Limits To Company Representation In Litigation

A recent High Court decision1 reconsidered the circumstances in which a shareholder or director may represent a company in legal proceedings. The court confirmed that it will exercise discretion to permit such representation only in exceptional circumstances, and in exercising such discretion it will look to establish whether the company has a real or bona fide case.

Facts

The case related to an application brought by Mr Flynn, the managing director and principal shareholder in the defendant company, for an order permitting him to legally represent the company in the proceedings. The proceedings involved the plaintiff bank seeking an order for possession and, if necessary, for sale of certain lands mortgaged to it by the company. When the bank's proceedings were still pending in the Masters Court, an application was made ex parte by Flynn to the High Court for an order permitting him, as a duly authorised agent of the company, to enter an appearance on behalf of it and represent and defend it in the proceedings. This was on the stated basis that the company had insufficient funds to appoint a solicitor or barrister to act on its behalf. The ex parte application was refused by Judge Peart (relying on an established line of authority), but was appealed to the Supreme Court, which directed that although an appearance might be entered on behalf of the company, any question of Flynn further representing the company was to be determined by the High Court on notice to the bank. Subsequently, an application was brought seeking permission to represent the company as an unqualified advocate for the purpose of the proceedings. Other reliefs were also sought.

Application

The court acknowledged that it first had to consider on what basis, if any, a company director who is not legally qualified should be permitted to represent it in litigation and whether the application should be granted on the facts of this case. Further, Judge Keane was of the view that he should not proceed to consider the application for the other reliefs unless he was satisfied that Flynn should be permitted to represent the company. Keane observed that the affidavit grounding the application repeated prior averments as to the company's impecuniosity and its strong and valid defence to the bank's claim (notwithstanding that the company did not deny that it had borrowed the money in dispute, mortgaged the land at issue as security for the borrowings and failed to repay the money...