Australian Competition and Consumer Commission v Adata

EX TEMPORE REASONS FOR JUDGMENT 1 Mr Wright, the third respondent in these proceedings, is the sole director and shareholder of the first respondent, Adata (Vic) Pty Ltd (Adata (Vic)). He has applied under r 1.34 of the Federal Court Rules 2011 (the Rules) to dispense with the requirements of r 4.01(2) of the Rules in relation to the first respondent. That rule provides that a corporation must not proceed in this Court other than by a lawyer. 2 A number of matters is well-established in various authorities related to that rule and its predecessors. First, the rule reflects the basic principle that a company is ordinarily required to be represented by a lawyer. Nonetheless, a judge of this Court has the discretion to dispense with the requirements of the rule if it is in the interests of justice to do so. An application for dispensation with the rule must show that there is sufficient reason for that to occur. However, there is no requirement under the Rules of this Court for the applicant to show any special or exceptional circumstances. Some of the factors that may be relevant to the exercise of this discretion have been identified in various authorities over the years. I will mention just a few: Molnar Engineering Pty Ltd v Burns (1984) 3 FCR 68 per Smithers J, Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 per French J, Australian Competition & Consumer Commission v Dataline.net.au Pty Ltd [2004] FCA 1361 (Dataline) per Kiefel J and, more recently, GP Technology Solutions Pty Ltd v Hughes Trading Solutions Pty Ltd [2012] FCA 1012 per Yates J. I have taken the principles reflected in those decisions into account in reaching my decision on this application. 3 Mr Wright has filed a number of affidavits in support of his application, most of which appear to disclose little, if anything, of relevance to the application. Then, in his written submissions, Mr Wright made a number of assertions of fact that did not find any support in his affidavit material. 4 Putting aside these obvious deficiencies for the moment, Mr Wright submitted that I should take the following matters into account in determining his application. First, he considers that he has a "reasonably sound ability to read and understand the law and to apply it to the facts of this situation". Secondly, he has completed a Master of Taxation degree. Thirdly, he has completed five days of intensive training in Australian Consumer Law as part of a Master's subject at the University of Melbourne. Fourthly, he has applied for entry into the Juris Doctor program at the University of Melbourne. Fifthly, he is presently "barely making ends meet", and he is currently applying to Centrelink for financial assistance. Sixthly, he is unable to afford a lawyer and, in any event, it would be very difficult for him to find somebody who understood his case and had a better knowledge of it than him. 5 In response, Mr Star for the Australian Competition and Consumer Commission (the Commission), the applicant, made the following submissions. First, there is no evidence that the first respondent is unable to afford to employ a lawyer to act for it. Secondly, Mr Wright's conduct in these proceedings thus far has demonstrated that he will not be able to competently and efficiently represent the first respondent. And, thirdly, the Court should have regard to the provisions of s 37M of the Federal Court of Australia Act 1976 (Cth) that require all litigation in this Court to be conducted quickly, inexpensively, efficiently and justly. 6 In reply, Mr Wright sought to rely upon three pages of an affidavit filed by the applicant in an attempt to demonstrate that the first respondent was not in a financial position to employ a lawyer to represent it in these proceedings. I should say at once that, having considered those pages, I do not consider they provide any evidence to that effect. 7 It is convenient to begin my consideration of these submissions by recording a number of aspects to the procedural background to these proceedings. First, the proceedings were commenced by the Commission seeking, among other orders, declarations and final injunctions against Adata (Vic), the first respondent, and Adata Pty Ltd, the second respondent, in relation to a number of alleged contraventions of ss 73, 76, 78, 79 and 86 of the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)), connected with 193 unsolicited consumer agreements. The Commission claims that Mr Wright was knowingly concerned in, or a party to, each of those contraventions. The contraventions are alleged to have occurred in respect of the provision of services connected with the filing of taxation returns at various remote locations in the Northern Territory and Western Australia during the years 2012 and 2013. 8 The proceedings were commenced in June 2014 and to date none of the respondents has filed an appearance, nor has any of them filed a defence to the Commission's statement of claim. That is so partly because the past four months, or so, have been devoted to an unsuccessful attempt by the parties to mediate a resolution of the dispute. 9 Turning then to the application itself, it should be noted at the outset that Mr Wright is only seeking to represent the first respondent in these proceedings and he has made it clear that he does not want to represent the second respondent. In his submissions, the reason he gave for this approach was that, "I would like to defend myself and my own company, Adata (Vic) Pty Ltd, but it would not be necessary to defend the other company, as it should never have been included as a party to this action." 10 This approach will necessarily mean that if no address for service is filed by a lawyer acting for the second respondent, in accordance with r 4.01 of the Rules, the Commission will be entitled to seek a default judgment against the second respondent. Indeed, the Commission's counsel, Mr Star, has stated that the Commission intends to take that course, acknowledging that it will need to address the intricacies associated with seeking a default judgment, which includes declaratory relief. 11 As has been pointed out many times in recent years, s 37M of the Federal Court of Australia Act 1976 (Cth) requires all proceedings in this Court to be conducted justly and as quickly, inexpensively and efficiently as possible. That being so, while taking into account the factors illuminated in the various authorities that I mentioned earlier, I consider the question in this application essentially reduces to whether dispensing with the requirements of r 4.01 of the Rules will assist me to dispose of these proceedings according to these precepts. 12 As to disposing of the proceedings justly, it is important to note that the allegations against the two corporate respondents are different in nature from those against Mr Wright. The two companies are alleged to have been directly responsible for the contraventions of the Australian Consumer Law and Mr Wright is alleged to have been directly, or indirectly, knowingly concerned in those contraventions. While Mr Wright was, and is, alleged to have been the human agent of each corporate respondent, it is a mistake, in my view, to treat them all as the same individual; namely, Mr Wright. The two corporate respondents were, and remain, separate legal persons. 13 In Dataline, Kiefel J said of a similar situation (at [3]): Then there is the question of his position in the action. In relation to the contraventions against the first, second and third respondents, it is sought to make him liable as an accessory, or as being knowingly concerned in the contraventions. It could hardly be a satisfactory state of affairs to have him as a witness in his own defence and also making submissions and presenting evidence for the companies. 14 Like Kiefel J, I do not consider it would be a satisfactory situation for Mr Wright to attempt to appear in both roles. Furthermore, there is the additional factor that Mr Wright only seeks to act for one of the two corporate respondents. That means that, in any event, Adata Pty Ltd will be left to face the Commission's allegations undefended. 15 Then there is s 37M of the Federal Court of Australia Act 1976 (Cth) that Mr Star raised in his submissions. While Mr Wright may have gained some insight into the Australian Consumer Law during his studies associated with one of his Master's subjects, I do not consider he has shown a sufficient knowledge to allow him to effectively represent Adata (Vic), much less a knowledge sufficient to assist me to dispose of these proceedings more quickly, inexpensively and efficiently. 16 Furthermore, in his conduct of these proceedings thus far, Mr Wright has demonstrated little, if any, knowledge or understanding of the procedural and evidentiary rules and processes pertinent to the conduct of these proceedings such that the trial of these proceedings is likely to be conducted more quickly, inexpensively and efficiently if he represents Adata (Vic). 17 For all these reasons, I do not consider Mr Wright has shown sufficient reason for me to exercise the discretion to dispense with r 4.01 of the Rules to allow him to appear for the first respondent. I therefore refuse his application. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves.