FEDERAL COURT OF AUSTRALIA Basetec Services Pty Ltd v CPB Contractors Pty Ltd (formerly Leighton Contractors Pty Ltd) [2017] FCA 510 File numbers: SAD 27 of 2017 SAD 84 of 2014 Judge: WHITE J Date of judgment: 27 April 2017 Catchwords: PRACTICE AND PROCEDURE – application by two persons who are not lawyers to represent a company Held: application refused, but the first person is entitled to represent himself in his personal capacity in relation to the application to vary an injunction by which he is bound. Legislation: Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Sch 2) s 18 Federal Court of Australia Act 1976 (Cth) s 37M Federal Court Rules 2011 (Cth) rr 1.34, 4.01(2) Cases cited: Australian Competition and Consumer Commission v Adata (Vic) Pty Ltd (No 2) [2015] FCA 272 Basetec Services Pty Ltd v Leighton Contractors Pty Ltd (No 2) [2015] FCA 672; (2015) 236 FCR 432 Basetec Services Pty Ltd v Leighton Contractors Pty Ltd (No 7) [2016] FCA 1587 Basetec Services Pty Ltd v Leighton Contractors Pty Ltd (No 6) [2016] FCA 1534 Damjanovic v Maley (2002) 55 NSWLR 149 Deputy Commissioner of Taxation v Compumark Pty Ltd [2012] FCA 583 Pacific Air Freighters (Qld) Pty Ltd v Toller [2000] FCA 0343; (2000) 171 ALR 519 Pharm-a-Care Laboratories Pty Ltd v The Commonwealth (No 12) [2012] FCA 289 Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 Worldwide Enterprises Pty Ltd v Silberman [2009] VSC 165 Date of hearing: 27 April 2017 Registry: South Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 23 Counsel for the Appellant/Applicant: Mr Paul Figallo appeared on behalf of the Appellant/Applicant Counsel for the Respondent: Mr P O'Sullivan QC with Ms G Walker Solicitor for the Respondent: Herbert Smith Freehills ORDERS SAD 27 of 2017 BETWEEN: BASETEC SERVICES PTY LTD ACN 086 798 361 Appellant AND: CPB CONTRACTORS PTY LTD ACN 000 893 667 (FORMERLY LEIGHTON CONTRACTORS PTY LTD) Respondent JUDGE: WHITE J DATE OF ORDER: 27 APRIL 2017 THE COURT ORDERS THAT: 1. Mr Paul Figallo is refused leave to represent Basetec Services Pty Ltd (Basetec) in the hearing today and to represent Basetec generally until it obtains legal representation. 2. The application contained in paragraph 1 of the interlocutory application filed by Basetec on 27 March 2017, is dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ORDERS SAD 84 of 2014 BETWEEN: BASETEC SERVICES PTY LTD ABN 30 086 798 361 Applicant AND: LEIGHTON CONTACTORS PTY LTD ABN 98 000 893 667 Respondent AND BETWEEN LEIGHTON CONTRACTORS PTY LTD ABN 30 086 798 361 Cross-Claimant AND: BASETEC SERVICES PTY LTD ABN 30 086 798 361 Cross-Respondent JUDGE: white J DATE OF ORDER: 27 April 2017 THE COURT ORDERS THAT: 1. Each of Mr Charles Figallo and Mr Paul Figallo be refused leave to represent Basetec on the Respondent's interlocutory application but Mr Charles Figallo has standing in his personal capacity to appear in relation to the application to vary the injunction by which he is bound. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. EX TEMPORE REASONS FOR JUDGMENT WHITE J: 1 By interlocutory applications filed on 27 March 2017, Basetec Services Pty Ltd (Basetec) sought leave for its managing director, Mr Charles Figallo, to represent it in relation to the respondent's application for security of costs in its appeal in Action No SAD 27 of 2017 and in relation to the respondent's application for variation of an injunction issued on 17 July 2015 in Action No SAD 84 of 2014. The respondent is CPB Contractors Pty Ltd, formerly known as Leighton Contractors Pty Ltd. It is convenient to refer to it as Leighton. 2 At the hearing of the applications, Mr Charles Figallo did not appear. Instead, his son Mr Paul Figallo, and the general manager of Basetec, appeared and made an oral application for leave to represent Basetec in the matters before the Court today and until such time as Basetec obtains legal representation. Basetec needs the Court's leave to be represented by either Mr Charles Figallo or Mr Paul Figallo because r 4.01(2), of the Federal Court Rules 2011 (Cth) (the FCR), provides that "[a] corporation must not proceed in the Court other than by a lawyer". Basetec seeks in effect a dispensation from the need to comply with that Rule, pursuant to r 1.34 of the FCR. Leighton opposes the grant of leave, whether to Mr Charles Figallo or to Mr Paul Figallo. 3 Neither of Mr Charles Figallo nor Mr Paul Figallo is a lawyer. 