SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

[2019] ACTSC 86

28 September, 11, 17 October, 21 November 2018; 22, 28 March 2019

CORPORATIONS - Members rights and remedies - application in the Court's inherent jurisdiction for leave to commence a derivative action - where companies in liquidation - where liquidator neither supports nor opposes the application - whether conditions should be imposed

PRACTICE AND PROCEDURE - Joinder - pleadings - strike-out - whether corporate entities of which plaintiff was sole director and shareholder should be joined to existing proceedings

PRACTICE AND PROCEDURE - Corporate plaintiffs - leave to appear otherwise than by a solicitor - general principles and factors relevant to the exercise of discretion to grant dispensation - where re-pleading required and companies in liquidation - application refused

Corporations Act 2001 (Cth) ss 236, 237, 447A, 447E, 479(1)

Court Procedures Rules 2006 (ACT) rr 30(4), 210, 211, 222, 425

Insolvency Law Reform Act 2016 (Cth) Sch 2

Carpenter v Pioneer Park Pty Ltd [2008] NSWSC 551; 71 NSWLR 577

Chahwan v Euphoric Pty Ltd t/as Clay & Michael [2008] NSWCA 52; 245 ALR 780

Damjanovic v Maley [2002] NSWCA 230; 55 NSWLR 149

Deputy Commissioner of Taxation v Compumark Pty Ltd [2012] FCA 583; 292 ALR 83

Enviro Pak Pty Ltd v New Horticulture Pty Ltd [2013] FCA 306

Herbert v American Express Australia Ltd [2018] FCA 1790

Hu v PS Securities Pty Ltd t/as Trustee of Joseph Family Trust [2011] NSWSC 303

Manny v David Lardner & Associates [2018] ACTSC 159

O'Toole v Scott [1965] AC 939

Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 64; 97 ACSR 581

Re DH International Pty Ltd (in liq) (sub nom Challis v Hoffman) [2017] NSWSC 870; 121 ACSR 585

Re Dungowan Pty Ltd (in liq) [2014] NSWSC 1721

Re Sundara Pty Ltd [2015] NSWSC 1694

Re Three Chimneys Pty Ltd (in liq) [2015] NSWSC 1754

Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241

1. Mr Manny, the plaintiff, is suing his former solicitor, David Lardner & Associates (the Solicitor), who acted for him in family law proceedings conducted in 2010 and 2011. Mr Manny alleges professional negligence based on advice given before he entered into consent orders in those proceedings. The consent orders had the effect of staying Mr Manny's ability to deal with assets of a number of corporate entities of which he was sole director and shareholder.

2. The corporate entities were also parties to the family law proceedings. The first is Landagency Pty Ltd (ACN 135 024 458) (Landagency), which is not in liquidation and is not presently deregistered. Mr Manny is the sole director and shareholder of Landagency.

3. The remaining three entities are Jeff Manny Constructions Pty Ltd (in liq) (ACN 083 451 870), JK3L Pty Ltd (in liq) (ACN 081 795 128), and Lonagann Pty Ltd (in liq) (ACN 099 576 904) (together, the Companies). They went into liquidation and had been deregistered in 2016. On 12 July 2018, I made orders reinstating the Companies, with reasons for judgment delivered previously on 31 May 2018: Manny v David Lardner & Associates [2018] ACTSC 159 (Manny v Lardner).

4. The reinstatement proceeding was precipitated by an earlier interlocutory application filed 25 January 2018, whereby the Solicitor applied to strike out the statement of claim under r 425 of the Court Procedures Rules 2006 (ACT) (Rules), and sought that summary judgment be entered. One of the grounds on which the Solicitor relied was that the Companies and Landagency were the entities who truly suffered the loss pleaded, not Mr Manny directly, and they were not parties to the proceeding.

5. The consideration of the strike out/summary judgment issue was deferred until the question of reinstatement of the Companies was resolved. The purpose of the reinstatement on 12 July 2018 was so that the Companies could then seek to be joined in the existing proceedings between Mr Manny and the Solicitor.

