Proceedings Dismissed: Legal Representation Required in Commercial Litigation

The Court dismissed proceedings initiated by a company represented by its sole director, requiring a solicitor on the record due to previous failed proceedings and lack of ethical behavior.

Supreme Court New South Wales

Medium Neutral Citation: [NAME] as Trustee of the [NAME] v [NAME] [2019] NSWSC 1831 Hearing dates: 28 November 2019 Decision date: 28 November 2019 Jurisdiction: Equity - Commercial List Before: Hammerschlag J Decision: Proceedings dismissed, dismissal to be stayed until 6 February 2020. If a solicitor has come onto the record for the plaintiff by 6 February 2020, the stay of the dismissal to continue until further order Catchwords: PRACTICE AND PROCEDURE – Uniform Civil Procedure Rules Pt 7 rr 7.1, 7.2 and 7.3, Civil Procedure Act 2005 NSW s 14 – requirement for a company to have a solicitor on the record in proceedings in the Court – whether Court should dispense with the requirement – where company commences proceedings purporting to be represented by its sole director – where Commercial List Statement makes significant and improperly pleaded allegations of dishonesty on the part of the defendant – where the director has previously been responsible for multiple earlier dismissed proceedings involving substantially the same complaint now made – where the Court has no confidence that the director will behave ethically or responsibly - where the director has significant outstanding orders for costs against him in favour of the defendant – where the Court has no confidence that the proceedings have any prospect of success -

HELD that the Court should not dispense with the requirement that the plaintiff be represented by a solicitor on the record Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Civil Procedure Act 2005 (NSW) Category: Procedural and other rulings Parties: [NAME] as Trustee of the [NAME] - Plaintiff [NAME] - Defendant Representation: Counsel: [redacted] J.R. Clarke SC - Defendant

Solicitors: [redacted]

EX TEMPORE Judgment 1. On 30 October 2019 [NAME] ("[NAME]") as trustee for the [NAME] ("[NAME]"), commenced proceedings in this Court against [NAME] ("[NAME]") by suing out a Summons and an accompanying Commercial List Statement. There is no solicitor on the record for [NAME]. The Summons and Commercial List Statement were signed by [NAME] ("[NAME]") on behalf of [NAME], as its sole director.

2. The starting point is that the public interest in the efficient and proper conduct of litigation is served by the contesting parties being represented by properly qualified legal practitioners. This is because the Court relies on practitioners to meet the significant obligations on them in conducting proceedings in the Court. [ADDRESS] relies on their competence and their probity.

3. Under the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) a company can commence proceedings by a director, if the director is a plaintiff (UCPR rr 7.1, 7.2 and 7.3). However, under s 14 of the Civil Procedure Act 2005 (NSW), in relation to particular civil proceedings, the Court may, by order, dispense with any requirement of rules of court if satisfied that it is appropriate to do so in the circumstances of the case. 4. [NAME] is not a plaintiff in the proceedings and he accepts that in his personal capacity he has no rights or claims against [NAME], which would give him standing properly to join as a plaintiff against [NAME]. The question is whether the Court should dispense with the requirements of the rules of court and allow [NAME] to conduct these proceedings by [NAME], without a legal practitioner on the record. [NAME] seeks this leave by Notice of Motion filed on 20 November 2019.

5. I do not think that it is appropriate to dispense with the requirement. Justice dictates that leave should be refused. These proceedings have been preceded by various failed other proceedings motivated by [NAME] through [COMPANY] ("[NAME]") against [NAME], in this and the Federal jurisdiction, all arising out of substantially the same matrix of facts and all seeking to assuage the same basic complaint. 6. [NAME] replaced [NAME] as trustee of [NAME] on 27 June 2018. It is, as was [NAME]'s vehicle. There are significant outstanding orders for costs against [NAME] in favour of [NAME] in this and that jurisdiction. [NAME] has no prospect, he says, of paying them.

