Hawksford v Hawksford

Companies Act 1961 Corporations Act 2001 (Cth) LEGISLATION CITED : Married Persons (Equality of Status) Act 1996 Supreme Court Act 1970 Trading with the Enemy Act 1914

Adams v London Improved Motorcoach Builders Ltd [1921] 1 KB 495 Allen v Bone (1841) 4 Beav 493; 49 ER 429 Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561 AW & LM Forrest Pty Ltd v Beamish (1998) 146 FLR 450 Baiada & Ors v Waste Recycling & Processing Service Of NSW [1999] NSWCA 139; (1999)130 LGERA 52 Bone v Commissioner of Stamp Duties (1972) 2 NSWLR 651 Burns, Philp & Company Limited v Gillespie Brothers Proprietary Limited (1947) 74 CLR 148 Capper's Pty Ltd v L & M Newman Pty Ltd [1960] NSWR 143 Corporate Affairs Commission v Bradley [1974] 1 NSWLR 391 Corporate Affairs Commission (NSW) v Transphere Pty Ltd (No 2) (1985) 9 ACLR 1005 Daimler Company Ltd v Continental Tyre & Rubber Company (Great Britain) Ltd [1916] 2 AC 307 Davies v Taylor (No 2) [1974] AC 225 Re DG Brims & Sons Pty Ltd (1995) 16 ACSR 559 Ernst & Young (Reg) v Tynski Pty Ltd [2003] FCAFC 233; (2003) 47 ACSR 433 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688 Foss v Harbottle (1843) 2 Hare 461; 67 ER 189 Fraser Henleins Pty Ltd v Cody (1945) 70 CLR 100 Halliday v Sacs Group Pty Ltd (1993) 67 ALJR 678 Hampton Court Ltd v Crooks (1957) 97 CLR 367 Harry S Bagg's Liquidation Warehouse Pty Ltd v Whittaker (1982) 44 NSWLR 421 Haviland v McLeary (1894) 15 NSWR (Eq) 22 CASES CITED : Hawkins Hill Gold Mining Co v Briscoe (1887) 8 NSWR (Eq) 123 Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549 Hood v Phillips (1842) 6 Beav 176 Hudgson v Endrust (Aust) Pty Ltd [1921] 1 KB 495 Inglis v Moore & Others (No 2) (1979) 25 ALR 453 J v Lieschke (1987) 162 CLR 447 Re Jay-O-Bees; Rosseau v Jay-O-Bees [2004] NSWSC 818; (2004) 50 ACSR 565 Kadian v Richards [2004] NSWSC 382; (2004) 61 NSWLR 222 Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 McAusland and Anor v Deputy Commission of Taxation and Another; Antlers Pty Ltd and Anor v Official Trustee in Bankruptcy and Anor (1993) 12 ACSR 432 McKenzie v Director General of Conservation and Natural Resources & Ors [2001] VSC 220 Maries v Maries (1853) 23 LJ Ch 154 Nece Pty Ltd v Ritek Incorporation; Ritek Incorporation v Nece Pty Ltd & Anor (1997) 24 ACSR 38 Phillips v Walsh (1990) 20 NSWLR 206 Pinner v Knights (1843) 6 Beav 174 Rushby v Roberts [1983] 1 NSWLR 350 Sanpine Pty Ltd v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 365 Shales v Lieschke (1985) 3 NSWLR 65 State Bank of Victoria v Parry & Ors (1990) 2 ACSR 15 Swansson v R A Pratt Properties Pty Ltd [2002] NSWSC 583; (2002) 42 ACSR 313 United States Tobacco Co v Minister for Consumer Affairs (1988) 20 FCR 520

Brett Paul Hawksford - First Plaintiff Brett Hawksford Management Proprietary Limited - Second Plaintiff Michael Jeffrey Hawksford - First Defendant PARTIES : Bremick Pty Limited - Second Defendant BMB Investments Pty Limited - Third Defendant Timothy Daley - Fourth Defendant

C J Bevan; A C M Iuliano - Plaintiffs COUNSEL : P M Wood - First Defendant J C Kelly SC - Second, Third and Fourth Defendants

Evangelos Patakas & Associates - Plaintiffs SOLICITORS : Clayton Utz - First Defendant Colin Daley Quinn - Second, Third and Fourth Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

4348/04 BRETT PAUL HAWKSFORD AND ANOR v MICHAEL JEFFREY HAWKSFORD AND ORS JUDGMENT HIS HONOUR: Nature of the Case 1 This judgment concerns a Notice of Motion brought by the plaintiffs, which challenges the retainer of the solicitors for the second and third defendants in the case. It seeks numerous declarations and orders which are said to be consequential upon a finding that no such retainer exists. The Parties to the Proceedings 2 The first plaintiff ("Brett") is the brother of the first defendant ("Michael"). Brett and Michael each hold 906,251 'A' class shares in the second defendant. All the other shares in the second defendant, namely 249,998 'A' class shares and 175,000 'B' class shares, are held by the third defendant. The shareholding of the third defendant is complex, being divided between Brett, Michael, and three companies. One of those companies has Brett and Michael as its only shareholders, another is the trustee of a discretionary trust which benefits Brett's family, while the third is the trustee of a discretionary trust which benefits Michael's family. The second plaintiff is the company which is the trustee of the trust for the benefit of Brett's family. 3 The second defendant was incorporated in 1965, at the instigation of the father of Brett and Michael. It has carried on a substantial business as an importer and distributor of industrial fasteners for many years. 4 The third defendant was incorporated in around 1958, also at the instigation of the father of Brett and Michael. 5 The fourth defendant is a solicitor. In the proceedings in which this Notice of Motion is brought, he is sued in his own right. As well, he has filed a Notice of Appearance in these proceedings on behalf of the second and third defendants. The 1991 Shareholders Agreement 6 By 1991 differences of opinion had emerged between Brett and Michael concerning the operation of the second defendant. By that time Brett and Michael were (as they still are) the only directors of both the second defendant and the third defendant. 7 On 30 October 1991 an agreement was entered between Brett, Michael and the second defendant. It fixed the salaries and other benefits to be provided to Brett, Michael, and their respective families. It provided for review of those salaries, but "in such a way that strict equality shall be maintained as between Michael (including Christine) and Brett". It stated a dividend policy for the second defendant, which included: "7(c) so far as is practicable, all dividends as and when declared shall be fully franked and it is agreed that subject to appropriate availability of cash the company shall distribute by way of dividends fifty percent of the after tax profit."

