Molnar Engineering Pty Ltd v Burns, E.J. [1984] FCA 201

Date of Order: 17 July 1984 Where Made: Melbourne. ORDER

2. The appellant pay the costs of and incidental to this

JM__THE FEDERAL, COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY } ) )

CORAM: SMITHERS. SWEENEY AND KEELY JJ. 17_ JULY 1984

of a single Judge or this Court refusing an application by

Molnar Engineering Pty. Ltd. (the comeany) that Mr. Frank

Molnar (Moinar) "be granted leave to appear on its behalf" in

"The application is based on an advertisement published in October 1982 in the Sun News Pictorial by The Herald & Weekly Times Ltd. in Which Mr. E.J. Buens, describina himself as the Chief Inspector of Lifts and Cranes, brings to the attention of owners and users or the Molnar Two Post Motor Vehicle Hoists. and to the public generally. that those hoists do not comply with the Lifts and Cranes Act 1967 and Reaqulations made thereunder and that in his opinion those hoists are unsate to be used. and requiring the owners and users of those noists to cease using the hoists immediately. The company claims that in publishing that advertisement The Herald & Weekly

Times Ltd. engaged in conduct which was misleading or deceptive, or was likely to mislead or deceive, and thus was in contravention of s.52 Trade Practices Act 1974. The company is claiming damages against the publisher under s.82 of the Act and is seeking orders under s.87 of the Act requiring the publisher to publish further

advertisements and to distribute letters to rectify the deceptive or misleading conduct alleged. The Herald & Weekly Times Ltd. is taking no part in the hearing of the application.

The application for leave was made by motion on the . third day of hearing of the action. The Court has express power to arant the leave sought (0.4 r.14). Counsel for the resvondent Burns did not consent to leave being qranted; he Made certain opservations of a aqenerzl nature, but refrained from urcing the Court to dismiss the application saying that it wes & matter for the Court. The Herald & Weekly Times is a respondent to the initiating application in these proceedings but has taken no part in the application the subject of this appeal. On the hearing of this appeal Mr. Burns' counsel made submissions only on the question of costs, the notice of appeal having specifically sought an order that "the

Respondent CBurns] pay to the Appellant the costs of the said

His Honour accepted evidence that, as a result of a

resolution carried by a meeting of the directors of the

company, Molnar, if granted leave to appear on the company's

behalf, would "be fully authorized to act for and bind the Company in the course of (the) proceedings until their conclusion". It was accepted also that of 70,005 issued shares of the company 70,001 are owned by Molnar, one each by his wife and two children and one by a proprietary company

owned by him. There was evidence also before his Honour that the "estimated costs of my legal representation for the balance of the expected duration of this action are in excess of $100,000 and that the Applicant cannot both pay those costs and continue in business". As to the company's financial

++» in summary it seems to me that the company at the merent is in tinencial citficulties because of the dirficulty of selling the hoist, that assets or the comvoiny are mortaaged as security for loans obtainea by the company, and that the present income of the company is rot sufficient to cover both the servicing of the loans already in ¢kistence and to make provisicn for either a further loan to pay for legal expenses and legal advice of counsel appearing in the action, particularly when the business 185 such that the income coming from the activities of the company is very low. It is claimed that the company is operating at a substantial loss. It does not have

sufficient funds or access to credit facilities sufficient to remain in production and further pay its legal advisers."

"Impecuniosity of an applicant, being a company, may have effects altogether different from the problem presently before the Court. Those effects are not relevant in the determination of the motion. Nevertheless, it is fairly bold to assert that an aqent, not being a legally qualified

company in legal proceedings in which it is an applicant and which raise difficult and complex questions of fact and law and in which, from what

has occurred already, difficult questions of admissibility of evidence will arise constantly.

"T have much sympathy for the position of the applicant in this case. Much weight must be given to a litiqant beina a company, to be able to present its case before the Court, particularly in claims under the Trade Practices Act. I have taken into account all the submissions made by counsel on behalf of the company, but having reqard to the nature of these proceedings, and the

difficult questions of fact and law which arise, this is a case which, in my opinion the Court should have the benefit of legal practitioners appearing for the applicant. Accordingly, the Court refuses the motion."

