Garage Wholesalers Pty Ltd ACN 109 969 059 v Engineering Software Solutions Pty Ltd ACN 109 359 499

Leave 2 In relation to leave, O 4 r 14(2) of the Federal Court Rules (the Rules) provides that except as provided by or under any Act, a corporation may not, without leave of the Court, commence or carry on any proceedings otherwise than by a solicitor. Order 9 r 1(3) provides that a corporation may not without the leave of the Court enter an appearance or defend any proceeding except by a solicitor. 3 Unlike the English equivalent and the rules of various State Supreme Courts, O 4 r 14 raises no express threshold requirement of special or exceptional circumstances. As French J observed in Simto Resources Ltd v Normandy Capital Ltd (1993) 10 ACSR 776, the Full Court of this Court in Molnar Engineering Pty Ltd v Burns (1984) 3 FCR 68 noted that application of r 14 did not invoke of the 'inflexibility of the practice in England'. In Molnar, the Full Court of this Court said: But in this court the presence of r.14(2) of O.4 and r.3 of O.9 introduces a new element. Those rules proceed on the basis that there is a discretion in the court to permit a company to commence and carry on any proceedings other than by a solicitor and to enter an appearance or defend any proceeding without a solicitor and, it would seem, it is a discretion to be exercised by reference to all relevant considerations. 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 [Anderson's case Hubbard Association of Scientologists International v. Anderson (supra)], 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 0.5 r.6, 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 0.5 r.6 can hardly be other than essentially residual. Having this in mind, the discretion introduced in 0.4 r.14 and 0.9 r.3 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 similarly residual discretion. Certainly a change of emphasis appears to be involved. The discretion introduced in the express provisions of the rules is, in the absence of other guidance, to be exercised judicially according to the requirements of justice. The discretion is as to a matter of procedure but it may well affect matters of substance. The consequence of permitting a non-qualified person to appear will be to deprive the court of assistance in respect of matters of law. It might also, according to circumstances, render difficult the proper assessment of fact. These considerations go to the ability of the court ideally to reach the correct decision on the matters of law and fact involved in the litigation. This may operate to the detriment of a company appearing without a solicitor but such a consequence would be of the company's own making. The application by the court of the correct principles of law and the correct assessment of the facts in a particular case are important objectives, but they are not necessarily unattainable without the assistance of qualified advocates. The attainment of these objectives, so far as possible without qualified assistance, is accepted as appropriate where a party sues or defends in person. The discretion being reposed in the court it is inevitable that it be exercised in favour of a company where there is sufficient reason. According to the strength of the case made as to the existence of such reason, so the weight to be given to the consideration that the court might lack qualified legal assistance, will decline. 4 Mr Kay has deposed to the fact that the respondent does not have sufficient funds to pay legal fees. The documents he has prepared are all quite clear and comprehensive. As observed by French J in Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241, it may be that a more liberal approach is warranted where the corporation is in the position of respondent rather than having actually commenced the proceedings. 5 There is no particular legal complexity about the nature of these proceedings albeit that some technical consideration will be required in relation to some mechanical features of the pleaded complaint. 6 It is a further consideration that I propose (given the modest sum involved) to transfer the proceeding to the Federal Magistrates Court so that it can be dealt with, with less formality and cost. In this regard I am mindful of the Privy Council decision of O'Toole v Scott [1965] AC 939 at 959 where the Privy Council after referring to a court's inherent right to regulate its proceedings, said: There is no reason in principal for limiting the discretion as suggested. It can be exercised either on general grounds common to many cases or on special grounds arising in a particular case. This exercise should not be confined to cases where there is a strict necessity; it should be regarded as proper [for a magistrate] to exercise the discretion in order to secure or promote convenience and expedition and efficiency in the administration of justice.

Transfer 7 Section 32AB of the Federal Court of Australia Act 1976 (Cth) (the Act) provides for discretionary transfer of proceedings on the application of a party or on the Court's own initiative. Section 32AB(6) provides that the following considerations are to be taken into account: (a) any Rules of Court made for the purposes of subsection (4); and (b) whether proceedings in respect of an associated matter are pending in the Federal Magistrates Court; and (c) whether the resources of the Federal Magistrates Court are sufficient to hear and determine the proceeding; and (d) the interests of the administration of justice. 8 Further Order 82 r 4-8 of the Rules outlines considerations which may be taken into account in addition to the factors to which the Court must have regard under s 32AB(6) of the Act. In summary, the Court may take into account the following factors: (a) whether the proceeding or appeal is likely to involve questions of general importance, such that it would be desirable for there to be a decision of the Federal Court on one or more of the points in issue; (b) whether, if the proceeding or appeal is transferred, it is likely to be heard and determined at less cost and more convenience to the parties than if the proceeding or appeal is not transferred; (c) whether the proceeding or appeal is likely to be heard and determined earlier in the FMC; (d) the wishes of the parties. 9 Having considered the factors outlined in s 32AB(6) of the Act and O 82 r 4-8 of the Rules, I am of the view that this matter should be transferred to the Federal Magistrates Court. I am informed that the Federal Magistrates Court has the capacity to manage this matter. The claim involves alleged misrepresentations and s 52 of the Trade Practices Act 1974 (Cth) and relates to a moderate amount (approximately $80,000). While there may be some interesting and challenging technical issues, the sum in issue given the straight forward nature of the claims at law may be disproportionate to the costs which may be occasioned in pursuing the claim through this Court. On transfer, it is likely that the matter can be dealt with more expeditiously and less formally, both resulting in a potential cost saving to the parties. Having raised with the parties the question of transfer, neither objects. There is at least on the face of the matter, no matter of general importance likely to be involved but, in any event, if there were, the transfer would at least permit one additional avenue of appeal. 10 I therefore consider that it is in the interests of the administration of justice for the matter to be transferred. 11 Accordingly, I order that: 1. Mr Kay have leave to represent the respondent until further order of this Court or the Federal Magistrates Court. 2. The proceeding be transferred to the Federal Magistrates Court pursuant to s 32AB of the Federal Court of Australia Act 1976 (Cth) and O 82 r 6 of the Federal Court Rules. 3. Any costs incurred to date in these proceedings be costs in the cause on their transfer to the Federal Magistrates Court. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

Associate: Dated: 16 April 2009 Counsel for the Applicant: G Provan