There were provisions relating to management, as follows: "9. Management of Bremick (a) Management Meetings shall be held on the third Wednesday of each month commencing at 9.30 am and finishing not later than 12.30 pm. Michael and Brett shall be Chairmen of each Management Meeting alternatively. The conduct of such meeting shall be in accordance with the following principles unless otherwise agreed from time to time between Michael and Brett: (i) Departmental Managers shall only be required to attend Management Meetings for purposes relevant to their departments. (ii) Company objectives and priorities are to be reviewed and agreed, particularly as to minimising inventory, improving the efficiency of stock turnover, reduction of indebtedness and the most efficient utilisation of surplus funds from time to time in that context and it is agreed that no expenditure shall be incurred so as to frustrate the payment of dividends in accordance with clause 7(c). (iii) The conduct of debtors' accounts shall at all times be on the most efficient basis possible. (b) All available management information shall be provided to Brett and Michael not less than two days before each Management Meeting. It is agreed that Wade Llankesbury Hewett of Bradfield & Scott, Solicitors, shall be invited to attend, at the expense of Bremick, the first three Management Meetings. 10. Directors Meetings (a) Formal meetings of Directors of Bremick shall be held as and when required but, not less than each three (3) months, a specific Directors Meeting for the purpose of monitoring the progress of Bremick shall be held and the said Wade Llankesbury Hewett shall be invited to attend such meeting at the option of either Michael or Brett for the purpose of advising and assisting in the resolution of any outstanding matters. It is noted that the attendance of the said Wade Llankesbury Hewett at any Management or Directors Meetings is as adviser only and is not intended to be in any capacity of Director or participant in the business activities or affairs of Bremick." 8 There was also a clause, as follows: "12. Relations with Employees (a) No spouse or family members of either of the Directors shall be employed by Bremick unless both Michael and Brett so agree. This clause does not inhibit the entitlement of Michael to cause Bremick to pay Christine in relation to clerical services heretofor provided by her to Bremick. (b) Any employee working in an area within the jurisdiction of one Director, may not be called upon to do any work by the other Director outside that jurisdiction unless agreed to by the first Director. (c) Each of the Directors shall have ultimate responsibility, control and authority over their respective areas of jurisdiction. (d) All matters relating to the hiring and dispensation with the services of any employee shall be matters to be attended to at the appropriate Management Meeting in the presence of the relevant Departmental Manager. (e) The Bankers of Bremick shall be instructed that the signatories on the bank account of Bremick shall be either of Michael and Brett or any two of Mark Macourt, Colin Wilson, Graham Love or Wade Llankesbury Hewett. (f) The cheque signatories will ensure that cheques are returned promptly and in any event on the request of the Accountant of Bremick." 9 Other provisions gave each brother pre-emptive rights to purchase the shares of the other, provided for each to have service agreements with the second defendant, and dealt with how some loan accounts would be administered. Clause 16 provided: "In the event that any provision of this Agreement is in conflict with or is construed to be limited by the Articles of Association of Bremick this Agreement shall take priority over the Articles of Association and each of the parties agrees with the other to vote in favour of such resolution as may be reasonable required to alter the Articles of Association of Bremick to reflect the terms of this Agreement." The Present Proceedings 10 The present proceedings were begun on 5 August 2004. The plaintiffs' claim is now articulated in an Amended Statement of Claim filed on 1 October 2004. The allegations are complex. In very broad and incomplete terms, the plaintiffs allege that Brett and Michael were equal partners in an incorporated partnership, carried on through the second defendant and various corporations in the group of which the second defendant is a member. They allege that the second defendant made substantial profits in the 2003 and 2004 financial years, and had cash available to pay a dividend in each of those years, yet did not do so. As well, they allege that the profits of those years have been reduced, by various management decisions for which Michael is responsible, and which are themselves breaches of terms of the 1991 Shareholders Agreement. They allege that Michael has received benefits from the second defendant, when Brett has not received any corresponding benefit. They allege that Michael has frozen Brett out of the day-to-day management of the second defendant, and, by breaching a provision of the Shareholders Agreement about the responsibilities that Brett was to carry out, has caused the second defendant to lose a very substantial customer, Coventrys. 11 So far as the fourth defendant is concerned, the Amended Statement of Claim alleges that by 2001 there was a history of irreconcilable differences between Brett and Michael, and that the fourth defendant was engaged by both of them to give legal advice. It alleges he has been negligent in various respects. The fourth defendant had one share in the second defendant transferred to him by Michael, and one share in the third defendant transferred to him by Brett, for the purpose of enabling the fourth defendant to exercise a casting vote in resolution of day-to-day management disputes and conflicts. The plaintiffs allege that the fourth defendant has failed to act impartially, and in various other respects has acted improperly. 12 Over the years since 1995, the plaintiffs allege that the way in which the dividend policy was implemented was by the second defendant declaring a dividend to the third defendant, which in turn would declare dividends to the trustees of the respective family trusts of Brett and Michael. The plaintiffs say that obligations arising from the overall incorporated partnership, as well as from the Shareholders Agreement, require that policy to be continued. The orders which are sought are, broadly: an order for specific performance of the obligations to pay dividend, and for that dividend to be paid as Brett directs "without deduction or set off for any sums claimed by [the second defendant] to be due by Brett … or his related entities to [the second defendant]"; that the third defendant distribute any dividend it receives equally to the trustees of the two family trusts; that Michael and the fourth defendant account to Brett for benefits which they have received in breach of fiduciary duties they respectively owed to Brett; an order for specific performance to enable Brett to resume his role in the management of the company; specific performance of the pre-emptive rights term of the Shareholders Agreement to enable Brett to acquire the share in the second defendant which Michael transferred to the fourth defendant; an order that the fourth defendant transfer back to Brett the share the fourth defendant holds in the third defendant; and orders for damages and equitable compensation against both Michael and the fourth defendant. 13 Many of these allegations are contested, including all allegations of wrongdoing. Progress of the Litigation 14 On 7 September 2004 the fourth defendant filed a Notice of Appearance, on behalf of himself alone, in the proceedings. On 13 September 2004 the fourth defendant filed a Notice of Appearance on behalf of the second and third defendants. It was served on the plaintiffs' solicitors on the afternoon of 15 September 2004. 15 On 17 September 2004 the proceedings were before his Honour Justice Hamilton. On that day his Honour ordered that the proceedings be heard together with some earlier proceedings which Brett had begun against the fourth defendant. His Honour made orders, in accordance with a form of Short Minutes brought in by the solicitors for the plaintiffs, fixing times for filing of an Amended Statement of Claim, for the making of any request for particulars and response to that request, for the defendants to file and serve their defences and any cross-claims, and for the plaintiff to file and serve any reply and defence to any cross-claim. 16 On 29 October 2004 the defences of the second and third defendants were filed, and as well a cross-claim by the second defendant against the plaintiffs was filed. 17 The Cross-Claim alleges that the second defendant has paid out on a guarantee which it gave to the Commonwealth Bank of Australia of a debt owed by the second plaintiff. It alleges the bank had, as other security for that loan, a guarantee by Brett, an equitable charge by Brett and the second plaintiff over shares they owned in the second defendant [as I understand it the second plaintiff does not own any shares in the second defendant; I merely repeat the allegation in the Cross-Claim] and an equitable mortgage by the second plaintiff over all its assets and undertaking. The Cross-Claim asserts that, by payment out of the guarantee, the second defendant became entitled to be indemnified by the first plaintiff, became entitled to contribution from Brett, and was subrogated to the bank's securities. In consequence, amongst other things, any right of the second plaintiff to receive dividends from the third defendant is charged in equity with repayment of the amount which the second defendant paid to the Commonwealth Bank. As well, the Cross-Claim asserts that Brett owes the second defendant $100,000 on a loan account. The Cross-Claim seeks to enforce the various personal obligations it alleges, and an order for sale of the shares which are charged. 18 As mentioned earlier, it was on 12 November 2004, after the filing of this Cross-Claim, that the plaintiffs filed their Notice of Motion challenging the retainer of the fourth defendant. Matters Relevant to Authority to Appoint Fourth Defendant to Act for Second and Third Defendants

The Allegation that Michael is a Managing Director 19 In the Amended Statement of Claim, the plaintiffs pleaded that Brett and Michael are joint Managing Directors and shareholders of the second defendant and of the third defendant. In his defence Michael does not admit that he and Brett are joint Managing Directors of the two companies. The second, third and fourth defendants each admit that allegation.

Articles of Association of Second Defendant 20 The second defendant was incorporated under the Companies Act 1961, with Articles of Association as set out in Table A of that Act, subject to some modifications made by the Articles. Table A, as so modified, includes the following provisions: "73. The business of the company shall be managed by the directors who … may exercise all such powers of the company as are not, by the Act or by these regulations, required to be exercised by the company in general meeting … … 80. Subject to these regulations questions arising at any meeting of directors shall be decided by a majority of votes and a determination by a majority of directors shall for all purposes be deemed a determination of the directors."

The provision in Table A for a chairman to have a casting vote was deliberately omitted. "83. The quorum for a Directors' meeting shall be two until otherwise determined by the Directors. 91. The directors may from time to time appoint one or more of their body to the office of managing director for such period and on such terms as they think fit, and subject to the terms of any agreement entered into in any particular case, may revoke any such appointment … … 93. The directors may entrust to and confer upon a managing director any of the powers exercisable by them upon such terms and conditions and with such restrictions as they may think fit, and either collaterally with or to the exclusion of their own powers, and may from time to time revoke, withdraw, alter or vary all or any of those powers."

Clause 18 of the Articles substituted the following for Clauses 64, 65 and 66 in Table A: "Subject to these Articles all of the Directors shall retire at the first and each successive annual meeting and be eligible for re-election …"

Articles of Association of Third Defendant 21 The third defendant was incorporated with Articles which included a provision (Article 98) analogous to Article 73 of the second defendant. It had the following Articles: "89. The Directors may meet together for the despatch of business adjourn and otherwise regulate their meetings as they think fit and may determine the quorum necessary for the transaction of business. Until otherwise determined two Directors shall form a quorum. … 91. Questions arising at any meeting shall be decided by a majority of votes. In case of an equality of votes the Chairman shall have a second or casting vote."

It had no provision for anyone being a Managing Director. Article 77 requires "one third of the Directors or if their number is not a multiple of three then the number nearest to but not exceeding one third " to retire from office at each annual general meeting.

How Defendants put their Assertion of Retainer 22 On 28 September 2004 the solicitors for the plaintiffs wrote to the fourth defendant, referring to the Notice of Appearance which he had filed on behalf of the second and third defendants. The letter enquired: "2. Please provide us with a copy of the resolution and minutes or meeting of the board of directors of each of Bremick and BMB resolving: (a) to appoint you and your firm as their legal representative in these proceedings including, the payment of your legal fees in so acting; (b) to oppose these proceedings in general including the Plaintiff's application for expedition; and (c) to instruct you to file your affidavit sworn 13 September 2004 to oppose the Plaintiffs' application for expedition. 3. Kindly provide to our client copies of all documents relating to your retainer in this matter including, but not limited to all fee disclosure documents/retainer agreements and all correspondence exchanged between your firm on the one part with Bremick and/or BMB on the other part in respect of such retainer. Our client requires such documents in his capacity as a director of both BMB and Bremick." 23 On 6 October 2004 the fourth defendant replied saying: "2. As you are well aware, there is no resolution or minutes of any meeting of the board of directors of Bremick or BMB resolving to appoint the writer or this firm as the legal representative of either of those companies in these proceedings , or in relation to either of the other matters referred to in your letter. Nor could there be. There are only two directors of Bremick and BMB; your client, the first plaintiff, and his brother, the first defendant. We trust that you do not make so bold as to suggest that your client, as one of only two directors of each of those companies, is entitled to sue the companies and then disable themselves from defending his claim by pointing to the absence of a board resolution appointing solicitors? By commencing the proceedings - and consenting to orders of the Court on 17 September 2004 which obliged the companies to file and serve their Defences and Cross Claim on or before 29 October 2004 - your clients' conduct has obliged the companies, by their management, to defend themselves. Indeed, having commenced the proceedings against the companies, your client, the first plaintiff, has placed himself in a position in which he has an interest which is adverse to the interests of the companies and, in the ordinary course, would be duty bound as a fiduciary, to absent himself from any board meeting at which the defence of the proceedings arose for consideration. If that were not the correct position as a matter of equity and corporations law, your client, the first plaintiff, will have engineered a situation in which he has deprived the companies of an opportunity to defend themselves and they would be exposed to the default procedures under the Supreme Court Rules. 3. We enclose copies of our general retainer agreement for Bremick Pty Ltd dated 3 August 2001 and our instruction from Bremick Pty Limited and BMB Investments Pty Ltd dated 10 September 2004."

