier this year I became involved in a new business venture, the head office of which was situated in Queensland. This necessitated me spending more and more time in Queensland and on 11th May 1996 I travelled to Queensland to take up a full time position with the company, Currumbin Environmental Products Pty. Limited. 3. On 16th May 1996 I was advised by Mr Hayward of the decision which had been given in this matter by Master Coulehan on 15th�May 1996. 4. As I was aware of the fact that I would not be returning to Sydney within the time prescribed by the Rules for an appeal against that decision to be lodged (that is, by 22 May) I directed Mr�Hayward to lodge, within that time, an application for an extension of leave within which to lodge the appeal. 5. I am informed by Mr Hayward and do verily believe that that application was lodged and in support of that application I swore an affidavit dated 23rd May 1996. I crave leave to refer to that affidavit, it already having been filed in this Honourable Court. 6. Although I returned to Sydney for short periods between 11th�May 1996 and 10th�July 1996, I did not actually return to Sydney on a full time basis until 10th July 1996. 7. After being advised by Mr Hayward of the decision given by Master Coulehan on 10th July 1996, I determined that despite the company's financial position, it was necessary for me to seek legal advice and I therefore arranged to confer with Mr Brent Hedges, a Sydney based Solicitor who had previously acted for the company in other matters and on 18th July 1996 I instructed Mr Hedges to immediately appoint agents in Darwin to lodge an appeal against the Master's decision. 8. The delay in my providing Mr Hedges with those instructions was in part caused because of the turmoil and upheaval which I was experiencing in moving backwards and forwards between Sydney and Queensland. In trying to deal with this matter, I had taken files to and from Queensland so that by the time I returned on 10th July 1996, some files were still in Queensland and some were in Sydney." 33. Mr�Grove said it was an "oddity" that the Master's refusal to hear Mr�Hayward on 10�July meant that to appeal the decision of 10�July and the decision of 15�May (requiring in essence that the appellant instruct solicitors if it wished to contest the proceedings) the appellant had to instruct solicitors. I do not regard this as an "oddity"; it represents the norm in litigation. In any event, the Master's refusal to hear Mr Hayward on 10 July is not challenged on appeal. 34. (b) Specific submissions: Mr Grove submitted that the appeal of 19�July against the decision of 10�July had been lodged only 2 days out of time,. That is correct. Mr Rowe conceded that this 2 days' delay had not prejudiced the respondent; however, he opposed a 2 days extension of time on the basis first that no satisfactory reason for the delay had been advanced, and second that in any event the appeal against the substantive decision of 15�May had no merit. As to the first point , it is sufficient to say that par8 of Mr�Whitaker's affidavit of 23�July (see p13) provides a satisfactory explanation for the 2 days delay; I deal later with the second point, which also goes to the decision of 15 May. 35. Mr Grove submitted that the Master was wrong on 15�May in requiring that the appellant establish "exceptional circumstances", if it was to obtain an order under r2.04 to dispense with r1.13; alternatively, he submitted that if the criterion for dispensation was "exceptional circumstances", there was ample evidence to establish such circumstances in this case, and the orders sought on appeal (p11) should be made. 36. �As to the appeal against the decision of 10�July Mr�Grove relied on Kidron and Spaile Architects Pty Ltd v Garrett (1994) 35 NSWLR 572 (CA). It was there held by Priestley�JA (with whom� Sheller JA agreed) at p578: "Where (1) delay is small, (2) an appeal is not