6. Since that time, the parties have become bogged down in a quagmire of interlocutory applications. Mr Manny has extant applications dated 29 January 2018, 22 May 2018, 11 July 2018, 30 August 2018, 3 October 2018 and 20 February 2019. Through these applications, he seeks the following relief:

(a) Dismissal of the Solicitor's strike out application and application for summary judgment.

(b) Joinder of the Companies to the present proceedings, as well as joinder of Landagency.

(c) That Mr Manny have leave to commence derivative proceedings on behalf of the Companies and Landagency under ss 236, 237, 447A or 447E of the Corporations Act 2001 (Cth) (Corporations Act).

(d) That Mr Manny have leave to represent the Companies and Landagency, rather than a solicitor, as required by r 30(4) of the Rules.

(e) That ownership of the property of the Companies be transferred to Mr Manny under s 479(1) of the Corporations Act.

(f) That Mr Manny have leave to amend the pleadings.

7. The applications were all heard together with the Solicitor's application of 25 January 2018 over multiple partial days of hearing. The duration and interrupted nature of the hearing arose from the piecemeal filing of evidence which resulted in adjournments to address the new material, arguments extending past the time allocated, and the parties each seeking to reopen for different reasons and at different times.

8. In light of the reinstatement of the Companies, the Solicitor no longer seeks summary judgment, save as to seeking any costs of the application seeking that aspect of relief, now thrown away.

9. The order in which it is convenient to deal with the issues is:

(a) Whether the Companies ought be joined to the proceedings;

(b) Whether Mr Manny should be granted leave to bring derivative proceedings on behalf of the Companies;

(c) Whether Mr Manny should be granted leave to represent the Companies and Landagency, rather than a solicitor, as required by r 30(4) of the Rules;

(d) Whether ownership of the property of the Companies should be transferred to Mr Manny;

(e) Whether Mr Manny's current claim ought be struck out; and

(f) Whether Mr Manny should be granted leave to amend the pleadings.

10. Mr Manny's application to dismiss the application to strike out the claim will succeed or fail based on the converse result of the Solicitor's application.

Should the Companies be joined to the proceedings?

11. By way of describing the interest of the Companies and of Landagency in broad compass, on 27 August 2010 and 10 October 2010, orders were made in the proceedings in the Family Court which included a restraint on Mr Manny and the Companies from selling or disposing of a number of properties owned by them.

12. Mr Manny alleges, and seeks to contend on behalf of the Companies and Landagency, that the consent orders ought not to have been entered into by the Companies and that the Solicitor was negligent in the advice given in that regard, or alternatively, acted in breach of the Solicitor's retainer.

13. There may also have been an alternative case that the Solicitor failed to follow instructions. In either case, the contention is that the orders were not in the interests of the Companies and it led the Companies into financial difficulties with their lending institutions, specifically the ANZ Bank, who issued a number of default notices, the last of which is dated 30 November 2010.

14. On 22 December 2010, the ANZ Bank appointed receivers to 13 mortgaged properties owned by JK3L Pty Ltd. On 21 February 2011, the ANZ Bank appointed administrators to the Companies. On 18 April 2011, the creditors of the Companies resolved to wind up the Companies and appointed Murray Smith and Shane O'Keeffe as liquidators of the Companies.

15. The amended statement of claim dated 10 January 2018 claims damages in the range of $26 to $35 million.

16. Multiple parties may be included in a proceeding if (relevantly here) separate proceedings by each of them may give rise to a common issue of law or fact and any of the rights to relief claimed arise out of the same series of events: r 211 of the Rules. The circumstances giving rise to the claim by the Companies and Landagency overlap with the personal claims made by Mr Manny, and accordingly, proceedings brought by the corporate entities will give rise to issues of law or fact that are common to the existing proceedings being prosecuted by Mr Manny.

17. Each person whose presence as a party is necessary to enable the court to adjudicate effectively and completely on all issues in dispute in a proceeding must be included as a party to the proceeding: r 210 of the Rules.

18. The Solicitor properly does not resist joinder of the Companies, in that it is accepted they are proper parties to the present proceedings. However, the key hurdle the Solicitor raises (apart from the other issues dealt with separately) is r 222 of the Rules, which relevantly provides that a person may be included as a plaintiff in a proceeding only if the person agrees to be included.

