New South Wales Supreme Court CITATION : Starcevich v Swart & Associates Pty Ltd [2007] NSWSC 86 HEARING DATE(S) : 8 February 2007 JUDGMENT DATE : 8 February 2007 JURISDICTION : Equity JUDGMENT OF : Hamilton J DECISION : The requirements of UCPR rr 7.2(1) and 7.2(2) are cumulative. Rule 7.2 must be strictly complied with. CATCHWORDS : CORPORATIONS [1083] – Legal capacity and relations with outsiders – External litigation procedure – Appearance in court by company and representation – Who may appear – Representation by director – In Supreme Court of New South Wales UCPR r 7.2 must be strictly complied with. LEGISLATION CITED : Uniform Civil Procedure Rules 2005 rr 7.2, 9.1, 14.3 CASES CITED : Starcevich v Swart and Associates Pty Ltd [2006] NSWSC 960 Starcevich v Swart and Associates Pty Ltd [2006] NSWSC 1387 Teresa Starcevich (P1) PARTIES : Andrew Charles Roth (P2) Swart & Associates Pty Ltd (D) FILE NUMBER(S) : SC 3961/06 COUNSEL : In person (Ps1&2) J Swart, Director, by leave (D) SOLICITORS : Self represented (Ps1&2) Director, by leave (D) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J THURSDAY, 8 FEBRUARY 2007 3961/06 TERESA STARCEVICH & ANOR v SWART AND ASSOCIATES PTY LTD JUDGMENT 1 HIS HONOUR: These proceedings are before me today for trial. The matters for trial are the plaintiffs' claim as made in statement of claim filed on 15 November 2006. Mrs Swart, a director who has appeared for the defendant today (about which I shall have more to say later in these reasons for judgment), has informed me that the defendant seeks to proceed today upon a statement of cross claim which it filed on 23 January 2007. 2 The plaintiffs were until this morning represented by Pryor Tzannes & Wallis, Solicitors. This morning Miss Karine Marianne from that firm announced her appearance for the plaintiffs. However, immediately thereafter, she sought leave to file a notice of ceasing to act for the plaintiffs. The reason leave was required was that that firm ceased to act on 30 January 2007 and there had not been time to serve the notice of ceasing to act required by the Rules. As it was clear and was not disputed by the plaintiffs that they knew that the solicitors intended to cease acting, I granted leave for that notice of ceasing to act to be filed in court this morning and Miss Marianne then departed. 3 The two plaintiffs then announced their appearance in person and applied for an adjournment of the proceedings from today. The only matter that they were aware was listed to proceed today was their claim. They tell me, and I have no material to the contrary, that they became aware of the existence and service of the statement of cross claim only during the proceedings in court this morning. 4 This is not the first time during the course of these proceedings that the plaintiffs have appeared in person or that solicitors have ceased to act for them. Mr Richard Shakenovsky of Greenstein Shakenovsky, Solicitors, filed a notice of ceasing to act for the plaintiffs on 18 August 2006. 5 In announcing opposition to the application for adjournment, Mrs Swart asserted that the termination of the solicitors' services was part of a course contrived by the plaintiffs to avoid finalisation of the matter in the Court. She desired to lead evidence to this effect. However, no evidence was led. 6 I drew attention to certain problems that faced the defendant in proceeding with the matter today. The first is that Mrs Swart both appeared on the application and intended to appear on the hearing, if it proceeded, as a director of the company. However, an examination of the material on which she relied to justify that course showed that that material was defective. The relevant rule is r 7.2 of the Uniform Civil Procedure Rules 2005 ("the UCPR"). The relevant parts of that rule are as follows: " 7.2 Affidavit as to authority to commence and carry on proceedings in Supreme Court or District Court (cf SCR Part 4, rule 4A, Part 11, rule 1A) (1) A person who commences or carries on proceedings in the Supreme Court or District Court: (a) as the director of a company within the meaning of the Corporations Act 2001 of the Commonwealth …… must file with the originating process, notice of appearance or defence, as the case may be, an affidavit as to his or her authority to act in that capacity, together with a copy of the instrument evidencing that authority. (2) The affidavit made by the director of a company within the meaning of the Corporations Act 2001 of the Commonwealth must contain: (a) a statement to the effect that: (i) the director is a director of the company, and (ii) the director has been authorised by a resolution of the directors duly passed at a meeting of directors held on a specified date (which must not be earlier than 21 days before the date of the affidavit) to commence and carry on the proceedings, as the case requires, and (iii) the authority has not been revoked, and (iv) the director is aware that he or she may be liable to pay some or all of the costs of the proceedings ……" 7 The affidavit on which Mrs Swart relied, being her affidavit affirmed 11 September 2006, sets out the matters required by r 7.2(2). In that affidavit she referred to a resolution of the directors passed on 7 September 2006. However, a copy of that resolution was not attached to the affidavit, nor, so far as I can ascertain, was it filed in Court. 8 In my view, the requirements of r 7.2(1) and 7.2(2) are cumulative, so that there was not last September a filing of the requisite material to found Mrs Swart's right to appear. A directors' resolution of January 2007 has, indeed, been filed in court, but, so far as I can tell, without a further affidavit. It appears that a copy of the earlier resolution was produced in Court and marked for identification before White J, but his Honour required formal compliance with the rule requiring proof of the director's standing. 