hopeless, and (3) no relevant prejudice will be caused by an extension of time. � a due exercise of discretion requires the granting of an extension of time." 37. I respectfully agree with this approach. As to criteria (1) and (3), Mr�Grove submitted that in the present case the real delay in appealing against the decision of 15�May was small in all the circumstances, and had occasioned the respondent no relevant prejudice. I accept that. As to criterion (2) - the question whether an appeal against the decision of 15 May is "not hopeless" - Mr�Grove relied on the following 4 authorities (particularly No.(2)) to establish his primary submission that it is unnecessary for the appellant to establish "exceptional circumstances" to obtain an order under r2.04 dispensing with r1.13. 38. (1) Bay Marine Pty Ltd v Clayton Country Properties Pty Ltd (1986) 8 NSWLR 104 (C.A.) concerned a challenge to a contingent creditor representing a corporation in court. Mr Grove rightly conceded that the sole issue before that court was one of representation in court, akin to what Mr�Hayward sought to do on 10�July. It can be seen that Bay Marine Pty Ltd (supra) is therefore not directly in point on the appeal, since the issue there concerned actual representation in Court while the issue here is whether the requirement of r1.13 - that the corporation should take steps in the proceeding only by a solicitor

should be dispensed with under r2.04. The relevant NSW Rule, Pt.4 r4(2), provides as far as material: "Except as provided by or under any Act, a corporation � may not commence or CARRY ON ANY PROCEEDINGS otherwise than by a solicitor." (emphasis mine)