7. There are significant costs orders against [NAME]. It is plain that it has no prospect of paying them.

8. Doing the best I can to describe it, [NAME]'s underlying grievance is that he had, or was to have, a minority interest through corporate entities in a joint venture with [COMPANY] ("[NAME]") and perhaps others, in a strata property management business conducted through an entity called [COMPANY] ("[COMPANY]"). [NAME] is associated with [NAME]. [NAME] complains that he did not get his fair share of the venture and that the other joint venture participants divested themselves of their interests in the venture for value, but left [NAME] out of the process, as a consequence of which he says he suffered economic loss and personal stress. The relevant events occurred principally between 2007 and 2011.

9. A Settlement Deed was entered into on 4 July 2011, under which [NAME], asserted by [NAME] to be controlled by [NAME], bought from [NAME], the shares through which it participated in the venture. [NAME] and [NAME] released [NAME] and all others from all claims. [NAME] paid [NAME] $450,000. By express provision, [NAME] has the benefit of the releases under the Settlement Deed in certain events, which, I am prepared to accept, have occurred.

10. In 2011, [NAME], through [NAME], sued an entity called [NAME] in the Federal Court in connection with the same venture, saying that [NAME], apparently also associated with [NAME], had a majority interest in the joint venture and had agreed, but had failed, to ensure that he received certain shares in [COMPANY] and to pay him certain fees. [NAME], which was a Hong Kong entity, did not defend and [NAME] obtained judgment for $952,775. [NAME] never met the judgment. No claim was made against [NAME] in those proceedings. 11. [NAME] was made bankrupt on 13 November 2014, in circumstances unrelated to this present case. 12. [NAME] then commenced new proceedings against [NAME] in this list on 19 December 2014. A new director, [NAME], was appointed to [NAME] and I gave him leave to conduct the proceedings. [NAME] failed to comply with directions and I dismissed the proceedings on 24 April 2015, on terms that it was without prejudice to it recommencing them within 12 months. [NAME] recommenced two days before the expiry of the 12 months.

13. On 24 October 2016, [NAME] struck out the Commercial List Statement and ordered [NAME] to pay [NAME]'s costs, fixed at $25,000, prior to filing any proposed amended pleading. [NAME] moved by motion to set those orders aside. On 6 February 2017 I dismissed the motion with costs, but I was told that more information which could sustain the motion, might be available and I gave leave for it to be remotivated within six months. [NAME] was thus given another indulgence. [NAME] filed a further Notice of Motion, which I dismissed on 7 April 2017 when [NAME] did not appear. On that day, [NAME] filed a Notice of Motion seeking to set aside my orders.

14. On 28 April 2017 [NAME] filed a Notice of Motion seeking orders that the proceedings be stayed or dismissed because [NAME] under superannuation legislation lacked authority to represent a superannuation [NAME] as a consequence of [NAME]'s bankruptcy.

15. On 12 May 2017, [NAME] found that [NAME] did not have authority. Her Honour dismissed [NAME]'s Notice of Motion and made a costs order in favour of [NAME] for $55,000.

16. On 2 August 2017, [NAME] filed a Notice of Motion seeking an order that the proceedings be dismissed for want of prosecution and that [NAME] pay part of the costs.

17. On 6 November 2007, [NAME] dismissed [NAME]'s proceedings for want of due dispatch, and ordered [NAME] to pay part of [NAME]'s costs. [NAME] assessed [NAME]'s share of those costs as $163,456.71.

18. On 13 December 2017, [NAME] filed a Notice of Motion seeking that [NAME]'s orders be set aside. On 2 February 2018, I dismissed it with costs. [NAME] and [NAME] sought leave to appeal from the Court of Appeal in relation to the orders of [NAME] and [NAME]. [ADDRESS] refused leave on 10 April 2018.

19. On 24 May 2018, [NAME] served [NAME] with a Bankruptcy Notice. [NAME] then moved the Federal Court to set aside the Bankruptcy Notice. In those proceedings he sought to raise by cross-claim the substance of the claim in the proceedings dismissed by [NAME]. He also commenced new proceedings in the Federal Court by Originating Application and Statement of Claim, this time in his own name against [NAME], seeking to vindicate the same grievance.

20. On 11 April 2019, Gleeson J of the Federal Court dismissed [NAME]'s proceedings. [NAME] sought leave to appeal out of time. This extension was refused by Flick J on 18 October 2019.