The "General Retainer Agreement" 24 The document which was described as "our general retainer agreement" is a six-page document, on the letterhead of the fourth defendant's firm of solicitors, entitled "Disclosure and costs agreement between solicitor and client". It is addressed to: "The Manager, Bremick Pty Ltd." 25 It includes the following: "Thank you for your instructions to act in this matter . We are required by the Legal Profession Act to disclose information about your rights and the terms of our engagement, which are as follows: The Work 1. The work you require us to do is set out in the annexure to this agreement. … 5. We may either: (a) ask you to pay the expenses directly, or Method of billing and payment (b) obtain funds from you on account of an expense to be incurred, or (c) seek reimbursement from you of an expense we have paid on your behalf; (d) if any disbursements remain unpaid at the completion of the matter or upon the termination of the retainer, we will send you a bill for those; (e) we will bill you for our professional costs at the completion of the matter or upon termination of the retainer … Costs which may be recoverable from the unsuccessful party

13. If an order is made requiring the unsuccessful party to pay your costs, that order will not affect your liability to pay our costs and expenses under this Agreement.

Generally speaking, if the matter proceeds to a hearing and if you obtain a verdict then you can expect an order to be made that the other party pay a proportion of your costs. You will not however recover all of your costs from the defendant. You will only recover the amount, which is agreed with the defendant or, failing agreement, the amount which an assessor considers to be fair and reasonable to be paid by the defendant. If the matter is settled, then it may be settled for an amount which includes your costs but in that event we will let you know before you settle, the amount which you can expect to receive clear of professional costs and expenses, medical expenses and the like.

If you are the unsuccessful party, the Court will normally order that you pay the other party's costs, which may be substantial.

GENERAL ADVICE ANNEXURE TO FEE AGREEMENT The work we will undertake for you may include: · Attending you and receiving instructions; · Attending to advise you of your legal position; · Negotiating with other parties and legal representatives in connection with your matter. · Further advising you, and receiving your further instructions from time to time. · If instructed, commencement, continuation or defence of legal proceedings; · Carrying out all work associated with representing you." (emphasis added)

The "estimate of professional costs" was followed by a table in which one column was headed "range of verdicts/settlements" , and the other "estimated range of costs" . The document is signed by Michael, and dated 3 August 2001. Alongside Michael's signature the client is again identified, in handwriting, as "Bremick Pty Ltd" .

The Specific Retainer 26 The other document enclosed with the fourth defendant's letter of 6 October 2004 is a letter dated 10 September 2004 addressed to the fourth defendant's firm, on the letterhead of the second defendant, and signed by Michael over the title "Michael Hawksford, Managing Director". The title to the letter identified the parties to the present proceedings. It continued: "I refer to the above proceedings. Bremick Pty Limited and BMB Investments Pty Limited would be grateful if you would take all necessary steps to enter an Appearance on their behalf in the above proceedings and cause them to be represented by counsel at the hearing of the application for expedition."

Legal Bills 27 The final item of evidence relied upon by the defendants is a collection of legal bills. Four of them are tax invoices from the fourth defendant's firm, addressed to "The Manager, Bremick Pty Ltd". Each begins "Dear Mark Macourt". Mr Macourt is an officer of the second defendant. 28 The first tax invoice is dated 30 October 2002, and bears the heading "Corporate Issue". It relates to work over the period 23 April 2002 to 28 October 2002. Some of the items of work charged for relate to the fourth defendant dealing with both Brett and Michael on different occasions. By the end of the period covered by this tax invoice Brett has engaged his own solicitor, Mr Patakas. An entry relating to 25 October 2002 concerns an attendance by the fourth defendant on Mr Patakas and another gentleman, concerning "proposals re SMG restructure & Brett's ranting and threats re money". ("SMG" is the Senior Management Group of the second defendant.) 29 The second memorandum, dated 12 December 2002, is headed "Corporate Issue" and relates to work done between 21 October 2002 and 29 November 2002. It includes numerous contacts between the fourth defendant and Mr Patakas. The entries are suggestive of serious disagreements between Brett and other people in the management of the second defendant. Samples are "BH's threat to go to GE", "BH met with GE - GF not worried. BH furious", "BH's purported refusal to travel to Coventrys after refusal of $100,000 interim dividend", "Meet Brett Hawksford re dividend offer - abuse - BH proposed Bremick pay out CBA and still pay dividend to him." 30 The third memorandum of fees is dated 5 May 2003, and relates to work done over the period 3 December 2002 to 15 April 2003. It is headed "Statutory Notice". The fourth defendant continues to have frequent contact with Mr Patakas. The topic discussed between the fourth defendant and Michael on 18 December 2002 was "Brett Hawksford extortion". A conference between the fourth defendant and Brett on 8 April 2003 related to "threats re ACCC & fax to marketing". That entry was followed by a telephone call from the fourth defendant to Michael, to "discuss Brett's threats". 31 The fourth memo of fees is dated 8 May 2003. It is also headed "Statutory Notice". It claims only reimbursement of some disbursements. 32 The final item is a letter from Mr McNally, barrister, dated 1 March 2004 to the fourth defendant's firm, enclosing a memorandum of his fees relating to the second defendant for "perusing facility agreement and fixed and floating charge and advising in respect of various matters". Onus of Proof 33 Ritchie's, Supreme Court Practice, para 66.1.2 says: "There are conflicting authorities as to whether a solicitor bears the onus of establishing the authority to appear in the proceedings. The decisions in Morgans Hill Gold Mining Co v Briscoe (1887) 8 NSWR 123; Harry S Bagg's Liquidation Warehouse Pty Ltd v Whittaker [1982] 44 NSWLR 421 at 430; AW & LM Forrest Pty Ltd v Beamish (1998) 146 FLR 450; BC 9804350 all favour the view that the solicitor bears the onus of proof. Conversely, other authorities have held that the party impugning the solicitor's authority must establish its absence: Adams v London Motor Builders [1921] 1 KB 495; [1920] All ER Rep 340 at 500 per Bankes LJ and at 500 per Atkin LJ; Halliday v Sacs Group Pty Ltd (Dawson J, 23 December 1992, unreported); Halliday v High Performance Personnel Pty Ltd (in liq) (1993) 113 ALR 637 at 639; BC 9303570 per Mason CJ. See casenote "Solicitors: Challenge to Retainer - Casenote; Knox Street Apartments v Flexman " (2002) 76(4) ALJ 228." 34 In Sanpine Pty Ltd v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 365 at [170] - [180] I discussed the principles involved in deciding which of the parties in litigation bears the onus of proving a particular matter, and how that question is affected by the precise cause of action alleged or relief sought, and defences raised, in a particular piece of litigation. I will not repeat that discussion here. Those principles lead to the conclusion that when a party to litigation seeks to have a claim stayed or dismissed, or (as here) an order that the appearances of certain defendants be struck out, on the ground that the solicitor purporting to act for a party is not retained, the onus of proving the lack of retainer is on the person who asserts it. The lack of retainer is a negative fact, of which the Court needs to be satisfied before it makes any such order, and the party who asserts that fact must prove it. 35 I do not accept that any of the cases referred to in Ritchie as ones favouring the view that the solicitor bears the onus of proof, require any different conclusion. 36 The first case referred to in Ritchie is in fact called Hawkins Hill Gold Mining Co v Briscoe (1887) 8 NSWR (Eq) 123. As a decision of the Full Court of the Supreme Court of New South Wales (Stephen, Deffell and Owen JJ) it is binding upon me. However, it is not really a decision about onus of proof at all. Though it held that a defendant to proceedings can "call on the plaintiff's solicitor on the record to produce his authority", that holding was in response to a submission by counsel (at 126), and a holding by the trial judge (at 129), that it was only the plaintiff in litigation who could challenge the authority of someone who was purporting to act for him. 37 The precise question which Stephen J posed as arising was stated (at 129) as being "can a defendant call on the plaintiff's solicitor on the record to produce the authority on which he acts?". The reasoning of Stephen J (with whom Deffell and Owen JJ concurred) on that topic included the following, at 130-131: "I think the answer to this question may be most readily found in the answer to the question whether, where a suit is brought without authority, the plaintiff on the record would, in the event of the success of the defendant, be liable for costs. It has not been seriously contended that the plaintiff in such a case would be liable, and if that is so, why should the defendant not be permitted to challenge the authority of the solicitor? Must he allow the suit to proceed, and in the event of his success look to the solicitor, and to him alone, for his costs? … the Primary Judge appears to have held that until the plaintiff himself interferes, the solicitor must be assumed to have the necessary authority, but from this decision I feel constrained respectfully to dissent. In this very case indeed the plaintiff company might never have known of the institution of this suit, and consequently never have interfered, and in that event what would have been the position of the defendants? If the plaintiff does know of the institution of the suit, and yet takes no steps to stop the proceedings, it would prove conclusively that he recognised the authority of the solicitor; but where he has no such knowledge, the defendant, unless he is permitted to interfere, has only the solicitor on the record to look to for his costs instead of the plaintiff. I think, too, that the case of Schjott v Schjott (19 Ch D 94) is an authority for the proposition that a defendant has, equally with a plaintiff, the right to call upon the solicitor on the record to produce his authority."