A majority of the Court of Appeal (Kirby�P and Samuels�JA) held that in any event the court had inherent power to permit a corporation to "carry on proceedings otherwise than by a solicitor".
To the same general effect as their Honours' view is the decision of the Privy Council in O'Toole v Scott (1965) AC 939. That decision affirmed the court's discretion, flowing from the inherent right of a judge or magistrate to regulate the proceedings in court, to permit natural persons to act as advocates for other persons, subject to usage or statutory provisions, the discretion being exercisable "in order to secure or promote commonsense and expedition and efficiency in the administration of justice". Their Lordships observed at p959 that the exercise of the discretion "should not be confined to cases where there is a strict necessity �". See also Abse v Smith (1986) QB 536 affirming the Court's discretionary power, based on its inherent power to regulate its own practices. The discretionary power is cumulative upon the powers in the Rules; see I.H. Jacob "The inherent jurisdiction of the Court" (1970) 23 Current Legal Problems 23.
In Bay Marine Pty. Ltd. their Honours Kirby P and Samuels JA disagreed as to whether the Court could dispense under Pt1 r12 (which corresponds with r2.04) with the requirements of Pt4 r4(2). They agreed that (assuming there was power to dispense) the circumstances must be exceptional for its exercise to be justified. I consider that the prohibition in New South Wales in Pt4 r4(2), expressed in terms of "carry on proceedings", is wider than that in r1.13, expressed in terms of "take a step in a proceeding". I consider that Pt4 r4(2) extends to prohibit a non-legal practitioner from appearing in Court for a corporation as well as from taking steps in the proceeding such as filing process or pleadings or applications in the Court, while r1.13 prohibits only the latter activity. Neither party before me, however, dealt with the respective nature of Pt4 r4(2) and r1.13. On this construction, r1.13 is silent on the issue of a non-solicitor attending Court to address argument, a matter which in this jurisdiction falls to be dealt with solely under the inherent power. As noted earlier (p13), there was no appeal against the Master's refusal to allow Mr�Hayward to address the Court on 10�July.
Mr�Grove submitted that in Bay Marine Pty Ltd (supra) Kirby�P did not require that "exceptional circumstances" be shown before the Court would permit a corporation to "carry on proceedings" other than by a solicitor; rather, he submitted, his�Honour would have decided the question by reference to "the justice of the case". He submitted that the headnote to Bay Marine Pty Ltd (supra) did not accurately reflect what Kirby�P had said. I reject that submission, on the basis of the analysis of the decision by Mr�Rowe. His Honour considered (at p105) that Pt4 r4.(2) expressed the "normal requirement of this Court" as regards the appearance of corporations before it, and (at pp105-6) reflected the practice of the Court and many other common law Courts. His�Honour said at p107 that he reached his conclusion that the contingent creditor "should (nevertheless) be permitted to speak for" the appellant corporation at the present stage "having regard to the following (seven) very exceptional circumstances", which he then specified. See also his Honour's ultimate conclusion at pp108-9 that "the normal rules as to the representation of the appellant" should be waived, because "the circumstances of the case are sufficiently extraordinary and the needs of justice sufficiently plain" to warrant the Court utilizing "its inherent power", about which there was "no doubt", to allow the contingent creditor "to carry on the appeal for the appellant", until further order. As to the power under Pt1 r12 to dispense with requirements of Pt4 r4(2), his Honour said at pp108-9: "The source of the legal impediment is said to be the Rules of Court which require a corporation to carry on any proceedings in the Court by a solicitor. However, the Rules of Court may be dispensed with by the Court in appropriate circumstances: see Supreme Court Rules, Pt1, r12. The last-mentioned Rule (Pt1 r12) was designed to bring into the general practice of the Court the approach of courts of equity to their Rules. It was long ago said that "the rules must be the servant not the master of the Court": see Clune v Watson
Tarl 75. It is all too easy for those whose lives are daily engaged in the administration of Rules to overlook the fact that they exist and are designed, not as an end in themselves but as a means to the end of the attainment of justice. There is no necessary justice in the inflexible and unthinking application of Rules for neatness' sake, especially when the Rules themselves contain ample powers of dispensation which may be utilised in appropriate cases. The prohibition, relevantly, on the carrying on of proceedings otherwise than by a solicitor is one of the "requirements" of the Rules. What is "required" is that, except as provided by statute, a corporation will not endeavour, relevantly, to carry on proceedings otherwise than by a solicitor. It is that requirement which the Court may dispense with under Pt1, r12. IT WOULD BE UNDESIRABLE FOR THAT BENEFICIAL RULE FOR DISPENSATION TO BE GIVEN A NARROW CONSTRUCTION. Its language, the history which preceded it in courts of equity, its position in the first part of the rules and the utility of such a provision to promote the interests of justice all suggest that A MEANING SHOULD BE GIVEN TO THE RULE WHICH PERMITS THE COURT TO DISPENSE WITH THE REQUIREMENTS, such as that which obliges a corporation to carry on proceedings by a solicitor. The Court has more than ample power, in the language of the Rule and in the discretion which it confers, to protect itself and other parties before the Court, from any injustice or surprise which may be occasioned by dispensing with compliance with the Rules and with the normal practice. For example, in the present case, the Court would have sufficient means at its disposal to require proof of Mr�Berben's authority to speak for the company (a matter which I take it to be involved in the substance of the appeal itself). The Court would also be perfectly well able to limit the right to appear and to control it by reference to such considerations as the protection of the respondent as to costs and the efficient disposal of the issues raised by the appeal. Such control is regularly exercised where a natural person appears without legal representation. There is no reason at all why similar control could not be exercised in the present case." (emphasis mine)
I respectfully agree with this general approach to the width of the dispensing power. See also Morres v Papuan and Rubber Trading Co. Ltd [1914] NSWStRp 21; (1914) 14 SR (NSW) 141 at 143-4, per Cullen�CJ.
(2) In Hubbard Association of Scientologists International v Anderson and Just (No.2) (1971) VR 577 (F.C.), a Writ in the name of a corporation as plaintiff, issued by its authorised agent who was not a solicitor, contrary to the effect of the provisions in the then Victorian Rules, was set aside. The action was thereby time-barred. On appeal, that order was in turn set aside; in lieu, a permanent stay was ordered, to be lifted when and while the plaintiff appointed a solicitor to act for it. The Full Court at p580 considered that there was a wide discretion in dealing with "irregularities" such as this, and that "this discretion (under the then O.70 r1) should be exercised according to the justice of the particular case", so as to ensure that the interests of the other party could be sufficiently protected. It is clear that in the present case the filing of the appellant's defence and counterclaim, in breach of r1.13, is an "irregularity" in terms of r2.01(1), and the discretionary power under r2.01(2) to deal with it could have been exercised "according to the justice of the case". Rule 2.01(2) provides, as far as material:

