Fitzpatrick v Keelty

Dismissal of the proceedings 6 The applicant is a bankrupt, pursuant to orders of a Federal Magistrate dated 22 May 2007: see Kidney v Fitzpatrick [2007] FMCA 943. Section 60 of the Bankruptcy Act 1966 (Cth), concerns the stay of legal proceedings commenced by a person who subsequently becomes a bankrupt. Relevantly, the section provides: (1) … (2) An action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action. (3) If the trustee does not make such an election within 28 days after notice of the action is served upon him or her by a defendant or other party to the action, he or she shall be deemed to have abandoned the action. (4) Notwithstanding anything contained in this section, a bankrupt may continue, in his or her own name, an action commenced by him or her before he or she became a bankrupt in respect of: (a) any personal injury or wrong done to the bankrupt, his or her spouse or a member of his or her family; or (b) the death of his or her spouse or of a member of his or her family. (4A) … (5) In this section, action means any civil proceeding, whether at law or in equity. 7 In Fitzpatrick v Keelty [2008] FCA 35, I held that the causes of action that arose from or were incidental to the termination of the applicant's employment did not fall within the exception in s 60(4) and accordingly were deemed to have been abandoned under s 60(3) of the Bankruptcy Act. In relation to those causes of action that did not arise from or were incidental to the termination of the applicant's employment, I considered that they did not have reasonable prospects of success, and accordingly, I struck them out on that basis (see Fitzpatrick v Keelty [2008] FCA 35 at [52] - [57]).

The respondents' submission as to costs 8 Therespondents' primary submissions as to costs can be summarised as follows: · In most proceedings where one party fails, it will be usual to order that party to pay the successful party's costs. The general purpose of the usual costs order (that costs follow the event) is, for reasons of fairness and policy, to compensate the successful party in the form of a partial indemnity for the expense to which he or she was put in defending or prosecuting the proceedings. The corollaries of the compensatory principle are that: (i) the object of a costs order is not punitive; (ii) an unsuccessful applicant should not be protected from a costs order because he or she may have mistakenly but genuinely believed he or she was right to commence the litigation, as this has nonetheless exposed the successful respondents to costs in defending the proceedings. · A successful litigant, in the position of the respondents, should be awarded costs in the absence of special circumstances or 'good cause' justifying some other order. · The circumstance that the unsuccessful applicant is alitigant in person is not a ground for displacing the ordinary result that costs followthe event. As Hodgson CJ (in Equity) stated in Bhagat v Royal & Sun Alliance Life Assurance Australia Limited & Ors [2000] NSWSC 159 (at [13]): … I accept that a court does have to make allowances for the position of litigants in person, and to try to ensure that such a litigant does not lose out because of lack of expertise; although there is a limit to what the Court can do in that regard, while still remaining an impartial determinant of a dispute. The Court may in those circumstances refrain from making orders against litigants in person for conduct that might be considered as justifying orders for costs against represented litigants. By the same token, litigants in person can cause great hardship and expense to other parties, through making allegations and claims that lawyers would recognise as allegations and claims that could not reasonably or even properly be made, and through making proceedings much longer and much more expensive than they otherwise would be, by not focusing accurately on the real issues in the case. Conduct of that nature by legally represented parties would often lead to orders for indemnity costs. Litigants in person may escape the consequence of indemnity costs, but I do not think that the circumstance that a party is a litigant in person is a ground for displacing the ordinary result that costs follow the event.

