Federal Court of Australia

Hillier v Martin (No 8) [2021] FCA 1272

ORDERS

THE COURT ORDERS THAT:

1.    The second respondent’s oral application for an order varying the time for compliance with paragraph 7 of the orders made on 28 September 2021 be refused.

2.    Mr Thomas Patrick Martin be restrained from acting as the legal representative of the second respondent in any capacity in connection with these proceedings.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

CHARLESWORTH J

INTRODUCTION

1    The underlying controversy in this dispute has been summarised in prior interlocutory judgments of the Court. These reasons relate to two issues affecting the defence of the proceedings by the second respondent Nordburger Operations Pty Ltd. I will refer to them as the Defence issue and the Representation issue.

Summary of the Defence issue

2    The Defence issue arises by virtue of orders made on 28 September 2021 in the following terms:

7.    At or before 4.00 pm (ACST) on 1 October 2021, the second respondent if so advised is to file and serve any application for an extension of time in which to file a defence, such application to be supported by an affidavit deposing to:

a.    the reasons for non-compliance with the previous deadlines fixed by the Court for the filing of the defence; and

b.    annexing a copy of a complete draft of any defence proposed to be filed.

8.    In the event that an application is filed and served in accordance with paragraph 7, the application is, by this order set down for hearing at 10.30 am (ACDT) on 11 October 2021.

9.    In the event that no application is made by the second respondent in accordance with paragraph 7 then, by force of this order, the second respondent is not entitled to file a defence in the action and shall be entitled to be heard in the trial of the action only in respect of the terms of the final relief (if any) to which the applicant may be entitled should the facts alleged in the third amended statement of claim or any subsequent amended statement of claim be established.

3    In these reasons the above orders will be referred to as Order 7, Order 8 and Order 9. The circumstances in which the orders were made will be detailed later in these reasons. No party has applied to set them aside.

4    On 1 October 2021 at 4.33pm, Operations filed an application seeking an extension of time by which to file a defence. I will refer to it as the 1 October application. The supporting affidavit of its lawyer, Mr Thomas Martin, had annexed to it a copy of a defence proposed to be filed (Proposed Defence).

5    The applicant, Mr James Hillier, submits that for the purposes of Order 9, the 1 October application was not an application “made in accordance with” Order 7, both because it was not filed within the time specified in the opening words of Order 7, and because the supporting affidavit did not have annexed to it a copy of Operations’ complete defence as required by Order 7(b).

6    The Court has granted Operations leave to make an oral application for an order that the time specified in Order 7 be extended to accommodate a delay of about half an hour in filing the 1 October application. Operations otherwise disputes that the Proposed Defence is incomplete. It presses the application for an extension of time to file a defence. The proposed date for filing that document is 5 October 2021. That date has passed due to the necessity to hear and determine the 1 October application as indicated in Order 8.

7    As explained below, on the assumption that Order 9 is not operative, I would refuse the 1 October application on its substantive merits, with the consequence that Operations ought to be restricted in the presentation of its case in the same manner as presently provided for by Order 9 in any event. Accordingly, I will not allow Operations’ application for an order varying the time specified in Order 7 as I do not consider it to be in the interests of justice to do so. Order 9 should remain undisturbed.

Summary of the Representation issue

8    The Representation issue concerns Operations’ legal representation in the proceedings. It arises on an interlocutory application filed by Mr Hillier on 8 September 2021. By [2] of that application, Mr Hillier seeks an order as follows:

the notice of address for service filed by Thomas Patrick Martin on 12 August 2021 for the second respondent be uplifted from the Court file and that there be an order that Mr Martin is not entitled to act as the legal representative of the second respondent in any capacity in connection with the conduct of the within proceedings; …

9    This application is made on two bases. First, it is submitted that Mr Martin is not a “lawyer” within the meaning of the Federal Court Rules 2011 (Cth) such that Operations cannot be represented by him except with the leave of the Court. I have not accepted that submission.

10    Second, it is submitted that Mr Martin should be restrained from acting for Operations because of the variety of capacities he has in connection with the proceedings and its subject matter giving rise to conflicting interests and duties. I have accepted that submission and am satisfied that the application should be allowed in part.

THE DEFENCE ISSUE

11    This issue concerns the exercise of the Court’s civil practice and procedure provisions, particularly provisions concerning the consequences of a party’s default.

12    Section 37M(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) provides that the overarching purpose of the provisions is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. Section 37M(2) provides:

Without limiting the generality of subsection (1), the overarching purpose includes the following objectives:

 (a)    the just determination of all proceedings before the Court;

(b)    the efficient use of the judicial and administrative resources available for the purposes of the Court;

 (c)    the efficient disposal of the Court’s overall caseload;

 (d)    the disposal of all proceedings in a timely manner;

(e)    the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.

13    Section 37M(3) requires that the Court interpret and apply the civil practice and procedure provisions (and exercise any power conferred or duty imposed by them) in the way that best promotes the overarching purpose.

14    The parties to the proceedings must conduct the proceedings in a way that is consistent with the overarching purpose:  FCA Act, s 37N(1).

15    As to the meaning of these provisions, it is convenient to repeat what I said on the topic in Prodata Solutions Pty Ltd v South Australian Fire and Emergency Services Commission (No 3) [2020] FCA 1210 (at [90]):

… In order for the command in s 37M to have any utility, the ‘overarching purpose’ must be understood as conveying a singular objective that is capable of being best promoted by a decided outcome, relative to other outcomes that might otherwise be open to the Court were it not for the enactment of s 37M(1). As such, I do not consider it appropriate to characterise the requirement in s 37M(1) as a consideration capable of being outweighed by other countervailing considerations. Nor is it to be understood as merely listing a variety of countervailing factors to be weighed in the balance in the exercise of the power in question. Rather, s 37M(1) conditions the manner in which all powers conferred by the Court’s practice and procedure provisions are to be interpreted and exercised. It confines the latitude that might otherwise be available to the Court in the exercise of those powers:  given a choice between outcomes, the Court must choose the outcome that best promotes the overarching purpose. The task of identifying the manner of exercising a power that ‘best promotes’ the overarching purpose involves evaluative elements, but the task itself is mandatory. And the Court must exercise its powers according to the outcome of it.

(emphasis in original)

16    Section 37P(2) provides that a judge may give directions about the practice and procedure to be followed in relation to the proceeding or any part of it. Such directions may require things to be done within set timeframes:  FCA Act s 37P(3)(a) and (b). Section 37P(5) provides that if a party fails to comply with a direction given by the Court or a judge under subs (2), the Court or judge may make such order or direction as the Court or judge thinks appropriate. Such orders may have the effect of limiting a party’s defence:  FCA Act, s 37P(6)(b). The Court otherwise has the power to make any interlocutory order that the Court considers appropriate in the interests of justice:  FCA Act, s 23; Rules, r 1.32.

Operations’ defaults

17    Operations is presently in default of an order that it file a defence on or before 13 September 2021.

18    Order 7 required that any application filed by Operations be supported by an affidavit deposing to “the reasons for non-compliance with the previous deadlines fixed by the Court for the filing of the defence”. It was directed to the reasons for non-compliance with all previous deadlines. As discussed below, there are several of them. The seriousness of the defaults is to be assessed in the context of the whole of the procedural history of the matter.

19    Mr Hillier, commenced this action on 11 August 2020. The only respondent at that time was his sister Mrs Victoria Martin (now named the first respondent). In Hillier v Martin (No 7) [2021] FCA 1221 (Hillier No 7) I summarised the issues to be tried as between Mr Hillier and Mrs Martin. It is convenient to extract some of what I said there:

3    The parties are in dispute as to the ownership and control of a hamburger business trading as Nordburger. Mr Hillier is the brother of the first respondent, Mrs Victoria Martin.

4    Mr Hillier’s case is that there exists a joint venture agreement involving himself, Mrs Martin and the third respondent Erik Vari Pty Ltd. He alleges that, pursuant to the joint venture agreement, the assets of the business were held by the company Nordburger Pty Ltd, of which Mrs Martin was sole director and shareholder. He seeks a declaration to the effect that at all material times Mrs Martin held the shares in Nordburger Pty Ltd on trust for the joint venturers on the terms of the joint venture agreement. The material times date back to late 2012 when the joint venture was allegedly formed. I will refer to the trust alleged by Mr Hillier as the JV Trust. Mr Hillier asserts an equity share in the corpus and income of the JV Trust of at least 40%. He acknowledges Mrs Martin has an interest of at least 20% in the same.

5    Among other things, Mr Hillier alleges that Mrs Martin caused the assets of the business to be transferred to Nordburger Operations Pty Ltd in circumstances constituting a breach of the joint venture agreement, breach of fiduciary obligations arising by virtue of the JV Trust, and a fraud on a power in respect of the JV Trust. He alleges that the transfer had no valid effect on the terms and operation of the joint venture agreement. He alleges that the transfer was undertaken at a time when Mrs Martin was the sole director and shareholder of both Nordburger Pty Ltd and Operations and the controlling mind of each entity. Among other things, Mr Hillier seeks a declaration that Operations holds the business assets on trust for the benefit of the joint venture participants and on terms consistent with the joint venture agreement.

6    The fact of the transfer to Operations does not appear to be disputed. It is Mrs Martin’s case that the transfer occurred in the context of a restructure of the business in late 2019. Mrs Martin denies the existence of a joint venture agreement and so denies the existence of any trust arising out of any such agreement. She alleges that Operations holds the business assets as the duly appointed Trustee of the Nordburger Holdings Trust (NH Trust), being an express trust settled by Deed (the NHT Deed) shortly prior to the transfer. According to the NHT Deed, Mr Hillier and Mrs Martin are the only primary beneficiaries. There appear to be many other persons meeting the description of secondary beneficiaries.