"(2) � where there has been a failure to comply with this Chapter, the Court may - set aside the proceeding, either wholly or in part; set aside a step taken in the proceeding or a document, judgment or order in the proceeding; or exercise its powers under this Chapter to allow amendments and to make orders dealing with the proceeding generally." 46. The power to deal with the appellant's summons and defence and counterclaim under r2.01(2) is a power additional to the dispensing power under r2.04; however, Mr�Grove did not seek any relief under r2.01(2) and Hubbard (supra) is not strictly in point. I would, however, think that the same basis should be adopted in approaching the grant of relief under r2.04, as under r2.01(2). 47. As to r2.01(2), in MacFoy v United Africa Co. Ltd. (1962) AC 152 Lord�Denning�MR said at 160: "� the court has a discretion whether to set (an irregularity) aside or not. IT WILL DO SO IF JUSTICE DEMANDS IT BUT NOT OTHERWISE." (emphasis mine) 48. In Metroinvest Anstalt v Commercial Union Assurance Co. plc (1985) 2 All ER 318, Cumming-Bruce LJ at p324 considered that the corresponding provision in the English Rules, Ord.2, r1(2) was so framed - '� as to give the Court the widest possible power in order to do justice." 49. A relevant factor in the ultimate decision (but not necessarily the only relevant factor) is the prejudice or lack of prejudice occasioned thereby to the respondent; see Metroinvest (supra). 50. Mr Grove submitted that of the 4 authorities, Hubbard was the most pertinent for present purposes, the other 3 being cases involving an appearance in Court. 51. '(3) In Arbuthnot Leasing International Ltd v Havelet Leasing Ltd and ors (1991) 1 All ER 591 it was held that while a court could permit a director of a company to appear as an advocate on its behalf, it would do so only in exceptional circumstances, such as where its assets were frozen by a Mareva injunction so that it could not instruct solicitors. At p595 Scott�J said: "There are, as I see it, two problems in the present case. First, there is the question whether (the corporation) is able, in view of the terms of (O12 r1(2), the English equivalent of r1.13, which similarly provided that a defendant body corporate "may not take steps in the action otherwise than by a solicitor"), to make an application for leave to pay the debts to which I have referred, otherwise than by a solicitor. Is Mr Maughan, as its chief executive, able to make that application on its behalf? Second, there is the question, AND I THINK IT TO BE A SEPARATE ONE, whether the practice of the High Court permits Mr�Maughan, on behalf of (the corporation), to appear as advocate and make submissions and address the court." (emphasis mine) 52. It can be seen that his Lordship drew a distinction between making an application, that is, preparing and filing the necessary documents, and seeking to be heard in Court; the former was regulated by O12 r1(2), the latter by "the practice of the High Court". The language of O12 r1(2) is similar to r1.13, in referring to taking "steps in the action", as distinct, for example, from the language of Pt4 r4 in New South Wales of "carry on any proceedings". I adopt, in relation to r1.13, Scott�J's approach to O12 r1(2); I consider that the question of Mr�Hayward appearing in Court is a "separate" question to Mr�Whitaker's taking steps in the proceeding. The latter is regulated by r1.13, the former is not. As noted earlier, there is no challenge to the refusal of the Master to allow Mr�Hayward to address the Court on 10�July. 53. In Arbuthnot Leasing (supra) His Lordship examined the case law and summarised the principles applicable as follows at pp597-8: "First, (RSC Ord.12 r1, the equivalent of r1.13) is of statutory effect and prohibits a body corporate from taking a step in an action otherwise than through a solicitor. Second, the courts have an inherent power to regulate their own procedure and a judge in an individual case has, as part of that