That reasoning is on the topic of who has standing to challenge the authority of a solicitor who has purported to appear for a party in litigation. It is not on the topic of onus of proof. 38 The factual situation was that the solicitor (Mr Want) purporting to act for the plaintiff (an English company) was challenged to produce his authority, and he produced none. There was also evidence that the plaintiff had gone into liquidation, and that, when the defendant had asked Mr Want to accept service of process in another action, Mr Want had told the defendant there was no one in the colony who could accept service. In that situation it is, with respect, no surprise that the Full Court concluded that the suit which Mr Want had begun should be dismissed with solicitor-costs to be paid by Mr Want. Such a conclusion would be arrived at, on that evidence, even when the defendant had the onus of proving the lack of authority. 39 Harry S Bagg's Liquidation Warehouse Pty Ltd v Whittaker (1982) 44 NSWLR 421 involved a challenge to the retainer of a solicitor who had been appointed by a Mr White to act on behalf of a company. At 427 Powell J held that there were no validly appointed directors of the company, and no validly appointed managing director. The basis for Mr White's authority was then argued to be, inter alia, that the members of the company acquiesced in him acting as a director, and hence the company must have held him out as having authority to retain the solicitor. That argument was rejected by Powell J, at 429, on the ground that even if as between the solicitor and the company Mr White would have had ostensible authority to engage the solicitor on behalf of the company, a third party was free to establish the true position. It followed from his Honour's earlier findings that the true position was that Mr White did not hold any office in the company which would have conferred upon him actual authority. His Honour then, at 430, pronounced the only part of the judgment which explicitly deals with the topic of onus: "The result of all this is that, unless - the onus of establishing which, in the absence of a retainer under seal by Fanhaven, would seem to lie on Fanhaven ( Daimler Co Ltd v Continental Tyre and Rubber Co (Great Britain) Ltd (supra) at 327 per Lord Atkinson) or on the solicitor on the record for the Plaintiffs (see Chitty's Archbold Practice 12 Ed (1866) 85; Daniell's Chancery Practice 4 Ed (1865) 289, 491 and cases there cited) - since the commencement of these proceedings the actions of Mr White in purporting to retain the solicitor have been ratified by duly appointed Directors of Fanhaven (see, for example, Danish Mercantile Co Ltd v Beaumont (1951) 1 Ch 680) or, in the absence of any duly appointed Directors, by the members of the company in general meeting ( East Pant Du United Lead Mining Co (Ltd) v Merryweather (1864) 2 H & M 254; 71 ER 460; Danish Mercantile Co Ltd v Beaumont (supra) at 686 Buckley on the Companies Act 12 Ed (1949) 169; 13 Ed (1957) 171) there is no evidence that the solicitor has been validly retained on behalf of the company. On this aspect of the matter, all I can say is that, notwithstanding the frantic activity which occurred, or is said to have occurred, on the 15 th or 16 th July 1982 (see Exhibits "P", "Q", and "R") and on 21 st July 1982 (see Transcript p136-p140; MFI's 15-23 inclusive) there is no real evidence before me either that, Directors of the company having been validly appointed, the retainer of the solicitor was ratified, or that, there being no Directors of the company validly appointed, the members of the company in general meeting ratified the retainer of the solicitor." 40 The explicit statement concerning onus in the first sentence of this quotation relates to the onus of establishing ratification of the authority of a solicitor who had commenced an action without instructions. I accept that it would be the party who alleged that there had been such a ratification who would bear the onus of proving it. That does not lead, however, to the conclusion that whenever there is a challenge to the retainer of a solicitor, it is the solicitor or the client he is purporting to represent who bears the onus of establishing the solicitor's authority. 41 AW & LM Forrest Pty Ltd v Beamish (1998) 146 FLR 450 concerned a motion challenging the retainer of the solicitors for the plaintiff. At 458 Young J refers to Harry S Bagg's and states: "The onus is on the solicitors to establish their retainer and they do that ordinarily by producing the signed retainer. They must also show the authority of the person who signed it."

Those observations were not, however, part of the ratio of the case, because, at 458, a positive finding was arrived at that "Mr Forrest had no power to appoint solicitors without the authority of the board." Thus, the decision in the case did not turn on any question of onus. 42 Daimler Company Ltd v Continental Tyre & Rubber Company (Great Britain) Limited [1916] 2 AC 307, referred to by Powell J in Harry S Bagg's, was not a case in which there was a motion to stay a plaintiff's claim, or defendant's defence, on the ground that the solicitor lacked authority. Rather, it was an action brought in the name of a company to collect debts, during World War I. The plaintiff's directors and shareholders were, with one exception, German nationals. The action had been begun in the name of the company on instructions of its secretary, who was German-born but had become a naturalised Englishman. The plaintiff took out a summons to sign judgment, which was opposed, on the grounds (i) that the company and its officers were enemy aliens and consequently that the company was incapable of instituting the proceedings or giving a good discharge for the amount claimed, and that the defendants, in paying the amount claimed, would be acting in contravention of the Trading with the Enemy Act 1914, and (ii) that there was no authority in the solicitors for the company to issue the writ. The defendants sought that unconditional leave to defend should be given to them. The courts below had held that the plaintiff should have liberty to sign final judgment. 43 The House of Lords held that the defendants should be permitted to defend. Lord Atkinson, at 320 accepted that leave to defend should be granted if the judge "… is satisfied that the defendant has a good defence on the merits, or thinks the facts disclosed by the defendant sufficient to entitle him to be permitted to defend the action." After outlining the skimpy and unsatisfactory evidence concerning the authority of the secretary to institute the action, Lord Atkinson said, at 327: "The burden of proving that the secretary had power and authority to institute the present action some months after the outbreak of the war rested on the respondent company. I am clearly of opinion that they have not discharged that burden." 44 No other of their Lordships dealt specifically with the question of onus. Lord Parker of Waddington (with whom Viscount Mersey and Lord Kinnear agreed (at 317), as did Lord Sumner (at 336)) at 336-7 made a positive finding that the action "was instituted without authority from the company". Thus, Lord Parker's decision did not turn on any question of onus. The case as a whole cannot be regarded as one which is authority for any proposition about onus of proof in an action such as the present one. 45 Even Lord Atkinson's remarks, quoted at para [43] above, are not clear about whether his Lordship was talking about a true onus of proof rather than an onus of adducing evidence. As well, when the issue before their Lordships concerned whether leave to defend should be granted, and there was evidence which (putting it most favourably to the respondent) suggested that there was a real question to be investigated about the secretary's authority, one can understand that leave to defend would be granted unless the respondent showed that the secretary had the necessary authority. That is not the same forensic context as there is in the challenge to retainer in the present case. 46 The authority which points the other way is extensive. Halliday v Sacs Group Pty Ltd (1993) 67 ALJR 678 (also reported sub nom Halliday v High Performance Pty Ltd (in Liq) (1993) 113 ALR 637) arose after Dawson J, in an unreported judgment delivered on 23 December 1992, had dismissed an application for a review of a taxation of costs. One of the grounds on which the taxation was objected to was that the successful party had never proved that the solicitors who purported to act for it were really retained by it. Dawson J rejected the application. The applicant then applied to Mason CJ for an extension of time in which to appeal. Mason CJ rejected that application on the basis (at 682) that the grounds of appeal were without merit. In so doing Mason CJ said, at 679-80: "Dawson J held that the party who challenges the existence of a retainer bears the onus of establishing the absence of it. In this case, there never was a challenge to the existence of the retainer during the course of the proceedings. His Honour went on to say: The mere fact that a person appears on the record as the solicitor for a party does not necessarily justify the conclusion that there is a contract of retainer between the solicitor and that party; (see, by way of analogy only, Hall v Laver 1 Hare 571, at 575-6; 66 ER 1158, at 1160). But, at least where the party is aware of this and takes no steps to rectify it, then a presumption must arise that there is a contract of retainer between them (see, by way of analogy only, Reynolds v Howell (1873) LR 8 QB 398, per Blackburn J at 400). And, both in so far as the court is concerned and as between the parties to an action, the presumption that the solicitor on the record represents the party for whom he is recorded as being solicitor must surely be a strong one (see Lady de la Pole v Dick (1885) 29 ChD 351, per Cotton LJ at 347. See also O 7, rr 2(2), 7(2)). The applicant contends that the judgments in Adams v London Improved Motorcoach Builders Ltd [1921] 1 KB 495 do not support the approach taken by his Honour. In my view, what his Honour said plainly accords with the judgments of Bankes LJ and Atkin LJ in that case. Further support for his Honour's conclusion is provided by Hudgson v Endrust (Aust) Pty Ltd (1986) 11 FCR 152 and Davies v Taylor (No 2) [1974] AC 225." 47 While a decision of a single judge of the High Court is not a precedent which is binding on a judge of this Court (Bone v Commissioner of Stamp Duties (1972) 2 NSWLR 651 at 654), when two single judges of the High Court each approve a legal proposition, that constitutes a persuasive precedent of high order. 48 It should be said that the decisions in Adams v London Improved Motorcoach Builders Ltd [1921] 1 KB 495; Hudgson v Endrust (Aust) Pty Ltd (1986) 11 FCR 152 and Davies v Taylor (No 2) [1974] AC 225 are not decisions on onus of proof. Rather, they are decisions which were concerned with a situation where a solicitor acted in the name of a plaintiff on the instructions of the plaintiff's union or friend or insurer, where the question was whether the plaintiff, when successful in the action, had any liability to pay the solicitor, which could be indemnified against by a costs order. Each supports the second proposition relied on by Dawson J, that a liability of a person to a solicitor for costs arises if it is established that the solicitor was acting for that person with his knowledge and assent. Even so, both Dawson J and Mason CJ have held that "the party who challenges the existence of a retainer bears the onus of establishing the absence of it." 49 That it is the person challenging the retainer of a solicitor who bears the onus of proving that the solicitor has no retainer has also been accepted in the Full Federal Court in Inglis v Moore & Others (No 2) (1979) 25 ALR 453 at 464-5 per Davies J, in Ernst & Young (Reg) v Tynski Pty Ltd [2003] FCAFC 233; (2003) 47 ACSR 433 at [35] per Branson, Marshall and Stone JJ, and in the Supreme Court of Victoria by Gillard J in McKenzie v Director General of Conservation and Natural Resources & Ors [2001] VSC 220 at [53] - [55]. 50 Some nineteenth century cases had clearly decided that the onus of proving authority, in an application like the present, was on the party whose solicitor had his authority challenged. These are cases referred to in the citation which Powell J gave in Harry S Bagg's to Daniell's Chancery Practice. Pinner v Knights (1843) 6 Beav 174 is a decision of Lord Langdale MR. On a motion to strike out the name of a plaintiff from a suit it appeared that it was the plaintiff's brothers who had instructed the solicitor to bring the suit, allegedly with the plaintiff's permission. Lord Langdale said, at 175: "The law of the Court is perfectly clear, that if the authority afterwards comes into question, aye or no, whether there is authority from the client or not, and there is no writing, it will go against the solicitor unless he can prove distinct authority or implied authority by acquiescence or some other means."