7    It is Mrs Martin’s case that the terms of the NHT Deed are consistent with the terms of a prior family trust and reflect the prior legal relations between her and Mr Hillier in respect of their past business activities. She denies that Vari has any interest in the business, whether by virtue of any joint venture agreement, or at all.

20    The abbreviations in that passage will be employed in the remainder of these reasons.

21    By an interlocutory application dated 17 June 2021, Mr Hillier sought leave to file a second amended statement of claim (2SOC), including amendments to the prayer for relief. Up until that time (and to the present day) Mrs Martin was represented by the firm Norman Waterhouse Lawyers. At the time that the proceedings were commenced, she was the sole director of Operations. Since that time the Court has been informed that Mr Martin (her husband and now the lawyer for Operations) was appointed co-director of Operations and co-appointer of the NH Trust. More recently, Mrs Martin has filed an affidavit to the effect that she has resigned as a co-director of Operations (leaving Mr Martin as the sole director) and Mr Martin has resigned as co-trustee. The recent changes in control of Operations do not affect the outcome of this application.

22    On 24 June 2021 the Court made an order granting Mr Hillier leave to amend his statement of claim, including by amendments to [70]. That paragraph alleges that Mrs Martin’s actions in establishing the NH Trust and transferring legal ownership of business assets to Operations as trustee of that trust were undertaken in breach of the joint venture agreement, the JV Trust and her fiduciary duties arising thereunder, and at a time when she was the sole director of Nordburger Pty Ltd and Operations (and hence their controlling mind) and “of no valid effect on the terms and operation of” the joint venture.

23    Mr Hillier was also granted leave to introduce new [73.5] and [75.4] in his prayer for relief, by which he claims the following remedies:

73.5    a declaration that Nordburger Operations Pty Ltd holds the shares in Nordburger Pty Ltd and the intellectual property rights purportedly transferred to it by Nordburger Pty Ltd (to the extent that the transfer of any such assets to Nordburger Operations Pty Ltd is valid, which is not admitted) on trust on the terms of the Nordburger Joint Venture Agreement.

…

75.4    Nordburger Operations Pty Ltd provide an accounting to the Applicant of all income, profits, and the disposition of profits and assets, of or derived by the Nordburger Holdings Trust since its inception in about October 2019;

24    The grant of leave to amend [70] was unconditional. However, the grant of leave to introduce [73.5] and [75.4] was expressed to be conditional upon Operations being joined as the second respondent in the proceedings. The reasons for imposing that condition on the grant of leave was explained in Hillier v Martin (No 3) [2021] FCA 709 (Hillier No 3) in the following terms:

24    At present I am satisfied that if the amendments were to be made, Operations should be joined as a party at least on the basis specified in r 9.05(1)(b)(i) of the Federal Court Rules 2011 (Cth), that is the joinder of Operations is necessary for its cooperation in the enforcement of the Court’s orders.

25    On the limited submissions that have been made before me today, I am not presently satisfied that Operations, as a corporate trustee, otherwise has a legitimate interest in being heard in the controversy between the applicant and the respondent as articulated in the pleadings in the present form. More particularly, I am not presently satisfied that it is either necessary or appropriate for Operations, as trustee, to adopt a partisan position in the disputed allegation in [70.4] of the first amended statement of claim, which is not affected by any proposed amendment. If the allegation in [70.4] is made good, it is difficult to see what submission Operations could make to resist declarations of right giving effect to that finding. Operations should nonetheless be joined as a party if orders are sought against it, such as those now proposed. In that regard, I am not satisfied that the respondent is presently the sole controller of Operations, having apparently divested herself of share holdings in her name and having appointed her husband as a co-appointor of the Nordburger Holdings Trust and co-director of Operations in its capacity as trustee.

26    For the effective enforcement of the Court’s orders, should there be an entitlement in the applicant to an account of profits as claimed in the amended paragraphs it seems to me that Operations ought to be joined.

…

29    I accept that for the purposes of identifying Operations as an entity knowingly in receipt of trust property, it is sufficient to plead and prove that the respondent was the alter ego of Operations at the time of the impugned transactions. The opening words in [70], as amended, are sufficient for that purpose. But it is a different question as to whether orders can or should be made that are directed in their terms to Operations without that company being joined, particularly orders directly requiring Operations do what would be required by [75.4] of the 2ASOC.

30    I am satisfied that the grant of leave should be conditioned by a requirement that the applicant seek leave to join Operations and that Operations in fact be joined. There does not appear to be a compelling reason to delay its joinder as a party.

25    The orders in Hillier No 3 were relevantly expressed as follows:

1.    The applicant has leave to amend the statement of claim by:

(a)    inserting the amendments in the proposed amended paragraphs 70.4 and 70.5 of the proposed second amended statement of claim in the form of annexure JH59 to the affidavit of James Hillier sworn on 17 June 2021; and

(b)    deleting the previously numbered paragraphs 75.4 to 75.7 of the first amended statement of claim.

2.    The applicant has leave to introduce the pleas proposed at paragraphs 73.5 and 75.4 of the proposed second amended statement of claim on the condition that Nordburger Operations Pty Ltd be joined as the second respondent in the proceedings and the applicant is granted leave to join Nordburger Operations Pty Ltd as a party for that purpose.

3.    The leave granted in paragraphs 1 and 2 is to be exercised on or before 28 June 2021.

…

8.    On or before 19 July 2021 the first respondent is to file and serve an amended defence.

9.    In the event that the leave in paragraph 2 is exercised, on or before 19 July 2021 the second respondent Nordburger Operations Pty Ltd is to file and serve a defence.

…

26    Mr Hillier immediately informed the Court that he exercised the leave to join Operations as a party and that leave was granted. On 28 June 2021, Mr Hiller filed the 2SOC naming Operations as the second respondent. On 1 July 2021 the Court granted Mr Hillier leave to file an amended originating application reflecting the prayer for relief contained in the 2SOC and naming Operations as the second respondent. The Court also ordered that Operations be taken to have been joined as the second respondent as and from the time that the 2SOC was filed.

27    Mr Martin has attended nearly all the hearings in the proceedings, at times providing instructions to Mrs Martin’s lawyers in her absence. Before the joinder of Operations, he was granted an audience before the Court in various capacities and has on those occasions made submissions attacking the merits of Mr Hillier’s claims. In light of the history summarised thus far, this is not a case in which the joinder of Operations occurred in circumstances where its controllers first became apprised of the issues to be tried in the proceedings from the date of its joinder as a party.

28    Rule 9.05(1) provides that if a person is joined as a party under r 9.05, the start date of the proceeding for the person is the date on which the order is made. The date of Operations’ joinder was (at the latest) 1 July 2021.

29    On 13 July 2021 Operations was served with a copy of the amended originating application and the 2SOC in a manner of service that complied with the rules as to service of documents on a company. Service was affected in that way after Norman Waterhouse Lawyers had failed to respond to an enquiry as to whether it would accept service on behalf of the company. Mr Martin has previously confirmed that he was aware that Mr Hillier had made a request for Norman Waterhouse Lawyers to accept service of the documents on Operations’ behalf.

30    After it was served, Operations did not file an application for extension of time to file its defence before the date for compliance arrived. The original deadline of 19 July 2021 came and went without any communication having been made to the Court in respect of it.

31    As at the next case management hearing on 4 August 2021, Operations had not filed an address for service. I granted Operations an audience (through Mr Martin) to raise its arguments about prejudice he asserted arose from the date of service and other asserted consequences arising from the service date. The Court was informed that Mr Martin had written to Mr Hillier’s lawyers alleging (among other things) that the delay in service had prejudiced it in the preparation of its defence. The correspondence also asserted that the delay in service had the consequence that Mr Hillier had not exercised the liberty to apply to join Operations as a party such that Operations did not have that status in the proceedings.

32    In the result on that day, Mr Hillier did not oppose the grant of an extension of time for Operations to file a defence to 18 August 2021, being the date proposed by Mr Martin. In the circumstances, it was not necessary to make any finding as to whether Operations had been prejudiced as a consequence of the issues relating to service of documents upon it, nor was it necessary to determine the merits of Mr Martin’s submission that Operations had not been joined as a party. It will be necessary to return to that issue later in these reasons.

33    Operations did not file a defence on 18 August 2021. Nor did it bring an application for an extension of time in which to do so before that deadline expired. Nor did it communicate with the Court to explain its default in any other way. At that time, Mrs Martin was also in default of an order that she file an amended defence.

34    The next case management hearing occurred on 23 August 2021. At that hearing, Mrs Martin sought an extension of time to file an amended defence to 27 August 2021. Operations sought an extension of time to file a defence to 1 September 2021. Mr Martin said that the defence of Operations would be subsidiary to the amended defence that was at that time yet to be filed by Mrs Martin.

35    Those extensions were granted notwithstanding that the Court was not satisfied that there had been an adequate explanation for the defaults. The Court expressed its dissatisfaction with the delays. It warned Mrs Martin and Operations (by their representatives) of the attitude the Court may take in respect of any further delays. The Court criticised Mrs Martin and Operations for allowing court ordered deadlines to pass without making any application or any approach to the Court to seek an extension of time or to provide an explanation. The Court criticised that practice as securing an extension of time by illegitimate means. The Court repeated that the legitimate way to secure an extension of time was to contact the Court before the deadline passed to seek an extension and to provide an explanation. The Court explained that whilst it would grant the extensions that were sought on that day, any further application to extend the deadlines must be made by way of interlocutory application supported by affidavit. Mrs Martin and Operations were told that they would be treated as being in default under the Rules if their obligations were not complied with. The Court said that the failure to seek extensions of time rendered the Court’s processes ineffective. It explained that there was little utility in hearing argument about the appropriate date by which a document should be filed if parties simply took it upon themselves to file the document at a later time.

