Who can conduct litigation for a company?

Sanae Prasad

A company within the meaning of the Corporations Act 2001, may commence and carry on proceedings in any court by a solicitor or by a director of the company (r 7.1(2)). However, this is qualified by r 7.1(3) which states that in the case of the Supreme Court, commencement by a director is only authorised if the director is also a plaintiff in the proceedings.

This piece of legislation was discussed in the case of Hebbel Constructions Pty Ltd [2024] NSWSC 707.

In a long-standing dispute between Hebbel Constructions Pty Ltd and Bitar Pty Ltd, Bitar decided that they no longer wanted their solicitor, Mr Davis, as representation. Mr Davis agreed and asked the court for leave to cease to act for Bitar. The court granted leave on the basis that the company had lost confidence in Mr Davis.

The problem arose in Bitar asking the court to then allow a director to represent Bitar in an application to set aside the creditor's statutory demand. Following r 7.1(3), given these were Supreme Court proceedings, the company may only appear by a director if they are also a plaintiff in the proceedings. In this case, Bitar was the defendant. However, s 14 of the Civil Procedure Act allows the court to 'dispense with any requirement of rules of court if satisfied that it is appropriate to do so in the circumstances of the case'.

This is mirrored in the Federal Court. In r 4.01(2) of the Federal Court Rules, a corporation must not proceed in the Court other than by a lawyer. R 1.34 allows the Court to dispense with this obligation as per their judicial discretion.

Exercise of Judicial Discretion

Black J dispensed of r 7.1(3) for the adjournment application, given it was narrow in scope. However, the rule was note dispensed for the substantive application to set aside the Demand. The refusal to dispense of the rule was based on the finding that the proposed representative director has a limited understanding of the proceedings and the issues which were likely to arise. Case law also showed that in circumstances of an application to set aside a creditor’s statutory demand, the Court has rarely dispensed with the applicable rules.

Takeaway

The key takeaway for companies is that legal representation is not just a procedural formality, but a practical necessity. Courts may occasionally allow a director to appear on behalf of a company, but this discretion is exercised sparingly and typically only for limited or straightforward matters. As shown in Hebbel Constructions Pty Ltd [2024] NSWSC 707, a lack of legal expertise can be a decisive factor against granting such leave. Without qualified legal representation, companies risk being unable to effectively present their case, comply with procedural requirements, or respond to legal complexities, which can ultimately jeopardise the outcome of the proceedings.