Court of Appeal dismisses extension of time appeal where director represented company contrary to Battle rule.

THE COURT OF APPEAL [2019] IECA 286

Record Number: 2019/328

Whelan J. Costello J. Murray J.

BETWEEN/

MUNSTER WIRELESS LIMITED APPLICANT

- AND - A JUDGE OF THE DISTRICT COURT RESPONDENT

- AND – TIPPERARY COUNTY COUNCIL AND IRELAND AND THE ATTORNEY GENERAL NOTICE PARTIES JUDGMENT of Ms. Justice Máire Whelan delivered on the 14th day of November 2019

Introduction

1. This is an application for an extension of time to appeal the order of Ms. Justice Faherty made 26th July, 2018 (perfected 14th August, 2018) of a preliminary issue directed to be tried prior to the hearing of an application for leave to apply for judicial review. The issue for determination was whether, contrary to the well-established rule in Battle, it was legally permissible for the company Munster Wireless Limited to be represented by William Fitzgerald, one of its directors, rather than a professional legal representative.

2. Mr. Fitzgerald appeared on behalf on the applicant company throughout.

3. In a judgment delivered on 28th June, 2018 (further considered below) Faherty J. held that Mr. Fitzgerald was not entitled to represent the company in the application for leave to apply for judicial review. She further held that no issue of European law arose in the proceedings.

4. Mr. Fitzgerald applied to the Supreme Court for leave to pursue a leapfrog appeal from the judgment of Faherty J. The application for a leapfrog appeal was refused in a determination of the Supreme Court made on the 16th May, 2019.

5. Subsequently, Mr. Fitzgerald attended at the Court of Appeal office where he was advised that he ought to have lodged a notice of appeal prior to seeking leave to leapfrog appeal to the Supreme Court and was by then out of time to lodge an appeal.

6. He contends that the substantive legal issues in the intended appeal have not been dealt with and he seeks an extension of time to appeal the decision of Faherty J. of the 28th June, 2018. He deposes that had he known of the requirement to lodge a notice of appeal with the Court of Appeal he would have done so.

7. The only respondent to this application is the State, with the District Court judge and Tipperary County Council taking no part in the matter.

Legal principles

8. The principles governing an application to extend time to appeal are set forth in the

decision of Lavery J. in Éire Continental Trading v. Clonmel Foods Limited [1955] I.R.

170. In his judgment Lavery J. identified the factors to which a court should give consideration on such an application: -

(1) whether the applicant has demonstrated that he has formed a bona fide intention to appeal the order in question within the time prescribed by the Rules of the Superior Courts;

(2) whether the applicant can identify some mistake which caused him to miss the time limit specified for lodging an appeal; and,

(3) whether the applicant has demonstrated that an arguable ground of appeal exists.

9. Each of the three factors are, as Lavery J. stated, proper matters for the consideration of the Court but are not binding pre-requisites. The over-arching obligation of the Court is to have regard to all of the circumstances of the case and to avoid visiting an injustice on either party to the litigation. The principles do not have the status of legislation.

However, it is clear from decisions such as Murphy J. in O’Sullivan v. O’Halloran [2002] I.E.S.C. 32 that compliance with the third part of the test is of the utmost importance and unless the Court is satisfied that a proposed appellant has arguable grounds of appeal a court cannot appropriately make an order extending time.

10. Regarding the first and second parts of the test it is noteworthy that the respondent does not appear to take issue that same can be treated as satisfied. In an affidavit of Kevin Condon sworn 25th July, 2019 he states: -

“I say and am advised that while the Applicant may have formed a bona fide intention to appeal the determination within the permitted time and was mistaken as to the necessity to lodge papers in the Court of Appeal in advance of bringing an application for leave to appeal to the Supreme Court… that the Applicant has failed to put forward any arguable ground of appeal.”

11. I am satisfied that compliance with the first and second ground can reasonably be inferred in circumstances where Mr. Fitzgerald lodged his application for a leapfrog appeal with the Supreme Court in time and deposed that had he known of the requirement to lodge a notice of appeal with the Court of Appeal he would have done so. Therefore, the central issue is whether the applicant has demonstrated any bona fide grounds of appeal.