inherent power, the power to permit any advocate to appear for a litigant if the exceptional circumstances of the case so warrant. No limit can be placed on what might constitute sufficient exceptional circumstances. But third, subject to any exceptional circumstances that might require a particular individual in the interests of justice to be allowed to appear as advocate, the general practice of the court is that bodies corporate cannot appear by their directors but only by solicitors or counsel." 54. It may be noted that in the English Rules there is no general power to dispense with the Rules, as in r2.04, though O2 r1(2) corresponds with r2.02. In the absence of such a power, a Court has no power to dispense with the requirements of the Rules; see Doyle v The Commonwealth of Australia [1985] HCA 46; (1985) 156 CLR 510 at 518. 55. Mr�Grove submitted that Scott�J's reference to "exceptional circumstances" related only to the question of the director appearing in Court, as opposed to filing the application. That is clearly correct, but it is to be noted that his Lordship proceeded on the basis that RSC Ord12 r1 was a complete prohibition on doing what Mr�Whitaker did here; he considered that the director could not file process or make an application for the appellant in ANY circumstances, exceptional or otherwise. That is why his�Lordship said in relation to the "first" question (p20) at p598: "Now I must see how those principles apply to the present case. First, an application by (the corporation) to vary the injunctions that bind it would constitute a step in the action. I cannot see any escape from that conclusion. Accordingly, it seems to me that an application by (the corporation) must be made under the authority of a solicitor instructed by (the corporation). It follows that I am in Mr Rimer's favour in so far as he submits that Mr Maughan in person cannot on behalf of (the corporation) make the application for leave for (the corporation) to pay its debts." 56. That is to say, Scott J concluded that the director could not apply to vary the injunctions against the corporation, because that would constitute a "step in the action" and would therefore be in breach of RSC Ord.12 r1(2). However, as the director was a party to the litigation (which is not the case here, as regards Mr�Whitaker) Scott J gave him leave to address the Court on behalf of the corporation as well as on his own behalf. 57. I consider that Arbuthnot Leasing (supra) provides no support for Mr�Grove's submission that the Master was wrong in applying the "exceptional circumstances" test, when considering whether to dispense under r2.04 with r1.13. 58. (4) Molnar Engineering Pty Ltd v Burns [1984] FCA 232; (1984) 3 FCR 68 involved O4 r14 of the Federal Court Rules which provides as follows: "14. (1) Subject to sub-rule (2) and to Order 43 (which relates to disability), any person may proceed in the Court by a solicitor or in person. '(2) 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." (emphasis mine) 59. This Rule is very similar in wording to the NSW Pt4 r4(2), except for the vital words emphasized above, and is substantially different to r1.13; it expressly contemplates a discretionary power - that the Court may give leave to "carry on any proceedings" - unlike the simple prohibitions in NSW Pt4 r4(2) and in r1.13. Neither NSW Pt4 r4(2) nor r1.13 contemplate the Court giving leave; the question in Bay Marine Pty Ltd, as here, was whether the application of the rule should be dispensed with under Pt1 r12 (in NSW), or r2.04 in this jurisdiction. However, the end result, whether leave or dispensation, is much the same. Mr�Grove submitted that nevertheless the principles applied in Molnar (supra) should apply here. In Molnar (supra), as in Bay Marine Pty Ltd (supra) the question was whether a person should be granted leave to appear in Court for a corporation; that is not the issue here. There the appearance in Court was caught by the words "carry on any proceedings"; that is not the case under r1.13. The majority in Molnar (supra) (Smithers and Keely�JJ) held that O4 r14(2) conferred discretionary power on the Court to grant leave to appear, exercisable in favour of a company when "sufficient reason" had been shown. The discretion was one "to be exercised juridically according to the requirements of justice", as Smithers�J put it at p74 "by reference to all relevant considerations" (p73). In that case a meeting of the directors had resolved that Mr Molnar be "fully authorised" to act for the company in the proceedings. Smithers�J said at p74: "The problem is to recognise what is sufficient reason for the purpose in hand. The common reason for a company seeking to proceed without qualified assistance is, no doubt, that the company does not have the funds to engage such assistance. One would suppose that a company might successfully support an application to sue or defend without qualified assistance, not only where the company is bereft of funds, but also where having regard to the necessary or reasonable commitments of the company, the appropriation of funds to engage qualified assistance for the litigation in question would create financial difficulties with which the company could not cope, or with which it ought not be required to cope. The class of company involved, the nature of its undertaking, its financial structure, its ability to retain and pay its staff and no doubt other factors might be relevant in particular cases. Similarly the identity of the shareholders and the spread of the shareholding would be relevant. So also would the capacity of a person by whom the litigation might be commenced and carried on." 60. At p75 his Honour said: "As the company had the task of persuading the court that there is good reason for the exercise of the discretion by the court in its favour and of performing that task in circumstances in which there may well not be any cross- examination, it was essential that the material presented should be directed to those matters in respect of which questions may well arise in the mind of the court." 61. At p76 his Honour said: "Certainly in circumstances in which a company's finances are such that a refusal to exercise the discretion in its favour would actually cause the abandonment of proceedings by a company, the loss of skilled legal assistance to the court should carry no weight. It is fundamental that the courts be accessible to a company as an entity according to law and subject to the law." 62. Mr�Rowe stressed what his Honour said at pp73-4 and 76 viz: "There may well have always been a discretion to permit the appearance on behalf of a party of a non-qualified person but, as stated in (Hubbard's) case, it has long been regarded in the higher courts as proper, where the assistance of qualified persons is available to give the courts help in the administration of justice to refuse to exercise the discretion in favour of allowing such an appearance, other than on merely formal matters such as adjournments. It is my opinion that the inflexibility of the practice in England both before and after the promulgation of the English O5 r6 (which is similar to NSW Pt4 r4) could not but be an influence against the exercise of that discretion by reference to all relevant circumstances. And the discretion remaining in the face of a rule such as O5 r6 can hardly be other than essentially residual. Having this in mind, the discretion introduced in O4 r14 and O9 r3 does introduce an element different from that which might have been expected when the Federal Court of Australia was established in 1976, had it been intended that the discretion of that court should be but a similar residual discretion. Certainly a change of emphasis appears to be involved. � The problem is to recognise what is sufficient reason for the purpose in hand. The common reason for a company seeking to proceed without qualified assistance is, no doubt, that the company does not have the funds to engage such assistance. One would suppose that a company might successfully support an application to sue or defend without qualified assistance, not only where the company is bereft of funds, but also where having regard to the necessary or reasonable commitments of the company, the appropriation of funds to engage qualified assistance for the litigation in question would create financial difficulties with which the company could not cope, or with which it ought not be required to cope. The class of company involved, the nature of its undertaking, its financial structure, its ability to retain and pay its staff and no doubt other factors might be relevant in particular cases. Similarly the identity of the shareholders and the spread of the shareholding would be relevant. So also would the