Mr. Merkel, who appeared with Mr. Judd on behalf of thse company, conceded that the present appeal is within the category of cases in which appeal courts exercise parcticuiar caution in reviewing decisions cf a Judge at first instance, He contended, however, that, having regard to the finding that the company could not both stay in business and pay its legal

advisers, the application gained support from the dictum of

the Full High Court in Adam Brown v. Philip Morris (1981) 35

ALR at 629 "that the question of injustice flowing from the order appealed from would qenerally be a relevant and

The principles relevant to the exercise of a court's

discretion to qrant leave such as that .sought on the company's motion have been discussed in a number of cases. In

McGra v.__Dobie (1890) 16 VLR 646 at 649 Higginbotham C.J.

delivering the judgment of the Victorian Full Court. speaking

"It cannot be contended with anv show of reason, where the prosecutor has no counsel or attorney. that the justice 1s not to accept the aid of anv other fit ana proper person in discharging his

duty of hearing the evidence and dealing with the charqe."

Tn O'Toole vy. Scott £19653 AC 939 at 959, the Privy Council,

after referring to a court's inherent right to requlate its

"There 15 no reason in orincirle for limiting the discretion @s sucoected, It can be exercised ejther on génsrel «grounds common to many cases or on special crounds arcsimad tm a particular case.

Its exercise snoula not there is a strict necess as prorer for a mag discretion in order t convenience ana exvbeditiar administration or iustice.

pe conrined to cases where ty: it shouic be regardea strate to exercise the fe) 3

In Hubbard Association of Scientologists v. Anderson £19723 VR

340, Smith. Little and Gowans JJ. sitting in the Full Court of the Supreme Court of Victoria having said (at 341) that in superior courts the practice had been to refuse to hear a

company except through the agency of a legally qualified

"Tt would not be right to impose too rigid a limitation on a discretion thus conferred, but it

has long been regarded in the higher courts as proper to refuse to exercise the discretion in

persons (other than on merely formal matters such as adjournments) when the assistance of qualified

persons is available to give the courts help in the administration of justice.

There is no suqgestion here that professional representation has been denied or cannot be procured. Mr. Tampion's avowed object is to establish the position that he be recognized as the company's spokesman in this and ail other proceedings necessary for the prosecution of the

"14.(1) Subject to sub-rule (2) and to Order 43 (which relates to disability), any person may

proceed in the Court by a solicitor or in person. (2) Erycept as provided hy or under any Act, a corporation may mot, wirhour the leave of the Court, commence or carry on any proceeding otherwise than by a solicitor. (3) Sub-rule (2) does not apply to an organisation,"

The rererence to an orqganazatson in rujle 14(3) is to an

organization registered under the Conciliation & Arbitration

Rules dealing expressly with the capacity of a corporation to commence or carry on a proceeding other than by a solicitor, or, to enter an appearance or to defend a proceeding except by a solicitor do not appear in the rules of

the Supreme Court of Victoria. The rules of the High Court

provide that unless the contrary intention appears therein "person" includes "corporation and body politic"; the

expression "plaintiff" includes "a person seeking relief against another person by a form of proceeding in a Court", and the expression "defendant" includes "a person against whom

relief is sought by originating processes". Rule 1 of 0.4

provides that where a plaintiff sues by a solicitor the solicitor shall endorse upon the writ of summons the address of the plaintiff and his own name and place of business or the name of his firm and its place of business. Rule 2 of 0.4 of

"2. (1) A plaintiff suing in person shall endorse upon the writ of summons his place of residence and his occupation.

The Rutes of the Supreme Court of New Scuth Wales contain a provision, eart 4(2), thar exceot as proviaed by or under any Act, "a corporation may not commence or carry on any

In Hubbard Association of Scientologists International

v. Anderson (supra) the Association claimed the right to appear by a lay representative of its own choice. It was said by the Full Court that certain cases:-

regarded as a litigant in person, must appear before the court by or through an agent. The

through which a company may appear before the court may be limited by statute or by the practice of the court. They show also that in superior courts, when not inhibited by statute, the practice has been to refuse to hear a company

person. The provisions of s.5(3) of the Leaal Profession and Practice Act 1958, conferring the right to practice in and before this Court, among others, on persons duly admitted as barristers and solicitors, confer aright of audience on the persons so qualified and recoanized. The provisions of the sub-section do not grant that right of audience to any other class of persons. CBy way of aside it is noted this was an appeal from a judgment of McInerney 3.1] McInerney, J.''s opinion was that when these statutory provisions were read with s.111 of the Act it was 'clear that in the Supreme Court the right of audience on behalf of other persons, i.e. the right to 'appear' for them, 1s confined to barristers and solicitors'. This cannot be questioned. But it is necessary to bear in mind that what is being dealt with is the 'right' to appear or the 'right' of audience, of the persons concerned, not the power of the Court to permit persons to appsar."

cases mentioned Tritcnia Dra, & Ors. v. Equity & Taw

"When an appeal is arqued before the House of Lords, mo one has any right of audience except counsel instructed on behalf of a party or (when the litigant is a natural person) the party himself. In the case of a corporation, inasmuch as the artificial entity cannot attend and araue personally, the right of audience is necessarily limited to counsel instructed on the corporation's behalf."