The background

12. In November 2016 Mr. Fitzgerald, a director of the company Munster Wireless Limited, signed an application for leave to seek judicial review. The preliminary issue before the High Court was whether a director whom the company purports to vest with appropriate authority pursuant to statute to bind the company is thereby entitled to file papers in court and initiate and conduct proceedings on behalf of the company.

13. Mr. Fitzgerald contended that section 41 of the Companies Act, 2014 conferred such an entitlement on him to represent the company in litigation.

14. Section 41 provides: -

“(1) Notwithstanding anything in its constitution, a company may empower any person, either generally or in respect of any specified matters, as its attorney, to execute deeds or do any other matter on its behalf in any place whether inside or outside the State.

(2) A deed signed by such attorney on behalf of the company shall bind the company and have the same effect as if it were under its common seal.”

15. The respondent contended that the import of section 41 was merely to permit a person to stand in the shoes of the company and to act on behalf of the company in limited circumstances such as in the execution of documents but it had no bearing on the right of the courts to regulate who appears before it.

16. In her judgment Faherty J. observed: -

“To my mind the power of attorney referred to in s. 41 of the 2014 Act does not divest the company, or the attorney acting in its place, of the company’s incorporated status. Even if Mr. Fitzgerald had power of attorney (of which there is no evidence) that does not transform Mr. Fitzgerald’s position into something analogous to a natural person who wishes to conduct his or her litigation in person.

Thus, Mr. Fitzgerald’s reliance on s. 41 cannot be dispositive of his entitlement to file pleadings on behalf of the company or to represent it in court.”

17. Faherty J. noted that the right of audience of a shareholder or a director of a company to appear on behalf of the company in court was considered in Battle v. Irish Art Promotion Centre Limited [1968] I.R. 252 where the managing director of a company brought an ex parte motion seeking liberty to conduct the defence to the plaintiff’s action on behalf of the company. Ó Dálaigh C.J. in the Supreme Court, noting the earlier English decision of Tritonia Limited v. Equity and Law Life Assurance Society [1943] A.C. 584, observed: -

“In the absence of statutory exception, a limited company cannot be represented in court proceedings by its managing director or other officer or servant. This is an infirmity of the company which derives from its own very nature. The creation of the company is the act of its subscribers; the subscribers, in discarding their own personae for the persona of the company, doubtless did so for the advantages which incorporation offers to traders. In seeking incorporation they thereby lose the right of audience which they would have as individuals; but the choice has been theirs.”

The rule in Battle was subsequently endorsed by the Supreme Court in Coffey v. Tara Mines Limited [2008] 1 I.R. 436.

EU law argument

18. Mr. Fitzgerald contended that the rule in Battle contravened Article 54 of the Treaty on the functioning of the European Union (TFEU).

Article 54 states: -

“Companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the Union shall, for the purposes of this Chapter, be treated in the same way as natural persons who are nationals of Member States.”

19. He argued that since it is not a requirement for a natural person to be represented by a qualified legal professional in court and a natural person is entitled to represent himself, it must follow that a company is also not required to be represented by a legal professional.

Faherty J. at para. 37 of her judgment found that Article 54, when considered in its context, had no bearing on the law in this jurisdiction which requires a company to be represented by a lawyer: -

“Article 54 relates solely to the freedom to establish companies across the EU and, having so established in Member States, companies are to be treated in the same way as natural persons who are nationals of Member States.”

20. The judge observed that even Article 19 of the Statute of the Courts of Justice of the EU provides that the right of audience of any individual other than a Member State or an institution of the EU before the ECJ requires that such individual be represented by a lawyer.

21. Mr. Fitzgerald invoked the Charter of Fundamental Rights of the European Union contending that the rule in Battle was contrary to Articles 20, 47 and 52. At para. 48 of her judgment Faherty J. stated: -

“Apart from the Court’s finding that no issue of EU law arises in respect of Mr.

Fitzgerald’s claimed entitlement to represent the company in court, Mr. Fitzgerald has failed to point to any EU element in the matter of the dispute between Munster Wireless Limited and the respondent such as would entitle him to invoke the provisions of the Charter.”

She considered the High Court decision in AIB Plc v. Aqua Fresh Fish Limited [2015] I.E.H.C. 184 adopting the dictum of Keane J. who had determined that the Charter had no applicability to the issue of the rule in Battle – the key issue which she had to determine.