19. None of the Companies have consented. The liquidator appointed, Mr James Patrick Downey, has not applied for the Companies to be joined, nor has the liquidator expressed his consent for the Companies to be joined. This has led Mr Manny to seek to bring derivative proceedings without opposition from the liquidator.

20. As to Landagency, Mr Manny is currently able to consent to Landagency being joined as a party to proceedings. Again, the Solicitor does not oppose the joinder, but raises the application of r 30(4) of the Rules. It provides that a corporation may start and carry on a proceeding by a solicitor acting for the corporation, or with the court's leave, by an officer or employee of the corporation authorised by the corporation to represent it. That issue is dealt with separately below.

21. In light of these issues, while I accept that the Companies and Landagency are appropriate parties to be joined to the existing proceedings, any joinder must be subject to my findings as to other matters considered below.

Should Mr Manny be granted leave to bring derivative proceedings on behalf of the Companies?

22. Creditors and members of a company have standing to seek leave to bring a derivative action in the name of a company in liquidation: Chahwan v Euphoric Pty Ltd t/as Clay & Michael [2008] NSWCA 52; 245 ALR 780 (Chahwan v Euphoric) at [124], cited in the judgment of Re DH International Pty Ltd (in liq) (sub nom Challis v Hoffman) [2017] NSWSC 870; 121 ACSR 585 (Challis v Hoffman) at [5] per Gleeson JA. As Mr Manny is at least a shareholder (and on his version of the evidence, also a creditor, although it is not necessary to determine that fact), he has standing to bring the application.

23. As the Companies are in liquidation, the application falls within the Court's general equitable jurisdiction, rather than s 237 of the Corporations Act: Chahwan v Euphoric at [124]-[125]. The Court thus has a general exercise of discretion having regard to all the circumstances of the case: Challis v Hoffman at [28]-[29]; Re Dungowan Pty Ltd (in liq) [2014] NSWSC 1721 (Dungowan) at [26] per Black J.

24. As part of that discretion, the Court considers the "three main matters":

(1) Whether the proceedings proposed to be pursued have some solid foundation, in that they exhibit such a degree of merit as to be neither vexatious nor oppressive and to present reasonable prospects of success.

(2) The liquidator's attitude to the question whether the proceedings should be pursued.

(3) Whether practical considerations support the initiation of the proceedings, with particular reference to financial protection of the liquidator and the estate of the company by means of indemnity and, if indicated, security.

25. These three matters were referred to by Barrett J in Carpenter v Pioneer Park Pty Ltd [2008] NSWSC 551; 71 NSWLR 577 (Carpenter) at [34]. They have subsequently been applied by Ward J (as her Honour then was) in Hu v PS Securities Pty Ltd t/as Trustee of Joseph Family Trust [2011] NSWSC 303 at [38], and by Black J in cases such as Re Sundara Pty Ltd [2015] NSWSC 1694 (Re Sundara) at [10] and Dungowan at [25] (citing an earlier decision of his Honour to the same effect).

Do the proceedings have some solid foundation?

26. The requirement that each claim have a "solid foundation" involves, as a practical matter, that "there are reasonable prospects of success and some tangible benefit is genuinely in prospect": Carpenter at [30], cited in Re Sundara at [10].

27. Mr Manny seeks to pursue the Solicitor on behalf of the Companies in negligence and breach of contract. I have previously found (Manny v Lardner at [30]) that there is at least an arguable case to be run on behalf of the Companies.

28. The question whether some tangible benefit is genuinely in prospect requires consideration of whether there will be a dividend returned to creditors if the action succeeds.

29. Mr Manny claims the Companies and Landagency have suffered losses of tens of millions of dollars. Whether the quantum claimed is realistic or fanciful is difficult to say without delving into the merits further and without expert accounting evidence - a task which the Court does not undertake on applications such as this. Mr Manny also claims that he is a significant creditor, owed $3.6 million by the companies in director's fees. The invoices to support that claim were only created after the derivative action application was made and the Companies were reinstated. I have put to one side Mr Manny's claims as a substantial creditor of the Companies. The liquidator has presently declined to adjudicate on the amounts claimed by Mr Manny because it is unnecessary to do so until such time as the Companies may receive sufficient funds to pay any creditor a dividend.