",.. the well-established rule that argument at your Lordships' bar on behalf of one individual by

another is only permitted if that other is briefed as counsel. Such a rule, limiting a right of audience on behalf of others to members of the English or Scottish or Northern Irish Bars, secures that the House will be served by barristers or advocates who observe the rules of their profession, who are subject to a disciplinary code, and who are familiar with the

methods and scope of advocacy which are follows in presenting arguments to this House."

In Frinton and Walton Urban District Council v. Walton and

District Sand and Mineral Co. Ltd. & Anor £19381 1 All E.R.

649 the defendant corporation's managing director sought to

appear in person. Morton J., having had London County Council

v. London Tramways Co (1897) 13 TLR 254, and Scriven v.

Jescott (Leeds) Ltd. (1908) 53 Sol. Jo. 101 drawn to his

"The language of RSC Order 4 ¥.2 oes not conterplate that a company can sue sn r2rson and the points to which my attention has been draw are sufficient to satisfy me tnat &@ company camuict appear in person,"

The terms of o.4 ¢.2 resembled the High Court Rules set out

above,~ save that no definitions of person, plaintiff or

defendant were contained therein. In London County Council v.

London Tramways Co. (supra) Cave and Wright JJ. held, without argument, that the chairman of a corporation which was a party

could not appear for it. It was also so held by Bray d. in

Kingdom before 1962 was that under rules containing nothing in express terms concerning the right or grant of leave toa company to sue or defend without a solicitor, it was firmly established that 0.4 r.2 did not apply to a company. A company attempting to commence or conduct proceedings other than by a solicitor was not regarded as a litigant suing or

In 1962 when the rules of the Supreme Court of the High Court of the United Kingdom were revised 0.4 r.2 became 0.5

6.--(1) Subject to paragraph (2) and to Order 80, rvle 2, any person \imether or not he sues as a trustee or personal representative or any other representative capacity) may begin and carry on proceedinys an the High Court by a solicitor or in person.

(Z) Except as expressly provided by or under any enactment a body cotporate may 'iot begin or

carry on any such proczelines otherwise than by a solicitor."

A note to that rule states, "A body corporate." -- This Rule

embodies the previously existing practice (see Re L.C.C. etc.

(1897), 13 T.L.R. 264; Scriven v. Jescott (1908), 53 S.J. 101)."

But in this Court the presence of r.14(2) of 0.4 and r.3

of 0.9 introduces a new element. Those rules proceed on the

basis that there is a discretion in the Court to permit a

company to commence and carry on any proceedings other than by a solicitor and to enter an appearance or defend any proceed- ing without a solicitor and, it would seem, it is a discretion

to be exercised by reference to all relevant considerations.

There may well have aiways been a discretion to permit

the appearance on behalf of a party of a non-qualified person

but, as stated in Hubbard Association of Scientologists

International v. Anderson (supra), it has long been regarded in the higher courts as proper, where the assistance of qualified persons is available to give the courts help in the administration of justice to refuse to exercise the discretion

in favour of allowing such an appearance, other than on merely formal matters such as adjournments. It is my opinion that the inflexibility of the practice in England both before and after the promulgation ot the Enalish 90.5 ©.6, could not but be an influence acainst the exercise or that discretion br reterenze to all relevant circumstances. And the discretion rensini.it

in the face of a rule such as 0.5 r+.6 can hardly be other than

Having this in mind, the discretion introduced in 0.4 r.14 and'0.9 r.3 does introduce an element different from that which might have been expected wnen the Federal Court of Australia was established in 1976, had it been intended that

the discretion of that Court should be but a similarly

residual discretion. Certainly a change of emphasis appears to be involved. The discretion introduced in the express provisions of the rules is, in the absence of other guidance,

to be exercised judicially according to the requirements of justice. The discretion is as to a matter of procedure but it may well affect matters of substance. The consequence of permitting a non-qualified person to appear will be to deprive the Court of assistance in respect of matters of law. It might also, according to circumstances, render difficult the proper assessment of fact. These considerations go to the ability of the Court ideally to reach the correct decision on the matters of law and fact involved in the litigation. This may operate to the detriment of a company appearing without a solicitor but such a consequence would be of the company's own makina. The application by the Court of the correct principles of lasz7 and the correct assessment of the facts ina particular case are important cbjectives, but they are nov necessarily unattainable without the assistance of qualified advocetes. The attainment of these objectives, so far a5 possible without qualified assistance, is accepted as

appropriate where a party sues or defends in person.

The discretion being reposed in the Court it is inevitable that it be exercised in favour of a company where there is sufficient reason. According to the strength of the case made as to the existence of such reason, so the weight to

be given to the consideration that the Court might lack

The problem is to recognize what is sufficient reason for the purpose in hand. The common reason for a company seeking to proceed without qualified assistance is, no doubt, that the company does not have the funds to engage such assistance. One would suppose that a company might successfully support an application to sue or defend without

qualified assistance, not only where the company is bereft of funds, but also where having regard to the necessary or reasonable commitments of the company the appropriation of funds to engage qualified assistance for the litigation in question would create financial difficulties with which the company could not cope, or with which it ougnt not be required to cose. The class of corgany involved, the nature of its undertaking, its financial structure, 1ts ability to

retain and pay its staff and no doubt other factors might be

Similarly the identity of the shareholders and the spread of the shareholding would be relevant. So also would the capacity of a person by whom the litigation might be commenced and carried on. In this case Mr. Molnar is, from

the point of view of substance, aone man company. In

addition he is the inventor of the hoist in question and uncerstands the technical factors relating to its safety. It

could no doubt be urged that, in the case of a one man company

Fee eerepcee tee en ene ge -- es eee - -- we ee ee eee |

which seeks leave to carry on the proceedings without a solicitor and which proposes that it be carried on by the one man of the company the situation approximates, in substance,

that of a litigant in person. If Mr. Molnar were carrying on

business as personal proprietor thereof he would have the privilege of conducting litigation himself without qualified

The accessibility of the courts to any citizen unconditionally, in this respect, is regarded as fundamental to the system of justice under the Crown. That ready accessibility to the courts should be available to a juristic person is no doubt similarly fundamental. However, it has been regarded as arpropriate that when a trader decides to use the corporate forn in which to carry on his business for the advantsces flowing therefrom his accessibility to the courts ag plaintiff and bis appearence a5 a defendant should he made conditional as sat forth in 0.5 ¢.6 cf the rules of the Unitec Kingdom and the practice which it reflects. But where a discretion is conferred on the Court, and where a case is

presented that there is sufficient reason to permit a company

to sue or defend without qualified assistance, the circumstance that the company is a one man company and that that man is proposed as the agent by whom the company seeks to be represented, and that he has advantageous educational and technical qualifications, way be significant. With these

considerations in mind I turn to the situation before the

Ido not read his Honour's comments as indicating that because of the financial difficulties referred to by him, he would, but for considerations affecting the convenience and

efficiency of the administration of justice, have granted this

application. Had his Honour not given the weight he did to the inconvenience of not having qualified legal assistance, questions such as those referred to below would have remained for further consideration by him. So far as his Honour was

concerned the matter was concluded by the view that, assuming impecuniosity, it was a bold assertion that in proceedings

where difficult and complex leqal questions of fact and law arose leave should be qranted for a non-cvalified aqent to @ppear for the commany. Tt' waz, an his Hontur's view, too

As the company had the task of sirsuading the Court that there is good reason for the exercise of the discretion Fy the Court in its favour and of performing that task in circum- stances in which there may well not be any cross-examination, it was essential that the material presented should be directed to those matters in respect of which questions may

The financial position of the company was and is not

Clearly established by the evidence of Mr. Molnar. Why he

would ehoose to abandon his action rather than reduce the company's losses by carrying on the business in a way which involves continuing the losses is certainly not explained. It seems that until the third day of the trial it was thought within the capacity of the company to conduct the trial with senior and junior counsel appearing on behalf of the company. Until then it was thought that a hearing over two weeks was probable. At that stage it appeared that the duration of the trial miaht extend to one month, that is for twice the previously anticipated duration. It is apparent that financial resources which would have supported two counsel for two weeks would support a lesser representation for twice that time. On this basis it is difficult to infer that, in the relevant sense, legally qualified assistance for the trial is, for tinancial reacons, not rcassnabiy wethin the capacity of