22. Regarding alleged incompatibility between the requirement in Irish law that a company be represented in court by a qualified legal representative and Article 6 of the European Convention on Human Rights the judge concluded at para. 56 that there was no such incompatibility: -

“Insofar as there might be exceptional circumstances such as might warrant a relaxation of the rule in Irish law so as to allow a fair hearing as envisaged by the rules of natural justice or constitutional justice or Article 6 of the Convention, there is no evidence put before this court of any such circumstances arising in the present case.”

She considered that the decision of Arma v. France [2007] ECHR 5568, which Mr.

Fitzgerald had placed reliance on, was distinguishable: -

“… Mr. Fitzgerald’s circumstances cannot be said to equate to what presented in that case. Unlike the applicant in Arma… Mr. Fitzgerald has not come before the Court in the context of a liquidation case or a petition to wind up Munster Wireless Limited.”

Regarding a request for a preliminary reference to the ECJ she concluded that no question which required such a referral arose.

AIB v. Aqua Fresh Fish

23. The High Court order of Faherty J. was perfected on the 14th August, 2018. On the 18th October, 2018 the judgment in the appeal of AIB Plc v. Aqua Fresh Fish [2018] I.E.S.C.

49 against the decision of Keane J. – on which Faherty J. had placed reliance in her judgment delivered on the 28th June, 2018 – was delivered in the Supreme Court. It concluded that: -

“The so-called rule in Battle v. Irish Art Promotion…when complemented by the inherent jurisdiction and discretion of the Court to permit, in exceptional circumstances, representation of a company by a person who is not a lawyer with a right of audience, continues to be the law in this jurisdiction and is consistent with the Constitution.” (per Finlay Geoghegan J.)

The Supreme Court further found that exceptional circumstances had not been established which would warrant the Court permitting the company to be represented by its director. The Supreme Court upheld the decision of Keane J.

24. In Klohn v An Bord Pleanála [2019] I.E.S.C. 66 Clarke C.J. observed at para. 7.5:

“Attention was also drawn to the fact that this Court has recently confirmed, in Allied Irish Bank plc v. Aqua Fresh Fish Ltd [2018] IESC 49, the proposition which had appeared to be the law since Battle v. Irish Art Promotion Centre Limited [1968] I.R. 252, which is to the effect that a corporation cannot self-represent save in exceptional circumstances, thus creating a category of party (but not of proceedings) where, it might appear, representation by a visiting lawyer other than in conjunction with an Irish-qualified lawyer would not be permissible on the basis of the argument put forward by Ms. Ohlig. Whether that consideration of national law could have any bearing on the ultimate determination of the legal issue of Union law which arises in this matter is ultimately a question for the CJEU.”

Exceptional circumstances

25. Sir Thomas Bingham M.R. in Radford v. Freeway Classics Limited [1994] 1 B.C.L.C. 445 explained the reason why a company director or office holder was not entitled to represent a company as follows: -

“A limited liability company, by virtue of the limitation of the liabilities of those who own it, is in a very privileged position because those who are owed money by it, or obtain orders against it, must go empty away if the corporate cupboard is bare.

The assets of the directors and shareholders are not at risk. That is an enormous benefit to a limited company but it is a benefit bought at a price. Part of the price is that in certain circumstances security for costs can be obtained against a limited company in cases where it could not be obtained against an individual, and another part of the price is the rule that I have already referred to that a corporation cannot act without legal advisors. The sense of these rules plainly is that limited companies, which may not be able to compensate parties who litigate with them, should be subject to certain constraints in the interests of their potential creditors.”

Determination of the Supreme Court

26. On the 16th May, 2019 the Supreme Court refused to grant leave to the applicant to appeal directly from the High Court by way of a leapfrog appeal. The Supreme Court in refusing to grant leave to appeal pursuant to Article 34.5.4 of the Constitution observed that Battle had established that, save for the most exceptional circumstances, a company could only be represented by a duly qualified lawyer, this being different from the case of individuals who could self-represent. The Court emphasised that this distinction is entirely justified by the fact that a company is a separate legal entity, with a personality distinct from that of its members under the Companies Act, 2014.

