Manitowoc Crane Group Asia Pte Ltd & Anor v Preston Erection Pty Ltd & Ors [2004] NSWSC 1141

New South Wales Supreme Court

CITATION : Manitowoc Crane Group Asia Pte Ltd & Anor v Preston Erection Pty Ltd & Ors [2004] NSWSC 1141 HEARING DATE(S) : 19/11/04; 25/11/04 JUDGMENT DATE : 25 November 2004

JUDGMENT OF : Nicholas J DECISION : Application for disqualification refused

CATCHWORDS : Whether authorised director of defendant corporations should be disqualified from continuing to appear for them in the proceedings pursuant to Pt 11 r 1A Supreme Court Rules 1970 (NSW) LEGISLATION CITED : Court Rules 1970 (NSW) Pt 11 r 1A (2), (3), (6), (7) Bhagat v Global Custodians Limited (No 1) [2001] NSWSC 720 CASES CITED : Damjanovic v Maley (2002) 55 NSWLR 149 Grimwade v Meagher [1995] 1 VR 446 Manitowoc Crane Group Asia Pte Ltd - First Plaintiff Potain SAS - Second Plaintiff PARTIES : Preston Erection Pty Ltd - First Defendant Preston International Pty Ltd - Second Defendant Patent Marketing Corporation Pty Ltd - Third Defendant FILE NUMBER(S) : SC 3108/04 COUNSEL : D T Kell - Plaintiffs J Preston - as authorised director for Defendants SOLICITORS : Baker & McKenzie - Plaintiffs J Preston - as authorised director for Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Nicholas J

25 November 2004

3108/04 Manitowoc Crane Group Asia Pte Ltd & Anor v Preston Erection Pty Ltd & Ors JUDGMENT – ex tempore 1 His Honour: In this matter I have had the benefit of substantial and thorough submissions on behalf of the applicants/plaintiffs from Mr Kell of counsel and also from Mr Preston, who represents the defendant corporations. I am grateful to both representatives for them because it enables me to deliver my reasons for the conclusion to which I have come without delay. 2 By their Further Amended Notice of Motion filed 25 November 2004 the plaintiffs seek an order, firstly, that Mr John Preston be restrained from continuing to represent the defendants/cross-claimants in proceedings number 3108 of 2004 (these proceedings), and ancillary or consequential relief if that order is made. As already recorded, the orders sought in paragraphs numbered 2, 3, 4 and 5 of that pleading are no longer pressed. The application is supported by the affidavit of Stephanie Marina Bronk sworn 9 November 2004 and the exhibit to that affidavit, which is exhibit A in these proceedings. 3 Mr John Preston is a director of each of the three defendant corporations and he caused to be filed a notice of appearance on 10 June 2004. He has had the conduct of all the proceedings for the defendants thereafter. 4 The nature and history of the proceedings are conveniently summarised in the affidavit of Miss Bronk. Shortly stated, the statement of claim filed 26 May 2004 alleges an agreement reached between the plaintiffs and the defendants between about the 12th and 27th of June 2003 for the settlement of a series of disputes. Relief is sought by the plaintiffs which includes an order for specific performance of what has come to be described as the settlement agreement. 5 On 10 June 2004 a defence was filed and also a cross-claim. From those pleadings it is apparent that the agreement is in dispute and the relief sought by the plaintiffs is opposed. It is also plain that it is inevitable that Mr Preston would be a significant witness of fact in the proceedings. The present issues would indicate the likelihood, at least at this stage, of Mr Preston being required to give evidence on behalf of the defendants. 6 The history to which I have been referred in submissions also indicates that the matter came before Mr Justice Hamilton in this Court on 26 July 2004, who dealt with a number of processes in relation to various pleadings that had been filed and with complaints about them. It will be seen from his Honour's judgment of 26 July 2004 that the plaintiffs successfully applied for orders striking out various paragraphs of the defence which included allegations that were found to be incomprehensible, some of them; scandalous, some of them; embarrassing, some of them. Leave was granted to replead. Other orders were made relevant to the future conduct of this matter. 7 The history also showed that the defendants have launched a number of claims against the plaintiffs in the Local Court at Parramatta for royalties which are the subject of the cross-claim in this Court. It should be noted that during the course of the proceedings before me Mr Preston indicated that the proceedings in that Local Court would be discontinued, if they have not already been discontinued. 8 The history also showed that on 17 August 2004, at least from the perception of the plaintiffs' solicitors, Mr Preston threatened to cut into pieces and, in effect, cause to be scrapped the twenty-four Superdecks the subject of the proceedings unless, apparently, some rent or fee for the storage of those Superdecks was paid as requested by the defendants. That indication from Mr Preston led to some correspondence between the parties which led to a request for an undertaking from the defendants not to cut up and scrap the Superdecks. That undertaking was refused. It apparently necessitated the plaintiffs' proposal to apply to the Court for an order to restrain Mr Preston and/or the defendants from carrying out the threat. It appears that this issue was resolved at the last minute. Apparently on 20 August 2004, when the matter was about to come to Court Mr Preston provided the required undertaking. Since that time directions have been made by consent and it is contended that in some respects the directions and timetable for the continuing conduct of the matter have not been complied with. 9 On the material before me it is claimed that Mr Preston will be a principal witness for the defendants in any final hearing and his involvement in the proceedings is very evident from the history to which I have referred. In support of this application the plaintiffs contend that Mr Preston's personal involvement in the litigation is so extensive as to deprive him of the independence and objectivity for the proper conduct of the defendants' case which is required for the administration of justice in the proceedings. 10 It is put that his conduct of the defendants' case to date demonstrates a lack of independence and an obvious inability to understand what is required of him as their representative. It is also put that the interest of the defendants can only be properly served if they are represented by a person whose judgment is not clouded by personal interest. 11 It is necessary to turn to the relevant rules which are in Pt 11. Rule 1A states: "Except as provided by this rule or by or under any Act a corporation (other than a solicitor corporation) may not enter an appearance in, or defend, any proceedings otherwise than by a solicitor."