The statement that it is thoudht rise te continave the eoupany's operations at full strenoth involving the full employment of twenty two employees, at aloss, inevitably raises questions as to whether that course snould be regarded as reasonable for the purposes of this application and at the same time suagests the existence of resources of some siqnificance. There is not, in the evidence, a sufficiently particularised relationship between the cost of maintaining the action with legal representation and the available

resources of the company. In an application of this kind the

applicant should take the Court fully into its confidence.

On the evidence, Molnar's statement that the company's financial situation was such that unless he was granted leave to conduct the hearing on behalf of the company it would have to withdraw from the proceedings unrealistically limits the alternatives open to the company. The company is carrying on a large business at a loss. It is apparently contemplated that that situation will continue until this litigation comes to an end. That may be well into the future. And on what has been stated all those losses will be irrecoverable unless this

case is fought and won. Clearly, therefore, as far as

appears, choices available to the company include reducing the scale of its current business operations or reducing the scale of the lesal representation engaged. There may be reasons for not adopting the former of those choices but they do not at present appear, and indeed having regarc to the importance of the case to the company one would think there may be gocd

In this case it is said that some $300,000 has already been expended in preparations for the case, apparently in legal assistace and the engagement of technical experts. Ina situation where so much has already been spent, and the continuance for some indefinite time of business losses are regarded as tolerable, it is difficult to see that the change

in the anticipated length of the hearing of this case had real

significance in relation to the financial situation of the company and the anticipated allocation of its resources to the

This is not to say that according to the progress of the

litigation, or on the submission of material dealing with

particularity as to the economic policy which it may he incumbent upon the company to adopt, a satisfying case could not be made, upon an application pursuant to the existing liberty to apply, that there is good reason to grant the leave which is sought. Certainly in circumstances inwhich a company's finances are such that a refusal to exercise the discretion in its favour would actually cause the abandonment of preceedings by a company, the lost of skilled lecqal assistance to the Court should carry no weaght. It is fundamental that the courts be accessible to a company as an entity according to law and subject to the law. Thus, the

observations of Higgins J. in Fedecrtsd Eircine Drivers ard

Firemen's Association of Australasia ov. Broken Hili

Proprietarv Co. Ltd. (1913) 16 CLR 245 are in point. In that case an organization registered under the Conciliation & Arbitration Act 1904 sought to be represented in a proceedings in the High Court by its secretary. His Honour said at p.250:-

"I should like to reserve my opinion as to the right of the secretary to appear in this Court; but, of course, no one can contend that sec.27 gives him the right. A litigant is under no

obligation to employ counsel; the organization cannot appear before the Court physically; and to say that a duly authorized secretary cannot put its views before the Court seems to involve a denial of justice to an impecunious organization. In this case the rules of the association provide that 'The General Secretary shall be the officer to sue and be sued on behalf of this

I am not prepared, however, to dissent from my brethren on this point, especially as they see their way to allow, in this case, the secretary to

express the views of the organization without expense."

On the question of the impecuniosity of the company I draw the inference from the observations of the learned Judge that he accepted the general thrust of the statements made by Mr. Melnar concerning his company's financial position. It may be that but for the wseight which his Honour accorded to the desirability of there being available to the Court qvaiified jegal assistance he would have qvranted leave as sougnt but, «as indicated above, this does not clearly arpcsr. But if, as suggested in that ceneral thrust, refusai of the application would really operate as an effective barrier to the continuance of the company's proceedings in this Court, I would, as previously stated, regard the situation as one in which too much weight was given to the loss of qualified legal

assistance. However, if it were the view of this Court that it is required to exercise the relevant discretion then, for

reasons stated above, I could not be satisfied, on the

materials submitted with respect to the company's financial

situation, that good reason is shown for the exercise of the

discretion under 0.4 r.14 in favour of the company.

Accordingly I would dismiss the application with costs.