30. There are other creditors listed by the liquidator in the report to creditors, including the ANZ Bank. Mr Manny disputes that this is an outstanding debt, saying that the mortgage to that bank was paid out before the Companies were deregistered.

31. I accept that the Companies had a significant property asset portfolio worth some millions of dollars. However, the assets were also heavily encumbered and the failure to repay those debts is what led to administrators being appointed during the family law proceedings. Whether the loss of the assets was due to any conduct of the Solicitor and whether the losses attributable to such conduct are in the quantum claimed are not matters about which I should express a view on this application.

32. The lack of certainty in the evidence around the liabilities of the Companies, combined with the lack of detail and evidence as to the amounts that might be recovered if they are successful in the proposed causes of action, makes it difficult to confidently conclude that there will be a tangible benefit to the Companies.

33. However, I have accepted there are reasonable prospects of success of the causes of action sought to be pursued. That includes accepting there is a prospect of the Companies recovering an amount of money for some loss (not just nominal damages).

34. If the losses claimed and the debt to the ANZ bank are taken at face value, this is not a case where the Companies were so hopelessly insolvent that any successful recovery would still be insufficient to pay a dividend to creditors. But even if the losses claimed are vastly exaggerated and only a small sum is recovered, that would still represent a tangible benefit in the circumstances of this case. The alleged creditors are Mr Manny and the ANZ bank. There do not appear to be other liabilities or expenses apart from the liquidator's costs and the legal costs of the proceedings. I am satisfied on the balance of probabilities that proven creditors would receive some small dividend, and this is sufficient to warrant pursuing legal proceedings.

35. The liquidator has indicated that he has no way of knowing the merits of the case sought to be put on behalf of the Companies. He has therefore refused to assign any causes of action to Mr Manny and has strongly encouraged Mr Manny to engage independent legal representation.

36. However, the liquidator has also indicated to the Court that he has no objection to Mr Manny prosecuting the action(s) proposed by way of a derivative action, or to the Companies being joined in the existing action on that basis.

37. I accept the Solicitor's submission that the liquidator's attitude to the proceeding is neither positive nor negative in that the liquidator does not express the view that there is no reasonable cause of action to be pursued. The liquidator makes it clear he has simply not investigated the merits of the causes of action raised by Mr Manny as being available to the Companies, due to the Companies being entirely without funds.

38. The liquidator's attitude amounts to a neutral factor in the Court's consideration.

Do the practical considerations support the initiation of the proceedings?

39. This issue was the key focus of the Solicitor's submissions. The Solicitor submitted that an adequate indemnity is perhaps the most significant matter, relying on Dungowan at [48]. It was submitted that no indemnity has been provided to the Companies and no security has been offered.

40. The Solicitor seeks some form of indemnity to protect it from a valueless costs order in the event that the Companies' claims are unsuccessful. I accept that it is necessary to have regard to the risks the litigation poses for the other party, given that three of the plaintiffs will be companies in liquidation: Re Three Chimneys Pty Ltd (in liq) [2015] NSWSC 1754 at [15]; Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 64; 97 ACSR 581 at [10].

41. Affidavit evidence of Mr Boettcher, a solicitor with more than 40 years' experience as a commercial litigation solicitor, estimates the costs of a 10 to 15-day hearing would be in the range of $239,000 to $291,000 and that an adequate indemnity on a party/party costs basis would be approximately $200,000. The estimate is based on the high end of the range and includes the costs of retaining both senior and junior counsel, and the plaintiffs (once joined) and the Solicitor retaining 3 expert witnesses each to address the issues of accounting, property valuation and legal services (as to the proper conduct of family law proceedings).

42. In my view, notwithstanding the experts that may be required, the estimate of a 15-day hearing is overly generous and does not take account of case management and time allocation procedures in which the Court now engages to ensure the efficient use of the Court's resources. The range is closer to a hearing of between 7-10 days and at this stage of the proceedings, party/party costs of $125,000 would appear to be a closer estimate (excluding the costs already spent in defending the proceedings against Mr Manny).