4 By way of brief background, Basetec appeals against the orders of Besanko J made on 20 December 2016 in Basetec Services Pty Ltd v Leighton Contractors Pty Ltd (No 7) [2016] FCA 1587. Save for the issue of costs which was dealt with separately, those orders gave effect to the judgment of Besanko J delivered on the previous day in Basetec Services Pty Ltd v Leighton Contractors Pty Ltd (No 6) [2016] FCA 1534. That judgment followed a substantial trial extending over 15 days, in which Basetec had been represented by senior counsel. 5 In the trial, Basetec had claimed damages, compensation and other orders against Leighton, relying on three causes of action. They were a claim in contract, a claim of misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Sch 2) and a claim in tort of inducing a breach of contract by a third party. The claims arose out of construction work which Basetec had undertaken as subcontractor to Leighton. Leighton had made a cross-claim alleging breaches of contract by Basetec and claiming a legal or equitable set-off in relation to the damages resulting from the breaches of contract. Basetec succeeded on its claim in contract, although for an amount which was much less than the amount which it had claimed. It failed on the other two causes of action. Leighton had partial success on its cross-claim but again for an amount which was much less than the amount it had claimed. 6 Basetec now appeals against the orders based on the Judge's determination of the claims in contract and inducing a breach of contract and against the orders based on the Judge's determination of Leighton's cross-claim. 7 Leighton has lodged an interlocutory application seeking an order that Basetec provide security for its costs of the appeal. It has also filed an interlocutory application in Action No. SAD 84 of 2014 seeking a variation of the injunction which the Court issued to Mr Charles Figallo on 17 July 2015. I will refer to that injunction in more detail shortly but, in general terms, its effect was to restrain Mr Charles Figallo from placing improper pressure on Leighton to settle the underlying action by making threats to Leighton, its officers and employees and from disseminating information communicated on a without-prejudice basis to Basetec in the course of a mediation. 8 The exercise of the Court's discretion pursuant to r 1.34 in relation to r 4.01(2), is to be exercised by reference to "all relevant considerations": Pharm-a-Care Laboratories Pty Ltd v The Commonwealth (No 12) [2012] FCA 289 at [18]. The authorities indicate the variety of matters which may bear upon the exercise of the discretion in a given case. These include: (a) the financial capacity of the company and those standing behind it and whether a lack of financial capacity would inhibit a company from obtaining legal representation: Deputy Commissioner of Taxation v Compumark Pty Ltd [2012] FCA 583 at [19]-[20]; Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 at [13]; Worldwide Enterprises Pty Ltd v Silberman [2009] VSC 165 at [20]; (b) the factual complexities of the case and the capacity of the proposed representative to conduct it effectively having regard to the skills, training, qualifications and experience of that representative: Damjanovic v Maley (2002) 55 NSWLR 149 at [77]; Compumark at [19], Termi-Mesh at [13]; (c) the overarching purpose of the civil practice and procedure provisions specified in s 37M of the Federal Court of Australia Act 1976 (Cth) (the FCA Act) and the effect on the achievement of that purpose if the company proceeds with, or without, legal representation: Australian Competition and Consumer Commission v Adata (Vic) Pty Ltd (No 2) [2015] FCA 272; Compumark at [20]; Silberman at [20]; (d) the ability of the proposed representative to exercise the objectivity expected of a legal practitioner: Pacific Air Freighters (Qld) Pty Ltd v Toller [2000] FCA 0343; (2000) 171 ALR 519 at [11]; (e) whether a lack of available disciplinary measures in relation to the persons seeking to represent the company will affect the administration of justice: Compumark at [20]; Damjanovic at [76]; (f) the manner in which the case has progressed to date and the manner in which it may progress without the party having legal representation: Compumark at [20]; Silberman at [20]; (g) when the company in question is a respondent, a more liberal approach to the exercise of the discretion may be warranted: Termi-Mesh at [14]. 9 I will address first the application in respect of Mr Charles Figallo. 