capacity of a person by whom the litigation might be commenced and carried on." (p76) "There is not, in the evidence, a sufficiently particularised relationship between the cost of maintaining the action with legal representation and the available resources of the company. In an application of this kind the applicant should take the court fully into its confidence." 63. In the light of these authorities Mr�Grove submitted that r2.04 imported a general discretion, to be exercised in the interests of justice on "sufficient reason" being shown, rather than only when "exceptional circumstances" were established. He submitted that the approach taken in Hubbard (supra) should be applied to r2.04. Mr�Rowe submitted to the contrary. 64. I accept Mr Grove's submission. In doing so I bear in mind Mr�Rowe's submissions on the effect of Bay Marine Pty Ltd (supra). I consider that r2.04 should not be narrowly construed. In so far as Bay Marine Pty Ltd (supra) applies the criterion of "exceptional circumstances", I decline to apply it to r2.04. I apply the approach taken in Hubbard (supra). See also, Lazar v Taito (Australia) Pty Ltd (1984- 85) [1985] FCA 35; 5 FCR 395 (F.C.) on the corresponding Federal Court Rule O1 r8; McGregor�J held at pp403-4 that it empowered a dispensation with personal service "particularly �where there is no apparent injustice and the alleged error can only be one of procedure" and Neaves�J considered at p414 that it conferred "a very wide discretion on the court to dispense with personal service where the court considers it appropriate to do so." 65. It follows that I consider that the criterion of "exceptional circumstances" applied by the Master (see pp7-8), set too high a standard, and I uphold Mr�Grove's submissions (p14) that it was wrong to apply it. 66. There remains the question whether the appellant has shown sufficient reasons to obtain the orders which it seeks at p11. As to the evidence and the application of the law to the facts, Mr�Grove relied on Mr�Whitaker's affidavits of 11 and 29 April. He submitted that they showed that the appellant lacked both cash assets and income, and an ability to raise funds. I do not accept that they go far enough to establish this. He further submitted that in the defence and counterclaim Mr�Whitaker revealed a detailed knowledge of alleged facts, which it would be necessary to be placed before the Court. He pointed out that while the respondent suggested that Alice Springs Meatworks Pty Ltd was somehow obliged to fund the appellant in this litigation - see pars4-6 of Mr�Rowe's affidavit of 24�April - Mr�Whitaker in par8 of his affidavit of 29�April showed that this was not the case. I accept these latter submissions. 67. However, I accept Mr�Rowe's submission that consideration must also be given to the rights of the respondent, which has to defend a counterclaim for $15 million. I do not consider that the appellant has taken the Court "fully into its confidence", as Smithers J put it in Molnar (supra) at p76. The Master pointed out on 15 May 3 relevant considerations; see p8. There is nothing in the later affidavit material placed before me that bears upon the means of the shareholders of the appellant, who may benefit from this action; or the capacity of Wales Australian Resources Pty Ltd, or its shareholders, to finance the respondent in this litigation. A bare statement to that effect by Mr�Whitaker, without disclosing the basis for it, is not enough; in pars9 and 10 of his affidavit of 23�July he deposes: "9. The issued share capital of Alice Springs Abattoirs Pty. Limited is 113,003 Ordinary One Dollar Shares held as follows:-

