Kelly v Commonwealth of Australia as represented by Services Australia [2025] FCA 736 | Case summary | Zoe

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Kelly v Commonwealth of Australia as represented by Services Australia

[2025] FCA 736

Federal Court of Australia|2025-07-04|Before: Kennett J

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Source facts

Court

Federal Court of Australia

Decision date

2025-07-04

Before

Kennett J

Source

Original judgment source is linked above.

Judgment (52 paragraphs)

[1]

The applicant (Mr Kelly) commenced this proceeding by an originating application which he filed on 9 September 2019. It concerns harassment which he claims to have suffered in his workplace between May and August 2016. The lapse of time since the key events, and the extraordinary delays that have occurred in preparing the matter for a hearing, have led the respondents to seek to have the proceeding dismissed (or, in the alternative, a guillotine order).
In large part, the delay that has occurred flowed from an interlocutory application, filed on 13 December 2019, to strike out parts of the amended statement of claim (the strike-out application). That interlocutory application was heard by a Judge of the Court on 27 May 2020 and judgment was reserved. Further submissions and evidence on a specific issue were invited and filed in June 2022, in the light of two decisions of the High Court handed down in February of that year. Judgment was delivered, dismissing the interlocutory application, on 8 February 2023 ([2023] FCA 69). I am not privy to the reasons why this application took so long to resolve, but it is obviously regrettable.
Because the resolution of the proceeding is likely to turn on the evidence of Mr Kelly and his former workmates about their recollection of events that occurred in 2016, one consequence of the delay in determining the strike-out application was that it became more important than usual for all parties to work in a concerted manner to avoid further delay. The evidence before me indicates that this has not occurred.
The respondents filed an interlocutory application on 24 February 2025 (amended without objection on 4 March 2025) seeking the following orders.

[2]

[11]

(a) Mr Ristevski is alleged to have repeatedly "leered at" Mr Kelly and spoken to him expressing antisemitic opinions, sexist observations about Ms Stone, comments on Mr Kelly's appearance and statements antipathetic to Mr Kelly's sexual orientation. He is said to have sometimes stood silently behind Mr Kelly for long periods and come in to work to "surprise" him.

(b) Ms Stone is alleged to have made various statements to Mr Kelly about his appearance, personality and sexual orientation and to have described Mr Ristevski's behaviour as humorous. She is also alleged to have sent Mr Kelly sexually explicit images that contained references to homosexuality and body weight and were "derogatory in nature". She is also alleged to have spread a rumour that Mr Kelly had behaved inappropriately towards her.

(c) Mr Kowal is alleged to have:

(i) failed to discipline or relocate Mr Ristevski and treated Mr Kelly's complaints about him as trivial;

(ii) amended a report about Mr Kelly's performance in a negative way following a disclosure by Mr Kelly that he suffered from Attention Deficit Hyperactivity Disorder (ADHD);

(iii) conducted a so-called "mediation" between Mr Kelly and Ms Stone in a highly unsatisfactory manner; and

(iv) directed Mr Kelly to work in the Rockdale Centre, in isolation from other employees and at a workstation that lacked a functioning computer or headset, and without allocating any duties to him.

(d) After a meeting (about which several complaints are made) with another officer concerning the images that had been sent by Ms Stone, Mr Kelly claims that he became medically unfit for work on 27 September 2016 as a result of the matters referred to above. He also makes several complaints concerning the handling by the first respondent (the Commonwealth) of the assessment of his fitness for duty and his worker's compensation claim.

(e) Mr Kelly's employment was formally terminated on 4 October 2018.

(f) Based on these events, Mr Kelly alleges that he suffered:

(i) sexual harassment by Ms Stone;

(ii) several forms of discrimination contrary to the SD Act and the DD Act, amounting to unlawful discrimination within the meaning of the Australian Human Rights Commission Act 1986 (Cth) (the AHRC Act);

(iii) victimisation as a result of asserting his rights under the SD Act, the DD Act and the AHRC Act;

(iv) failure to consult and to provide unpaid personal leave in breach of the Fair Work Act 2009 (Cth) (the FW Act).

[12]

Mr Kelly seeks a declaration pursuant to s 46PO of the AHRC Act that the Commonwealth unlawfully discriminated against him; damages (including aggravated damages); declarations of unlawful discrimination against Ms Stone and Mr Kowal; and pecuniary penalties against the Commonwealth under s 546(1) of the FW Act.
The following chronology is drawn from documents that are in evidence on the interlocutory application or on the Court's file.
Before making an application to the Court under s 46PO of the AHRC Act, it was necessary for Mr Kelly to have made a complaint to the Australian Human Rights Commission (the AHRC) and for that complaint to have been terminated by the President under s 46PE of that Act. As required by the Rules, Mr Kelly's complaint to the AHRC (the AHRC complaint) and the notice of termination were annexed to his originating application.
In making the AHRC complaint Mr Kelly was represented by his current solicitors. The complaint is dated 7 November 2018 and attached a letter of the same date from the solicitors. That letter requested that the complaint be terminated without inquiry because there was no utility in attempting conciliation. However, it also contained a detailed statement of the facts on which the complaint was based (running to 19 single spaced pages), a summary of the impact of the respondents' conduct on Mr Kelly and submissions concerning the legal position. Approximately 100 pages of documents referred to in the statement of facts were attached. This material, submitted over the signatures of the firm's "Chairman & Senior Team Leader" and another solicitor, must be taken to have been prepared on the basis of detailed instructions from Mr Kelly.
After the dismissal of the strike-out application in February 2023, orders were made on 6 March 2023 fixing dates for the filing of any further amended statement of claim (30 March 2023), a defence (11 May 2023) and any reply (1 June 2023). After the matter came into my docket, on 10 May 2023 these deadlines were extended by consent and Mr Kelly filed his further amended statement of claim on the same day (roughly six weeks late and with no extension having previously been sought). The deadlines for filing of a defence and any reply were extended, again by consent, on 24 July 2023 and 9 August 2023. The Commonwealth and Mr Kowal (who were jointly represented) filed their defence on 12 September 2023. On 11 October 2023 further extensions were granted for the filing of a defence by Ms Stone (11 December 2023) and the filing of a reply by Mr Kelly (12 January 2024). An amended defence by all of the respondents was filed on 12 December 2023. On 22 December 2023 the deadline for the defence was extended nunc pro tunc, and a new filing date of 24 January 2024 was fixed for a reply.
Provision was also made for a mediation to occur in January 2024. The mediation was unsuccessful.
On 1 July 2024 (more than six months after the respondents had filed their joint defence) a further consent order was made extending the time for filing of a reply to 12 July 2024. In correspondence leading up to that order, Mr Kelly's solicitors said that Mr Kelly had told them he needed more time to provide instructions on a reply "due to his mental health condition". It does not appear that any extension had been sought before then.
In an email on 12 July 2024, attaching draft consent orders, Mr Kelly's solicitors again told the respondents' solicitors that he required additional time to give the instructions necessary for a reply because of his "mental health conditions". On 15 July the respondents' solicitors asked whether Mr Kelly's solicitors could "provide any further details of Mr Kelly's purported condition impacting the progress of the pleadings". The response to this request (on 17 July 2024) was:

[35]

The updated medical certificate was signed by Dr Jane Roberts, who was described as a Registrar, but the institution at which she worked was again redacted. It was dated 15 January 2025. It recorded that Mr Kelly had attended as an outpatient on 17 December 2024 and had been reviewed on 15 January 2025. It certified that he was "unfit for work/school/usual activities" from 17 December 2024 and would be "fit to return to work/school/usual activities" on a handwritten date which is unclear (but in my view is probably "20/01/2025"). This certificate did not, as suggested, confirm either a hospital admission or a serious viral infection.
My associates informed the parties that I was content to receive an update in seven days. No update was provided within that time.
After being prompted by my associates on 10 February 2025, Mr Kelly's solicitors reported that Mr Kelly's health had improved to the extent that he was able to provide instructions including in relation to his evidence; he was eager for the matter to proceed to a hearing without further delay; and proposed revised timetabling orders had been sent to the respondents' solicitors. A further extension until 12 February 2025 was requested for the provision of a further response. Their further response was delayed until 14 February 2025, when they provided chambers with proposed revised orders to which the respondents neither consented nor objected. A listing for case management was requested. I listed the matter for case management on 25 February 2025.
On 24 February 2025 the respondents filed their interlocutory application. The listing for case management the next day was vacated and the application was made returnable on 5 March 2025. The respondents sought to argue the application on that day; however, I listed it for hearing on 19 March 2025 in order to allow Mr Kelly a short time in which to put on evidence, including evidence from his treating psychiatrist.
As noted earlier, Mr Kelly filed his re-opening application on 25 March 2025. I dismissed that application on the papers on 16 May 2025, reserved the costs thereof, and indicated that I would include my reasons for that decision in these reasons. The need to deal with the re-opening application (and potentially receive and consider further evidence) before deciding the respondents' interlocutory application, and the fact that there was still no affidavit evidence from Mr Kelly, made it clearly impossible for the hearing on liability, due to commence on 30 June 2025, to go ahead. Counsel for both sides had earlier accepted that the loss of this listing was practically inevitable. On 26 May 2025 I made orders in chambers formally vacating the listing.

[36]

The orders sought by the interlocutory application are set out at [4] above.
Mr Kelly's evidence on liability was due to be filed by 18 November 2024. By the time I heard argument on the interlocutory application it was three months overdue and no clear indication had been provided as to when it might be ready. At the time of publication of these reasons, Mr Kelly's evidence still has not been filed.
Further delay is clearly antipathetic to the interests of the administration of justice. Resolution of factual issues in the trial is clearly very likely to depend on competing recollections of conversations and interactions between Mr Kelly and others which occurred in 2016. Witnesses' recollection of detail is already likely to be impaired and further delay can only worsen the situation.
It was submitted for the respondents that delay caused prejudice to them, in that potential witnesses are likely to have left the employment of the Commonwealth (in which case they may be hard to contact and cannot be directed to testify). Counsel for Mr Kelly suggested that delay was prejudicial to both sides. In my view, the consequences of delay are likely to fall more heavily on the respondents. For Mr Kelly, the events giving rise to his claims have been very significant and he can be expected to have clear (even if not necessarily accurate) recollections. He has also set down his version in writing in some detail in the process of making his complaint to the AHRC. None of these things are true for the witnesses whom the respondents might call (including the individual respondents). Even if it is correct (as Mr Kelly submitted) that both sides are prejudiced by further delay, that is small comfort. That proposition implies acceptance of a trial process in which both sides are proceeding on the basis of deficient memory and there can be no confidence in the outcome; hence my observation above that the interests of the administration of justice are prejudiced by further delay.
Three other matters should be noted at this stage.
First, there is a long history of delay in the proceeding since the judgment on the strike-out application, mostly on Mr Kelly's side of the record.

[39]

The first reference to a viral infection in the documents is in an email from Mr Kelly's solicitors to the respondents' solicitors on 6 January 2025. That email refers to an earlier telephone conversation during which the issue was apparently discussed. A medical certificate was attached covering the period from 9 December 2024 to 2 January 2025. A later medical certificate, dated 15 January 2025, covers the period up to (on my reading) 20 January 2025.
The medical certificates, as noted above, do not tell one anything about the nature or the seriousness of the condition suffered by Mr Kelly. They do not (contrary to the suggestion in one email) evidence an admission to hospital. They go no higher than to indicate that Mr Kelly was sufficiently unwell to be unfit to go to work or school for several weeks. The question whether he was so unwell as to be unable to review a draft affidavit and give instructions for its completion is left open.
Ms Nesbitt, a solicitor in the firm acting for Mr Kelly, affirmed an affidavit on 4 March 2025. She deposed that her colleague, Ms Ekaterina Oglos, had been unable to contact Mr Kelly between 29 November and 17 December 2024 and that, on the latter date, Mr Kelly disclosed that he had been diagnosed with a serious viral infection that required urgent medical attention. He provided his solicitors with the earlier of the medical certificates referred to above on 19 December 2024. Ms Nesbitt did not give any further evidence concerning the viral infection or any inquiries made in relation to it save that, after an email was sent to him on 4 February 2025 (with copies of the correspondence exchanged between the solicitors), Mr Kelly confirmed to Ms Oglos during a telephone call on 6 February 2025 that he had recovered from the viral infection and was in a position to finalise his affidavit so that it could be filed by 12 February 2025.
Ms Oglos affirmed an affidavit on 19 March 2025. She deposed to having had a telephone conversation with Mr Kelly on 10 January 2025 during which he said, among other things, that he had "never been so unwell". She also telephoned Mr Kelly on 4 February 2025 for a further update and he said that he was still "extremely unwell" (Ms Oglos' words) but "remained 'confident to proceed'". Ms Oglos also deposed that she called Mr Kelly in an effort to make progress with his evidence on 13 February 2025 (interestingly, after the date he had given on 6 February 2025 as a target for completing his affidavit) and on this occasion he "confirmed that he had made a partial recovery from his recent viral infection, but remained extremely scattered and continued to experience significant difficulty in recalling key events and dates". Further attempts were made to contact Mr Kelly (apparently without success) between 13 and 24 February 2025. The next conversation referred to (involving Ms Nesbitt, Ms Oglos and Mr Kelly) was on 10 March 2025. No reference is made to a viral infection in the affidavit evidence concerning this conversation.
On the basis of the medical certificates, one can accept that Mr Kelly suffered an illness in December 2024 and January 2025 that led to him seeking medical treatment and led two practitioners to certify him as unfit for work. Although his illness was presumably not trivial, there is evidence of only two medical appointments in this time. Beyond this, the only evidence supporting a viral infection is the hearsay evidence of Mr Kelly's self-description and an observation by his solicitor about her impression of a telephone call. In circumstances where the reasons for Mr Kelly's evidence not having been filed had obviously become important, this is insufficient. It has not been suggested that there was any particular difficulty in obtaining a more detailed certificate from one of the practitioners who had treated him. The lack of convincing detail, in circumstances that demanded it, makes it impossible to accept that the filing of Mr Kelly's evidence was delayed by a serious viral infection.
In any event, at its highest, the evidence concerning a viral infection indicates a problem arising in mid December 2024 and persisting until some time in February 2025. It arose only after Mr Kelly's evidence was significantly overdue.

[47]

Dr Parmegiani expressed the view that the most helpful thing that could be done to eliminate or reduce the effect of the conditions suffered by Mr Kelly was the conclusion of these proceedings "in as speedy a manner as possible". He concluded that, if the proceedings concluded in 2025, he expected Mr Kelly to be able to return to work as a social worker by the end of the same year.
As noted earlier, I adjourned the respondents' interlocutory application for two weeks in order to allow a period (albeit a very brief one) for Mr Kelly to obtain some evidence from his treating psychiatrist concerning his condition. It appears that, rather than move immediately to obtain that evidence, Mr Kelly's solicitors tried again to contact their client and finalise his evidence but received no response. It was not until 12 March 2025 that an approach was made to the clinic of his psychiatrist, Dr Chee. An email attaching a letter of instructions was sent on 12 March 2025 and followed up by a phone call to Dr Chee's receptionist and a further email the next day. Unfortunately, rather than seeking a confined report on Mr Kelly's mental health situation and the extent to which it had affected his ability to give instructions and settle his own affidavit since the latter part of 2024, Mr Kelly's solicitors asked Dr Chee for what was in effect a fully-fledged expert report (including reasoning and complying with the Court's practice note) covering a wide ranging series of questions.
Two points should be made here. One is that Mr Kelly's solicitors do not seem to have previously sought any report from Dr Chee for the purpose of filing as part of Mr Kelly's evidence in the proceeding (the letter of 12 March 2025 refers only to a report dated June 2018; and the email of 18 November 2024, quoted above, indicates that only one expert report (presumably that of Dr Parmegiani) was proposed to be relied on). The other is that the breadth of the request made to Dr Chee effectively ensured that his report would take some time to complete and there would be no substantial up-to-date expert evidence about Mr Kelly's mental health when the interlocutory application came on for hearing.
Dr Chee provided a one page handwritten note to Mr Kelly's solicitors dated 17 March 2025. He observed that the striking out of the proceeding would be "highly psychiatrically detrimental" to Mr Kelly. He did not engage with the issue upon which the Court really needed his assistance, namely Mr Kelly's capacity to complete his evidence. On that issue, the Court has only the cautiously optimistic report of Dr Parmegiani based on an assessment in October 2024.
The correspondence between the parties' solicitors includes some references to Mr Kelly's mental health as a reason why he needed a lot of time to make decisions in the context of the proposed reply (which ultimately was not filed). In their email of 18 November 2024 Mr Kelly's solicitors said that he needed more time, in part because of his "ill health", but they were in the process of "finalising" his evidence. On 28 November 2024 Mr Kelly's solicitors reported that they had "nearly finalised" his instructions in relation to his evidence (which, oddly, was now said to include two expert medical reports), and the delaying factor was now the extensive volume of documents to be exhibited. They said that Mr Kelly's draft affidavit would be finalised the following day and then reviewed by counsel and the principal solicitor of the firm. They expected to be able to file all of the evidence by 3 December 2024. On 6 December 2024 they said that a draft of Mr Kelly's affidavit was complete and the issue was counsel's availability to review it. In their next written communication Mr Kelly's solicitors referred to the serious viral infection that he was said to be suffering from and made no mention of mental health problems. On 7 February 2025 they reported that he was able to give instructions and eager for the matter to proceed.
Ms Oglos gave evidence in her affidavit that the email sent on 28 November 2024 was preceded by a call from Mr Kelly himself asking for more time. If true, this points to a lack of candour in the email which made the email quite misleading in so far as it purported to give an account of the reasons why more time was needed to settle the evidence.
In Ms Oglos's account, Mr Kelly's mental health does not arise again until 11 February 2025, when she received what she describes as a "concerning" call from him in which he said (among other things) that he had considered admitting himself to hospital for a lengthy period and that the need to finalise his evidence and recall traumatic events that occurred nearly ten years ago was exacting a "mental toll" on him. Ms Oglos had the impression during a telephone call on 13 February 2025 that Mr Kelly was "scattered" and had trouble recalling key events and dates. Her next conversation with him appears to have been on 10 March 2025, when, according to her recollection, he "suffered a reaction displaying the following symptoms including shortness of breath, tearfulness, incoherent speech, incessant talking, racing thoughts, irritability and stress and referred to suicidal ideations".
Ms Oglos's affidavit also exhibited what was described as the latest draft of Mr Kelly's affidavit. On its face, it appears to be very close to a final document, with only a small number of specific things (mainly dates) marked as requiring attention. However, not much can be taken from this. Taking the emails of 28 November and 6 December 2024 at face value, it would appear that by early December 2024 the affidavit was sufficiently developed to be sent to counsel for his input (which suggests that it must have had substantial input from Mr Kelly by that stage). However, there is no direct evidence as to whether amendments have been made that require Mr Kelly to review the entire document again.
I accept that Mr Kelly has suffered from mental illnesses for a significant period of time and that these illnesses have impaired him in formulating his affidavit evidence and giving instructions to his solicitors. It is apparent that his solicitors have had considerable difficulty in keeping him focused on the necessary tasks. It also appears to be the case that, at least in the weeks leading up to the hearing of the interlocutory application, Mr Kelly was quite distressed when asked to focus on the events that gave rise to the proceeding. However, the extent to which he is actually incapacitated is unclear. Dr Paremegiani's report indicates that, by late October 2024, Mr Kelly's medication was allowing him to function reasonably well and he was expected to continue to improve.

[51]

If it is the case that Mr Kelly is so deeply impaired as to have been unable to finalise his affidavit in the months that have passed since the orders of 10 September 2024, a different problem arises: whether he will be able to comply with any new filing date (and indeed whether he will ever be able to give evidence). There must come a point where the respondents can no longer be expected to wait, and the devotion of public resources to litigation ceases to be a useful response to the events in Mr Kelly's workplace in 2016.
In the light of these uncertainties and complexities, I have come to the view that the proceeding should not be dismissed at this stage, but should be put on a strict timetable with an order that it will stand dismissed in the event of non-compliance by Mr Kelly. This will at least ensure that he and his solicitors understand that, if a deadline for filing material cannot be met, they will need to approach the Court before the deadline passes and justify a further extension.
Because of the draconian effect of a self-executing order, it is necessary to allow Mr Kelly a reasonable time for filing his evidence. The respondents will then have to be allowed an appropriate time to file their evidence in response. I will order the parties to provide to chambers a list of mutually available dates between 1 October 2025 and 30 April 2026 and agreed or competing draft timetabling orders (including a self-executing order as mentioned in the previous paragraph). If necessary a date will be fixed for a case management hearing.
I am satisfied that this is a case in which "unreasonable" acts or omissions by a party have caused the other parties to incur costs, with the result that the Court's discretion to award costs in relation to the interlocutory application is not excluded by s 570(1) of the FW Act (see s 570(2)(b)). Mr Kelly's non-compliance with the order requiring his evidence to be filed is extreme. It was sought to be excused by assertions of ill health but these were not properly supported by evidence. His solicitors have delayed and obfuscated in their responses to inquiries from the respondents' solicitors, leading to the respondents filing their interlocutory application. Mr Kelly will be ordered to pay the respondents' costs of the interlocutory application (including the unsuccessful application to re-open the applicant's case) as agreed or assessed.
I sought submissions from the parties as to whether costs might be ordered against Mr Kelly's solicitors. It is agreed that, if the Court is satisfied that costs can be ordered consistently with s 570, an order requiring those costs to be paid by the solicitors can be made (see Ryan v Primesafe [2015] FCA 8 at [67] (Mortimer J)). However, although I have been critical in these reasons of some aspects of the handling of this case by Mr Kelly's solicitors, the evidence concerning their instructions is not sufficiently clear to sustain a conclusion that their conduct warrants the unusual step of ordering costs against them.
There will therefore be an order that Mr Kelly pay the respondents' costs occasioned by the interlocutory applications.