43. Further, an indemnity does not mean funding the entirety of the litigation in a lump sum. Given the stage of the proceedings, with so many unknowns, it would be inappropriate to make such an order here. Provision for legal costs can occur in tranches and this is the more appropriate requirement until the litigation achieves a greater degree of certainty in its course.

44. As a condition of the grant of leave, $30,000 should be paid either into a solicitor's trust account or into court by way of an indemnity of the Companies in respect of a potential adverse costs order, and I will reserve liberty to the Solicitor to apply for further indemnification once the substantive proceeding is further advanced and the issues are properly joined.

45. Other matters such as the requirement for a corporation to be represented by a solicitor and the state of the pleading are addressed separately below.

46. The effect of the reasoning below is that these practical considerations can all be accommodated by a number of conditions. Subject to those conditions being met, I am satisfied that it is appropriate to allow derivative actions on behalf of the Companies to proceed. That finding means that it is unnecessary to consider Mr Manny's alternative argument based on s 447A of the Corporations Act.

Should the Court grant leave to Mr Manny to represent the Companies instead of a solicitor?

47. Rule 30(4) of the Rules provides that a corporation may start and carry on a proceeding in the Supreme Court -

(a) by a solicitor acting for the corporation; or

(b) with the court's leave, by an officer or employee of the corporation authorised by the corporation to represent it.

48. The policy of such rules is that ordinarily a corporation is required to be represented by a solicitor: Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 at [13], per French J, when a member of the Federal Court of Australia.

49. The Court also has a general discretion to allow a corporation to be represented by an unqualified person: O'Toole v Scott [1965] AC 939 at 952, 958-959.

50. There is no single method or criteria for determining whether the Court should grant leave. Relevant factors to be considered include (see Damjanovic v Maley [2002] NSWCA 230; 55 NSWLR 149 (Damjanovic) at [69]-[88] per Stein JA, with whom Mason P and Sheller JA agreed):

(a) the complexity of the case;

(b) genuine difficulties of the unrepresented party;

(c) the unavailability of disciplinary measures and the lack of a duty to the court by lay advocates;

(d) the protection of the client and their opponent; and

(e) the interests of justice.

51. Damjanovic also referred to whether the matter is in an inferior court or tribunal, something which is not relevant to the present application. These types of considerations have been applied in the Federal jurisdiction, most recently by Flick J in Herbert v American Express Australia Ltd [2018] FCA 1790 at [20].

52. Authorities such as Deputy Commissioner of Taxation v Compumark Pty Ltd [2012] FCA 583; 292 ALR 83 at [20] and Enviro Pak Pty Ltd v New Horticulture Pty Ltd [2013] FCA 306 at [18] have referred to factors in addition to those mentioned above, although they do appear to fall within the broader considerations already identified. They include:

(a) the manner in which the case has progressed to date;

(b) the manner in which the case can proceed in the future without a solicitor;

(c) whether the lack of disciplinary measures in relation to the person seeking to represent the company will affect the administration of justice;

(e) whether the case can be conducted in an orderly and responsible fashion without a solicitor;

(f) whether there are financial considerations which would inhibit a company from obtaining legal representation;

(g) the stage which the case has reached;

(h) whether the defendant is likely to expend more funds in defending the claim absent a solicitor acting for the company; and

(i) the effect, if any, on court resources and in particular on other litigants in the court list if the company were to appear without a solicitor.

53. In the present case, Mr Manny strongly desires to represent the Companies and Landagency himself. He submits that he has dealt with lawyers over many years and he has lost trust in them. He says he can be more responsive to the needs of the Court or issues that are identified by his opponent if he can interact with the Solicitor's legal representatives directly. Part of the reason for that submission, Mr Manny contends, is that there is no person who knows the details of the case, including the historical facts and the documents, better than him.

54. Mr Manny also has concerns about costs for the Companies and Landagency. He submits that for a solicitor to properly get across the matter and the documents will take months and this will be a very expensive exercise. As the Companies and Landagency have no funds that can be diverted to legal fees, he will be funding the legal representation personally.

55. Although he is not a lawyer, Mr Manny submits (albeit not in these words) that:

(a) he is a relatively sophisticated businessman with an ability to understand court processes and legal concepts;

(b) that despite the voluminous paperwork, the case is in fact straightforward; and

(c) that his prompt dealings with people such as the liquidator and ASIC in progressing issues and putting evidence before the Court indicates that he is well up to the task of representing the Companies and Landagency.