27. The Supreme Court noted at paras. 25-27 that Faherty J. had correctly understood and applied the decision of Keane J. in AIB v. Aqua Fresh: -

“…none of the facts as outlined in the application for leave or in the other documentation… give rise to any concern that what may be described as exceptional circumstances, coming within the definition of Aqua Fresh Fish, are at play…

The applicant submits that s.41 of the Companies Act, 2014 acts as a statutory exception to the principle established in Battle however such is not the case…

The decision in Arma which is put forth by the applicant to support his invocation of Article 6.1 of the ECHR is a case which concerns locus standi: the applicant had set up a company of which she was the manager and sole shareholder…” The Supreme Court considered that the reasoning in Arma was based “more on the locus standi of a director who has a vested and particular interest in the company which was clearly in a state of extremes.”

The Supreme Court concluded its determination to refuse leave noting: “Faherty J. was correct in finding that the factual situation of the within case could not be equated with Arma, and thus there exists no incompatibility of Article 6.1 of the ECHR.”

Proposed appeal

28. The proposed notice of appeal exhibited identifies five separate grounds of appeal:

(1) Precedent –

“Throughout these proceedings the courts have acquiesced to [Mr.

Fitzgerald’s] right to represent the company.” There is no statutory prohibition on a company being represented by a non-legal professional.

(2) That section 41 of the Companies Act, 2014 does entitle a duly authorised attorney for the company to represent the company in court and that this is the statutory exception referred to by Ó Dálaigh C.J. in the Battle judgment which did not exist until the commencement of the Companies Act, 2014. It allows the company to attend and argue personally addressing the judgment of Viscount Simon L.C. in the Tritonia case.

(3) It is contended that the High Court exceeded its jurisdiction by interpreting EU law with regard to Article 54 TFEU: “The Court claims that there are restrictions on companies being treated as natural persons but does not and cannot specify what these restrictions are.”

(4) The fourth ground is directed to Article 54 of the TFEU and also Articles 20, 47 and

52 of the Charter.

(5) The fifth proposed ground of defence arises pursuant to the European Convention on Human Rights and the decision of Arma v. France.

Decision Acquiescence

29. The suggestion that some form of acquiescence equivalent to estoppel has arisen is not maintainable. Almost three years ago on the 28th November, 2016 Mr. Justice Humphreys directed a preliminary issue be heard, namely: “Whether it is appropriate that the applicant company be represented by one of its directors and not a professional legal representative…” At its highest, the evidence before this Court demonstrates that Mr.

Fitzgerald attempted to represent the company in the teeth of sustained opposition from the respondent and the reason why the judicial review proceedings have not progressed is because his attempts to do so have been contested and resisted by the respondent throughout. This ground of appeal conflates his claimed right to represent the company in litigation with his right to argue that he is entitled to represent the company in that litigation. The fact that the courts afford him a right of audience to advance this argument cannot amount to an acceptance of the argument.

30. It is noteworthy that counsel for the State contended that Mr. Fitzgerald was not entitled to advance this argument at all in the first place. This approach contrasts with the stance adopted by the respondents in Aqua Fresh Fish, Klohn and indeed Battle itself where the party claiming locus standi to represent was allowed to appear in court and advance arguments in support of their contentions. The stance sought to be adopted by the State in this regard was unduly narrow, inconsistent with precedent and not an argument advanced before the High Court at the original hearing. For the latter reason, if no other, I do not consider the argument to be soundly based. Mr. Fitzgerald is entitled to advance his arguments. The constitutional right of access to the courts necessarily encompasses an entitlement to establish a claim and substantiate it.

31. The decision of the Supreme Court in AIB v. Aqua Fresh Fish Limited is fatal to the Mr.

Fitzgerald’s contention that merely because there is no expressed statutory prohibition on a company being represented by a non-legal professional that same entitles him to represent the company in proposed judicial review proceedings.

Power of Attorney

32. The contention advanced is that s.41 of the Companies Act, 2014 gives rise to a statutory exception and in effect legislates to circumvent the Battle rule. This matter has already been specifically dealt with by the Supreme Court in its decision to refuse a leapfrog appeal where at para. 26 it states: -

“The applicant submits that s. 41 of the Companies Act, 2014 acts as a statutory exception to the principle established in Battle; however such is not the case. As stated by Faherty J., this section merely permits a person to stand in the shoes of the company and to act as the company: it does not divest the company of its incorporated status. The power of attorney permitted in this section does not analogise or transform the power of a director vested with same, into one which would allow him/her to represent the company in court.”