10 Mr Charles Figallo is the sole director and secretary of Basetec and has been its managing director since 1999. 11 In his affidavit of 24 March 2017, Mr Charles Figallo deposed that he was then in the process of obtaining legal representation in relation to the appeal and that he sought to represent Basetec only until such time as it did secure legal representation. He also deposed to "having spent a large amount of time" working on both the underlying action and the appeal and to being personally aware of the issues involved in each. Next Mr Figallo deposed that Basetec's representation by solicitors and counsel in the trial had meant that it had not had a full opportunity to give evidence or to present Basetec's case adequately at the trial. 12 In my opinion, it is inappropriate for the Court to grant Basetec a dispensation from the requirements of r 4.01(2) in respect of Leighton's application for security for costs. A number of matters indicate that that is so. First, Basetec has not provided any evidence that it lacks the financial capacity to obtain legal representation. On the contrary, Mr Charles Figallo has deposed that Basetec does intend obtaining legal representation in relation to the appeal and I also note that the appeal itself was commenced by Basetec's former solicitors. 13 Secondly, I do not consider that the Court can have the necessary confidence that, if Mr Charles Figallo was granted leave to represent Basetec, the proceedings would be conducted in an objective and dispassionate way so as to facilitate the efficient determination of the appeal. A number of matters in the evidence warrant the conclusion that the Court cannot have that confidence. It is sufficient, however, for present purposes to refer only to the injunction issued against Mr Charles Figallo on 17 July 2015. The terms of that injunction restrained Mr Charles Figallo from: (a) communicating directly with the Respondent, its officers, employees or agents (including its legal representatives in the underlying proceedings) about those proceedings or their subject matter in a manner calculated to intimidate, harass or otherwise bring improper pressure on the Respondent (including its officers, employees or agents) in respect of the conduct of the underlying proceedings; (b) communicating directly with the Respondent's parent company, CIMIC Group Limited, its officers, employees or agents about the underlying proceedings or their subject matter in a manner calculated to intimidate, harass or otherwise bring improper pressure on the Respondent (including its officers, employees or agents) in respect of the conduct of the underlying proceedings; (c) publishing or causing to be published to persons not party to the underlying proceedings statements about: (i) the Respondent's conduct of the proceedings; or (ii) the conduct of the Respondent's legal representatives in the underlying proceedings, which were calculated to intimidate, harass or otherwise bring improper pressure on the Respondent (including its officers, employees or agents) in respect of the conduct of the underlying proceedings; (d) publishing to persons other than the parties to the underlying proceedings and their legal representatives information: (i) communicated in the course of the mediation between the parties had; or (ii) expressly identified in writing or orally as having been communicated on a without prejudice basis; or (iii) otherwise communicated in connection with an attempt to negotiate a settlement of the underlying proceedings; and (iv) details of any settlement offers made by the Respondent. 14 The circumstances leading to the issue of that injunction are set out in Basetec Services Pty Ltd v Leighton Contractors Pty Ltd (No 2) [2015] FCA 762; (2015) 236 FCR 432. It is not necessary to repeat those circumstances in detail in these reasons. It is sufficient to say that they included: (a) the apparent contemptuous nature of Mr Figallo's communications, at [47]; (b) the absence of any acknowledgement by Mr Charles Figallo of the wrongfulness of his conduct and of any statement of willingness to modify his conduct, at [48]; (c) Mr Charles Figallo's statements that, unless restrained by court order, he would continue conduct constituting a form of public abuse or obloquy, at [49]; (d) the fact that Mr Charles Figallo had not tempered his conduct despite advice to do so from his own solicitors, at [50]. 