56. Finally, Mr Manny points to the personal impact of the case on him and the fact that he is driving this case and has a vested interest in achieving the best result for the Companies and Landagency. Mr Manny contends that as someone with a vested interest in the result he will prepare and present his argument and the evidence to support it with a thoroughness that a dispassionate legal professional would not necessarily bring to the case.

57. The Solicitor's argument is that the proceedings are factually and legally complex, and will be conducted more efficiently if the Companies and Landagency are represented by a solicitor. The Solicitor points to the convoluted pleadings thus far to emphasise the need for the claims of the corporate entities to be conducted by a legal practitioner, particularly given that three are in liquidation.

Findings as to legal representation for the Companies and Landagency

58. I accept much of what Mr Manny has submitted in terms of his knowledge of the detail of his case, his vested interest in ensuring the proper progress of the matter and his ability to grasp and address legal concepts. I also accept that the costs of engaging a solicitor are significant for Mr Manny. He has undertaken to pay the legal and professional costs of the liquidator, and he is the person who will be responsible for the payment of any legal costs for the Companies and Landagency.

59. However, the variety of considerations and history of the matter to date all persuade me that at present, the Companies and Landagency should be represented by a solicitor. The following are the key factors I have considered.

60. First is the complexity of the case, both legally and factually. Some brief examples illustrate the point. The parties will likely require evidence from an expert solicitor and expert accounting evidence traversing the financial state of the Companies and Landagency in respect of causation and loss, given the large amounts claimed in the Statement of Claim.

61. There may be an issue as to whether legal advice given relating to interlocutory consent orders that do not bring the proceeding to an end falls within the advocate's immunity from suit. Given the conduct occurred in 2010 and 2011, there may be arguments about the application of a limitation period. If the action by the Companies and Landagency is negligence resulting in purely economic loss (as stated in the proposed pleading), there may be additional considerations that need to be addressed, including at the pleading stage.

62. This case is not straightforward either legally or factually, and extra caution is required when the application for leave to conduct a proceeding through a lay advocate relates to corporations that are in liquidation.

63. A second factor that has weighed in my consideration is the manner in which the case has progressed to date. A number of the interlocutory applications brought over time are a result of Mr Manny's lack of understanding of the intricacies of the Corporations Act. Examples include: an initial failure to appreciate who suffered the loss and the effect of deregistration; an initial lack of understanding as to the necessity to appoint a liquidator on reinstatement; and the non-applicability of s 237 of the Corporations Act to companies in liquidation.

64. This is not to be critical of Mr Manny, as he has diligently attended to both researching and acting upon issues when they have been drawn to his attention. It is simply that the way the matter has proceeded has highlighted the real value that a solicitor is likely to have brought to the substantive proceeding to date. Legal practitioners have the expertise to ensure that from the outset, at least the basic legal principles being relied upon are correct, as well as an understanding of what evidence is likely to be relevant, and the means of filing and serving it in a timely manner.

65. In these interlocutory applications, volumes of material have been put before the Court, much of which has not been relevant to their disposal. Further, after judgment on the interlocutory applications was reserved, Mr Manny sought to reopen them, in part to rely upon s 447E of the Corporations Act as an alternate means of the Court granting the same relief he had previously sought. That section no longer applies as it has been repealed (see Sch 2 of the Insolvency Law Reform Act 2016 (Cth) (commenced 29 February 2016). A solicitor's training, qualifications and experience are particularly suited to identifying the issues and the correct legal principles, and then putting the necessary material before the Court.

66. Third, and in part overlapping with the second factor, is the stage the proceedings are at. The matter has not progressed beyond the pleadings despite the case commencing in 2016. The clear formulation of the case is essential so as to give the Solicitor the opportunity to understand exactly what conduct is said to give rise to the causes of action alleged. The current Amended Statement of Claim (discussed further below) is prolix and the proposed further amendments strongly suggest that a solicitor needs to be involved at this stage to significantly advance the proceeding without any further delay.