I accept that this is a correct statement of the law. Accordingly, that proposed ground of appeal is doomed to failure. It is simply unstateable.

33. Further, the claim of Mr. Fitzgerald insofar as it is based on section 41 assumes that the Oireachtas in altering the manner in which the power to appoint an attorney was expressed from that previously iterated in in section 40 of the Companies Act 1963, intended to abrogate the significant rule of law clearly articulated in Battle, a rule which (as that decision makes clear) was by the time of that case in 1967, long established.

Were this the intention, one would expect it to be clearly stated which it is not. That this is not the legislative intention is put beyond doubt by the express facility for appointment of company representatives in connection with particular functions in certain criminal proceedings provided for in section 868 of the Companies Act, 2014, and the stipulation in that provision that such a representative may not act on behalf of the company before any court for any other purpose. Section 868(6) provides: -

“(1) The following provisions of this section apply where a company is charged, either alone or with some other person, with an indictable offence.

(2) The company may appear, at all stages of the proceedings, by a representative and the answer to any question put to a person charged with an indictable offence may be made on behalf of the company by that representative but if the company does not so appear it shall not be necessary to put the questions and the District Court may, notwithstanding its absence, send forward the company for trial and exercise any of its other powers under Part 1A of the Criminal Procedure Act 1967, including the power to take depositions.

(3) Any right of objection or election conferred upon the accused person by any enactment may be exercised on behalf of the company by its representative.

(4) Any plea that may be entered or signed by an accused person, whether before the District Court or before the trial judge, may be entered in writing on behalf of the company by its representative, and if the company does not appear by its representative or does appear but fails to enter any such plea, the trial shall proceed as though the company had duly entered a plea of not guilty.

(5) In this section, ‘representative’ in relation to a company means a person duly appointed by the company to represent it for the purpose of doing any act or thing which the representative of a company is authorised by this section to do.

(6) A representative of a company shall not, by virtue only of being appointed for the purpose referred to in subsection (5), be qualified to act on behalf of the company before any court for any other purpose.

(7) A representative for the purpose of this section need not be appointed under the seal of the company.

(8) A statement in writing purporting to be signed by a managing director of the company or some other person (by whatever name called) who manages, or is one of the persons who manage, the affairs of the company, to the effect that the person named in the statement has been appointed as the representative of the company for the purposes of this section shall be admissible without further proof as evidence that that person has been so appointed.”

Noteworthy are the conclusions of McKechnie J. in this regard in his judgment in this Court in AIB Plc v. Aqua Fresh Fish [2017] I.E.C.A. 77 at 39-41 where he observed: -

“The modification based on exceptional circumstances, as above discussed, has of course been created judicially; the Oireachtas has also taken an interest, however, but only in a restricted sense, confining its intervention to situations where a company is prosecuted on indictment. Even then, as s. 868 of the Companies Act 2014 shows, the relaxation is modest, as the duly appointed person has a limited representative function. Such person may answer any question required to be put to the company (s. 868(2)), exercise any right of objection or election on the company’s behalf (s.868(3)) or enter a plea in writing to the offence as charged (s.

868(4)). However, the representative cannot go further. Similar exceptions were contained in the corresponding subsections of s. 382 of the Companies Act 1963, which provision was first enacted to deal with the problems identified in The State (Batchelor & Co (Ireland) Ltd.) v. Ó Leannáin [1957] I.R. 1.

The real relevance of these provisions, however, is not in the limited exception they have created in respect of criminal offences, or even in the severe restrictions imposed within that exception, but rather in what they do not permit a representative to do on behalf of a company. Section 868(6) of the 2014 Act provides that the appointment of such a person under the section does not qualify that person to ‘act on behalf of the company before any court for any other purpose’. Strikingly, s. 382(5) of the 1963 Act likewise provided. As is clear, this exception in its original setting pre-dates even Battle and evidently it was open to the legislature in drafting the 2014 Act, or at any time in the preceding fifty years, to broaden its scope so as to permit company representation by non-lawyers in other circumstances. This it has not done, instead retaining the narrow exception for indictable matters and continuing the express prohibition that a person so appointed shall not be qualified to act other than for the purposes of the section.