36    Neither Mrs Martin nor Operations complied with the newly imposed deadlines for their defences.

37    Late in the day on 27 August 2021, Mrs Martin’s solicitor filed an affidavit, in which he explained that Mrs Martin’s draft pleading was in the possession of Senior Counsel “for completion”. He sought an extension of time for the filing of Mrs Martin’s defence to 30 August 2021.

38    The next hearing occurred on 2 September 2021.

39    At that hearing, Counsel for Mrs Martin told the Court that he had been in possession of Mrs Martin’s draft amended defence “for about a week or so”. He did not press for an extension to 30 August 2021 because it could not be achieved. Instead, he sought until 9 September 2021 to make an application for an extension of time to file the amended defence and confirmed that the complete proposed defence would be annexed to an affidavit in support of that application.

40    Mr Martin confirmed that he had “looked over” Mrs Martin’s draft defence. He confirmed that he was in a position to make an application for an extension of time for Operations to file a defence by 7 September 2021, which would be supported by an affidavit providing an explanation for Operations’ delay. Mr Martin again said that Operations’ defence would be “supplementary” or “complimentary” to Mrs Martin’s amended defence. The Court made separate orders directed to Mrs Martin and Operations, requiring that they each file and serve an application for an extension of time in which to file a defence, to be supported by an affidavit giving particulars explaining the delay in the preparation of the document. The date for compliance was 7 September 2021.

41    The Court again expressed its disapproval in connection with the delays. It informed the parties that if there was non-compliance with the deadlines fixed that day, the Court would consider whether the matter should be set down for a case management hearing to enquire of its own motion why judgment shouldn’t be entered in the action for Mr Hillier.

42    On 8 September 2021, Mrs Martin filed an interlocutory application seeking an extension of time in which to file an amended defence to “a date to be determined”. The supporting affidavit of the solicitor stated that Mr Martin had been involved in providing instructions to Norman Waterhouse Lawyers for the purpose of the preparation of Mrs Martin’s defence. He stated that both Mr Martin and Mrs Martin had given timely responses to requests for information to Norman Waterhouse Lawyers.

43    Operations did not comply with the order requiring it to file an application for an extension of time to file a defence.

44    The next hearing occurred on 9 September 2021. Counsel for Mrs Martin explained that her amended defence was complete, but said he was instructed to seek a further period of time before filing the document so that it could be used for alternative dispute resolution purposes. The request for further time was refused. The Court ordered that Mrs Martin’s defence be filed at 4pm that day. The Court explained that whether Mrs Martin’s explanation for the delay should be accepted would be considered again in the event of any future default on her part.

45    Mr Martin sought to delay the time for the filing of Mrs Martin’s defence. He confirmed that he had seen the final draft of the document. He asserted again that it was Operations’ intention to render Operations’ defence “as complementary to the first respondent’s defence as possible in order to save on complexity and cost”. He said that on the previous day he had spent a considerable period of time reviewing Mrs Martin’s proposed amendments. He acknowledged that Operations ought to have filed an application for an extension of time to file its own defence. He submitted that “[t]here are a great number of very troubling and confounding falsehoods and intentionally misleading matters in [Mr Hillier’s] pleading that render a response to it more problematic”. The Court interrupted these submissions to remind Mr Martin that he had been afforded an opportunity to explain Operations’ delay by way of an affidavit but had not done so.

46    Mr Martin said that he expected he would be in a position to file Operations’ defence by 4pm on the following Monday (four days hence), but qualified that with criticisms of Mr Hillier’s pleading that he said “may not entirely prohibit or restrict the filing of a defence”.

47    The Court ordered that the time for Operations to file a defence be extended to 13 September 2021.

48    As I have mentioned, Operations remains in default of that order.

The orders of 28 September 2021

49    The orders of 28 September 2021 were made in the following circumstances.

50    Between 10 September 2021 and 14 September 2021 there was an exchange of correspondence between the Court (through my Chambers) and the parties.

51    On 10 September 2021, the Court informed the parties of its expectations for the conduct of a hearing of interlocutory applications that had been set down to proceed on 28 September 2021. The Court expressed its expectation that any party seeking to file a document outside of the timeframes ordered on 9 September 2021 should file an affidavit providing an explanation for the delay.

52    On 13 September 2021, Mr Martin sent an email to my Associate in relation to Operations’ defence. It is necessary to extract it in full:

I write as a courtesy to inform the Court and the other parties that regrettably the second respondent is not in a position to file its defence by 4.00 PM today. The second respondent’s pleadings will, however, be ready for filing imminently, and the other parties could reasonably anticipate service to occur later this afternoon or early tomorrow morning, subject to when the documents are returned from the Registry after e-filing.

The reason for the slight delay from the time for filing required under the orders of Thursday last week, namely 4.00 PM today, is that substantial amendment of the first respondent’s pleadings, as settled by her senior counsel, has necessitated further review and consideration than it has been feasible to complete in the two business days allocated to the second respondent for this exercise. With due diligence, however, the second respondent does expect to be able to file the defence shortly.

I apologise for any inconvenience to the Court and the other parties that this may cause, and trust that no substantial prejudice will result, in light of the relatively short period of delay, and in circumstances where the third respondent is yet to decide whether it will elect to file a defence.

I had not informed the other parties of this correspondence in advance or consulted with them about it, on the basis of urgency and expediency.

(emphasis added)

53    Operations did not file a defence in the timeframes referred to in that email.

54    On 14 September 2021, Mr Martin send a further email to my Associate as follows:

By way of update to the below, the Second Respondent’s Defence is close to completion and should be ready for filing later today.

55    The Court (through my Chambers) responded in terms that reminded Mr Martin of his obligations to avoid sending correspondence to the Court without the foreknowledge and consent of the other parties. The email concluded:

The second respondent is to comply with the requirement set out in the Associate’s email in respect of the filing of a document outside of the deadlines fixed by the orders made on 9 September 2021.

The second respondent should make it clear whether it is seeking any order and, if so, the form of the order that is sought. The attitude of the other parties is to be sought in connection with the proposed order.

In the interim, the other parties should promptly be provided with a copy of the defence in the form in which it is to be lodged for filing.

(emphasis added)

56    Operations did not apply for any order, whether informally or by interlocutory application.

57    No defence was filed on 14 September 2021.

58    The next hearing occurred on 28 September 2021. The matter was listed for case management that day, as well as for argument on outstanding interlocutory applications potentially affecting Operations’ interests. At the commencement of the hearing Mr Martin was not in attendance. He had not corresponded with the Court in advance of the hearing to advise that he could or would not attend.

59    The Court requested the solicitor for Mrs Martin to contact Mr Martin to enquire about his absence. The hearing was stood down for a short time for that purpose. The solicitor informed the Court that Mr Martin had been contacted and reported that he would not be attending the hearing. No explanation was provided and no adjournment was sought. The hearing proceeded in the absence of Operations, the Court dealing with a number of case management issues affecting its interests, including the question of its breach of the 13 September 2021 deadline. Mrs Martin did not seek to be heard in relation to that issue.

60    By reference to the default, Counsel for Mr Hillier sought an order “that the second respondent not be entitled to file a defence in the action and only be entitled to be heard, if at all, on the terms of any final relief”.

61    The Court did not allow Mr Hillier’s application in terms. Instead, the Court made Orders 7, 8 and 9. The following matters were taken into account in making the orders:

(1)    Operations’ correspondence to the Court of 13 and 14 September 2021 stated that the defence was imminent at that time;

(2)    the Court’s response included a reminder that Operations should state whether it sought an order, and the form of the order that it sought;

(3)    Operations did not apply for any order, whether formally or informally to address the circumstance that it was in breach of the order that it file its defence by 13 September 2021;

(4)    the Court had previously expressed its disapproval of allowing Court-ordered deadlines to expire rather than applying for an extension of time and had specifically referred to powers it may exercise in respect of a party in default;

(5)    Operations had not attended the hearing on 28 September 2021 of its own choice without providing the Court with an explanation for its non-attendance and without seeking an adjournment of that hearing;

(6)    the circumstance of Operations’ default was an obvious topic to be addressed at the case management hearing (as it had been at previous successive case management hearings);

(7)    however, it did not appear that Mr Hillier had given Operations notice of the proposed order in advance of the hearing.

62    In the circumstances just described, I determined that Operations should have a short period of time to make an application for an extension of time to file the defence, supported by an explanation for its past defaults, given on oath. I considered it appropriate to afford Operations that opportunity, after first putting it on notice of the consequences that would immediately follow if it did not avail itself of the opportunity in accordance with the Court’s orders.

Events after 28 September 2021

63    On 29 September 2021, Mr Martin appeared by telephone link at a resumed hearing. He confirmed that Operations’ non-appearance on 28 September 2021 was due to his forming the view that there was nothing to be gained by his attendance. He otherwise made submissions with a view to deferring the hearing of the representation application (discussed below). He did not seek an order setting aside Orders 7, 8 and 9 and no such application has since been made on Operations’ behalf.

64    At 2.32pm on 1 October 2021 Mr Martin sent an email to the Court and the other parties advising that an application, unsworn affidavit and draft defence would be served on the other parties by 4.00pm that day. Mr Martin advised that the application and affidavit would be formally filed “immediately thereafter” and served by close of business on that day. Mr Martin sent a further email at 4.06pm to the Court and the parties, attaching the unsigned interlocutory application and unaffirmed affidavit annexing the draft defence. The signed and affirmed documents were filed at 4.33pm on 1 October 2021.

