Vintage Marine Art Pty Ltd v Henderson & Cremer

EX TEMPORE Judgment

1. BELL P: I will ask Brereton JA to deliver the first judgment.
2. BRERETON JA: Before the Court are two notices of motion: one filed on behalf of the respondents on 15 July 2019 whereby they seek, pursuant to Uniform Civil Procedure Rules 2005 (NSW) ('UCPR') r 6.29, an order that the second applicant Gina Edwards be removed as a party and an order that the summons for leave to appeal be dismissed for non‑compliance with UCPR r 7.1 or alternatively, a stay of the proceedings pending the appearance of a solicitor in the proceedings on behalf of the applicant; the other motion filed on 17 July 2019 on behalf of the applicant seeks an order pursuant to Civil Procedure Act 2005 (NSW) s 14 dispensing with compliance with UCPR r 7.1 in the relevant respect and, if that relief is granted, removing the second applicant Ms Edwards as a party.
3. UCPR r 7.1 provides, by sub-rule (2), that a company within the meaning of the Corporations Act 2001 (Cth) may commence and carry on proceedings in any court by a solicitor or by a director of the company. However, sub-rule (3) provides that, in the case of proceedings in the Supreme Court, that provision authorises a company to commence proceedings by a director only if the director is also a plaintiff in the proceedings. Although there is room for argument as to whether an appeal is a new or separate proceeding from the first instance proceedings, the prevailing view, as appears from cases dealing with the requirement for leave to proceed against a company in administration or in liquidation, is that an appellate proceeding (including an application for leave to appeal) is a distinct and separate proceeding. I proceed on that basis.
4. The summons for leave to appeal instituting the present proceedings named as applicants the plaintiff below, Vintage Marine Art Pty Ltd, and also Ms Edwards personally, who was not a party in the proceedings below. It was signed on behalf of both applicants by Ms Edwards - as director, officer or shareholder of the first applicant, and on her own behalf. On the assumption, which can subsequently be addressed, that she is not a proper party and ought to be removed, then r 7.1(2) and (3) would have the effect that the proceedings could not be commenced and carried on by Vintage Marine Art in this Court by a director. That is to say, that would be the case unless sub-rule (3) were dispensed with.
5. The respondents have drawn attention to the judgment of this Court in Bay Marine Pty Ltd v Clayton Country Properties Pty Ltd, [1] in which the Court unanimously held that it had an inherent power to permit a corporation to carry on proceedings otherwise than by a solicitor, and Kirby P opined that insofar as the rules prohibited a corporation from commencing or carrying on proceedings otherwise than by a solicitor, the Court could dispense with the requirements of that rule under other provisions of the rules. While Samuels JA disagreed with Kirby P in the latter respect, and Mahoney JA did not determine the point, whatever doubt may have attended that proposition in circumstances where the dispensing power was found in another rule of the Court seems to me to be overcome by the circumstance that the dispensing power is now to be found in the Civil Procedure Act s 14, and not in another rule of Court. Thus, it seems to me that pursuant to Civil Procedure Act s 14, the Court does have power to dispense with r 7.1(3). In any event, the unanimous opinion of the Court in Bay Marine was that the Court had inherent power to permit a company to act otherwise than by a solicitor.
6. In Bay Marine, the Court - including Kirby P - observed that the circumstances must be exceptional to justify the exercise of such a power. While the epithet "exceptional" might have been appropriate in the context of the inherent power, at least in the context of Civil Procedure Act s 14 it could not require more than that the circumstances be "special", and for present purposes I take this to be, in substance, a requirement for circumstances special or particular to the case in question.
7. Relevant considerations operative in this case include that the corporation is a closely held one in which the director in question has a substantial interest, being a 25% shareholding, and appears to be the chief executive officer. Although the case might be stronger where the relevant corporation is no more than the alter ego of the director, in this case, notwithstanding that her interest is a minority one, there has been no challenge at any stage to her authority to give instructions for and to authorise the bringing of the proceedings on behalf of the company.
8. A second and, it seems to me, very material consideration is that which lies at the heart of the substantive application before the Court: that is to say, the impecuniosity of the corporation. To deny a corporation that, on the respondent's case, is impecunious, the opportunity to be heard because it cannot afford to retain solicitors is to permit, effectively, the case to go by default on the very ground that the respondents assert. That seems to me to be a particularly material consideration in the present case.
9. Thirdly, although the respondents invoked the circumstance that what was in issue was merely the question of an application for leave to appeal from an order for security for costs in the sum of $40,000, the relatively limited scope and quantum of what is in issue, in my mind, tends in favour rather than against the dispensing with the rule. It might be otherwise if the case before the Court were a far more complex and extensive one.
10. Finally, while it may fairly be said that the respondents have done everything they properly could to raise this issue before the primary judge and then at the earliest possible stage in this Court, nonetheless, the circumstance is that the Court is assembled to hear the application for leave and the appeal concurrently. The papers have been prepared, and the matter has been set down for hearing on that basis. It would be a considerable waste of the Court's and the parties' time and efforts to now frustrate that process by refusing to dispense with the rule.
11. For those reasons, in my opinion, the Court should dispense nunc pro tunc with compliance with UCPR r 7.1(3) so that the applicant Vintage Marine Art Pty Ltd may commence and carry on these proceedings by a director of the company.
12. As the applicant's motion accedes to the position that if that order is made, the second applicant may be removed as a party, it is not necessary to give further consideration to whether she was a proper party - although, in my judgment, it is plain that she was not.
13. For those reasons, I propose that the Court order that: 1. Pursuant to Civil Procedure Act s 14, compliance by the first applicant Vintage Marine Art Pty Ltd with UCPR r 7.1(3) be dispensed with. 2. The second applicant Gina Edwards be removed as a party to the proceedings.
14. BELL P: I agree with the reasons given by Brereton JA.
15. I would only add this. It follows from the assumption on which his Honour has proceeded, namely that the proceedings in this Court are separate proceedings, that the order his Honour proposes, waiving compliance with UCPR r 7.1 relieving Vintage Marine Art Pty Ltd from the need to be represented by a solicitor, is confined to the hearing of this application for leave to appeal and any appeal in the event that leave is granted. Subject to that, I agree with the orders proposed by Brereton JA and his Honour's reasons.
16. MACFARLAN JA: I agree with Brereton JA subject to the observations of Bell P.
17. BELL P: The orders of the Court will therefore be as proposed by Brereton JA.

Endnote

1. (1986) 8 NSWLR 104. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 October 2019