Having come to the view (at 176) that on the evidence it was impossible for the Court to make out on which side the truth lay, he struck the plaintiff's name out. 51 Hood v Phillips (1842) 6 Beav 176 is another decision of Lord Langdale MR, which held at 177-8: "Whenever the question arises, whether the authority has been given or not, and it becomes the subject of doubt and argument, the onus of proving it lies on the solicitor." 52 To similar effect is the decision of Wood VC in Maries v Maries (1853) 23 LJ Ch 154, and that of Lord Langdale MR in Allen v Bone (1841) 4 Beav 493; 49 ER 429. 53 These nineteenth century cases are not ones which made the distinction, which is now made in the law, between an onus of proof, and an onus of adducing evidence. If those nineteenth century cases cannot adequately be explained or distinguished on the basis that they were not making that distinction, I would, in light of the principles and authority earlier referred to, decline to follow them. 54 The distinction between an onus of proof and an onus of adducing evidence is of particular relevance in the present situation. Where party A has the legal onus of proving a negative proposition, and relevant facts are peculiarly in the knowledge of party B or where party B has the greater means to produce evidence relating to those facts, then provided party A establishes sufficient evidence from which the negative proposition may be inferred, party B then comes under an evidential burden, or an onus of adducing evidence: Hampton Court Ltd v Crooks (1957) 97 CLR 367 at 371-372; Apollo Shower Screens Pty Ltd & Anor v Building and Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561 at 564-5; Baiada & Ors v Waste Recycling & Processing Service Of NSW [1999] NSWCA 139; (1999)130 LGERA 52 at [55]. 55 I conclude that in the present case the plaintiffs bear the legal onus of proving that there is no retainer given by the second and third defendants, but that (in the words of Hunt J in Apollo Shower Screens Pty Ltd & Anor v Building and Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561 at 565): "… provided that the plaintiffs have established sufficient evidence from which the negative proposition may be inferred, the defendant carries what has been called an evidential burden to advance in evidence any particular matters with which (if relevant) the plaintiffs would have to deal in the discharge of their overall burden of proof … the plaintiffs' burden of proof of the negative proposition for which they contend is not as difficult in this case as it might otherwise have been because of the defendants' greater means to produce evidence which contradicts that proposition." Is Ostensible Authority Relevant, for Present Purposes? 56 I accept that for the purpose of deciding whether a solicitor has been validly retained to act for a company in litigation, it is the actual authority of the person who has purported to act on behalf of the company which is of importance, not the ostensible authority of that person: Harry S Bagg's Liquidation Warehouse Pty Ltd v Whittaker (1982) 44 NSWLR 421; AW & LM Forrest Pty Ltd v Beamish (1998) 146 FLR 450 at 458. Facts Relevant to Actual Authority 57 It is common ground that there has been no resolution of directors of either company to authorise the appearance in the proceedings. Nor has there been any informal consensus of the members, of the type that can sometimes amount to a decision by a corporation. 58 The "General Retainer" document does not suffice to confer authority on the fourth defendant. It is given only by the second defendant, and so could not be even part of a source of authority for the fourth defendant to act on behalf of the third defendant. 59 Even concerning the second defendant, it does not confer authority to act. There are numerous aspects of its verbiage, which are some of the words that I have emphasised in the extract from the general retainer at para [25] above, which suggests that it is a document directed to a particular piece of litigation which was either on foot or contemplated in August 2001. There is no evidence about the circumstances in which the document came into existence. As Michael signed the document, I can infer that he has knowledge of those circumstances. Even bearing in mind that it is the plaintiffs who bear the onus of proving lack of authority, the fact that the defendants have not explained those circumstances in evidence enables me to draw more strongly the inference which is available from the words of the document that it related to a single piece of litigation. As the present proceedings were not on foot in 2001, it could not have been this litigation. 60 A separate way in which the "general retainer" might be a source of authority is in the section headed "General Advice - annexure to fee agreement" which contemplates the bringing of different legal proceedings. However, the authority to commence, continue, or defend legal proceedings which is there conferred arises only "if instructed". Thus, that portion of the "general retainer" could be a source of the fourth defendant's authority to appear in the present litigation only if the person who instructed him to appear in the present litigation was himself acting on behalf of the second defendant when giving that instruction. The "general retainer" document thus does not achieve anything which is not achieved by a direct enquiry into whether the second defendant gave instructions to appear in these proceedings. 61 The various legal bills relating to the second defendant do not, in my view, advance the matter. As they all relate to the second defendant, they could not provide any basis for the fourth defendant having authority to act on behalf of the third defendant. 62 Even if it were the case that those fee memoranda related to matters concerning which the fourth defendant was validly instructed on behalf of the second defendant, the fact that a solicitor is instructed to act on behalf of a client concerning one matter, confers no authority to act concerning a different matter. Indeed, in Hawkins Hill Gold Mining Co v Briscoe (1887) 8 NSWR (Eq) 123, at 129-130, Stephen J (with whom Deffell and Owen JJ concurred) held that a general authority to act for a client is not enough to authorise a solicitor to commence a suit, and a more specific authority to do so is needed - though a general authority to institute suits would suffice. As well, there is a question about whether those fee memoranda indeed relate to matters concerning which the fourth defendant was validly instructed on behalf of the second defendant. The terms of the fee memoranda, and the involvement of Mr Patakas, suggests that by the time of the work to which they relate the brothers were already at loggerheads. Implied Actual Authority of a Managing Director or De Facto Managing Director 63 I shall assume, without deciding, that the pleading of the plaintiffs that Brett and Michael are joint managing directors, admitted by the second, third, and fourth defendants, is sufficient to establish, as against them, that Michael is indeed a managing director of the company. I shall also assume, without deciding, that it is possible for the third defendant to appoint Michael as Managing Director, even though its Articles of Association do not create any such office. I shall (without deciding that it is proper to do so) ignore any limitations on Michael's authority which might arise from him being a joint managing director rather than a sole managing director. 64 There is no resolution of either company identifying Michael's duties as Managing Director, nor are such duties defined by the Articles of either company. 65 Counsel for Michael pointed out that para 19 of the Amended Statement of Claim said: "It is an express term of the Shareholders' Agreement that each of the Hawksfords have established areas of responsibility within Bremick for its management, including management of the Bremick Business, that are known to and accepted by each other, which are as follows: a) Brett Hawksford shall have the responsibility, control and authority over Bremick's respective areas of marketing and sales, the sales and marketing department of Bremick; and shall hold the position of Marketing and Sales Director, in addition to his position as Joint Managing Director of Bremick (together with Michael Hawksford); b) Michael Hawksford shall have the responsibility, control and authority over Bremick's purchasing, finance and warehouse management." 66 He submits that, if Brett is marketing and sales director, Michael has authority over other areas of the operations of the second defendant, which would include giving instructions to solicitors on behalf of the company. 67 In my view, para 19 of the Amended Statement of Claim does not lead to that conclusion. Firstly, that paragraph is not admitted by any defendant and so does not give rise to the sort of admission on the pleadings which is an incontrovertible fact for the purpose of proceedings in which there is such an admission. Secondly, even if it had any evidentiary force (cf Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 85-6, 98 and cases cited at Ritchie's Supreme Court Practice para 18.3.2 - though I note that Brett has verified the Amended Statement of Claim), it would need to be taken as a whole. Its allegation of Michael's area of responsibility being "Bremick's purchasing, finance and warehouse management" does not, in my view, cover authority to instruct solicitors for the second defendant concerning a dispute about the administration and internal mode of operation of the company, like the present one. Thirdly, in any event the allegation says nothing about Michael's authority in relation to the third defendant. 68 When a person is given the title of "Managing Director" by a company, that brings with it implied actual authority to do all such things as fall within the usual scope of that office: Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549 at 583 per Lord Denning MR; State Bank of Victoria v Parry & Ors (1990) 2 ACSR 15 at 29 per Nicholson J; Corporate Affairs Commission (NSW) v Transphere Pty Ltd (No 2) (1985) 9 ACLR 1005 at 1009 per Young J; Fraser Henleins Pty Ltd v Cody (1945) 70 CLR 100 at 113, 129, 134-5. Thus, for example, it is part of the implied actual authority of the managing director of a company to order goods of a category in which the company deals: Capper's Pty Ltd v L & M Newman Pty Ltd [1960] NSWR 143. 69 Concerning whether a managing director has implied actual authority to instruct solicitors in litigation, Lehane J in Nece Pty Ltd v Ritek Incorporation; Ritek Incorporation v Nece Pty Ltd & Anor (1997) 24 ACSR 38 at 43 said: "No doubt because in most cases a managing director's actions are likely, if necessary, to be ratified, the question in practice rarely arises. Where it does arise, however, it is unlikely to be answered by reference to an abstract or general question such as, did the managing director have authority to instruct solicitors for the company? It is, I should think, highly unlikely that a managing director entrusted with the day to day management of a company would not have implied authority to instruct solicitors to take proceedings to recover debts or to resist claims against the company where the transactions concerned occurred in the daily operation of the company's business. It would not follow, however, that the managing director should be regarded as having implied authority, if the evidence went no further, to instruct solicitors to oppose a winding-up application of any apparent substance. Rather, it might be expected that that would be a matter with which the board would be directly and immediately concerned. … while evidence of what happened in the daily business affairs of Nece might be relevant to the question of the managing director's authority to instruct solicitors in matters arising in the course of those daily affairs, it would not, in my view, cast any light on the implied authority of the managing director to take steps (including instructing solicitors) in response to a winding-up application by Ritek. … It is possible to imagine circumstances which might lead to a finding of implied authority for that purpose: for example, if it were established that, during the course of the transactions giving rise to the claim founding the statutory demand, and perhaps also the circumstances giving rise to an alleged offsetting claim, Mr Sidney consistently, and to the knowledge of the board, represented the interests of Nece in its dealings with Ritek. Such evidence might establish that Mr Sidney was recognised by the directors of Nece as representing Nece in all, or substantially all, aspects of the relevant transactions; and, if that were so, it might not be a difficult step to conclude that he was authorised equally to deal with disputes arising out of the transactions, including, should Ritek choose to pursue any claims it might have by initiating winding-up proceedings, by taking steps on behalf of Nece in those proceedings, including making an application under s459G to set aside a statutory demand. But that is speculation." 70 The litigation which Brett brings against the second and third defendants makes allegations of a kind, relating to the internal administration of the company, which it would not be within the usual scope of a managing director's authority to deal. Michael did not have implied actual authority from either the second or third defendant to instruct solicitors to deal with them. 71 Nece Pty Ltd v Ritek Incorporation; Ritek Incorporation v Nece Pty Ltd & Anor (1997) 24 ACSR 38 involved a company with two shareholders, and two directors, who were in deadlock. The following remarks of Lehane J at 46 apply equally in the present case. "The reason there is no authority, and no ratification, is that it is not given because one of the parties - particularly, one the directors - whose affirmative vote is needed in order that it should be given is unwilling to give that affirmative vote. It could hardly be said, where lack of authority resulted from a positive decision of the competent authority of a company - ordinarily the board of directors - to refuse it, that an act done in purported exercise of the authority thus refused was invalid by reason of a contravention of the articles. That must equally be true, I think, if authority is sought by way of a proposal to the board but refused. The situation can be no different, in my view, where in the circumstances it is plain that authority, if sought, would be refused." Agency of Necessity 72 The second, third and fourth defendants rely upon the doctrine of agency of necessity as enabling Michael to act on behalf of the second and third defendants. They rely upon Burns, Philp & Company Limited v Gillespie Brothers Proprietary Limited (1947) 74 CLR 148 at 175, where Latham CJ said: "But the phrase "agent of necessity" is, in my opinion, only a convenient expression used in rationalizing to some extent the rights and obligations which are created in certain circumstances of emergency. It is a "shorthand" method of saying that such circumstances may create an authority to act in relation to the property of another person or to impose a liability upon him which would not exist in ordinary circumstances. Thus in some circumstances a wife may be an agent of necessity to pledge her husband's credit for necessaries. She may have no express authority to bind him, and the husband may even expressly repudiate her authority. But he cannot effectively do so. The authority is said to be irrevocable - see cases in Halsbury's Laws of England, 2nd ed Vol 16, p 700. In such a case there is no express or implied agreement that the wife shall be the agent of the husband. The phrases of the law of agency are used to describe, not the means of constituting the relationship which enables the wife to create a liability in the husband, but the result which follows from the marital relationship in certain circumstances of necessity. The so-called agency arises as what has been described an irrebuttable presumption of law - see Bowstead on Agency, 8th ed (1932), Art 15, pp 31, 32. Agency of necessity arises from action in circumstances of necessity and not from any real or presumed agreement between the person who becomes an "agent of necessity" and the person in whose interest he has acted." 73 The judgment of Latham CJ was a dissenting one, but even if it is taken at face value it does not suggest that the doctrine of agency of necessity has any operation outside the scope of a wife being the agent of her husband, or a ship's master being the agent of the owners of the ship and cargo. More recent textbook discussion does not suggest that the doctrine was ever regarded as capable of conferring authority on anyone other than ships' masters, carriers by land, acceptors for honour of bills of exchange, bailees, and wives or de facto wives - and even some of those categories are debateable: Bowstead & Reynolds on Agency 16th ed paras 4-001 - 4-012; Dal Pont, Law of Agency paras 6.1 - 6.14. Its application to wives has now been abolished in New South Wales by section 7 Married Persons (Equality of Status) Act 1996. What matters for present purposes is that it is a doctrine of the common law, which has never been regarded as applying to a corporation that is unable to act because its internal organs are in a state of deadlock. 74 Equity developed a doctrine applicable to corporations which had some analogies with the common law's doctrine of agency of necessity. The law developed from Foss v Harbottle (1843) 2 Hare 461; 67 ER 189 and had as its starting point that the company was the proper plaintiff to enforce rights of the company, but there were some exceptions to that general principle. It is not necessary, for present purposes, to examine the full scope of those exceptions. (They are discussed in Ford Austin and Ramsay, Ford's Principles of Corporations Law 8th ed para [11.250 - 11.340].) One category of exception permitted a shareholder sometimes to bring a derivative action, in the name of the company, to assert the company's rights when the board could not or would not act. However it is noteworthy that the principle in Foss v Harbottle is referred to as the "proper plaintiff rule" (not the "proper defendant rule"), and that what the exceptions sometimes allowed was a "derivative action" (not a "derivative defence"). More general principles of the law of procedure, applicable to any action, might possibly have given the court power to enable someone to intervene in court proceedings brought against a company if the company was not being represented (section 23 Supreme Court Act 1970; Shales v Lieschke (1985) 3 NSWLR 65 at 80-1, 90; United States Tobacco Co v Minister for Consumer Affairs (1988) 20 FCR 520; Rushby v Roberts [1983] 1 NSWLR 350 at 353-5 cf 360; Corporate Affairs Commission v Bradley [1974] 1 NSWLR 391. The reversal of the actual decision in Shales v Lieschke by J v Lieschke (1987) 162 CLR 447 was on the basis that a parent in proceedings which challenge the parent's right to continue to have custody of the child has a right to be heard, rather than the court having a discretionary power to permit the parent to be heard - that does not cut down the scope of the Court of Appeal's decision about when discretionary intervention can be permitted.) 75 The general law's principles on these topics, of derivative actions and interventions to put a case that a company being sued is not itself putting, are now abolished. Section 236 and 237 of the Corporations Act 2001 (Cth) now provide: "236(1) A person may bring proceedings on behalf of a company, or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for those proceedings, or for a particular step in those proceedings (for example, compromising or settling them), if: (a) the person is: (i) a member, former member, or person entitled to be registered as a member, of the company or of a related body corporate; or (ii) an officer or former officer of the company; and (b) the person is acting with leave granted under section 237. (2) Proceedings brought on behalf of a company must be brought in the company's name. (3) The right of a person at general law to bring, or intervene in, proceedings on behalf of a company is abolished. 237(1) A person referred to in paragraph 236(1)(a) may apply to the Court for leave to bring, or to intervene in, proceedings. (2) The Court must grant the application if it is satisfied that: (a) it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and (b) the applicant is acting in good faith; and (c) it is in the best interests of the company that the applicant be granted leave; and (d) if the applicant is applying for leave to bring proceedings - there is a serious question to be tried; and (e) either: (i) at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying; or (ii) it is appropriate to grant leave even though subparagraph (i) is not satisfied. (3) A rebuttable presumption that granting leave is not in the best interests of the company arises if it is established that: (a) the proceedings are: (i) by the company against a third party; or (ii) by a third party against the company; and (b) the company has decided: (i) not to bring the proceedings; or (ii) not to defend the proceedings; or (iii) to discontinue, settle or compromise the proceedings; and (c) all of the directors who participated in that decision: (i) acted in good faith for a proper purpose; and (ii) did not have a material personal interest in the decision; and (iii) informed themselves about the subject matter of the decision to the extent they reasonably believed to be appropriate; and (iv) rationally believed that the decision was in the best interests of the company. The director's belief that the decision was in the best interests of the company is a rational one unless the belief is one that no reasonable person in their position would hold. (4) For the purposes of subsection (3): (a) a person is a third party if: (i) the company is a public company and the person is not a related party of the company; or (ii) the company is not a public company and the person would not be a related party of the company if the company were a public company; and (b) proceedings by or against the company include any appeal from a decision made in proceedings by or against the company." 76 This statutory power is sufficient to enable the Court to grant leave in appropriate cases for a person to, in effect, conduct the defence of an action on behalf of a company which is being sued. The extensive scope of the power is made clear by sections 241 and 242, which provide: "241(1) The Court may make any orders, and give any directions, that it considers appropriate in relation to proceedings brought or intervened in with leave, or an application for leave, including: (a) interim orders; and (b) directions about the conduct of the proceedings, including requiring mediation; and (c) an order directing the company, or an officer of the company, to do, or not to do, any act; and (d) an order appointing an independent person to investigate, and report to the Court on: (i) the financial affairs of the company; or (ii) the facts or circumstances which gave rise to the cause of action the subject of the proceedings; or (iii) the costs incurred in the proceedings by the parties to the proceedings and the person granted leave. (2) A person appointed by the Court under paragraph (1)(d) is entitled, on giving reasonable notice to the company, to inspect any books of the company for any purpose connected with their appointment. (3) If the Court appoints a person under paragraph (1)(d): (a) the Court must also make an order stating who is liable for the remuneration and expenses of the person appointed; and (b) the Court may vary the order at any time; and (c) the persons who may be made liable under the order, or the order as varied, are: (i) all or any of the parties to the proceedings or application; and (ii) the company; and (d) if the order, or the order as varied, makes 2 or more persons liable, the order may also determine the nature and extent of the liability of each of those persons. (4) Subsection (3) does not affect the powers of the Court as to costs. 242 The Court may at any time make any orders it considers appropriate about the costs of the following persons in relation to proceedings brought or intervened in with leave under section 237 or an application for leave under that section: (a) the person who applied for or was granted leave; (b) the company; (c) any other party to the proceedings or application. An order under this section may require indemnification for costs." 77 It may be that a separate source of power to make such an order is to be found in sections 232 - 234 Corporations Act 2001, if the requirements of section 232(d) or (e) are met. So far as relevant sections 232 and 233 provide: "232 The Court may make an order under section 233 if: (a) the conduct of a company's affairs; or (b) an actual or proposed act or omission by or on behalf of a company; or (c) a resolution, or a proposed resolution, of members or a class of members of a company; is either: (d) contrary to the interests of the members as a whole; or (e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company. 233(1) The Court can make any order under this section that it considers appropriate in relation to the company, including an order: … (c) regulating the conduct of the company's affairs in the future; … (f) for the company to institute, prosecute, defend or discontinue specified proceedings; (g) authorising a member, or a person to whom a share in the company has been transmitted by will or by operation of law, to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the company; … (j) requiring a person to do a specified act." 78 As well, in at least some situations of corporate deadlock about what if any steps should be taken concerning litigation against a company, the provisions of section 1324 Corporations Act 2001 (Cth) may provide a means whereby the deadlock is broken. 79 A further way in which the interests of the company might in practice become represented in the litigation is if some sort of external administrator of the company, or receiver and manager of all or some of its assets, were to be appointed. 80 In all these circumstances I do not accept that there is any affront to justice, such as might encourage me to extend the law, in Brett being able, by non-cooperation, to prevent the usual organs of the company from making a decision that the company be represented in this litigation. In saying that, I am not prejudging whether any application by Michael under any of the statutory sections ought succeed. There are various matters of which the Court must be persuaded before an application under section 237 can succeed: Swansson v R A Pratt Properties Pty Ltd [2002] NSWSC 583; (2002) 42 ACSR 313, and each of the other possible routes to a court order authorising the defence of the proceedings has its own requirements to be satisfied. Rather, the sections provide a range of ways by which a deadlock can be broken, in circumstances that Parliament has decided are appropriate ones. If, on an application under any of these sections the Court were to decide it as not appropriate for Michael to be given the conduct of the defence of the action on behalf of the company, the continuation of the deadlock would simply be the consequence of Michael and Brett being shareholders and directors in two companies which were set up with a structure in which deadlock is a distinct possibility. The law does not enable Michael to act unilaterally to break the deadlock; he can do so only if the Court approves, and on terms (including as to the financing of the defence) that the Court sets. Election/ Waiver /Estoppel 81 The second, third and fourth defendants submit that the plaintiffs have lost any capacity they might have once had to question the authority of Michael to instruct solicitors for the second and third defendants in these proceedings. This arises, they say, from the sequence of events set out in paras [14] - [18] above, in which the plaintiffs not only delayed for nearly two months in filing a Notice of Motion challenging the retainer of the fourth defendant, but in that time took active steps to seek and obtain orders from the Court which imposed obligations on the second and third defendants. Further, they submit the bringing of the present Notice of Motion has something of a whiff of abuse of process about it, in seeking to stifle the second defendant's cross-claim. 82 The plaintiffs say it was appropriate for them to enquire by what right the fourth defendant claimed to have authority to act for the second and third defendants, and that they made that enquiry to the fourth defendant on 28 September 2004 (para [22] above). As well, on 28 September 2004 the solicitors for the plaintiffs wrote to the solicitors for Michael saying: "We refer to the Notice of Appearance by Mr Daley of Colin Daley Quinn on behalf of Bremick Pty Ltd and BMB Investments Pty Ltd dated and filed 13 September 2004. We note that our respective clients are the two directors of Bremick and BMB and that it goes without saying that our client did not agree to the retainer of Colin Daley Quinn. Accordingly, we request the following from your client as the only other director of each of those companies."

