Australian Securities & Investments Commission v Axis International Management Pty Ltd

REASONS FOR JUDGMENT 1 The fifth defendant, Seaswan Holdings Pty Ltd (Seaswan Holdings), seeks by way of motion pursuant to Order 4 rule 14(2) of the Federal Court Rules that it be represented other than by a solicitor namely by Mr Gordon Lesley Hill. I granted limited leave to Mr Hill to appear on behalf of Seaswan Holdings to argue the motion. The motion is supported by Mr Hill's affidavit sworn on 4 February 2010 and a set of detailed written submissions. The fifth defendant has, until January this year, been represented by solicitors, but on 28 January 2010, they withdrew as solicitors for Seaswan Holdings. Neither Seaswan Holdings nor any of its shareholders, there being two only, have any present or, it seems, any likely immediate future financial capacity to continue to engage the services of lawyers to represent Seaswan Holdings in this litigation. 2 Seaswan Holdings has spent several hundreds of thousands of dollars in legal costs, not only in relation to this action, but also in relation to three matters which are now before the Supreme Court in this State. Seaswan Holdings does not have any assets or bank accounts in its own right. This conclusion is supported by financial statements of the trust which are before the court. The most recent bank accounts with the National Australia Bank as at the end of May this year disclose that there is an indebtedness in excess of $770,000. That money was borrowed to finance legal actions. 3 Beyond that, in separate accounts, there is a sum of approximately $2000 in cash. Prior to May last year, the company was trustee for the Seaswan Property Trust. I have the Seaswan Property Trust tax return for 2009. It appears from that and the minimal amount of money held in a cheque account by the Seaswan Property Trust, that it has no capacity to borrow and it has minimal revenue. The former sole director and shareholder of the company, Mr Gordon Lesley Hill, is presently bankrupt. The current sole director and shareholder of the company is Diane Jean Hill and she has no income whatsoever. I have a copy of her most recent tax return. 4 Mr Hill holds a Bachelor of Laws degree and, in that respect is different to the ordinary case where a proposed representative has no legal qualifications. He was admitted as a barrister and solicitor in Western Australia on 22 December 1999 and practised for some time after that, although he did not renew his practice certificate after 30 June 2007. 5 The Full Court of this Court in Molnar Engineering Pty Ltd v Burns (1984) 3 FCR 68 acknowledged that the discretion to grant such an order, as is sought in this case, is to be exercised judicially depending on the existence of sufficient cause. 6 The guiding principles are usefully found in Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 where French J, as his Honour then was, set out the matters at some length. That decision has been followed and applied by other judges of this Court: see for example, Australian Communications Authority v Viper Communications Pty Ltd (2000) FCA 982 and Oakley Inc v Franchise China Pty Ltd (2002) FCA 404. As his Honour in Termi-Mesh said at paras [10] to [14], amongst other things: The power of the Federal Court to grant leave to a corporation to carry on a proceeding otherwise than by a solicitor is conferred as an integral part of the Rules in Order 4, r 14 and Order 9, r 1. There is no threshold requirement of special or exceptional circumstances. 7 There are a number of relevant factors for dispensing with the requirement that ordinarily a corporation will be required to be represented by a solicitor. Relevantly, they include the financial capacity or lack of capacity of the corporation and those standing behind it. I am satisfied that both Seaswan Holdings and those standing behind it have no capacity to continue to retain the services of lawyers in this case. There is, additionally, the factor which concerns the potential factual complexities of the case and the capacity of the proposed representative to conduct Seaswan Holding's case effectively. It is hard to be determinative at this stage concerning those matters. 8 However, it seems to me that, at least broadly in relation to areas of law, I will have the assistance not only of senior counsel appearing for the plaintiff, the Australian Securities and Investments Commission, but also the benefit of submissions on those legal matters from counsel for other defendants. And there will be, it seems, a substantial overlap as between the legal issues concerning them and those concerning Seaswan Holdings. In any event, Mr Hill is legally qualified although he does not presently hold a practising certificate. In Termi-Mesh, his Honour also observed that a distinction may be drawn between the case in which the company in question is an applicant and that in which it is a respondent, and that in the latter case, it may be that a more liberal approach to the ground of leave is warranted. 9 I would respectful agree with that observation. Seaswan Holdings is not before the Court by its choice. Seaswan Holdings is here as is the defendant and it seems to me, in those circumstances, that a more liberal approach to the ground of leave is indeed warranted. I mentioned that Mr Hill is presently a bankrupt. I do not regard that as a barrier to his acting as a representative for the company. There is no opposition to the motion from any of the parties including the plaintiff, although I have had the benefit of submissions on the last point, that is to say Mr Hill's bankruptcy, from counsel appearing for the plaintiff. Counsel has also helpfully pointed out that Mr Hill, it seems, will be a witness of fact and perhaps a witness going to central facts. 10 That, of course, will usually be the case in an action concerning a natural person. Nonetheless, Mr Hill is professionally trained and qualified. I would expect he is able to bring the necessary degree of objectivity to these matters. Accordingly on the evidence before me and having considered the submissions of the plaintiff and the relevant authorities, I am satisfied that an order granting leave to Seaswan Holdings to be represented by Mr Gordon Hill ought be made and I will so order. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour.