Gomez v Carrafa

MCELWAINE J: 1 I delivered ex tempore reasons in this matter on 23 August 2022. Very recently Allsop CJ has drawn attention to the importance of providing written reasons to self-represented litigants which substantially and accurately reflect the oral reasons: BBK19 v Minister for Immigration, Citizenship and Multicultural Affairs [2022] FCA 1001. What follows is an edited and settled version of my reasons. 2 I commence with the essential history of this matter. Kalaiselvi Gomez (Mrs Gomez) was made the subject of a sequestration order in August 2014 and the respondent Mr Michael Carrafa was appointed as her trustee in bankruptcy. Mrs Gomez was discharged from her bankruptcy in September 2017. This proceeding was first commenced by her in the Supreme Court of Victoria by filing a writ and statement of claim on 9 June 2020. It was transferred to this Court pursuant to orders made on 13 October 2020. 3 Whilst in this Court it has been the subject of various case management orders that are relevantly summarised as follows. On 23 February 2021, Anastassiou J made orders which, inter alia, gave leave to Mrs Gomez to file and serve any proposed amended statement of claim by 24 March 2021. On 29 June 2021, Anastassiou J gave leave to file and serve any further amended statement of claim by 27 July 2021 and adjourned an application by the respondent to strike out the extant statement of claim to a date to be fixed. 4 On 28 July 2021, orders were made, it would seem by consent, extending the time to file and serve the amended statement of claim to 2 August 2021. On 4 February 2022, various orders were made, including one requiring the respondent to file and serve any amended strike out application by 4 March 2022 or, in lieu thereof, to plead by way of defence to the amended statement of claim that was provided on 2 August 2021, in compliance with the orders made on 28 July 2021. 5 On 21 February 2022, the orders last made were varied such that by 18 March 2022 the respondent was to file and serve any defence to a further version of an amended statement of claim delivered on 20 February 2022 or, alternatively, to file and serve any amended application to strike out. On 5 July 2022, and after an extensive case management hearing before me, I relevantly made the following orders. 6 First, I struck out the statement of claim filed in the Supreme Court of Victoria as failing to disclose a reasonable cause of action. Secondly, I dismissed an interlocutory application by Mrs Gomez for leave to further amend. Thirdly, I adjourned the balance of the respondent's interlocutory application filed on 18 March 2022 to a date to be fixed, that being an interlocutory application to strike out the statement of claim but not one that clearly sought an order for dismissal of the proceeding. And, finally, I ordered that any further interlocutory application by the applicant for leave to amend be filed and served by no later than 4 pm on 2 August 2022. 7 Mrs Gomez, technically, failed to comply with the last order in that her interlocutory application was not filed until 5 August 2022, but that is not a matter that I regard as having any material significance in this case, and, as I indicated to the parties earlier today, I varied the order previously made by me to extend time to accommodate that delay. The interlocutory application now before me by Mrs Gomez seeks leave to amend in accordance with the form of the proposed amended statement of claim that she has attached to her affidavit made on 1 August 2022. 8 What is also before me today is the balance of the interlocutory application of the respondent filed on 18 March 2022, but as amended by my orders on 5 July 2022, to the following effect: (1) that pursuant to rule 16.21 of the Federal Court Rules 2011 (Cth) each iteration of the statement of claim and the amended statement of claim be struck out; (2) that leave to further amend be refused; and (3) that the proceeding be dismissed with costs. 9 The general principles which inform each discretion that falls to be exercised are well-settled and understood. For the benefit of Mrs Gomez, in broad summary I state the principles as follows: (1) Leave should not ordinarily be granted to amend if the consequence is that the amended pleading is immediately susceptible to a further application that it be struck out. The reason is that leave in those circumstances would be futile. (2) A pleading must set out the material facts necessary to identify an arguable cause of action; it must not be framed in a way that is likely to prejudice or embarrass the efficient disposition of the matter, it must not be an abuse of process, and it must not contain material that is scandalous. These principles are reflected in the wording of rule 16.21. (3) The striking out of a pleading is a power to be used sparingly and only in clear cases. (4) It is a serious matter to summarily deprive a party such as Mrs Gomez of the ability to fairly put a case and have it determined, by striking out a pleading and then by refusing further leave to amend by the entry of judgment. (5) Ultimately the discretion is to be exercised as to do justice in the particular circumstances of each case, although it is one primarily informed by the overarching purpose of civil litigation in this Court as set out at sections 37M and 37N of the Federal Court of Australia Act 1976 (Cth) when read with the Central Practice Note: National Court Framework and Case Management (CPN-1). 10 The interests of justice require consideration of, firstly, the applicant's interests, especially in the case of a self-represented litigant who is unfamiliar with the technical requirements of pleading. Self-represented litigants must be treated fairly and with respect; they may be given guidance on matters of practice and procedure, but it does not follow that it is open to this Court to embark upon the drafting process if it concludes that a pleading is materially defective. 11 Secondly, the respondent's interests. Here quite serious allegations of misconduct are sought to be made against the respondent. Accordingly, and in accordance with established authority, precision is required in the formulation of the claim so that it can be properly understood and responded to. That is most important. 12 Thirdly, the administration of the business of the Court. The demands on court resources and time and the interests of other litigants who seek to have cases dealt with quickly and efficiently must also be considered and given appropriate weight. 13 Lastly, the considerations of case management, in particular where amendments are sought, by reference to Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 (Aon). 14 Now, albeit Aon was a case that concerned the exercise of the discretion where a very late application to amend was made, which is not the case here, nonetheless it is important to recognise from the plurality reasoning, especially at [72], Gummow, Hayne, Crennan, Kiefel and Bell JJ, that the purpose of case management is to minimise delay and the expense of proceedings and is intended to guide the discretion whether to permit amendments or to refuse them. To the same effect see the reasoning of the plurality at [92], [93], [98] and [102]. 15 As counsel for the respondent correctly points out, Mrs Gomez has had the benefit of five attempts to plead a cause of action which complies with the basic rules of pleading. At the last case management hearing on 5 July 2022 I made it very plain to Mrs Gomez that: (1) she needed to give careful consideration to the legal elements of each cause of action that she seeks to make out; (2) her prior pleadings suffered from the fundamental defect that they did not grapple in a satisfactory way with those elements; (3) the essential elements of a malicious prosecution action were drawn to her attention, particularly by reference to the decision of the High Court in A v New South Wales (2007) 230 CLR 500; [2007] HCA 10; (4) I told her that I would strike out her extant statement of claim and I would refuse leave to amend in the terms of each subsequent iteration, but I would not then entertain the respondent's application to dismiss the proceeding with costs - for the reason that I made it clear to Mrs Gomez that as a self-represented litigant and despite the long history of this matter I would give her one further opportunity to plead a claim that complies with the basic rules of pleadings, and I would extend that opportunity to 4 pm on 2 August 2022. 16 I have carefully considered the proposed amended statement of claim that is now the subject of the application for leave to amend by Mrs Gomez. It seeks, on my analysis, to articulate four claims. The first and primary claim is for malicious prosecution, the central element of which is the preferring of charges by the Australian Financial Security Authority (AFSA) as initiated by the Commonwealth Director of Public Prosecutions (CDPP) on 18 July 2018 which proceeding was subsequently discontinued. Secondly, breach of statutory and fiduciary duties by the respondent in his capacity as trustee in bankruptcy. Thirdly, abuse of process. And, fourthly, that which is described as official misconduct, but which I have interpreted to mean misfeasance in public office. 17 The central contention that underpins each of these claims is that it was wrong for the prosecuting authority to assert that Mrs Gomez dealt unlawfully with otherwise divisible property in her bankrupt estate before the presentation of the creditor's petition in that she concealed or otherwise dealt with such property contrary to sections 265(3), 265(4), 265(7), or 266(1), of the Bankruptcy Act 1966 (Cth). On her contention, such property was subject to what is known as an equity of exoneration in favour of her husband which extended over joint matrimonial assets, primarily real property, and with the consequence that there was no, or little, divisible property left for the benefit of the creditors of the bankrupt estate. 18 It follows from that broad contention that, if made out, she could not have wrongly dealt with otherwise divisible property. The reason is that an equity of exoneration, when it applies in bankruptcy, operates to charge the bankrupt's interest in the property with an equity in favour of another to the extent of the equitable obligation to indemnify that other person: see, in particular, the Full Court decision in Parsons v McBain (2001) 109 FCR 120; [2001] FCA 376, particularly at [21], Black CJ, Kiefel and Finkelstein JJ. The property is not then divisible amongst creditors generally because it is charged and must be held by the trustee subject to it. 19 Mrs Gomez insists that she provided all information relevant to the claim to her trustee which he failed to disclose to AFSA, with the consequence that the prosecution was brought on a false or, at least, an incomplete factual basis. That contention of Mrs Gomez, as now sought to be framed involves two steps: (1) if the facts had been disclosed to AFSA by the respondent, it was clear that the prosecution would not have been commenced; and (2) once these facts were given by her to the CDPP the error was discovered and the prosecution was discontinued. 20 Central to those claims are four sub-contentions that the respondent acted firstly, without properly investigating the claimed equity of exoneration; secondly, by knowingly failing to provide available evidence to AFSA; thirdly, maliciously towards Mrs Gomez; and, fourthly, that, deliberately and dishonestly, the respondent was the actor in procuring a prosecution of her that was unjustified in the circumstances. 21 A contention that looms large in the proposed pleading is that the respondent had in his possession certain court books that Mrs Gomez had provided to him in connection with a bankruptcy proceeding brought by the trustee in the Federal Circuit Court against her husband for the recovery of divisible property in proceeding MLG 2642 of 2014, but that the trustee, in turn, failed to provide that material to AFSA and only chose to provide court books that he had prepared for that proceeding which, one infers, were only favourable to the case that the prosecution sought to make out. 22 Mrs Gomez contends that the material in her books, together with other documents she had provided or was prepared to provide to the trustee, established that her husband did have the benefit of the equity of exoneration as claimed. 23 The elements essential to prove a case of malicious prosecution, which I take from A v New South Wales at [1], Gleeson CJ, Gummow, Kirby, Hayne, Heydon and Crennan JJ, are, firstly, that a proceeding of a criminal character was initiated against the plaintiff by the defendant; secondly, that the prosecution was terminated in favour of the plaintiff; thirdly, that the defendant in initiating or maintaining the prosecution acted with malice; and, fourthly, that the defendant acted without reasonable and proper cause. 24 Establishment of each of those elements is essential. As to the first, the prima facie difficulty is that the proceeding was initiated not by the respondent, but by the CDPP and named AFSA as the informant or complainant. However, as the authorities demonstrate, that is not a fatal difficulty if Mrs Gomez can identify a case in her pleading that the respondent was actively instrumental in causing the prosecution to be commenced or maintained. 25 As to that, it must be asserted and pleaded that the respondent is the person who played the active role in causing the proceeding to be commenced: see Commonwealth Life Assurance Society v Brain (1935) 53 CLR 343 at 379, Dixon J, and A v New South Wales at [34] where the plurality speak to the undertaking of an active role in instigating the prosecution. 26 Those elements may be difficult to establish on the evidence where AFSA and the CDPP were responsible for the prosecution, but that is not the issue before me. The question is whether the pleading identifies the material facts to ultimately make good that contention if the case proceeds to a trial. There is no issue in this case about the second element. As to the third element, malice, it must be pleaded explicitly, though it may be a matter of inference drawn from explicitly pleaded facts that the respondent acted with malice which is clear from A v New South Wales at [93]. 27 The final element, that is, acting without reasonable and proper cause, requires proof of the absence of honest belief that the person charged is probably guilty of the offence: see A v New South Wales at [58]. Pausing there, that is an onus which falls on Mrs Gomez. That is not something that the respondent has to establish. 28 I have concluded that the proposed pleading is materially defective in numerous respects in that it fails to plead in a satisfactory way, by identifying each of the material facts, that which is required to establish the tort of malicious prosecution. 29 In particular, I draw attention to the following paragraphs, but, in doing so, it should not be considered that I have overlooked considering each and every paragraph in the pleading, which I have had the benefit of reading for some hours this morning. The starting point is paragraph 17, where the pleading is that the applicant had agreed with the respondent's employees to provide all the financial documents and books, both company and personal, for 15 years as requested. 30 We are then told at paragraph 18 that the applicant agreed to collate those documents. Paragraph 19 asserts by way of conclusion that the documents would have shown a comprehensive review of the applicant's personal and company financial positions and the extent of their expenses and borrowings against the applicant's personal assets for company expenses, each as supporting some of the elements of the equity of exoneration. 31 Paragraph 20 pleads that the applicant had agreed to tabulate that material. Paragraph 21 pleads that the material would have shown certain things. Paragraph 22 pleads that the applicant had agreed to cooperate with her trustee. Paragraph 23 pleads that there was a meeting between the applicant and certain employees of the trustee. At that meeting, certain information was requested, certain explanations were given, but ultimately as pleaded at paragraphs 35 and 36, the prosecution was commenced without the respondent being provided with that information and that he failed to ask sufficient questions about that information. 32 The difficulty with all of those paragraphs is the complete failure to identify what information is being referred to and to what effect. I raised this with Mrs Gomez during submissions and I questioned her about the need to identify the particular correspondence that she relies upon as establishing her case. It is just not pleaded. It is not even cross-referenced to the dates of correspondence or to emails. She failed to identify what material she relies upon. 33 The prosecution is dealt with from paragraph 37, and the pleading at paragraphs 37 to 40 is tolerably clear and appropriate, but then matters appear from paragraphs 42 through to paragraph 52 that are largely contentions by way of submissions, argument or conclusions; they are not pleadings of material facts. The material facts that are said to give rise to these contentions and conclusions are simply not identified. That is a material error. 34 Likewise, at paragraph 52 there is a contention that the respondent, "conveniently", omitted to inform AFSA or the CDPP about certain correspondence and certain facts; but once again, those facts and that correspondence is not identified. That defect flows into paragraphs 53, 54, 55, 56 and 57, each of which are largely argumentative contentions and conclusions without pleading the underlying material facts necessary to establish the cause of action. 35 It is unexceptional in this case, as Mr Barr conceded on the last occasion, that discontinuing a prosecution is sufficient to establish the second element. So it is not contentious that the prosecution was discontinued. Therefore, there is no relevant criticism which can be made about paragraphs 58 through to 68. One then turns to the current proceeding at paragraph 69. The broad elements of malicious prosecution are the subject of an attempted pleading at paragraph 74, but the problem is that these are argumentative conclusions. 36 By way of illustration, and without wishing to be comprehensive, paragraph 75.4 contends that the respondent failed to disclose material evidence that was in the respondent's knowledge or possession to the prosecuting authorities. However, there is no pleading of what that evidence was. Paragraph 75.5 grapples with the problem that was identified at the last case management hearing: that one has to identify how it is said that the respondent, who is two-steps removed from the prosecution, is the person who really was responsible for initiating it. There is a conclusion pleaded that the respondent managed to procure the criminal prosecution, but no pleading of material facts as to why. 37 As the authorities make clear, there is a heavy onus that falls on Mrs Gomez to demonstrate why in this case, where the CDPP exercised an independent discretion on referral from another public agency, that the real actor is the respondent. Anticipating that difficulty, Mrs Gomez sought to distinguish a passage to which I was taken in A v New South Wales at [35] which refers to Martin v Watson [1996] AC 74 - where: …a woman made an allegation that her neighbour had indecently exposed himself to her whilst standing on a ladder … She went to a police station and complained. A detective constable laid an information against the neighbour. 