and going on to pose a similar set of questions to those asked of the fourth defendant on 28 September 2004. 83 The solicitors for Michael replied, uninformatively, on 1 October 2004: "We act for the first defendant, Michael Hawksford in these proceedings. We do not act for Bremick, BMB Investments Pty Limited or Mr Daley. Any question you may have concerning the retainer of Mr Daley of Colin Daley Quinn by Bremick and BMB Investments Pty Limited should be directed to Mr Daley as their solicitors in these proceedings." 84 The second, third and fourth defendants submit that the letters of the plaintiffs solicitor of 28 September 2004 were quite unnecessary, as Brett knew perfectly well that there had been no resolution of the directors of either company authorising the fourth defendant to do anything, and knew the terms of the Articles of each company, and of the Shareholders Agreement. 85 I do not agree. It is a usual and proper step in litigation to enquire on what precise basis an allegation is made. In the present case, the response to that inquiry yielded specific information in the form of:

(a) the encapsulation of the fourth defendant's position, set out in its letter of 6 October 2004 (para [23] above);

(b) a photocopy of the "General Retainer Agreement" (para [24] - [25] above), and

(c) a photocopy of the letter of instructions dated 10 September 2004 (para [26] above). 86 I have referred to this submission as one of "election/waiver/estoppel" because no precise analysis was given to it. I do not accept, however, that there is any estoppel from precluding the plaintiffs from bringing the present Notice of Motion. Even if the second, third and fourth defendants have been assuming that the fourth defendant was authorised to act on behalf of the second and third defendants, that assumption is not one which has been brought about by conduct of the plaintiffs, in such a way as to make it unconscientious for the plaintiff to now challenge the assumption. 87 In that circumstance it is unnecessary to examine whether there would be a reason based in public policy against giving effect to any estoppel which might otherwise exist. One such public policy argument would require further examination of whether the Court's power to prevent a solicitor from masquerading, in court proceedings, as the solicitor for someone who had in fact not instructed him could be cut down by any estoppel between litigants. A second type of public policy argument concerns whether estoppel can be the means by which a company becomes represented in litigation when there has not been a valid authorisation of its participation in that litigation, when sections 236-242 Corporations Act 2001 (Cth) set out a regime, which goes so far as to abolish general law rights concerning the bringing or intervening in proceedings on behalf of a company. 88 Nor do I accept that the plaintiffs have made an election to treat the fourth defendant as solicitor for the second and third defendants. The ongoing disputes between Brett and Michael, and the fairly prompt questioning of the basis on which the fourth defendant purported to be authorised, count against any such conclusion. In that context, the obtaining of interlocutory orders, of the procedural kind that Hamilton J made on 17 September 2004 (para [15] above) is not the type of advantage that can trigger a finding that an irrevocable election has been made. A similar question to that which arose concerning estoppel, concerning whether there would in any event be a public policy limitation on the assertion of the estoppel, also arises concerning the allegation of election. It is not, however, necessary to examine it. 89 It was not submitted that the present is one of the cases in which waiver might be a separate legal doctrine to estoppel and election: cf Kadian v Richards [2004] NSWSC 382; (2004) 61 NSWLR 222 at [68] - [71], 245-6. 90 I do not accept that there is any abuse of process in the plaintiffs taking the present point. The terms of the orders the plaintiffs sought (para [12] above) shows that, even before the cross-claim was filed the plaintiffs were alive to the possibility that a set-off might be asserted against them. More fundamentally, I see no abuse of process in plaintiffs requiring that those who oppose them in litigation be validly authorised to do so. 91 For these reasons I conclude that the fourth defendant has not been validly retained to act on behalf of either the second or third defendant. Appropriate Form of Orders 92 The Notice of Motion of the plaintiff seeks a total of thirteen declarations and orders. 93 A Notice of Motion is an interlocutory application brought in principal proceedings for the purpose of advancing (in the sense of better enabling to be litigated) the claims which either a plaintiff or defendant makes in the principal proceedings: Haviland v McLeary (1894) 15 NSWR (Eq) 22; Phillips v Walsh (1990) 20 NSWLR 206; Re Jay-O-Bees; Rosseau v Jay-O-Bees [2004] NSWSC 818; (2004) 50 ACSR 565 at [63] - [72]. Taking steps to have removed from the record a party who has purported to appear, by a solicitor who lacks authority, is within the scope of the orders which can be sought by Notice of Motion. If a solicitor has purported to appear without instructions, it can be appropriate to make a declaration that that is what has happened, as well as an order staying or dismissing proceedings which have been brought without instructions, or striking out an appearance and defence which are without instructions: eg the order reformulated by Sheppard and Gummow JJ in McAusland and Anor v Deputy Commission of Taxation and Another; Antlers Pty Ltd and Anor v Official Trustee in Bankruptcy and Anor (1993) 12 ACSR 432 at 438, 451. 94 The first two prayers for relief are for declarations that the fourth defendant has not been retained by, respectively, the second and the third defendants. I will make declarations along those lines. The sixth prayer for relief is that the Notices of Appearance filed by the fourth defendant on behalf of the second and third defendants be struck out. I will make that order. The plaintiffs proffered an undertaking that, if that happened, they would not seek summary judgment against the second and third defendants. I will accept that undertaking. 95 The declarations and orders which the plaintiffs seek go well beyond declarations 1 and 2 and order 6, however. I will consider them by reference to the topics to which they relate.