The 1 October application

65    Mr Martin’s affidavit of 1 October 2021 states:

…

3.    The Second Respondent seeks an extension of time for the filing of its Defence until close of business Monday 4 October 2021.

4.    The reason for the delay in filing the Defence is that the Applicant’s pleadings are fundamentally deficient in terms of being non-compliant with the Federal Court Rules as to the pleading of the contents of oral discussions, the pleading of documents, the pleading of causes of action, the identification of parties, the use of particulars, and other matters.

5.    The Applicant’s pleadings, from the second paragraph onwards, are also materially misleading about the basic facts which are essential to the proper foundation of the proceeding. Practically each and every paragraph of the Applicant’s pleading would lead the Court into error, if not corrected by the pleadings of the respondents.

6.    The above matters have caused embarrassment, prejudice and delay to the Second Respondent in responding to the various allegations in a way that accurately states the undeniable, objectively ascertainable matters of fact which are known to the Applicant and his legal representatives but which are misrepresented in his pleaded case.

7.    As a result of the time required to rectify the state of the pleadings, the Second Respondent has not been able to complete this exercise for the pleading from paragraph 12 to 75 of the Applicant’s third Statement of Claim, and proposes to continue with this process in the interests of assisting the Court to exercise its jurisdiction without the risk of a miscarriage of justice that arises as a consequence of the Applicant’s lack of candour and dissimulation in his pleaded case.

66    The reason for the delay asserted in [4] is alleged non-compliance by Mr Hillier with the rules of pleading in connection with what is now the third amended statement of claim (3ASOC).

67    The reasons alleged in [5] and [6] have a different nuance. They are to the effect that the 3ASOC is misleading, that Mr Hillier’s case is untenable and that the Court would be led into error if the allegations were not to be “rectified” in the respondents’ pleadings.

68    By [6] it is also alleged that the defects in the 3ASOC have resulted in Operations suffering “embarrassment” and “prejudice” and have also caused delay in the preparation of Operations’ defence. I will proceed on the basis that the asserted embarrassment, prejudice and delay flows from the defects alleged in the preceding paragraphs, as no other species of prejudice is specified.

69    Paragraph 7 confirms that Operations has been unable to prepare the defence upon which it proposes to rely at trial. It confirms that Operations intends to continue with the process of drafting the defence. Implicitly, it is asserted that Operations has not had sufficient time to complete the drafting process.

70    It is necessary identify whether the 1 October application was made in accordance with Order 7 and, if not, the respects in which it was non-compliant.

Non-compliance with Order 7

71    Mr Martin submitted that the Proposed Defence traverses each plea in the 3ASOC. I accept that submission. In the Proposed Defence, [1] – [12] of the 3ASOC are met with detailed allegations in response, and [12] – [75] are traversed in a single paragraph which adopts Mrs Martin’s defence in relation to their respective subject matters.

72    The Proposed Defence may be regarded as the defence Operations proposes to file should an extension of time be granted.

73    Accordingly, the Proposed Defence is “a complete draft of any defence proposed to be filed” within the meaning of Order 7(b) made on 28 September 2021, strictly interpreted. Whether or not the Proposed Defence is the complete defence upon which Operations proposes to rely at the trial is a relevant consideration for other purposes.

74    The 1 October application was otherwise non-compliant with Order 7 because it was filed a little over half an hour late. In an ordinary case, a retrospective variation to the time specified in the order may be made to rectify what is, of itself, a minor instance of non-compliance (whether or not an explanation is provided for it). Operations has applied for that variation.

75    If its application were allowed, Order 9 would not be operative and the Court would then turn to decide the 1 October application on its substantive merits.

76    As explained below, I have concluded that even if Order 7 was varied so that Order 9 was not operative, I would in that event dismiss the 1 October application as unmeritorious.

77    I will now explain why that is so, before returning to the decide Operations’ application to vary the time specified in Order 7.

Inadequate explanation

78    Mr Martin alleges that the 3ASOC offends the rules as to pleadings. In the course of that submission, Mr Martin did not take the Court to the 3ASOC to identify any particular defect as to the form or manner of any particular plea. He articulated complaints about the 3ASOC at a high level of generality. I am not satisfied that there is any particular defect in the form of the 3ASOC that would explain Operations’ own past defaults. I am reinforced in that view by the circumstance that the defence recently filed by Mrs Martin contains factual allegations joining issue with the 3ASOC so providing Mr Hiller and the Court with a fair indication of the scope of the controversy to be tried between those parties.

79    If there be any want of particularisation in the 3ASOC, I consider Operations has had sufficient time to request particulars and to approach the Court for relief if they were not provided. If there be other defects in the pleading, the responsibility of Operations under s 37N of the FCA Act was to move promptly to seek relief in respect of them.

80    The allegation that Mr Hillier has egregiously misrepresented facts in the 3ASOC may or may not be correct. The factual allegations will be adjudicated by the Court following a trial conducted in accordance with the rules of evidence in the usual way.

81    Mr Martin devoted his oral submissions principally to the contention that Mr Hillier’s case cannot and should not succeed at the trial, including because Mr Martin was in possession of evidence that proved Mr Hillier’s case to be entirely unfounded and contradicted by his prior statements or conduct. However, the circumstance that Operations wishes to contest the case in that way does not provide an explanation for its repeated failure to comply with ever varying deadlines for filing a defence (including dates fixed at its own suggestion). If anything, the strength of Mr Martin’s convictions only serves to reinforce the imperative that a defence be filed by Operations (to the extent that its interests are affected) so that the issues in dispute can progress to trial and be finally determined. The purpose of the defence is not only to put Mr Hillier on notice of the case Operations proposes to run, but to define the scope of the controversy for the Court itself. To the extent that Operations asserts that Mr Hillier’s claim should be struck out or summarily dismissed, whether on the basis of fraud or otherwise, no applications of that kind have been filed in a timely way, or at all.

82    The allegation that Operations needs more time to respond to the 3ASOC otherwise appears to proceed from the premise that the allegations in the 3ASOC diverge so far from the truth that it has presented Operations with a very considerable task in pleading the facts necessary to answer the case. I do not accept that is an acceptable explanation for Operations’ present default or its past defaults.

83    Mr Martin’s affidavit does not state when he first commenced the task of the preparation of Operations’ defence. The fact that Operations presently “proposes to continue with this process” tells the Court nothing as to when the drafting process first got underway.

84    In the course of submissions concerning the merits of Mr Hillier’s case, the Court reminded Mr Martin to address the issue of Operations’ past defaults having regard to the history of the proceedings including his prior representations to the Court as to the progress of the defence. In response, Mr Martin submitted that the proceedings had been commenced by Mr Hillier in pursuance of an ambush strategy and that Mr Hillier had spent some 11 months preparing his initiating documents. He submitted that Operations had originally been afforded just two weeks to file a defence.

85    The “ambush” submission is one that appears to relate to the commencement of the proceedings against Mrs Martin, initially the sole respondent. As has been mentioned, the proceedings were commenced in August 2020. Mrs Martin was ordered to file a defence by 9 December 2020 (which she did not do). The first defence she filed on 15 January 2021 did not (as accepted by her Counsel) comply with the rules of pleadings, nor did a document titled “amended defence” dated 29 January 2021 (the formal status of which was the subject of a dispute that is now unnecessary to resolve). I do not consider the circumstances in which the proceedings were originally commenced provides an explanation for Operations’ own defaults.

86    Nor do I accept that Operations was originally provided only two weeks to prepare its defence. Underlying that submission is an assumption that Operations was under no obligation to commence the preparation of its defence at any time before orders were made on 4 August 2021 extending the time for its defence to be filed to 18 August 2021.

87    The submission is based on an incorrect interpretation of the Court’s order of 1 July 2021 which provided that the date of Operations’ joinder was the date on which the 2SOC was filed. The order was expressed in the past tense. As at 1 July 2021 the 2SOC had already been filed (on 28 June 2021). At the case management hearing on 4 August 2021, Mr Martin asserted that the word “filed” must be taken to read “filed and served” with the consequence that Mr Hillier had not exercised the grant of leave to join Operations as a party. As noted in the orders made on 4 August 2021, it was not necessary to determine the merits of that submission then, but I will do so now in order to address the point now sought to be made.

88    The Court’s order of 1 July 2021 means what it says:  Operations was joined as a party on the date that the 2SOC was filed.

89    In any event, the submission that Operations was given two weeks to file a defence cannot withstand scrutiny if it is intended to assert that the deadline of 18 August 2021 was unfairly imposed. The submission ignores the circumstance that the new deadline was the date Mr Martin himself had proposed in his correspondence as being the appropriate date. It is not suggested that Operations was unaware of the content of the 2SOC until it was served with that document on 13 July 2021. The document had been the subject of vigorous argument about which both of Operations’ directors were aware. Mr Martin has previously confirmed that he was aware that Mr Hillier had asked Norman Waterhouse Lawyers to accept service on Operations’ behalf. The Court was told that he directed Mr Williams not to accept service. To the extent that Operations persists in an earlier submission that it was prejudiced in the preparation of its defence because service had not been effected upon it until 13 July 2021, the submission must be rejected.