T certyl Lclt oo. Pw 14
Fe Oe 2 co a as tlee cons for eens Liebe ee Le

TON RN ee OAR TAELENS AOnLihee PESO CMON nd ate LE nate atten ey Bae oe

On appeal from a single judge of the Federal Court of

Australia Between: MOLNAR ENGINEERING PTY. LTD. Appellant and E. J. BURNS Respondent

caused to be published in the Sun News Pictorial by The

Herald & Weekly Times Ltd. (the publisher) an advertisement stating that Molnar Two Post Motor Vehicle Hoists did not comply with the Lifts & Cranes Act 1974 of that State and Regulations made thereunder, and that in his opinion those hoists were unsafe to be used and requiring the owners and

users of them to cease using the hoists immediately.

These hoists were manufactured and sold by Molnar Engineering Pty. Ltd. (the company) which instituted proceedings in this Court in which it claimed that in publishing that advertisement the publisher engaged in conduct which was misleading or deceptive or was likely to mislead or deceive and thus contravened s.52 of the Trade Practices Act 1974 (the Act). The publisher has taken no part in the hearing of the proceedings so instituted. The

company has alleged that the respondent aided and abetted, counse)led or procured the publisher to engage in the conduct

described and was thus, pursuant to s.75B of the Act, a

person involved in the contravention of the Act by the

The respondent has embarked on a vigorous defence of the

application and the questions of the safety of the hoists and whether they comply with the Victorian Act and Regulations

In addition the respondent has raised a defence that the

i Nakai et ne deme ta ee ene at eee at ERE Sno to ne ee BE

Act has no application to him, in that he has the benefit of the shield of the Crown in right of the State of Victoria.

After a number of interlocutory hearings the trial commenced before Northrop J. on 8 May 1984 when the company

was represented, as it was before us, by Queen's Counsel.

The case was opened, as counsel for the company said, "at some length" and the main expert witness for the company gave evidence in chief. It became apparent to his Honour, to use his own words, "that very difficult and complex questions of fact and law are raised by the application and the defences. The questions of fact will need to be decided on evidence given by a number of expert witnesses in a highly technical area of engineering. In addition, difficult

questions of law are raised in relation to Construction of

Acts Regulations and other documents." "From what has

occurred already," his Honour said, "difficult questions of

On the third day of the hearing, senior counsel for the company moved the Court that, pursuant to Order 4 R.14 of the Federal Court Rules, Mr Molnar be granted leave to appear on behalf of the company. Mr Molnar is the managing director of the company and its principal shareholder, owning all but

four of its 70,005 issued shares. His wife is the other

director of the company. He was duly authorised by the

"(1) Subject to sub-rule (2) and to Order 43 (which

relates to disability), any person may proceed in the Court by a solicitor or in person.

corporation may not, without the leave of the Court, commence or carry on any proceeding

"(1) A respondent may enter an appearance and may defend a proceeding by a solicitor or in pezrson.

(3) Notwithstanding sub-rule (1) and subject to any Act, a corporation may not without the leave of the Court or a Judge enter an appearance or defend any proceeding except by a solicitor."

Having set out these rules, his Honour then cited passages from the judgment of the Full Court of the Supreme Court of Victoria in Hubbard Association of Scientologists

International v Anderson (1972) V.R. 340 in support, amongst

other things, of the propositions that in superior courts, when not inhibited by statute, the practice has been to refuse to hear a company except through the agency of a legally qualified person, but that any court can, in the exercise of control over its own proceedings, allow itself to

pe addressed in a proper case by any person 1t considers a

proper person to be allowed audience. His Honour refused the motion with costs, adjourned the further hearing of the application to a date to be fixed, ordered that the costs thrown away as a consequence of the adjournment be costs in

The company sought orders that his Honour's orders be set aside and that the motion be granted with costs below and on appeal. The respondent submitted to us, as he had to his Honour, that while he did not consent to the orders sought, the matter was one for the Court and he wished to be heard

According to Mr Molnar, the company had embarked on the hearing in the belief that it would occupy in the order of

about one or two weeks. Counsel for the respondent said tnat

in earlier interlocutory proceedings before his Honour the respondent's estimate was stated as in excess of two weeks. Mr Molnar at some time after the hearing began concluded that

Mr Molnar deposed that the company "does not have sufficient liquid funds currently at its disposal or through credit facilities to pay its solicitors and counsel to continue to act on its behalf until the conclusion of this

This is an appeal from the exercise of discretion by a trial judge in the course of a part heard case. His Honour had marked advantages over an appeal court. He had heard the case opened, he had had a view of the operation of the hoist which was the subject of the application and he had heard the evidence in chief of the main expert witness for the

He was of opinion that difficult and complex questions

of fact, law and the admissibility of evidence would arise in the course of the case. The evidence before him was that the company lacked the ability to pay "its solicitors and counsel to continue to act on its behalf until the conclusion of this action." It was not established that the company was unable to continue to meet ats own legal costs in respect of the balance of the period for which 1t had originally budgeted, on the scale of continuing to retain both senior and junior counsel. If 1t had chosen to proceed without senior counsel

it would plainly have been able, within its original budget,

to have been legally represented for a longer period.