In coming to this conclusion I acknowledge an alternative approach to a provision such as that created by s. 868 of the 2014 Act. It is that such a measure could be regarded as being in the nature of a lex specialis designed to deal with a specific issue in a specific context, and that no wider implication should be drawn from it.

The reason why I believe that the former view is more correct is the legislative context in which the section was enacted. Such involved the most major reassessment, review and consolidation of company law, in all its aspects, in more than 50 years. If the situation had been more specific, and in particular if the provision had been adopted in a criminal statute, then perhaps the latter view might be more appropriate. This is not what occurred, however. Accordingly, the broader interpretation is thus justified in this case.”

34. Nothing in the Supreme Court decision trenches upon or is inconsistent with the said reasoning which I respectfully adopt.

Article 54

35. The third ground of appeal contends that Faherty J. exceeded her jurisdiction by interpreting EU law with regard to Article 54 TFEU. Mr. Fitzgerald’s contention is that the rule in Battle contravenes Article 54 of the TFEU. However, it is clear from the terms of Article 54 that the article applies for the purposes of Chapter Two of the TFEU and that it is not an article of general application, but rather identifies an element of the framework for the rights of nationals of one Member State who seek to establish themselves in another Member State. It is noteworthy but not determinative in any of this application that in its determination of the leapfrog appeal application the Supreme Court found no fault with the conclusion of Faherty J. that Article 54 TFEU is not an authority for the proposition that companies are to be treated the same as natural persons for all purposes and that it had no bearing on the law in this jurisdiction which requires a company to be represented by a lawyer.

36. Indeed, given that the consequence of the decision in Battle is that a company and a natural person are treated by the law in exactly the same way – insofar as neither may instruct a third party who is not a qualified representative to represent them in Court – it is impossible to see what differential treatment is complained of.

ECHR

37. The decision in Arma does not avail Mr. Fitzgerald and is distinguishable. On an analysis of a French language version of the judgment I find myself in agreement with the views expressed by the Supreme Court in its determination which noted at para. 27: -

“The reasoning was based more on the locus standi of a director who has a vested and particular interest in the company which was clearly in a state of extremes. As such, Faherty J. was correct in finding that the factual situation of the within case could not be equated with Arma, and thus there exists no incompatibility with Article 6.1 of the ECHR.”

38. Specifically, in this case the issue is who can represent the interests of the company in litigation in order to protect and advance the interests of the company itself. In Arma the question was whether a director or shareholder could intervene in a court process so as to protect her own particular interest in seeing the company continue and thereby protect the funds the manager had invested – an interest which the Court felt was convergent with the interests of the company (see para. 32 of the judgment of the Court). The case was thus concerned with the question of who had the right to properly become a party to proceedings, not the question of who had the right to represent those who were already parties to those proceedings.

39. Insofar as no incompatibility with the European Convention on Human Rights has been established, the Court has been furnished with no basis on which it could conclude that the application of the EU Charter of Rights and Fundamental Freedoms would result in any different conclusion.

Conclusion

40. Delany and McGrath “Civil Procedure in the Superior Courts” (4th ed., Round Hall, 2018)

at para. 23-116 states: -

“The principles in Éire Continental have been consistently referred to in subsequent cases and while the decisions have tended to focus on whether there was compliance with the three conditions referred to therein, the breadth of the discretion that the Supreme Court enjoys in deciding whether to enlarge time has also been emphasised. It has been suggested that while the three conditions set out in Éire Continental are a useful guide to the manner in which the jurisdiction of the Court will be exercised, the overriding consideration is that the Court has a discretion which must be properly exercised in all the circumstances of the case.

So, in Brewer v. The Commissioners of Public Works in Ireland Geoghegan J. stated that he would interpret the words of Lavery J. in Éire Continental as indicating that while the three conditions laid down were proper matters to be considered, it did not necessarily follow that a court would either grant an extension if all these conditions were fulfilled or refused the extension if they were not.”

41. I am satisfied that no arguable ground of appeal has been identified such as would satisfy the third limb of the Éire Continental test and warrant making an order extending time to appeal.

42. I would refuse the application.