90    It is plain that Operations considers it desirable to adopt a partisan position in the proceedings by contesting Mr Hillier’s case other than by adopting Mrs Martin’s pleading. It has had more than enough time to prepare a defence to advance that objective. Mr Martin’s affidavit does not assert that Operations was entitled to defer the commencement of any work on its own defence until Mrs Martin’s defence was finalised. Nor has it been suggested that Operations has not been in possession of the evidence or information it requires to respond to Mr Hillier’s case, nor is it suggested that it has only recently come into possession of information that has caused it to re-evaluate its position. Proceeding on the facts as I have found them above, Operations’ obligations under s 37N of the FCA Act commenced (at the latest) on 1 July 2021.

91    Operations has on two occasions been informed of the Court’s disapproving attitude of its past defaults and its failure to make applications for extensions in a timely way, that is, before the ordered deadlines come and go. The Court has remarked that non-compliance has the consequence that Operations was regarded by the Court to be a party in default. There was further non-compliance even after those remarks were made.

92    On 14 September 2021, Mr Martin advised my Chambers that Operations’ defence was imminent and he expected that it would be filed later that day. Whilst it is theoretically possible that Mr Martin has only recently encountered the difficulties associated with completing Operations’ defence, that is not a circumstance put forward in the supporting affidavit as an explanation for the delay.

93    It is to be recalled that Order 7(a) required that Operations’ supporting affidavit include an explanation for “the reasons for non-compliance with the previous deadlines fixed by the Court for the filing of the defence”. The explanation to be provided was in relation to all of the multiple deadlines in respect of which Operations had previously been in default. The explanation provided in Mr Martin’s affidavit is not adequate because it does not explain why Operations has previously represented that the defence was imminent, nor why it has previously suggested extended timeframes which have been fixed, but then been ignored. It is bereft of any detail as to when work on the defence commenced and how long the “process” of responding to the 3ASOC it is expected to take.

94    I do not make any finding as to whether the prior representations in the email correspondence concerning the progress of the defence can be reconciled against Mr Martin’s affidavit evidence. The point is that Operations has not reconciled them, so giving rise to an ambiguity in its explanation. The existence of the ambiguity is relevant in and of itself:  it has the consequence that a cohesive and comprehensive explanation for the past defaults has not been provided in circumstances where a cohesive and comprehensive explanation is plainly called for.

95    In the course of the hearing Mr Martin complained that he had not been given adequate notice that Mr Hillier would rely on the content of the earlier email communications to the Court. I do not consider Mr Martin to have been so disadvantaged. The issues arising on the 1 October application plainly required the Court to consider Operations’ prior defaults and to consider any explanation in the context of the history of the proceedings.

96    For completeness I should mention that Mr Martin attempted to advance other explanations from the bar table which should be briefly mentioned here.

97    Mr Martin submitted that he was in the process of preparing an application to be commenced in the High Court of Australia alleging judicial bias affecting the proceedings. He submitted that he had been busy preparing that application and appeared to suggest that the preparation of that application had restricted the time available to attend to Operations’ defence. In the absence of admissible evidence explaining the nature of the High Court application and the facts upon which it is based, I am not prepared to entertain that submission. Operations has previously foreshadowed a recusal application without specifying the facts upon which it might be based. It has not filed any such application before me, notwithstanding that a time was fixed by which it should do so. Whether the preparation of any such application has in fact inhibited Operations’ ability to attend to the deadlines fixed by this Court is a question of fact about which there is no evidence before me. The submission does not resolve the ambiguity arising from Mr Martin’s assurances of 13 and 14 September 2021.

98    Mr Martin otherwise directed criticism to the Court and expressed his lack of confidence in the conduct of the proceedings. Again, it was open to Operations to include that subject matter in a supporting affidavit as relevant to its explanation, but it did not do so.

Rulings on evidence

99    Before turning to the question of the Court’s discretion, I will rule on the admissibility of evidence provided by Operations after the conclusion of oral argument. The opportunity to submit further evidence was granted in circumstances where Mr Martin submitted that Mr Hillier’s reliance on his prior email communications to the Court was productive of unfairness. In advancing that complaint, he submitted that there was evidence he would have relied upon had proper notice been given. On the material before me, I did not consider the reliance by Mr Hillier on the email correspondence to be productive of unfairness. However, I invited Mr Martin to describe the additional evidence he wished to adduce.

100    Mr Martin said that he wished to adduce evidence in two categories. The categories were stated in an order granting Operations leave to refer the Court to the material falling within them. The categories are “correspondence passing from the second respondent to the applicant in connection with the merits of the applicant’s case and the alleged deficiencies in the statement of claim” and “evidence relating to proceedings in the District Court of South Australia to which the second respondent referred to in submissions”. Mr Hillier objected to Operations adducing any evidence within those categories on the basis of relevance. I nonetheless granted Operations the opportunity to provide the additional evidence to the Court. The parties were informed that a ruling on the objection would be given in these reasons for judgment and I now provide that ruling.

101    There are three emails before the Court, now marked R1, A3 and R2.

102    R1 is an email from Mr Martin the body of which contains additional submissions. It has four attachments, namely:

(1)    a document titled “District Court Proceedings”;

(2)    a document titled “Structure of greengrocer business”;

(3)    a document titled “Applicant emails to first respondent”; and

(4)    an email titled “correspondence”.

103    A3 is an email from Mr Hillier’s solicitor maintaining Mr Hillier’s earlier submission that evidence in the two categories is irrelevant and therefore inadmissible and asserting that two of the attachments to R1 do not fall within the scope of the leave to adduce additional evidence and so should not be read.

104    R2 is Operations’ response to A3.

105    A3 and R2 are read as submissions going to the evidentiary ruling and for no other purpose, save for one matter discussed at [109] ff of these reasons.

106    The document titled “correspondence” shows that on 31 August 2021 Mr Martin wrote to Mr Hillier’s solicitor to articulate Operations’ position in response to Mr Hillier’s claim and to draw attention to evidence that Operations asserted contradicted the case. The fact that Mr Martin wrote to Mr Hillier in those terms is not relevant to the issues I am now asked to decide. As I have said, if Operations considers Mr Hillier’s claim to be baseless or untenable it may make applications to this Court for relief, or it may file a defence to join the issues. It has done neither. The documents do not demonstrate that Operations has an adequate excuse for its failure to comply with the Court’s orders. As mentioned earlier, this application is not an occasion for the Court to make any finding or express any view on the relative merits of any party’s case. In the course of the hearing Mr Martin denied that he was inviting the Court to decide the underlying controversy. It follows that the document is irrelevant.

107    The document titled “District Court Proceedings” is a bundle of material that appears to have been filed in a District Court proceeding including a summons, statement of claim, defence, counter-claim, statement of counterclaim, third party action and reply. The body of the email R1 indicates that these documents are relied upon for the purpose of demonstrating that Mr Hillier is adopting a position in this proceeding that cannot be reconciled against the position he has adopted in the District Court proceeding in a dispute with another of the alleged joint venture participants. The documents may well constitute evidence that may well support a case that Operations may well wish to run at trial. But they are not relevant to the issues that I am presently asked to decide.

108    The documents titled “Structure of greengrocer business” and “Applicant emails to first respondent” are not within the scope of the leave granted to Operations to provide additional evidence. They will not be read. If I am wrong in categorising the documents in that way, I would in any event rule the documents to be irrelevant and therefore inadmissible on the present application, for the same reasons given in respect of the other documents.

A final submission

109    The submissions contained in R2, contend that “fraud unravels everything”, citing Lazarus Estates Ltd v Beasley [1956] 1 QB 702. Mr Martin submits that the documents attached to R1 “provide sufficient evidence to justify vacating all present orders made in the proceedings to date, and for requiring the applicant and his representatives to account for filing and relying upon false pleadings and affidavit material before the Court”.

110    These submissions only serve to reinforce my view that Operations does not have an adequate explanation for its defaults.

111    The allegation that fraud unravels everything in the transactions between the parties to these proceedings is a matter for the trial and ought to be properly pleaded. If it be Operations’ belief that the factual allegations in the 3ASOC are false, then that too, is a matter to be pleaded and tried. It has otherwise been open to Operations since its joinder to apply for an order that it be excused from filing a defence for any reason, including for reasons based on allegations of fraud that it believes should be substantially adjudicated prior to trial. In accordance with s 37N of the FCA Act, Operations had a duty to promptly advance any such position. As the history of the proceedings demonstrates, each of its directors (or past directors as the case may be) were intimately aware of the issues arising in the proceedings from their commencement and before Operations was joined. Rather than bring an application in connection with any alleged fraud, Operations has persisted in its representations to the Court that its defence is under preparation. Even if there be fraud capable of unravelling any commercial dealing between the parties, it is not capable of unravelling the consequences of Operations’ dealings with the Court itself, nor could it absolve Operations of its statutory duties under s 37N of the FCA Act. It is most certainly no basis for the vacation of all orders made in the proceedings to date.

Discretion and s 37M of the FCA Act

112    It is necessary to consider whether the Court should or would allow the 1 October application notwithstanding the absence of an adequate explanation for Operations’ past defaults. The same considerations affect my assessment of whether Order 7 should be varied to bring the 1 October application itself within time.

113    In exercising its discretion, the Court is bound to comply with s 37M(3) of the FCA Act. It is required to exercise its powers in the way that best promotes the overarching purpose of the civil practice and procedure provisions. The purpose is the facilitation of the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible, including to meet the objectives specified in s 37M(2) of the FCA Act. The requirement that the Court act justly and in accordance with the law of course encompasses the requirement that the Court comply with the rules of procedural fairness.