Prayer 3 - Ruling on Evidence 96 The fourth defendant has sworn an affidavit which was purportedly sworn on behalf of the second and third defendants. The third prayer for relief is for a declaration that that affidavit "be read subject to objections as having been sworn and tendered on behalf of the fourth defendant alone." 97 As to the form of that prayer for relief, a ruling on evidence is not appropriately made by a declaration. As to its substance, the litigation is still at an early stage. It is usually undesirable for rulings about the evidence in proceedings to be made other than by the Judge who hears the proceedings. Further, questions of admissibility of evidence should usually be decided on the basis of facts as they exist at the date of the trial. It is not impossible that facts might arise between now and the date of the trial - such as someone becoming validly authorised to act in the litigation on behalf of the second and third defendants - which might affect that question of admissibility. I decline to grant the third prayer for relief.

Prayers 4, 5 and 7 - No Power to Expend Funds 98 The fourth prayer for relief seeks a "declaration that the second and third defendants do not have the power to expend any of their funds for the purpose of either of them responding to this proceeding as defendants to it, or prosecuting any cross-claim, save and except for the purpose of giving discovery of their documents to the Court and to the other parties to the proceeding pursuant to the Rules and the directions of the Court for the giving of discovery of documents made in this proceeding." 99 I observed to counsel for the plaintiffs in the course of argument that such a declaration would continue to apply even if the fourth defendant were to go off the record immediately. He confirmed that that was its intention, submitting that what was involved here was a dispute between the shareholders in a deadlocked company, and that the company's money should not be spent on such a dispute: Re DG Brims & Sons Pty Ltd (1995) 16 ACSR 559 at 591-2 per Byrne J; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688 at 733 per Young J. 100 The fifth prayer for relief seeks "a declaration that the second and third defendants do not have the power to expend any of their funds to pay for the defence or any cross-claim to this proceeding of either the first or fourth defendants". 101 The seventh prayer for relief seeks "an order that the second and third defendants … be restrained from expending the funds of those two companies otherwise than in accordance with the terms of the declarations of right made in paragraphs 4 and 5 above during the pendency of this proceeding and any appeal from it." 102 These declarations sought are ones in the nature of final relief. The appropriateness of granting that relief could depend upon matters other than whether the fourth defendant was validly authorised to act for the second and third defendants. It is inappropriate to grant such relief by a Notice of Motion in these proceedings. For that reason, I decline to grant them. 103 Order 7 could not be granted in its terms, when declarations 4 and 5 are not made. However, that is a matter of drafting, which is capable of being overcome. Concerning the substance of the order, it is in part an interlocutory order, operating pending the hearing of the present proceedings. Such an order is appropriately sought by Notice of Motion in the proceedings. However, whether any such interlocutory injunction ought be granted might well depend upon questions other than whether the fourth defendant was validly retained. The only question concerning which evidence and argument was put on the hearing of the Notice of Motion related to the validity of the fourth defendant's retainer. I do not regard the question of whether an interlocutory injunction, restraining the second and third defendants from expending corporate funds on this litigation, ought be granted, as having been litigated in the present proceedings. For that reason, I decline to grant any such interlocutory order. This decision is, however, without prejudice to the rights of the plaintiffs to make another application which seeks such an interlocutory injunction. 104 Order 7 is also, in part, an application for an injunction restraining the expenditure of corporate funds pending any appeal from a decision in this litigation. Given the stage which this litigation has reached, well short of a hearing, let alone a judgment, an application for such an order is premature. For that reason I decline to grant it.

Prayers 8 and 10 - Accounting by Fourth Defendant 105 Prayer 8 seeks an order that the fourth defendant account for and repay all monies which have been paid to him or his firm, whether in anticipation of this proceeding, in response to it, or in respect of any cross-claim since 1 December 2003. Prayer 10 seeks an order that he file an affidavit particularising his compliance with Order 8. 106 These orders are likewise final orders. They relate, in part, to payments received well before the present litigation was begun. Unlike the situation where the retainer of a solicitor in proceedings is challenged, questions of the ostensible authority of whoever it may have been who instructed the fourth defendant since 1 December 2003 might arise. Further, the right which is asserted is a right of the second and third defendants, not a right of the plaintiffs. In circumstances where no order has been made under section 237 Corporations Act 2001 (Cth) conferring on the plaintiffs power to assert in litigation a right of the second and third defendants, the plaintiffs do not have standing to assert any such rights. For these reasons prayers 8 and 10 are refused.

Prayers 9 and 11 - Repayment by Michael 107 Prayer 9 seeks an order that Michael repay to the second and third defendants: "… all monies paid out of the funds of the second and third defendants to any legal representatives, and whether paid in anticipation of this proceeding, or in response to it, for costs and disbursements incurred, or on account of costs and disbursements expected to be incurred, in this proceeding on behalf of the first, second or third defendants, and to do so within 14 days of the date of this order." 108 Prayer 11 seeks an order that Michael file an affidavit particularising his compliance with the order sought in prayer 9. 109 Prayer 9 seeks an order which is not in terms limited to monies paid to the fourth defendant or his firm, or limited by reference to any particular timeframe. These prayers for relief should be refused for that reason and for the same reasons as prayers 8 and 10 are refused.

Prayer 12 - Fourth Defendant to Pay Costs of Proceedings to Date 110 Prayer 12 seeks an order that the fourth defendant pay the costs of the plaintiffs' "of and incidental to the response made to this proceeding to date by the second and third defendants and the cross-claim by the second defendant on the indemnity basis, without any right of indemnity for those costs from the funds of either the second or third defendants, and with liberty to the plaintiff to have this costs order assessed forthwith." 111 It is a common order, when a solicitor has taken unauthorised steps in litigation, to require the solicitor personally to pay the costs he has thereby caused other parties to incur. In the present case, however, it would be premature to make an order of the type sought in prayer 12. It is not beyond possibility (I say nothing about whether such an order should actually be made) that in some fashion the second and third defendants come to have their interests represented in the proceedings, and in a way which is able to make use of all or some of the work which the fourth defendant has done so far in the proceedings allegedly on behalf of the second and third defendants. In these circumstances it is preferable to reserve the question of what, if any, order should be made against the fourth defendant concerning the costs of the proceedings to date. 112 I note, however, that the question of whether the fourth defendant should have a right of indemnity for any of his costs from the second and third defendants could possibly depend upon questions other than the actual authority of those who have instructed him. Those questions might include whether Michael had ostensible authority to instruct him, whether it is necessary for the fourth defendant to have relied on an apparent authority of Michael, and if so whether he actually so relied. I also note that it is a matter for the discretion of the Court whether any costs awarded against a solicitor who started an action without authority are ordered on a party-party or indemnity basis: AW & LM Forrest Pty Ltd v Beamish (1998) 146 FLR 450 at 460.

Prayer 13 - Costs of this Notice of Motion 113 The thirteenth prayer for relief is that the fourth defendant and Michael pay the costs of the Notice of Motion on an indemnity basis, without any right of indemnity for those costs from the funds of either the second or third defendants, and with liberty to the plaintiffs to have the costs order assessed forthwith. It is preferable to reserve consideration of this prayer for relief until the parties have had the opportunity of considering these reasons for judgment. Orders

Declare that neither Timothy William Daley, nor the firm of Colin Daley Quinn, solicitors, is or has at any time been retained in this proceeding by the second defendant, Bremick Pty Limited.

Declare that neither Timothy William Daley, nor the firm of Colin Daley Quinn, solicitors, is or has at any time been retained in this proceeding by the third defendant, BMB Investments Pty Limited.

Order that the notices of appearance filed by Timothy William Daley on 13 September 2004 on behalf of the second and third defendants be struck out and removed from the Court file for this proceeding.

Note undertaking to the court by the plaintiffs that they will not move for summary judgment against the second and third defendants.

Direct that within 14 days of the date of delivery of these reasons for judgment the parties make an appointment with my Associate for the further argument of any remaining questions concerning the Notice of Motion. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.