Some light may be thrown upon the sudden chanye in attitude by the company towards its own legal representation by Mr Molnar's words in his original affidavit in support of the motion that "as a consequence of the now expected duration of the hearing the applicant is neither able nor

prepared to expend the large amount of money immediately

required to enable payment of legal fees" (emphasis

supplied). Mr Molnar swore a later affidavit in which he gave details of the company's financial position but nothing

was said by way of any attempt to withdraw the words "nor

Be that as it may, in my opinion the refusal of the motion made at the stage which the trial had reached should not be disturbed. If it be assumed, without deciding, that the learned trial judge's exercise of discretion should for any reason be put to one side, so that the question becomes one for our decision, I would regard the application, at best from the company's point of view, as veing premature. Any later application would be a matter for nas Honour's consideration in the light of the circumstances then existing. Liberty to apply was reserved under the order

I certify that this and the s1x(6) preceding pages are a true copy of the Reasons for Judgment herein of The Honourable Mr. Justice Sweeney

BETWEEN : MOLNAR ENGINEERING PTY. LTD. Appellant AND : E.J. BURNS Respondent CORAM: SMITHERS, SWEENEY and KEELY JJ. 17 JULY, 1984 KEELY J.

in this appeal I have had the advantage of reading, in draft form, the reasons for judgment prepared by Smithers J. and need not repeat the factual background, the nature of the proceedings, the history of the litigation, or the terms

of Order 4 r.14 of the Federal Court rules under which the

Even if that rule did not give to the Court expressly the power to grant leave to the appellant to be represented by Mr. Molnar, it is clear that the Court would

have the power to grant leave. As Griffith C.J. said in

ere are I A I A NN ON ty AN OI RELATOR AALS, OMA "ew

Australasia v. Broken Hill Proprietary Co. Ltd. (1913) 16 Cc.L.R. 245 at 249 "every Court can allow anyone to appear";

that opinion was shared by Barton, Isaacs and Higgins JJ..

As to what principles apply to the exercise of the power, two matters may be noted immediately. Firstly, in that case the Full High Court permitted the Association to be represented by its secretary although it would appear from the report that there was no evidence whatever before the Court to support the grant of such permission by reference to

any financial difficulties of the Association or any other reason. Secondly, the exercise of the power is not confined to cases where strict necessity is shown. As the Privy Council said in O'Toole v. Scott (1965) A.C. 939 at 959, referring to a magistrate's discretionary power to permit a

person, other than the informant or a legal practitioner, to

conduct the case for the informant, the discretion:-

"..can be exercised either on general grounds common to many cases or on special grounds arising in a particular case. Its exercise should not be confined to cases where there is a strict necessity; it should be regarded as proper for a magistrate to exercise the discretion in order to secure or promote convenience and expedition and efficiency in the administration of justice."

The Victorian Full Court in Hubbard Association of Scientologists v Anderson (1972) V.R. 340 (Smith, Little and

Gowans JJ.) said (at 341) that in superior courts the

practice has been to refuse to hear a company except through

the agency of a legally qualified person. However that practice can not be applied in this Court in the light of the power expressly conferred by Order 4 r.14 of the rules; that rule clearly contemplates that a corporation may be given leave and, therefore, will be given leave in an appropriate case. Nor would it be consistent with that rule, in my opinion for a single Judge of the Court in hearing an application for leave to apply the "long established rule" in the House of Lords "that an appeal cannot be argued on behalf of a party by any one except the party himself (if not a

corporation) or by counsel" (cf. Tritonia Limited and others

v Equity and Law Life Assurance Society (1943) A.C. 584 at 586).