21. On 30 October 2019, [NAME] started this case.

22. It is against this background that [NAME] seeks dispensation from the requirement that it have a solicitor on the record and seeks leave for these proceedings to be conducted by [NAME]. There is no good reason to permit this, and every good reason not to permit it. To permit it would undermine the significant policy reasons underlying the Rule. Where serious allegations of dishonesty are proposed to be made, legal practitioners have significant responsibilities to the Court. [NAME] has none of these. I have no confidence that he will behave ethically or responsibly, especially where what he says is clothed with absolute privilege. A symptom of the absence of the safeguard of a qualified practitioner is the Commercial List Statement, which is embarrassing and would be struck out if the proceedings continued. I shall refer to this later. I am not satisfied that the proceedings have any prospects of success, not least of all because of the terms of the Deed of Settlement. The Commercial List Statement is fraught with difficulties. As an articulation of a claim it is unintelligible.

23. Amongst others, it makes allegations of intentional and willful misrepresentation, conspiracy, fraudulent conspiracy, conspiracy to defraud, breaches of joint venture fiduciary obligations, non-disclosure, intended acts of deception and fraud. It incorporates a definition of fraud said expressly to come from the Crimes Act 1900 (NSW). It includes the following paragraphs:

80. The defendant claims to hold master in economics from St Gallen University, plus a bachelor in business administration and has been or is a board member and/or chairman of several international companies. With such credentials, he must know the difference between what is honest and dishonest business behaviour, plus make it his business to become aware of regulations affecting a listed company in Australia prior to becoming a shareholder in an Australian listed company 82. By reason of the offer made by [NAME] to Promoter on 8 June 2011, the defendant deprived Promoter of fair value for its promotion of the joint venture by misrepresentation, deceit and fraud to gain a financial advantage for himself and expense of Promoter.

83. By reason of conspiracy to defraud and the breaches of his joint venture fiduciary obligations as a joint venturer, the defendant deliberately and purposely and with the requisite intent, caused Promoter as a minority shareholder to have no bargaining power for the sale of its shares. This resulted in Promoter not being able to obtain any further value for its ZL and [NAME] shares, other than the offer made on 8 June 2011. (The pleading defines [NAME] and [NAME] as Promoter. ZL and [NAME] are [NAME] and [COMPANY] which were apparently to be corporate vehicles for the joint venture.)

1. Despite the manner in which it is now framed, it is plain that these proceedings seek to motivate the same complaints dealt with in earlier proceedings in this Court and dismissed, and proceedings dealt with in the Federal Court and dismissed.

2. A body of correspondence between [NAME] and the solicitors acting for [NAME] is in evidence. They include the following things said by [NAME] In an email of 27 January 2017 [NAME] wrote to [NAME]'s solicitor: [redacted]

1. In an email to the solicitor of 22 April 2017: "This matter has a long way to go, my friend, and I have nothing to lose."

1. In an email to the solicitor of 27 May 2017: "I am 69 years old and living on a pension. I have nothing to lose by causing [NAME] as much pain as I can, as he took away my retirement nest egg for reasons that I am unable to fathom."

1. In an email to the solicitor on 12 April 2018 he wrote: "I suggest that you do not tell [NAME] that it is all over, as it is not. I am now moving to plan B." (I interpolate that when I asked Mr [NAME] what plan B was, he said "these proceedings").

1. In an email to [NAME]'s solicitor on 24 May 2018 he wrote: "By now you will realise that I am not going away. As such, I imagine I will be seeing you on many more occasions in various courts." 1. [NAME] has plagued [NAME] for some years now with multiple unsuccessful proceedings, including motions and appeals. He owes [NAME] a significant amount of money for costs and he has no resources to pay. His correspondence indicates an intention to keep on going to cause [NAME] harm and inconvenience.

2. The motion is dismissed. [NAME]'s unequivocal statements that neither he nor [NAME] have any resources to pay a lawyer, it seems inevitable that the proceedings should be dismissed. I will hear the parties on this and on the question of costs

********** 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: 18 December 2019