Lettieri v Strangio & Ors [2008] VSCA 205

Court of Appeal (Vic)|2008-10-15|Before: WARREN CJ and HARGRAVE AJA

PRACTICE AND PROCEDURE - Applications on summons - Application for security for costs - Application for stay until legal representation obtained by company - Whether company manager permitted to represent the company in litigation - Company manager is an undischarged bankrupt - Supreme Court (General Civil Procedure) Rules 2005 r 1.17 (1), r 2.01(2) (b), r 64.24.

1 The applicant, Francesco Lettieri, seeks discontinuance of the appeal as misconceived, an order for security for costs of the appeal against the second respondent, Sharp Design Pty Ltd, and an order that the company be represented by a solicitor.

2 The appeal relates to an application for removal of a caveat. The relevant background facts are set out in the judgment of the judge of the Trial Division and do not require revisiting.[1]

3 Before proceeding to determine the substantive application it is necessary to determine whether the first respondent, Bruno Strangio, ought be permitted to speak on behalf of and represent the company. Mr Strangio is an undischarged bankrupt. He submits that the subject property transaction occurred before the sequestration of his assets and is therefore is not affected by his bankruptcy. However, any interest which he had in the property formed part of his estate for the purposes of bankruptcy.[2] Further, his trustee does not consent to him either prosecuting an appeal in his own name or his purported representation of the company. Mr Strangio, therefore, faces difficulty in purporting to act as he does.

4 However, leaving Mr Strangio's bankruptcy to one side for the moment, Mr Strangio submitted he should be given leave to represent the company on three bases: first, the director of the company authorised him to act on its behalf generally;[3] secondly, the company chose to have him do so in connection with this appeal; and thirdly, he, Mr Strangio, had been involved in the matter historically.

5 Given the close connection between Mr Strangio and the company, in that he was a co-party to the appeal, the Court permitted him to be heard for the confined purpose of arguing against the security for costs application.

6 Counsel for Mr Lettieri conceded he could not succeed on the discontinuance relief, it being tantamount to summary dismissal of the appeal. The Court was insufficiently constituted for that purpose. The application in that respect was not persisted with.

7 On an application for security for costs, the Court considers a broad range of factors.[4]

8 The reasons of the judge of the Trial Division do not reveal error. The appeal has no realistic prospects of success. His Honour adverted to the signing of the relevant contract. However, and quite significantly, his Honour considered the balance of convenience was 'overwhelmingly in favour of removal of the caveat'.[5]

An arm's length third party is patiently waiting to settle. On any view, neither Mr Strangio or Sharp Design have at any time tendered the purchase price. Sharp Design is a company with a paid-up capital of $2 and is in a position where its office bearers are very difficult to identify. Mr Strangio himself is bankrupt.

10 No submissions or materials were put before this Court to suggest the discretion was wrongly exercised. Mr Strangio argued the discretion ought just as readily been exercised the other way. The reasons articulated by his Honour do not support that position. Furthermore, Mr Strangio relied on a counterclaim of the respondents to argue the judge ought have exercised the discretion the other way. The reasons of the judge do not reveal any error in accordance with the test for considering appeals from the discretionary judgments.[6]

11 When questioned by the Court, Mr Strangio refused to inform the Court of the financial state of Sharp Design. He merely asserted[7] that Sharp Design had the capacity to pay either through itself or others. When pressed Mr Strangio did not provide further information. Further, we observe that the company has a paid up capital of two dollars and owns no real property in Victoria. Whilst these matters are not fatal they are strong indicators of impecuniosity in the absence of any other evidence of assets.

12 Mr Strangio is an undischarged bankrupt. Sharp Design is a $2 paid-up capital company. When pressed Mr Strangio conceded the company had no capacity to pay unless those behind it paid. He said his children, who own all the shares in the holding company of Sharp Design, would not provide security. No affidavit was filed on behalf of Sharp Design. In the circumstances, therefore, we conclude that there is a risk to the applicant if the appeal proceeds it will not have any order for costs in its favour satisfied

3. Whether an order for security for costs is oppressive

13 Mr Strangio, again in the absence of an affidavit, asserted that Sharp Design was trading and meeting its costs but that there could be a 'cash flow problem' given other circumstances such as an order for security for costs being made. In the absence of any affidavit there is nothing before the court to demonstrate oppression.

4. Whether the impecuniosity of the appellant arises from the conduct of Lettieri

14 Mr Strangio, again, provided nothing on affidavit. He asserted that indemnity costs ought not have been ordered by his Honour. In any event he submitted a bill in taxable form had not been provided on request. Ultimately, he put that Sharp Design could not afford a security for costs order and the difficulties of the company were caused by the negligence of the solicitor acting for the company.

15 Nothing was put before the Court to make out causation, by the conduct of Mr Lettieri, of the impecuniosity of Sharp Design.

16 There were no other relevant matters put by Mr Strangio on behalf of Sharp Design. By contrast Mr Lettieri is at risk on costs if the appeal fails. The Court is satisfied it is appropriate in the circumstances to order security for costs be provided by Sharp Design.

17 The matter of quantum then arises. An estimate of $30,000 has been deposed to by the solicitor for Mr Lettieri. The amount is not challenged. The Court is satisfied security in such sum ought be ordered to be paid within 14 days in a form of security satisfactory to the Prothonotary and in default the proceeding be stayed.

18 The remaining matter is whether Sharp Design ought be required to be represented by a lawyer on subsequent hearings. The law is clear.[8] There are sound policy reasons why a corporation ought be represented by a lawyer.[9] Nothing has been submitted in this hearing to warrant variation or exemption from that policy. The Court is further satisfied that, until further order, the second appellant, Sharp Design, ought comply with r 1.17 of the Supreme Court Rules. No formal order in that regard is necessary. The rule is clear.

1. The second appellant, Sharp Design Pty Ltd, by 4 pm on 29 October 2008 provide security to the satisfaction of the Prothonotary in the sum of $30,000.

2. In default of the second appellant complying with paragraph 1, its appeal stayed.

[1] See Lettieri v Strangio (Unreported, Supreme Court of Victoria, Whelan J, 7 August 2008).

[3] Mr Strangio handed to the Court a letter signed by one 'Kevin Brent Director & Secretary' dated 31 July 2008, a statement advising that Mr Strangio had his full and complete authority to act for and to represent' and 'to bind the company to any agreement executed in the absence of the Director'. There was not any affidavit in support in this respect.

[4] For example, Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40-972.

[5] Lettieri v Strangio (Unreported, Supreme Court of Victoria, Whelan J, 7 August 2008), [31].

[6] For example, Australian Coal & Shale Employees Federation v The Commonwealth [1953] HCA 25; (1955) 94 CLR 621, 627.

[8] See Supreme Court Rules, Chapter I, r 1.17 (1); Hubbard Association of Scientologists International v Anderson [1971] VicRp 97; [1971] VR 788; Hubbard Association of Scientologists International v Anderson (No.2) [1972] VicRp 66; [1972] VR 577.

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