67. Fourth, is the overall duty of candour a barrister or solicitor owes to the court. The court is entitled to place reliance on that duty and expects it to be met. That duty has already been the subject of an application by the Solicitor to reopen on the present interlocutory disputes, as it recently transpired that Landagency had become deregistered during the course of this tranche of interlocutory litigation, which was a position different from that communicated to the Court by the Solicitor, through his counsel during the hearing, and he therefore properly sought to correct it.

68. Whether or not Landagency was a going concern is so critical to Mr Manny's application for joinder that he must take responsibility for the oversight which led to that corporation's deregistration. Mr Manny may have been unaware that deregistration had occurred and I accept that once the Solicitor drew it to his attention, he moved immediately to remedy the default with ASIC. However, it is an indication of the extra effort that legal representatives must, and do, exert in order to place the true facts before the court.

69. An extension of this consideration is that while all parties are expected to follow proper procedure and adhere to the protocols of the Court, only legal practitioners are regulated and subject to disciplinary procedures. Lay advocates are not subject to the Legal Profession Act 2006 (ACT) or the ACT Legal Profession (Solicitors) Conduct Rules.

70. After judgment on the interlocutory proceedings was reserved for a third time and the parties were notified that the matter was listed for judgment, Mr Manny again sought by email to make further submissions to the Court about matters that were the subject of the interlocutory applications. He had no leave to do so, and had expressly been informed at the conclusion of the hearing on 28 March 2019 not to send further emails about matters before the Court once judgment was reserved. The email was brief, and Mr Manny may not have appreciated that it amounted to a submission, as he has previously demonstrated a willingness to comply with procedural aspects of the litigation.

71. Protocols of the Court serve important purposes in the administration of justice. In this case, both parties had been given multiple opportunities to be heard and to respond to each other's arguments in writing and orally. The court record does not include unilateral emails to chambers sent without leave, and such conduct only serves to create uncertainty about what was read and considered by the Court. More importantly, if a party emails a further submission after judgment is reserved, regardless of how brief, the opponent may be denied procedural fairness. I have not taken the contents of the email into account. It is mentioned here as an example of just one of the many small ways in which corporations benefit by being represented by solicitors, and supports the adherence to that usual course in the case of the Companies and Landagency.

72. A fifth factor is the protection of the Companies and Landagency themselves. Mr Manny is unqualified, unaccredited and uninsured. He is also a party to the proceeding and likely to be a key witness at hearing. It is true that a legal practitioner has not lived through the experience in the same way that parties to proceedings have. A legal practitioner therefore may never possess the same detailed knowledge of the facts, or the ability to retain them in the way that Mr Manny does. However, a corollary of that is the legal practitioner's independence, which enables proper and dispassionate advice to be given to a corporate client, based sometimes on years of training and experience in litigation, which includes critiquing the evidence to be led without any potential clouding of perspective.

73. A sixth factor is the interests of justice, which includes the public interest in the effective, efficient and expeditious disposal of litigation in the courts. This can generally best be achieved through parties employing qualified lawyers.

74. The complexity of the litigation, the desire to protect the Solicitor from inefficient, unnecessary or further protracted litigation, and the protection of the Companies and Landagency from potential exposure to increased liabilities if they are unsuccessful, combine to weigh strongly in favour of a conclusion requiring the Companies and Landagency to be represented by a solicitor until further order.

75. This does not mean that Mr Manny cannot remain substantially involved in the preparation of the case and he may well make arrangements to do so in order to keep costs down, but that will be a matter for him and the solicitor who is engaged on behalf of the Companies and Landagency.

76. The inclusion of the words 'until further order' will permit the Court to keep the question of the representation of the Companies and of Landagency under review. Where there is an uncontroversial directions hearing or a straightforward application, it may be possible for Mr Manny to seek to appear on behalf of the corporate entities on isolated occasions. Further, the proceeding might advance to a point where the risks of a lay advocate appearing or conducting the proceeding are of less significance and the costs of ongoing legal representation warrant revisiting of the issue. Nothing that I have said ought to prevent the Court from considering subsequent applications by Mr Manny for leave to appear, either on isolated occasions or if there has been a material change in circumstances.