Wales Australian Resources Pty. Limited 113,002 Myself (in trust for Wales Australian Resources Pty. Limited)
1 10. Wales Australian Resources Pty. Limited has limited assets and at present is funding litigation instituted against Alice Springs Abattoirs Pty. Limited by the Northern Territory Power and Water Authority. It does not have sufficient funds to also meet the expenses incurred in defending this litigation." 68. It is open to the appellant to make a fresh application at any time, under r1.13, on proper materials. I accept Mr Rowe's submission that as it stands the defence and counterclaim filed on 20 March is prolix and states matters of evidence, rendering it difficult for the respondent to plead to it. It is clearly desirable that the defence and counterclaim be properly pleaded, if it is to proceed. Conclusions 69. It follows from what I have said throughout the course of these reasons that while I do not apply the criterion of "exceptional circumstances" to r2.04 as the Master did, I concur in his general approach. As to the appeal against the decision of 15 May, I consider that the appellant has not shown sufficient reason why the requirements of r1.13 should not be met. As I indicated earlier I consider that the appeal against the order of 10 July should be allowed, because the three factors identified at p14 are established; that order is set aside. In lieu, time is extended to the extent necessary for the appeal of 19�July against the decision of 15�May to be properly instituted. I dismiss that appeal as regards orders 1 and 2 on p1; those orders are affirmed. I allow the appeal as regards order no.3 on p2, as this aspect is regulated by the Rules, though the matter of impecuniosity was not established; I quash and set aside that order. 70. The respondent, having substantially succeeded, must have 75% of its costs of the appeal; the Master's order that it have the costs of the proceedings before him is affirmed, other than the costs of the hearing of 10�July, as to which the appellant should have the costs. 71. Orders accordingly.

Alice Springs Abattoirs Pty Ltd v Northern Territory of Australia [1996] NTSC 69; 111 NTR 9; 134 FLR 440

At a glance

Court

Decision date

Source

Judgment (13 paragraphs)

Alice Springs Abattoirs Pty Ltd v Northern Territory of Australia [1996] NTSC 69; 111 NTR 9; 134 FLR 440 (16 September 1996)

Parties

Cases Cited (5)