114    It is relevant to consider the purpose of the Proposed Defence that Operations wishes to file. On its own admission, the Proposed Defence is not the defence that it intends to rely upon at trial. The opening pages of the Proposed Defence contain allegations of serious wrong doing against Mr Hillier and others. However, as Mr Martin’s affidavit states, additional time is sought so that Mr Hillier’s case can be answered more comprehensively, by elaboration of pleas in answer to (at least) [13] to [75] of the 3ASOC. It is reasonable to infer that the process of elaborating on those responses may be as detailed as that evidenced in the pages that appear to be complete. Mr Martin’s oral submissions have gone some way to explain what the intended content of the actual defence might be. However, all of that only leads me to the conclusion that the 1 October application is, in effect, an application for an extension of time to file a defence other than that upon which Operations proposes to rely at trial, without any firm indication as to when Operations will file the defence upon which it does intend to rely and without any adequate explanation as to why the task has not been completed. Critically there is no indication as to when it will be.

115    I have not overlooked that a respondent having filed a defence has a right to file an amended pleading as of right before the applicant party files a reply:  Rules, r 16.51(1). However, that entitlement presupposes that an original defence has been duly filed in accordance with the orders of the Court. I do not consider it to be in the interests of justice to permit the filing of the Proposed Defence on the basis that the document may later be amended in a way that adequately foreshadows the case Operations intends to run. Mr Hillier should not be put to the task of preparing a reply to a defence that requires significant amendment before it properly reflects Operations’ case. As I have mentioned, Mr Martin has given no estimate of when work on Operations’ defence will be complete in any event. It seems to me that the provision of a meaningful estimate is a fundamental requirement of a defaulting party in Operations’ position.

116    I do not consider Operations’ more recent defaults were the result of ignorance or misapprehension on its part as to the powers the Court may exercise in the event of future instances of non-compliance. The Court has previously made its dissatisfaction plain. It has expressed its dissatisfaction with the repetition of unsatisfactory conduct by which deadlines are allowed to come and go without any explanation or any application to extend them. In light of the Court’s prior remarks, Operations’ silence between 14 and 28 September 2021 represents a particularly serious departure from its responsibilities as a party. Having stated that the defence was ready to be filed, it did not apply for an order (as the Court indicated it should) and then chose to absent itself from the case management hearing listed for 28 September 2021 where the subject matter of its most recent default naturally arose for consideration. These circumstances reinforce my conclusion that the omission to file a defence is a consequence of Operation’s choices in the litigation.

117    It is also necessary to consider the progress of the proceedings more generally. They are at a critical stage. On 9 September 2021, the Court conferred with the parties as to the time for filing of affidavits and as to the trial dates. The matter has been set down for trial to commence in June 2022. With Operations’ concurrence, orders have been made for the filing of the parties’ lay and expert evidence. Those are critical deadlines. If they are not met, it is almost inevitable that the trial dates cannot be achieved. The vacation of the trial dates has implications not only for the parties, their legal representatives and the witnesses, but for the administrative and judicial resources of the Court itself. Mr Hillier is presently subject to a deadline that he file his lay affidavits by 11 November 2021. He has a present and pressing entitlement to know the case that Operations actually intends to advance at the trial so that he can comply with that order. Whilst his time for compliance could be extended, that would put the trial dates (fixed with the agreement of Operations) in peril. It would result in the hearing progressing at the rate unilaterally determined by a defaulting party. The delay is prejudicial in and of itself.

118    I should add that to grant the indulgence sought by Operations would create the circumstance that the third respondent, Erik Vari Pty Ltd may wish to file a pleading, whereas at present it has informed the Court that it will abide the event in the dispute between Mr Hillier and Mrs Martin. That only serves to highlight the implications of Operations’ defaults for the orderly progress of this matter to trial.

119    I do not consider the impact of granting Operations the indulgence it seeks is one that could or should be remedied by an order for costs. As Keane J said in Rozenblit v Vainer (2018) 262 CLR 478:

41    It has long been accepted that an order for costs in favour of a party adversely affected by the manner in which litigation is conducted may be a necessary means of preventing injustice resulting from the consequences of incompetence or inefficiency falling short of deliberate harassment or the pursuit of a collateral purpose on the part of an opposing litigant. The decision of this Court in Aon Risk Services Australia Ltd v Australian National University was a reminder that inefficiency or incompetence in the conduct of litigation may unjustly burden the other parties to the litigation, and the administration of justice itself. That decision made it clear, to the extent that clarity was necessary, that orders for costs will not always be sufficient to prevent injustice occasioned by inefficiency or incompetence in the conduct of litigation. The broader point for which Aon Risk is presently relevant is that injustice in the conduct of litigation cannot be justified by invoking the interests of justice.

42    Litigation is sufficiently stressful and expensive for all concerned without the unnecessary aggravations of additional cost, stress, distraction and delay occasioned by inefficiency, incompetence or sheer disregard of the rules. To the extent that the contention advanced on behalf of Mr Rozenblit reflects an assumption that inefficiently or incompetently conducted litigation, and the waste in terms of time and money inflicted upon the other party or parties, is nevertheless consistent with the promotion of access to justice because the end may ultimately justify the means, that assumption must be rejected. Inefficient or incompetent conduct of litigation may cause injustice even if it is not intended to do so. Litigation that is conducted inefficiently, incompetently or in disregard of the rules by one party is no less oppressive to the other party because it is not intended to be oppressive …

(footnotes omitted)

120    As to any prejudice that might be suffered by Operations, speaking generally, to the extent that a respondent party’s interests are potentially affected by the outcome of a proceeding, the rules of procedural fairness plainly require that the party be afforded a fair opportunity to defend a claim. In a case that proceeds on the pleadings, the filing of a defence is a critical pre-condition to the party’s participation in the trial because it is by the filing and service of the defence that procedural fairness is afforded to the applicant party. As such, the filing of a defence may be viewed as both the exercise of a right and the discharge of an obligation. To the extent that there be a right, the right is not absolute. As explained in Prodata at [124], the practice and procedure provisions of this Court, and the deadlines fixed in the exercise of the Court’s powers, may be regarded as affording the parties opportunities to take procedural steps in the proceedings. The opportunities are conditioned by a requirement that the procedural step be taken in a timely manner and in any event within the times specified in the Court’s orders. If a party does not avail itself of the reasonable opportunities provided to it, that is the party’s choice. It does not follow that the party has been denied procedural fairness.

121    I am satisfied that Operations has been afforded a fair opportunity to discharge its obligation to file a defence. I am also satisfied that it has been afforded a fair opportunity to seek an extension of the Court’s prior deadlines. It filed its first application for an extension of time only after Orders 7, 8 and 9 were made. Even then, it did not provide an adequate explanation for the past defaults. I do not consider the rules of procedural fairness require that it be provided with an opportunity to continue with the process described at [7] of Mr Martin’s affidavit.

122    It is relevant to consider the consequences that would follow should Order 9 remain operative. In that event, Operations will be entitled to make submissions as to whether Mr Hillier would be entitled at law to the remedies he seeks should the facts alleged in the 3ASOC be established and Mrs Martin’s defence fail.

123    A consequence of any finding that the JV Trust applies may well be that Operations is a trustee for a different a group of beneficiaries than those specified in the NHT Deed, including because it had knowledge of Mrs Martin’s wrongdoing by virtue of her status as its sole director and shareholder at the time Operations received the trust property. Her status as sole director and shareholder of the relevant entities at the time of the impugned transactions does not appear to be disputed.

124    When asked how Operations’ interests were affected in the proceedings, Mr Martin did not provide a clear or satisfactory answer. The most he could say is that the proceedings are a hostile third party dispute, including because Mr Hillier was wrongfully and unethically “pushing the barrow” of another joint venture participant.

125    I do not accept that this is a third party dispute as described in the authorities discussed in Hillier No 7. In effect, Operations seeks to defend the proposition that the NHT Deed is the instrument that governs the present relations between Mr Hillier and Mrs Martin. It is, as I understand it, seeking to protect the interests of the beneficiaries of the express settlement constituted by the NHT Deed against the asserted interests of the beneficiaries of the alleged JV Trust in a case where the Court is yet to determine which of the two competing trusts applies.

126    I accept that Operations has an interest in certainty in the outcome of the proceedings. It is critical that it know which of the competing trust cases is correct and to whom its fiduciary duties are owed. But it remains unexplained how its own interests (as opposed to its duties) are affected by the facts pleaded in the 3ASOC.

127    If I am wrong in my limited conceptualisation of Operations’ interests, then I would in any event exercise my discretion not to permit Operations any further opportunity to file a defence. It has had sufficient time to advance its interests as it perceives them to be by pleading its case by the ordinary mechanism of a defence filed in accordance with the Rules and the Court’s orders. If Operations’ substantive interests be adversely affected by the outcome of this particular application, then that is a natural and logical consequence of the choices it has made in the litigation.

Operations’ application to vary Order 7

128    It is to be recalled that the 1 October application was filed at 4.33pm, some 33 minutes after the time for compliance stated in Order 7. The delay is very short. With leave, Operations has made an oral application to vary the time in Order 7 to retrospectively bring the 1 October application within its requirements.

129    From the bar table, Mr Martin asserted that the short delay was explained by his inability to attend to the formalities of swearing of his affidavit. That appears to be consistent with an explanation he communicated to the Court by his email correspondence on the day. The correspondence demonstrates that the draft 1 October application and the supporting affidavit in unsworn terms were provided to the other parties shortly after 4pm in substantially the same terms in which they were later filed.

130    In all of the circumstances, I do not consider it necessary to ask whether there is a reasonable explanation for that particular delay, supported by admissible evidence. As I have said earlier in these reasons, in the ordinary course I would have been inclined to excuse that particular instance of non-compliance even in the absence of admissible evidence if I considered there to be some utility in granting the extension, including to ensure that Order 9 did not work an injustice.