15 There is some evidence that Mr Charles Figallo may, in relation to Basetec's appeal, be engaging in conduct of a similar kind to that which led to the Court issuing the injunction on 17 July 2015. It is not necessary presently to detail that evidence or to make findings concerning it. In my opinion, the very existence of the evidence suggests that it would be inappropriate for the Court to grant Mr Charles Figallo leave to represent Basetec in relation to either of the two applications of Leighton because it raises doubts about his ability to conduct the proceedings on behalf of Basetec in an appropriate manner, having regard to their complexity and seriousness. 16 Thirdly, I take into account that Basetec has had more than adequate time in which to obtain legal representation. The appeal was commenced on 1 February 2017 by the former solicitors acting on Basetec's behalf. Those solicitors filed a notice of ceasing to act for Basetec on 10 February 2017. Basetec has had the whole of the period since 10 February 2017 until the present time to obtain alternative legal representation. Mr Charles Figallo has deposed that it is Basetec's intention to obtain legal representation but no proper explanation has been given to the Court as to why that has not already occurred. Basetec seems to have delayed until about 18 April 2017, seeking legal advice or assistance from Saal & Associates. Even now it does not seem to have retained Saal & Associates formally, let alone to have retained them to appear at today's hearing. 17 It is obvious, as Mr Paul Figallo has acknowledged today, that it will not be practically possible for either Mr Charles Figallo or himself to conduct the appeal or the matters which are incidental to it. This will be an appeal of some size and complexity. The matters which are incidental to it will also involve some complexity. By matters incidental to it, I am referring to the applications for security for costs and other interlocutory applications which are presently before the Court. 18 The final matter I take into account is that Basetec has known since at least 17 February 2017 that Leighton would be objecting to any dispensation of the requirement in r 4.01(2) and so has had ample opportunity in which to put in place alternative arrangements. It was inappropriate for Basetec to have proceeded on an assumption that the Court would grant the dispensation it sought. 19 Accordingly, leave to Basetec to be represented by Mr Charles Figallo in relation to the application for security for costs is refused. 20 I also consider it appropriate to refuse that leave in relation to Mr Paul Figallo, although the circumstances relating to him do not match entirely those of his father. In particular, it is not suggested that Mr Paul Figallo has engaged in the kind of conduct which led the Court to issue the injunction on 17 July 2015. However, the other considerations which I mentioned in relation to Mr Charles Figallo are applicable in his case, namely, Basetec has not deposed to a lack of financial ability to obtain legal representation; it has had plenty of opportunity to obtain legal representation; it has not provided an appropriate explanation for not having obtained legal representation already; and the sheer complexity of the matter make it inappropriate, on my assessment, that Mr Paul Figallo be granted leave to represent Basetec. 21 For these reasons, I refuse to grant Basetec a dispensation from the requirements of r 4.01(2) in relation to Leighton's application for security for costs. 22 The application by Mr Charles Figallo in relation to Leighton's application to vary the injunction issued on 17 July 2015 stands differently. As I have already indicated, that injunction was directed to Mr Charles Figallo himself. He has a direct personal interest in the terms of that injunction. It should be accepted, in my view, that he has standing in his personal capacity to be heard in relation to that aspect of Leighton's application and that he does not need a dispensation by the Court in order to be entitled to be heard in relation to that part of Leighton's application. So I make it plain that my refusal to dispense with the requirements of r 4.01(2) relates only to Leighton's application for security for costs and, if it be necessary, in relation to other matters which may be the subject of interlocutory activity in relation to Basetec's appeal. 23 The formal order of the Court is that each of the applications by Basetec for dispensation from the requirements of r 4.01(2) is refused. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White. Associate: Dated: 12 May 2017