· A factor which may be relevant in the exercise of the Court's discretion in making an order for costs is the responsibility of the party against whom the order is sought for the costs incurred by the successful party. The respondents submit that in the present proceedings, the fact that the applicant was unrepresented significantly increased the expense to the respondents, despite the respondents' attempts to assist the applicant in confining the relevant issues. · The circumstance that the Commonwealth isa party (and the remaining respondents are indemnified by the Commonwealth) is not a ground for displacing the ordinary result that costs follow the event. · In the absence of evidence, the Court ought not to make any assumptions about the applicant's capacity to satisfy any costs orders made against him.In any event, the Court's acceptance that a party would be unable to meet a costs liability is not of itself a basis for refraining to make the usual order as to costs. 9 On 7 March 2008, I raised with the parties in court the issue of whether costs should be awarded against a party: (a) where the party may be suffering from a mental disability; and (b) where the party is a bankrupt 10 The respondents filed supplementary submissions in relation to these two issues. On the question of mental disability the respondents submitted: · A person under a disability cannot bind themselves for costs: Crocket v Roberts (2000) 9 Tas R 312 at [27]. · There is no fixed standard of sanity required for a person to bring proceedings. The cases do not consider that the level of mental capacity required is that of a "competent" litigant in person, but it cannot be less than that required to instruct a solicitor. It should be greater because a litigant in person has to manage court proceedings in an unfamiliar and stressful situation: Murphy v Doman [2003] NSWCA 249 at [35] per Handley JA. · Although there is a presumption that an adult person is capable if managing his of her own affairs, the Court may consider the matter of its own motion. Indeed, there may be circumstances where the lack of capacity is clear and the Court is entitled to rely on its own observation to make an assessment: L v Human Rights and Equal Opportunity Commission [2006] FCAFC 114. · Courts routinely make costs orders against self-represented litigants, whose prosecution of the proceedings might be different from that expected of a represented party, or even different from the approach adopted by most self-represented litigants. · There is insufficient evidence in the proceedings to overcome the presumption of sanity, which applies until the contrary is proved. The Court should not, in the circumstances of the proceedings, make an assessment that the applicant lacks the mental capacity to be a competent litigant in person. Moreover, questions of competence have not previously been raised in the proceedings, despite numerous directions hearings that were presided over by a number of experienced judicial officers. 11 On the question of whether a costs order could and should be made against a bankrupt, the respondents submitted: · There is ample authority for the proposition that courts may make costs orders against bankrupts (see the discussion in Southern Cross Mine Management PL v Ensham Resources & Ors [2006] QCA 531 at [4] - [105] in the context of the issue of whether costs orders made subsequent to bankruptcy are provable debts). · The ability of a party to recover an award of costs is independent of its right to the order itself, and a party's incapacity to pay a costs orders does not of itself mean that such an order should not be made against that party. As Nicholson J stated in Selliah v Minister for Immigration and Multicultural Affairs [1998] FCA 469 at 4: … Even if the proper inference to be drawn … is that such an order would be futile, I do not consider that would amount to special circumstances warranting the making of a different order. Here the applicant chose to comprehensively argue his case and expose himself to the risk of costs. Having failed, any futility of collection is not a reason for an order to the contrary. 12 The applicant filed written submissions purportedly dealing with the question of costs. However, those submissions did not address the orthodox reasons advanced by the respondents for a costs order in their favour. Indeed, the applicant has sought his costs, although he did not do so on any principled or sustainable basis. Nonetheless, I will explore whether the respondents' submissions should be accepted. 13 Self-evidently, in the ordinary course, the respondents would, as the successful parties, obtain a costs order against the applicant. The fact that the applicant is a self represented litigant is, of itself, an insufficient reason to refrain from making a costs order against him. The reason I raised with the respondents the question of whether I should take into account, potentially, the applicant's mental state is because some of the submissions he has made and, in particular, the submissions he has made more recently, might be viewed as a manifestation of a mental disability. However, on reflection and after a further review of the material, I do not think those submissions to be of a character that would enable me to be satisfied that the applicant was suffering from a mental disability. While a judge can, in appropriate circumstances, act on the basis that a party is suffering from a mental disability and can do so without expert evidence, it is a large step for a judge to take, particularly without expert evidence. It is a step that should be taken with care and caution, even if it is in contemplation, because the judge is concerned to ensure that a person under a mental disability is not inappropriately adversely affected by their own conduct. I have concluded that I should approach the matter on the footing that the applicant is simply a self represented litigant who has, as is often the case, been unable to formulate and articulate his case entirely rationally and without emotion, nor been able do so with the reserve that is expected of represented litigants. 14 I accept that I should not be constrained in making a costs order because the applicant is bankrupt. I propose to order that the applicant pay the respondents' costs of both sets of proceedings. 15 I should mention one final matter. The applicant sought an order that certain details concerning his case not be published. It is to be regretted that I did not advert to that issue in my reasons for judgment of 31 January 2008. However, the power conferred on the Court by s 50 of the Federal Court of Australia Act 1976 (Cth) is a power to be used sparingly. In my opinion, this matter has not been one in which, even remotely, it was appropriate to exercise that power. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.

Solicitor for the Respondents: Australian Government Solicitor