9 That rule must be strictly complied with and there has not been such compliance. In those circumstances, I should be reluctant to allow Mrs Swart to appear for the defendant at a trial, although the convenient course has been to allow her to continue to appear on the application for adjournment. 10 I should add that the nature of the case is such that in my view it would be wise for the defendant to consider having legal representation at the trial, bearing in mind the difficulty and sophistication of some of the issues that are raised. 11 However, that is not the end of the matter. The defendant seeks today to proceed upon the statement of cross claim that was filed in January. The first thing that is to be said is that, although the registry accepted the statement of cross claim, it was not filed either within the time limited by the rules or a time fixed by the Court for its filing. UCPR r 9.1(1) provides that a party may make a cross claim within the time limit for that party to file a defence or within such further time as the Court may allow. 12 The time for defence limited by the rules is 28 days: UCPR r 14.3. The 28 days for the filing of the defence has not yet expired. In addition to that, the statement of cross claim itself is a document that either should not have been accepted in the registry when proferred, at least without further order of the Court, because it was not filed within the time permitted. In addition to this, the plaintiffs' state that the cross claim has not come to their attention until today. In those circumstances, it is quite clear that the matter cannot proceed today as the defendant seeks to have it do. 13 The matter concerns a mortgage under which a default rate of interest of 126 per cent per annum is stipulated and the defendant under its cross claim seeks to recover interest at that rate. The plaintiffs' claim is to have the mortgage set aside under the provisions of the Contracts Review Act 1980 ("the CRA") or as being an unconscionable transaction in the general law. 14 The cross claim which I have mentioned is for enforcement of the mortgage. White J on 8 September 2006 granted to the plaintiffs injunctive relief upon the basis that they had an arguable case that the plaintiffs were entitled to relief under the CRA or as an unconscionable transaction. His Honour did this on the basis of an undertaking of the plaintiffs to the Court that they would pay into court the principal sum of $45,000 together with interest to date at the rate of 9 per cent per annum: Starcevich v Swart and Associates Pty Ltd [2006] NSWSC 960. 15 This the plaintiffs were unable to do. The Chief Judge in Equity on 5 December 2006 heard an application by the plaintiffs that they should be released from that undertaking but that the injunction should be left standing and an application was made by the defendant that the injunction should be dissolved by reason of non-compliance with the undertaking. His Honour refused the plaintiffs' application and acceded to the defendant's application, dissolving the injunction: Starcevich v Swart and Associates Pty Ltd [2006] NSWSC 1387. 16 By this stage the proceedings had been fixed for hearing before me at a Registrar's callover. Ms Marianne, as the plaintiffs' solicitor, and Mrs Swart appeared at that callover. The matter was fixed before me for one day only. I am afraid that the estimates given to the Registrar of the length of the hearing were in my view quite unrealistic, bearing in mind the issues involved. The fact that the hearing could not be completed today, even if it commenced, and would have to be stood over to a later time by reason of the estimates given by the parties is yet another reason why the application for adjournment should be allowed. 17 Upon my drawing to Mrs Swart's attention the various difficulties that the defendant faced, she did not persist in calling evidence or conducting a case that the application was a tactic or formed part of a strategy on the plaintiffs' part to delay finalisation. Although the adjournment is not granted on the basis of the plaintiffs' loss of legal representation, the grant of the adjournment will give them a further opportunity to obtain legal representation. It is highly desirable that they should do so. If they can arrange funds to pay for representation, that should be done quickly. If they cannot, they should seek, and seek swiftly, to obtain pro bono representation through the New South Wales Bar Association or in any other way that they can. Whilst it would be of assistance to the Court as well as to them if they could be represented, they must understand that the matter cannot continue indefinitely in abeyance. In those circumstances, if they cannot obtain representation, then they must make whatever preparation is necessary to conduct the case themselves. 18 I propose to stand the matter over for further directions before me on a day before the next Registrar's callover to see what progress has been made towards the matter being ready to be placed in that callover and a date given for trial. So far as I can tell on the material available to me at the moment, the case should be fixed for four days hearing. There is another Registrar's callover on 14 March 2007. 19 The orders that I make are as follows: (1) I grant leave to Mrs J A Swart to file an affidavit complying with r 7.2(1) and (2) of the UCPR in relation to her authorisation to appear for the defendant. (2) I grant leave to the defendant to rely on the statement of cross claim filed on 23 January 2007. (3) I direct that the plaintiffs serve their defence to cross claim and all affidavits on which they intend to rely on the claim and cross claim on or before 8 March 2007. (4) I grant leave to the defendant to file in Court the affidavit of J A Swart affirmed 6 February 2007. (5) I note that the plaintiffs have received in Court today copies of the statement of cross claim and the affidavit of J A Swart affirmed 6 February 2007. (6) The proceedings are stood over to 9 March 2007 at 9.30am before me for further directions. ********** 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.