Should ownership of the property of the Companies be transferred to Mr Manny?

77. This appeared to be an alternative form of relief sought by Mr Manny in the event that his application to commence a derivative application was unsuccessful. I have taken it to be a claim for the transfer of the legal right to bring proceedings, given that the Companies currently have no assets. I was unable to see from the evidence any facts which would found such an order, let alone the legal basis, as s 479 of the Corporations Act, which was relied upon by Mr Manny, has also been repealed. It has been unnecessary to determine the issue in light of the findings above permitting a derivative action to be brought.

Should Mr Manny's current claim be struck out and leave to amend or re-plead be granted?

78. The amended statement of claim filed 11 January 2018 contains 155 paragraphs and is not presently in a form which permits the Solicitor to properly respond to the allegations. While it discloses a cause of action, it remains difficult to follow, is embarrassing for the Solicitor and recites a detailed chronology of events in a manner which does not permit the Solicitor to understand how the facts pleaded are material to the cause of action alleged. In any event, the entire claim will need to be recast in light of the joinder of the Companies and Landagency as parties who suffered the majority of the losses claimed.

79. I have given consideration to the proposed further amended claim, but it suffers from similar deficiencies and is not a document that I would give leave to file.

80. The amended statement of claim should be struck out in its entirety but leave to re-plead will be granted.

81. The parties have each had substantial success on their respective applications, so that the costs of the hearing should be borne equally by the parties. The Solicitor specifically seeks the costs thrown away on the application that was filed in January 2018. The costs were wasted because of the subsequent reinstatement and now joinder of the Companies. The Solicitor contends that without those subsequent orders being sought and made, the application for summary judgment would have been successful.

82. That aspect of the application was never heard because of the intervening events, including the resolution of these present applications. Ordinarily, the Court does not embark upon a hypothetical trying of an issue for the purpose of determining costs. However, this is a case where it is clear that without the reinstatement of the Companies and their joinder to the substantive proceeding, Mr Manny is unlikely to have succeeded on at least that part of the claim being propounded which seeks damages for losses suffered by the Companies rather than by him. I therefore accept that there is a small degree of wasted costs on the Solicitor's application for which Mr Manny should bear responsibility.

83. In the exercise of the Court's discretion, I will order that Mr Manny pay 5% of the Solicitor's costs of the application filed 25 January 2018, not to be recoverable until the resolution of the proceeding. Otherwise, the parties are each to pay their own costs of the applications.

(1) Subject to compliance with the conditions set out in order 3, leave is granted to the plaintiff to commence and conduct derivative proceedings on behalf of Jeff Manny Constructions Pty Ltd (in liq) (ACN 083 451 870), JK3L Pty Ltd (in liq) (ACN 081 795 128), and Lonagann Pty Ltd (in liq) (ACN 099 576 904).

(2) Subject to compliance with the conditions set out in order 3, the following corporations are joined to proceeding SC 527 of 2016:

(a) Jeff Manny Constructions Pty Ltd (in liq) (ACN 083 451 870) as the second plaintiff;

(b) JK3L Pty Ltd (in liq) (ACN 081 795 128) as the third plaintiff;

(c) Lonagann Pty Ltd (in liq) (ACN 099 576 904) as the fourth plaintiff;

(d) Landagency Pty Ltd (ACN 135 024 458) as the fifth plaintiff.

(3) The Court's leave and joinder of the parties referred to in orders 1 and 2 above are subject to the following conditions:

(a) The corporations referred to in order 2 above are to be represented by a solicitor until further order; and

(b) On or before 3 June 2019, the first plaintiff, Mr Manny, is to pay into a solicitor's trust account or alternatively into Court, the sum of $30,000 by way of partial indemnity in respect of any adverse costs order payable to the first defendant in the proceeding.

(4) The amended statement of claim filed 11 January 2018 is struck out.

(5) Leave is granted to the first plaintiff to file an amended statement of claim on or before 4 June 2019.

(6) The second to fifth plaintiffs are to file any statement of claim on or before 4 June 2019.

(7) The first plaintiff is to pay 5% of the first defendant's costs of the application filed 25 January 2018.

I certify that the preceding eighty-four [84] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Associate Justice McWilliam.