I agree with Smithers J. that the discretion is to be exercised judicially according to the requirements of justice and that it must be exercised in favour of a company where there is sufficient reason; further that one reason likely to be advanced is that the company neither has, nor has access to, the funds required to engage legal practitioners. I also agree with him that leave should be granted where, having regard to the necessary or reasonable commitments of the company, the appropriation of funds to engage legal practitioners for the litigation in question would create financial difficulties with which the company could not - or with which it ought not be required to - cope

and that in this connexion the ability of the company to

retain and pay its staff may well be relevant. I also agree that in the present case it is relevant that Mr. Molnar is the inventor of the hoist under consideration in the proceedings, but I would prefer not to express an opinion as to whether, in considering the grant of leave to a company, the identity of the shareholders or the spread of the

The learned trial judge accepted evidence that Mr. Molnar, if granted leave to appear on the company's behalf would "be fully authorized to act for and bind the company in the course of (the) proceedings until their conclusion". His

Honour also accepted the affidavit evidence placed before him

as to the financial difficulties of the company. The

Passages quoted from those affidavits were cited by his

Honour in such a manner and in such a context as to show an

acceptance of them as being true statements; certainly no

comment appears in the reasons for judgment which suggests in any way any doubt either as to the truth of the statements or as to whether they sufficiently disclose the company's financial position. In my opinion his Honour accepted as true the following sworn statement by Mr. Molnar, quoted in

"accordingly my only option is to withdraw from the case or seek leave of the Court to conduct the hearing myself on behalf of the Applicant."

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"In summary, it seems to me that the company at the moment is in financial difficulties because of the difficulty of selling the hoist, that assets of the company are mortgaged as security for loans obtained by the company, and that the present income of the company is not sufficient to cover both the servicing of the loans already in existence and to make provision for .. a further loan to pay for legal expenses and legal advice of counsel appearing in the action, particularly when the business is such that the income coming from the activities of the company is very low. It is claimed that the company is operating at a substantial loss. It does not have sufficient funds or access to credit

facilities sufficient to remain in production and further pay its legal advisers."

In my opinion the last sentence is a finding of fact by his Honour. Had it been intended as a reference merely to a claim by the company, doubtless his Honour would

have so described it and, if his Honour had refused to accept

such a claim by the company, would have expressly said so in

Giving full weight to the principle that an appeal court should exercise particular caution in reviewing such a discretionary decision, in my opinion his Honour's discretion miscarried by attaching too much importance to the fact that the Court would be deprived of the assistance of a legal practitioner appearing for the company, when that fact is considered in the light of the findings which his Honour had

made in favour of the company's application as to its

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In this connexion his Honour said in his reasons for judgment that it was "apparent that very difficult and complex questions of fact and law are raised by the application and the defences", and that the case "is one which demands that full technical assistance be provided for the Court in its task of administering justice according to law". His Honour also said that "it is fairly bold to assert that an agent, not being a legally qualified practitioner, be granted leave to appear for a company in legal proceedings in which it is an applicant and which raise difficult and complex questions of fact and law and in which, from what has occurred already, difficult questions of admissibility of evidence will arise constantly". Lastly, at the conclusion of his reasons for judgment, his Honour said that "having

regard to the nature of these proceedings, and the difficult questions of fact and law which arise, this is a case in which, in my opinion, the Court should have the benefit of legal practitioners appearing for the applicant. Accordingly, the Court refuses the motion". The emphasis placed by his Honour in those four passages upon the

"difficult and complex questions of fact and law" show, in my opinion, that his Honour attached too much weight to that matter and insufficient weight to the financial difficulties of the company which were found to exist. I am satisfied

that, by reason of that matter, the judicial discretion

"I have much sympathy for the position of the applicant in this case. Much weight must be given to a litigant being a company, to be able to present its case before the Court, particuiarly in claims under the Trade Practice Act".

If I were not satisfied that the discretion miscarried in the manner described, I would nonetheless "infer that in some way there has been a failure properly to exercise the discretion

which the law reposes in the court of first instance" (House

v The King (1936) 55 C.L.R. 499 at 505). When satisfied that the exercise of the discretion has miscarried, it is for the appellate Court to exercise its own discretion. Upon the findings of the learned Judge on the evidence before him as to the financial difficulties of the company in my opinion it

should exercise that discretion in favour of the appellant by

Accordingly, I would allow the appeal, set aside the order made by the learned trial Judge refusing the leave sought and make an order granting such leave. As that opinion is not to prevail, it is not necessary for me to consider the question of costs, as to which counsel for the second-named respondent advanced submissions.

I certify that this and the preceding 6 pages are a true copy of the Reasons for

Judgment herein of the Honourable Mr. Justice Keely. Bx OLE aisle - , Assotéiate: Date: #7 /7/%5