131    However, in all of the circumstances described in these reasons, the continued operation of Order 9 does not work an injustice. It fairly reflects the position Operations would have been in, had the 1 October application been made within the time specified in Order 7.

132    Accordingly, I refuse to exercise my discretion to vary Order 7. The legal consequence is that Order 9 continues to operate in accordance with its terms. That is the outcome that best promotes the overarching purpose. To adopt any other approach would be to allow this matter to progress to trial in the manner and timing that best suits the defaulting party.

THE REPRESENTATION ISSUE

133    Rule 4.01(2) provides that a corporation must not proceed in the Court other than by a lawyer. Rule 4.03 provides that if a party is unrepresented when a proceeding starts and later appoints a lawyer, the lawyer must file a Notice of Acting in accordance with Form 4.

134    As at 6 August 2021, Operations had not filed a Notice of Address for Service nor had a Notice of Acting been filed. The Court ordered that it file an Address for Service.

135    On 13 August 2021, a Notice of Address for Service was filed on behalf of Operations. It comprises three pages. The second page provides a physical address for service together with an email address for Mr Martin. It is signed by Mr Martin as “Lawyer & Officer of Second Respondent”. The third page is headed “Outline of submissions” and sub-headed “Grounds for representation under FCR 4.01(2)” and contains seven paragraphs. It is necessary to extract them in full:

1.    Under Federal Court Rule FCR 4.01(2):

(1)    A person may be represented in the Court by a lawyer or may be unrepresented.

(2)    A corporation must not proceed in the Court other than by a lawyer.

2.    Pursuant to the Dictionary in Schedule 1 to the Federal Court Rules, ‘lawyer’ has the meaning given by section 4 of the Federal Court of Australia Act 1976 (Cth).

3.    Section 4 of the Federal Court of Australia Act 1976 (Cth), provides that ‘lawyer’ means:

‘a person enrolled as a legal practitioner of a federal court or the Supreme Court of a State or Territory.’

4.    The Legal Practitioners Act 1981 (SA) states that ‘legal practitioner’ or ‘practitioner’ means, relevantly:

‘a person duly admitted and enrolled as a barrister and solicitor of the Supreme Court.’

5.    For completeness, section 21 of the Legal Practitioners Act 1981 (Cth) imposes restrictions on persons in the State of South Australia ‘practising the profession of the law’, but includes several exemptions at ss.21(3), including that:

(3)    This section does not prevent:

…

(g)    an unqualified person from representing a party to proceedings in a court or tribunal for fee or reward, if the person is authorised by or under the Act by which the court or tribunal is constituted, or any other Act, to do so.

6.    In this case, the authorisation to represent the Second Respondent arises because Mr Martin is admitted and enrolled as a legal practitioner, of the Supreme Court of South Australia, under the Legal Practitioners Act 1981 (SA).

7.    Mr Martin is therefore a ‘lawyer’ for the purpose of the Federal Court Rules, and is entitled to file this notice of address for service on behalf of the Second Respondent.

(emphasis in original)

136    It is common ground that Mr Martin is enrolled as a legal practitioner of the Supreme Court of South Australia. Mr Martin has informed the Court that he does not hold a practising certificate issued under the Legal Practitioners Act 1981 (SA).

137    Mr Hillier’s interlocutory application is broadly founded on two alternate arguments.

138    First, it is submitted that Mr Martin is not a “lawyer” within the meaning and intent of r 4.01(2). It is submitted that the Court should not dispense with the requirement that Operations be represented by a lawyer because of the complexity of the case, the uncertainty about disciplinary measures that may be taken against him, the lack of duty owed to the Court by lay advocates, the protection of Operations and the other parties to the proceedings, and the interests of justice more generally.

139    Second, it is submitted that if Mr Martin is a “lawyer” within the meaning and intent of r 4.01(2), the Court should nonetheless prevent Mr Martin from appearing on behalf of Operations and should uplift the Notice of Address for Service in the interests of justice and in the exercise of the Court’s “inherent jurisdiction to prevent an abuse of its processes”.

The hearing

140    As mentioned above, Mr Martin attended by telephone at the hearing on 29 September 2021 on Operations’ behalf, having been absent without explanation the previous day. He made an application for the hearing of this application to be adjourned on two bases. First, he submitted that he was preparing the High Court application referred to at [97] above, which he anticipated would at some time form the basis of an application for a stay of these proceedings. I refused to grant an adjournment on that basis because there was no evidence before me in relation to the foreshadowed application and no means of assessing the impact it should properly have on the conduct of this action. Second, Mr Martin submitted that he had not received Mr Hillier’s written submissions in advance of the hearing in sufficient time to consider them and prepare a response. He indicated that he would otherwise be content to have an opportunity to file written submissions in response after hearing the oral submissions of Mr Hillier’s Counsel. The hearing proceeded in that fashion, Mr Martin making no oral submissions but having the opportunity to file written submissions in opposition to the order within a timeframe of his suggestion. Mr Martin did not file written submissions within that timeframe. The Court therefore has before it an opposed application but no submissions or evidence explaining the basis of the opposition.

141    On 29 September 2021, Mr Martin informed the Court that Operations will be represented by a different lawyer for the purposes of the trial, but there is no evidence about when that change of representation is intended to take place.

Is Mr Martin a lawyer?

142    The Dictionary to the Rules defines the word “lawyer” by reference to s 4 of the FCA Act. The makers of the Rules have not sought to confine the definition to a narrower class of lawyers, being admitted practitioners who hold current practising certificates.

143    Counsel for Mr Hillier acknowledges that on a literal construction of the statutory definition, the holding of a practising certificate is not included as a necessary criterion. Counsel submitted that the definition should nonetheless be construed so as to incorporate a requirement to that effect. As a matter of construction, I do not accept that submission.

144    The surest guide to the meaning of a statutory provision is the text:  Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27, Hayne, Heydon, Crennan and Kiefel JJ (at [47]). It seems me that the makers of the Rules (being the Justices of this Court) may be assumed to have appreciated the difference between a person being enrolled as a practitioner in (for example) the Supreme Court of a State or a Territory and a person holding a practising certificate authorising them to act for fee or reward. Given the ordinary meaning of the text, the construction favoured by Mr Hillier is one that could arise only by the inclusion of additional words by necessary intendment. The additional words may well be considered desirable. But that does not justify their implication, particularly in circumstances where the mischief that might otherwise ensue is capable of being addressed by the operation of other rules or the exercise of the Court’s powers. As discussed earlier in these reasons, this Court has express powers to make such orders as are appropriate in the interests of justice. In addition, the Court has the implied jurisdiction to control its processes, which necessarily includes powers that affect a party’s choice as to its legal representation:  Shaw v Buljan [2016] FCA 829; 153 ALD 252.

145    In my view, the definition in s 4 of the FCA Act may be seen as the manifestation of a legislative choice, that is, to include in the definition the broad class of persons who are enrolled as legal practitioners, whether such persons hold practising certificates or not. There will be cases in which it will be appropriate to afford the absence of a practising certificate great weight in the exercise of the Court’s discretion on an application of this kind. In other cases the absence of a practising certificate may assume lesser significance.

146    Operations is a company and so must be represented by a “lawyer” in accordance with r 4.01(2). Subject to what is said below, I am satisfied that it has a prima facie entitlement to be represented by the lawyer of its choice. Mr Martin is a “lawyer” for that purpose.

Fee or reward

147    Before proceeding further I will deal with an issue that arises from the submissions annexed to Operations’ Notice of Address for Service. Operations has not relied on those submissions or any other submissions on this present application. However, the submissions annexed to the Notice of Address for Service were referred to by Mr Hillier and I will therefore say something about the meaning I have given to them.

148    On their face, the submissions appear to advance a proposition that the definition of the word “lawyer” in the FCA Act embodies within it an authorisation of the lawyer to represent a party for fee or reward in this Court notwithstanding that the lawyer does not hold a current practising certificate.

149    The Court has previously enquired of Mr Martin as to his intended purpose for the annexation of the submissions to the notice. The Court notified Mr Martin that if he was representing Operations in the proceedings for fee or reward, the Court’s expectation is that he would frankly disclose that circumstance because the Court may take a different view of the law to that which appeared to be advanced in the annexed submissions.

150    Mr Martin has informed the Court that he was not “acting for fee or reward in the sense that I’m not charging for my services.” He confirmed that he was prepared to undertake to the Court that that was the case. He stated that he was volunteering his services. Mr Martin repeated that he had “no difficulty with saying that I’m not charging any fee for representing the second respondent”. Mr Martin’s assurances that he is acting voluntarily are, of course, accepted.

151    On that basis I will proceed on the assumption that the submissions annexed to the Notice were intended to assert that Mr Martin was acting voluntarily and that he was therefore not acting in contravention of any law.

Status of the Notice of Address for Service

152    The proposed order has two components. The first requires the uplifting of the Notice of Address for Service. The second imposes a prospective restraint affecting Mr Martin’s future representation of Operations.

153    In light of my conclusion as to the meaning of the word “lawyer” I do not consider it appropriate to order that the Notice of Address for Service be uplifted. The Notice forms a part of the Court’s historical record of Operations’ legal representation from the time that it was filed until the date of these reasons for judgment. It does no more than to reflect the circumstance that from 13 August 2021, Operations was represented by the lawyer of its choice. Operations is bound in the proceedings by the steps taken by that lawyer on its behalf as its agent for all purposes.

154    I have nonetheless concluded that Mr Martin should be restrained from continuing to act for Operations in the future conduct of the proceedings and I will now explain way that is so.

