Solicitors:
Minter Ellison - Aurenne Group Holdings and Aurenne Kalpini
William James - John Brice
[2]
Paul Blahut (Applicant) - self-represented
File Number(s): 2020/279262
2021/157977
[3]
EX TEMPORE JUDGMENT
HIS HONOUR: Two sets of proceedings are set down for hearing to commence on 13 February 2023 before me on an estimate of five days. There were originally three sets of proceedings, but one of them was dismissed in the circumstances described below.
The plaintiff in both, for whom Ms Campbell of counsel appears, is Aurenne Group Holdings Pty Ltd (Aurenne). The defendant in the first set is Sentinel Corporate Advisory (Sentinel), and the defendant in the second is Larmenius Holdings Pty Ltd (Larmenius). The defendants are entities associated with Mr Paul Blahut (Blahut), their sole director. Larmenius is the trustee of his family trust. Its only business is to hold assets, including shares in Aurenne.
The third set of proceedings was an oppression suit brought by Larmenius against Aurenne, amongst others. On 1 September 2022, I made an order that Larmenius provide security for costs by 22 September 2022. At that time, the proceedings (and the other sets apparently) were being funded by litigation funder GT Capital Partners Pty Ltd (GT). Solicitors Banton Group were instructed on behalf of Larmenius and Sentinel. Larmenius called on GT to provide the security. GT failed to do so. Not long thereafter, provisional liquidators were appointed to GT. Black J extended the time for Larmenius to provide security, on pain of dismissal of the proceedings. Larmenius failed to provide security and the proceedings stand dismissed.
A brief description of the extant proceedings will suffice.
In the first set, Aurenne claims repayment from Sentinel of $60,500 based on the assertion that Sentinel rendered to it, and it paid, the amount of an invoice purporting to be for services provided to Aurenne, which services were never provided. Sentinel cross claims against Aurenne and an associated entity, Aurenne Kalpini Pty Ltd, for which Ms Campbell also appears, and Mr John Brice, the third cross-defendant, for whom Mr Hynes of counsel appears, for payment of $100,000, being a success fee alleged to be payable in respect of the acquisition of a mining project, Mr Brice has been described as the guiding mind of Aurenne. These proceedings were transferred from the Local Court to the District Court, and then to this Court, on Sentinel's application.
In the second set of proceedings, Aurenne claims repayment of a loan made to Larmenius of $300,000 under Division 7A of the Income Tax Assessment Act 1997 (Cth). Larmenius cross claims for damages for misleading and deceptive conduct based on alleged misrepresentations concerning Aurenne's financial performance, that dividends would be paid, that instead of a dividend payment Aurenne would advance moneys to shareholders pursuant to Division 7A and would not demand or expect repayment at any time and that Aurenne would discharge any liabilities owing under any such loan. Larmenius also makes a claim for wrongful termination of the loan agreement, by which Larmenius says it suffered damage.
Blahut now, pursuant to two notices of motion filed on 15 November 2022, seeks leave to appear for Larmenius and Sentinel at the hearings scheduled next year.
Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 7.1(2)(a) provides:
(2) A company within the meaning of the Corporations Act 2001 of the Commonwealth -
(a) may commence and carry on proceedings in any court by a solicitor or by a director of the company…
UCPR r 7.1(3) provides:
(3) In the case of proceedings in the Supreme Court, subrule (2)(a) authorises a company to commence proceedings by a director only if the director is also a plaintiff in the proceedings
Section 14 of the Civil Procedure Act 2005 (NSW) (CPA) provides:
14 Court may dispense with rules in particular cases
In relation to particular civil proceedings, the court may, by order, dispense with any requirement of rules of court if satisfied that it is appropriate to do so in the circumstances of the case.
Blahut is not a party to the proceedings. He needs, and seeks, dispensation under s 14 CPA to appear.
The starting point is that there is a public interest in the efficient and proper conduct of litigation which interest is, in most cases, served by the contestants being represented by properly qualified legal practitioners. This is because the Court relies on practitioners to meet the significant obligations on them in conducting proceedings in the Court. The court relies, not only on their competence, but more importantly, on their probity. Their ethical obligations include restrictions on pleading or making charges of misconduct without proper foundation.
Blahut drew my attention to, and relied upon, the judgment of Goldberg J in Super Choice Now Pty Ltd v BrisConnections Management Company Ltd [2009] FCA 1026, in which his Honour gave leave for a director to appear for a company in proceedings which the company had brought to set aside a creditor's statutory demand. The company was impecunious, this being established through the production of audited and non-audited financial statements. His Honour considered that a significant factor favouring the grant of leave was that whilst the company was the moving party, its proceedings were in substance defensive because if the demand was not set aside, a presumption against it of insolvency would arise, which could found a winding up application. His Honour reached a different conclusion to that reached by Gordon J (as her Honour then was) in Julianne Barrow Charitable Trust v Brisconnections Management Company Ltd [2009] FCA 412. Her Honour's reasons for refusing leave included that the issues of fact and law in a case of the kind before her Honour were not suited to presentation and examination by a lay representative; that the director was to be the principal witness in the proceedings; and that neither he nor the company had given any reason why they could not secure legal representation.
Another feature which distinguished the cases dealt with respectively by Goldberg and Gordon JJ was that the former was substantially based on documentation rather than the viva voce evidence of the director who was going to be a witness.
In his affidavit, Blahut says:
16. Due to issues between GT Capital Partners and Banton Group which could not be resolved, Larmenius terminated the retainer agreement with Banton Group.
17. The provisional liquidators of GT Capital Partners Pty Ltd failed to provide the security for costs as required by the orders made by Justice Black and the proceedings were dismissed by his Honour at the relisting on 2 November 2022.
18. I have not been able to enter into a new retainer agreement either with Banton Group or another legal representative.
19. Larmenius and Sentinel remain unrepresented in any proceedings on foot in the Supreme Court of New South Wales.
For the following reasons (each of which is probably sufficient in its own right to warrant the refusal of leave) leave should be refused for Blahut to represent Larmenius or Sentinel:
1. Larmenius has made significant claims of misleading and deceptive conduct against Aurenne based, amongst others, on oral conversations between him and a Mr Underwood representing Aurenne. Blahut is not bound by the ethical restraints present when a legal practitioner appears;
2. Blahut will be a crucial, if not the only, witness on behalf of Larmenius and Sentinel in the proceedings. There will plainly be material disputes of fact concerning conversations to which he was party. He will no doubt be required for cross-examination, and himself seek to cross-examine, both presenting obvious difficulties;
3. the issues raised in the cases have a level of sophistication and complexity not suited to presentation and examination by a lay representative; and
4. Blahut's affidavit is entirely silent on the extent of his or his entities' resources to be able to instruct lawyers. Added to this, [16] of his affidavit is somewhat enigmatic. The issues which could not be resolved and which led Larmenius to terminate Banton Group's retainer are not detailed. Additionally, he gives no evidence as to what steps, if any, he has taken to enter into a new retainer agreement, either with Banton or another legal representative.
It will be readily apparent that this is a case far more aligned with that dealt with by Gordon J than that decided by Goldberg J.
The motions are dismissed with costs.
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Decision last updated: 06 December 2022