38 No evidence was offered on the charge, and: The House of Lords held that, since the facts relating to the alleged offence were solely within the complainant's knowledge, and that as a practical matter the police officer who laid the information could not have exercised any independent discretion, the complainant could be sued for malicious prosecution… 39 Mrs Gomez submits to me that it is not analogous to this case for the reason that the respondent withheld information; it was information within his knowledge. Even if that be accepted, and even if the pleading had identified how and why that is so, the problem is that it does not address the point that there was in this case, plainly, an independent discretion; it is one conferred by the Director of Public Prosecutions Act 1983 (Cth). It is the CDPP who determines who will be prosecuted and for what offences under federal law. 40 I return to the pleading which next makes some broad allegations of breach of duty and breach of fiduciary duty. There is no attempt to plead the material facts as to why the duties said to exist were breached in the particular circumstances of this case. There is an allusion made to what is the case at paragraph 77.2: that the respondent breached his duties under the Inspector-General's Practice Statement 14 paragraph 9.3, to which I was taken in argument, by selectively choosing to only provide AFSA and the CDPP with the set of court books that he prepared. 41 That begs the question: what was selectively omitted? It is not pleaded. That error then infects the balance of paragraphs 77.1 to 77.22, the latter aspects of which, from paragraph 77.11, are argumentative submissions and conclusions not based on material pleaded facts. Paragraph 78 then turns to the question of whether the prosecution was maintained, or commenced and maintained, without any reasonable or probable cause. One sees the broad contention that the respondent cannot demonstrate that he believed in the guilt of the applicant based on reasonable grounds. 42 And as I pointed out to Mrs Gomez in argument, and I think Mr Barr as well, that flips the onus of proof. It is not for the respondent to demonstrate anything. It is for Mrs Gomez to demonstrate the absence of reasonable and probable cause in accordance with the authorities that I have summarised. The balance of paragraphs 78.1 to 78.11 is in the form of argument and conclusions and is not a pleading of material facts necessary to establish the claim. 43 Part F of the document, again from paragraph 78, enters the territory of the duties of a bankruptcy trustee in making official referrals to AFSA. Everything at paragraphs 79.1 to 79.8 is pleaded by way of conclusion or submission. The material facts are simply not pleaded. Likewise, paragraphs 83 and 84 are in the form of arguments without reference to the material facts that are relied upon, and that error flows into that which purports to be the particulars at paragraph 85.4. 44 Part G is concerned with the trustee's and AFSA's alleged duties in making offence referrals. Nowhere does the pleading grapple with the problem of why it is said that Inspector-General Practice Statement 14 confers some sort of enforceable duty in favour of Mrs Gomez as distinct from a duty that falls on the trustee vis-a-vis AFSA. Indeed, it is difficult to comprehend how in referring a matter for prosecution a trustee in bankruptcy owes some concurrent duty to the bankrupt who is the subject of the referral. 45 Part H deals with abuse of process. Now, without clearly identifying what is meant, I have inferred that this is a reference to the tort of abuse of process as generally understood to be the commencement of a legal proceeding, not itself without foundation, but employed for an improper, collateral or ulterior purpose. 46 The classic statement of the elements of that tort is the decision of Isaacs J in Varawa v Howard Smith Co Ltd (1911) 13 CLR 35 at 91 where his Honour said that the gist of the cause of action is that it is "merely a stalking-horse to coerce the defendant in some way entirely outside the ambit of the legal claim upon which the Court is asked to adjudicate…" such that the final judgment has no reference to the ulterior purpose. It is an essential element of that tort that it must be for the purpose of extorting an advantage or concession, although in principle, it may apply to a criminal prosecution and a summary prosecution , as is clear from Williams v Spautz (1992) 174 CLR 509. This pleading from paragraph 86 wholly fails to address the elements of the tort. 47 The next claim is entitled "Official Misconduct" from paragraph 88, which I have interpreted as being misfeasance in public office. A summary statement of the elements of that tort was given by Smith J in Farrington v Thompson and Bridgland [1959] VR 286 at 293, that is: …if a public officer does an act which, to his knowledge, amounts to an abuse of his office, and he thereby causes damage to another person, then the action in tort for misfeasance in a public office will lie against him at the suit of that person. 48 What is required is conscious mal-administration rather than careless mal-administration. There must be knowledge of invalidity or excess of power. That is essential. The pleading, at paragraphs 88 through to 90, wholly fails to grapple with these requirements. 49 In the result, therefore, I am satisfied, as required by rule 16.21 of the Federal Court Rules 2011, that the proposed pleading is, firstly, likely to cause prejudice, embarrassment or delay in that it fails to grapple with the essential elements of the claims and secondly, fails to disclose a reasonable cause of action in respect of each of the four claims sought to be agitated. 50 It follows that in the exercise of my discretion I refuse the application for leave to amend, with the consequence that I dismiss the interlocutory application of Mrs Gomez of 5 August 2022. The next issue is whether I should dismiss the entirety of the proceeding as sought by the respondent's amended interlocutory application of 18 March 2022. 51 It is a significant thing and a serious step for a judge to shut a litigant out in a summary way without giving the person a fair opportunity of agitating his or her case in this Court. However, in my view, Mrs Gomez has had more than sufficient opportunity and indulgence to plead her case. I am positively not satisfied, having regard to the history of the proceeding that I have summarised and the detailed pleading that I have sought to summarise, that by a grant of any further period within which to formulate a new pleading Mrs Gomez will manage to plead a claim that is not further liable to be struck out. 52 These are very serious allegations that have vexed the respondent since 9 June 2020. In my view, the point has arrived where the administration of justice fairly and efficiently requires an order that the proceeding be dismissed, notwithstanding that this will preclude Mrs Gomez from agitating her grievances in this Court. I am satisfied by reference to the entire history of the proceeding that no reasonable opportunity to reframe the case by further amendments is likely to cure the defective character of the claim: see Polar Aviation Pty Ltd v Civil Aviation Safety Authority [2012] 203 FCR 325; [2012] FCAFC 97, particularly at [42] to [46], Perram, Dodds-Streeton and Griffiths JJ. 53 I also have regard to section 31A of the Federal Court of Australia Act which (though not directly relevant) speaks to summary termination where, inter alia, there is no reasonable prospect of successfully prosecuting a claim. Finally, I have regard to section 37P of the Act. In this case the Court, in my view, has afforded significant and sufficient opportunities to allow Mrs Gomez to plead a case that complies with the basic rules of pleading. What is now apparent is that the facts can rise no higher than as set out in the last iteration of her pleading, and, for the reasons I have given, there is no reasonable prospect that those facts, if accepted, can support the causes of action upon which Mrs Gomez relies. 54 I clearly informed Mrs Gomez on 5 July that this would be her last chance. I have regard to what Dixon J said in Sheehan v Brett-Young [2016] VSC 53 at [67], to which I was taken by counsel for the respondent, but, of course, each case depends on its own facts. However, having regard to all of these matters, I consider it appropriate to accede to the respondent's amended interlocutory application. I refuse to grant leave to further amend and I dismiss the entirety of the proceedings. 55 I then received submissions as to costs. The respondent seeks his costs on the usual party and party basis. Despite the submissions of Mrs Gomez, I saw no reason to depart from the usual rule that costs should follow the event and I further ordered that the applicant is to pay the costs of the respondent of the proceeding to be agreed or assessed. 56 For these reasons, I make the following orders:

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