The restraint

155    Counsel for Mr Hillier submitted that upon its joinder, Operations was unrepresented and so ought to have filed or caused to be filed a Notice of Acting if it had appointed a lawyer to represent it:  Rules, r 4.03.

156    I do not consider much turns on that point for the purpose of determining whether the proposed future restraint should be imposed. Questions of form may be put to one side.

157    Counsel submitted that Mr Martin should be restrained from acting because he had a personal interest in the subject matter of the litigation and because he had other capacities giving rise to a conflict of interests and duties. It was submitted that at the hearings of 2 and 9 September 2021, Mr Martin confirmed his variety of interests in that:

(1)    he is married to Mrs Martin who is a beneficiary of the NH Trust;

(2)    he is personally a beneficiary of the NH Trust;

(3)    he is the father of beneficiaries of the NH Trust;

(4)    since 7 December 2020 he has been a co-director of Operations (together with Mrs Martin);

(5)    he is a co-appointor of the NH Trust; and

(6)    he was recently appointed a co-trustee of the NH Trust together with Operations, having been appointed by himself and Mrs Martin in their capacity as co-appointors.

158    The Court has recently been informed of changes to the control of the trust affecting the assertions in sub-paragraphs (4) to (6) above, but neither Mr Hillier nor Operations has sought to re-open argument on the present application to make submissions as to the consequences of those changes. I do not consider much turns on the changes. At the time of publishing these reasons I am satisfied that Mr Martin is a director of Operations and has the powers of a co-appointor of the NH Trust, which power he may exercise at any time.

159    It is submitted that by virtue of (at least) Mr Martin’s status as a beneficiary and family member of other beneficiaries, he has a personal pecuniary interest in the outcome of the proceedings. I accept that submission, but it is important to identify the nature of the interest. Mr Martin is a beneficiary of the trust asserted to exist by Mrs Martin but he is not a beneficiary of the trust asserted to exist by Mr Hillier. The Court is yet to determine which of the two asserted trusts governs the rights and interests of the parties. Mr Martin has an interest in Mr Hillier’s case being dismissed because as a beneficiary of the NH Trust there is a prospect that he may receive dividends in the exercise of Operations’ discretion as trustee. As a director of Operations, Mr Martin may participate in resolutions causing Operations to make distributions in the exercise of that discretion. It is not to the point that he has no legal entitlement to a distribution under the terms of the NHT Deed.

160    A similar pecuniary interest exists by virtue of Mr Martin’s status as the husband and father of other beneficiaries. In those familial relationships he has a personal interest in the determination of Mr Hillier’s claims, particularly the plea at [70] and the declaration sought at [73.5] of the 3ASOC:  see [22] and [23] above.

161    In Sheraz Pty Ltd v Vegas Enterprises Pty Ltd (2015) 48 WAR 93, a majority of the Full Court of the Supreme Court of Western Australia (Court of Appeal) commented upon Counsel who had argued a case on behalf of an appellant company, one Mr Clifford. At the time that the events subject to the proceedings at first instance took place, Mr Clifford was the alter ego of the company. The company had sought to bring proceedings as the trustee of a discretionary family trust of which Mr Clifford was a beneficiary. Mr Clifford would have been a critical witness had the action proceeded to trial. The claim was dismissed as an abuse of process. In separate judgments, Buss and Murphy JJA, and Chaney J agreed that the appeal should be dismissed. Chaney J went on to comment on the circumstance that Mr Clifford had appeared as a barrister to argue the appeal on the company’s behalf. His Honour referred to provisions of the Legal Professional Conduct Rules 2010 (WA) (WA Rules) made under the Legal Profession Act 2008 (WA) which called for independence by practitioners engaged to represent clients in a matter before a court. Rule 33(2) of the WA Rules precluded a practitioner from acting as counsel for a client “if it would be difficult for the practitioner to maintain professional independence because of a connection with the client”. Rule 42 of the WA Rules provided that a practitioner must not act for a client in the hearing of a case in which it is known, or becomes apparent, that the practitioner will be required to give evidence centrally material to the determination of the contested issues.

162    His Honour said:

193    The question of Mr Clifford’s role as counsel was raised with him by the court at the outset of the hearing of the appeal. He justified his appearance by saying that he had ceased to be a director of Sheraz, that he had no direct interest in the outcome of the proceedings because he was only one of a number of beneficiaries under a discretionary trust, and that, while he would be a witness if the matter proceeded to trial, he was not a witness for the purposes of the appeal.

194    Given Mr Clifford’s intimate involvement in the transactions the subject of the action and his obvious personal interest in the outcome, there is at least a serious risk that he could not bring to the court the independence expected of counsel. The rules which preclude a person from acting as counsel when they are to be a witness do not only apply to the hearing at which evidence is to be given. Once it becomes apparent that a practitioner’s independence is affected by some personal connection, either with the client or the subject matter of the proceedings, of the type with which the rules referred to above deal, the practitioner should cease to act in the matter generally.

163    Buss and Murphy JJA recorded their agreement with those comments (at [22], [189]).

164    A central concern expressed in Sheraz is that a lawyer who has a pecuniary benefit in the outcome of the proceedings is presented with a conflict of interest and duty. In the present case, there exists a conflict between Mr Martin’s personal interest as a beneficiary (and family member of other beneficiaries) and his fiduciary duty to Operations in his capacity as its lawyer. The interest and the duty do not align because, at the very least, Operations has been presented with a choice as to whether to remain neutral in the proceedings. It has a choice as to whether to seek judicial advice or directions in its capacity as a trustee as to the appropriate course to adopt. At the very least it is Mr Martin’s duty to give advice in connection with those choices. The choices are critical, given that Operations stands as a trustee (on any party’s case) of one or other of the contested trusts.

165    I am cognisant of the fact that Operations’ choices may be circumscribed by the other order to be made today. However, it remains open to Operations to choose to make opposing submissions in relation to remedies, rather than submitting to the ultimate outcome. I would make the same order on the representation issue whether or not my judgment on the defence issue has been correctly decided.

166    Mr Hillier submitted that the circumstances gave rise to a risk that Mr Martin cannot bring to the Court “the independence of counsel in the interests of the administration of justice”. I accept that submission, to the extent that it identifies a conflict involving a risk. However, I do not make any assessment or finding about the chances of that risk transpiring in fact. The existence of the conflict is sufficient in and of itself to justify the order that is sought, particularly in circumstances where no basis is put forward by Operations to oppose the order. It is plainly preferable that the conflict be avoided. The application will be granted on that discrete basis.

167    Whilst the absence of a practising certificate is relevant, I do not consider that circumstance in and of itself to be a decisive factor. It is relevant because as a lawyer who does not hold a practising certificate, Mr Martin is not compelled to participate in any professional indemnity insurance scheme. That heightens the risk that if a claim were to be made by Operations against Mr Martin, the liability alleged against him may not be indemnified. In that respect, Operations does not have the same degree of protection from the risks flowing from negligent advice as it would have if it were represented by a lawyer who is obliged to hold professional indemnity insurance. I should not be understood as expressing any view about the risk of negligent advice occurring, other than to observe that it is a risk that exists in any lawyer-client relationship.

168    I have not overlooked the Court’s power to order a party’s lawyer to bear costs personally:  FCA Act, s 43(3)(f). Mr Martin is a lawyer for the purpose of that provision. However, I do not consider the existence of that power affords Operations sufficient protection from the risk of losses suffered from the provision of negligent acts or omissions in relation to the conduct of the proceedings more generally.

169    If I am wrong that the existence of the conflict is sufficient of itself to justify the order sought, I would in that event grant the order having additional regard to the risk presented by the absence of the practising certificate in the limited respect I have just described.

Matters not taken into account

170    I do not consider it necessary to weigh in the balance the remaining matters upon which Mr Hillier relied in support of the order. Briefly summarised, they are as follows:

(1)    the absence of immediate disciplinary sanctions affecting lawyers who do not hold practising certificates;

(2)    the apparent divergence between the views of Mrs Martin and Operations as to the conduct of their defences as disclosed by Mr Martin at a hearing on 25 June 2021;

(3)    the circumstance that the Court has previously asked Mr Martin to explain how Operations could advance submissions that were not advanced by Mrs Martin in the proceedings at a time when Mrs Martin was one of two directors constituting the company’s Board:  see Hillier v Martin (No 6) [2021] FCA 1009 at [33]; and

(4)    there have been occasions where Mr Martin has not caused Operations to comply in a timely way with the Court’s orders.

171    On their terms, these submissions do not invite the Court to make a finding that Mr Martin has acted unprofessionally in the proceedings, nor a finding that he has in fact advanced his own interests over those of Operations. I should not be understood to have made any such findings.

172    It is unclear what alternate findings or inferences the Court is otherwise asked to draw from the remaining submissions over and above the finding that there exists a conflict of interest and duty. The conflict can and should be avoided by the appointment of a new lawyer. It is in the interests of justice to make the order because Operations is the entity that holds the subject matters of the dispute on trust. In my view it is critical that it have independent representation.

173    The effect of the order is to cause Operations to do now what it has informed the Court it intends to do in any event before the commencement of the trial. The conflict I have identified arises not only at the time of the conduct of the trial, but also at the interlocutory stages of the proceedings.

174    In the absence of any submissions or evidence on the topic it is unnecessary to consider whether Operations would be prejudiced by the order in such a way that the discretion should not be exercised in Mr Hillier’s favour.

175    The order will be expressed in terms of a prospective restraint. I will hear from the parties as to consequential orders relating to Operations’ future representation in the proceedings, and as to costs.

Associate:

Dated:    19 October 2021