McCardle v Johnson

1. The proceeding be dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

DOWNES J: 1 Pursuant to an Order dated 5 June 2023, I listed this proceeding for hearing today to consider whether the proceeding should be dismissed for want of prosecution and any appropriate costs orders. As it transpires, neither respondent seeks costs associated with today's hearing or with the proceedings, and so the issue raised by the second part of that order was not required to be considered. 2 Before turning to the first issue, being whether the proceeding should be dismissed, I will deal with an informal application brought by the applicant that I recuse myself on the basis of actual or apprehended bias. 3 This is not the first occasion that the applicant has applied for an order that I recuse myself. For the reasons given in the decision of McCardle v Johnson [2021] FCA 1528 (2021 decision), I dismissed the applicant's then recusal application. 4 The relevant principles relating to apprehended bias appear at [60] to [66] of the 2021 decision. Those principles were recently confirmed by the High Court in a decision cited by the applicant, being QYFM v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs & Anor [2023] HCA 15. In that decision, Gordon J stated at [67]: As this Court held in Ebner v Official Trustee in Bankruptcy, a judge is disqualified, subject to qualifications relating to waiver or necessity, "if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide". The Ebner test has two steps: first, it requires the identification of what it is said might lead a judge to decide a case other than on its legal and factual merits; and second, there must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. Once those two steps are taken, the reasonableness of the asserted apprehension of bias can then ultimately be assessed. (footnotes omitted.) 5 In this case, by reference to the first of the two steps, the applicant was required to identify what might lead me to decide this case other than on its legal and factual merits. As to this, the applicant relied upon a number of matters. 6 First, the applicant pointed to the fact that my chambers sent an email to the parties this morning, attaching a letter sent by Judicial Registrar Lynch to her and dated 6 June 2022 (which became Exhibit 1 during today's hearing). By that email, the parties were advised that I might raise this letter with them during the course of today's hearing. As two of the three parties today appeared by Teams (including the applicant), it was necessary for this email to be sent before the hearing, rather than attempting to provide the document to the parties during the course of the hearing in circumstances where not all parties would be present in the courtroom. 7 The second basis on which the applicant claims bias or an apprehension of bias relies upon statements made in my earlier decisions in this matter, being the 2021 decision and McCardle v Johnson (No 2) [2022] FCA 168 (2022 decision). 8 For example, in the 2021 decision, reference was made at [40] to the applicant providing a certificate from the "Branyan Clinic" and that this certificate, "looks like a document issued by a general practitioner, although that is not certain". The submission made by the applicant was that this statement was "unacceptable" and that, on this basis, there was actual bias or an apprehension of bias. 9 Another example of a statement which is relied upon by the applicant is the recitation in [114] of the 2022 decision of the evidence given by the first respondent in his affidavit as follows: In total, I have in excess of $100,000.00 in unpaid fees incurred in the administration of the Estate, due in part to a shortfall in assets and a failure by the Applicant to pay her compulsory contributions as assessed under the Act. I consider that the Applicant's conduct and non-compliance with her requirements under the Act has occasioned the accrual of significant unnecessary costs, including legal costs, in the Estate. In addition, I have incurred costs responding to voluminous repetitive requests for information from the Applicant in these proceedings and others. 10 That evidence was relied upon, in passing, to support the conclusion that the applicant should provide security for costs, as was ultimately ordered. This appears from [126] of the 2022 decision which stated: There is no evidence to support an inference that the application for security for costs is being brought in order to deny the applicant a right to litigate. Indeed, the first respondent estimates that his likely costs exposure by close of pleadings will be $20,000 and he is not aware of any further assets which could be realised to pay his shortfall in fees and fees payable to his solicitors in respect of this and previous proceedings. The first respondent's motives in bringing this application are therefore defensive rather than oppressive. 11 However, as submitted by the first respondent, the reference to the costs that had been incurred by him to date in the administration did not loom large in the exercise of discretion in terms of ordering security for costs. 12 The third basis relied upon by the applicant was that various findings contained in the 2021 decision and the 2022 decision were wrong, and that there were numerous criticisms made of her in these decisions (although these criticisms were not identified). 13 Having regard to the matters relied upon by the applicant, the applicant has failed to identify how they might lead me to consider the issue under consideration at today's hearing other than on its legal and factual merits. Further, the applicant has failed to demonstrate a logical connection between each matter and the feared deviation from the course of deciding the case on its merits. 14 As I stated in the 2021 decision, the subjective views of the applicant are not relevant and nor is it sufficient that there be a reasonable apprehension that I will decide the matters or issues in the case adversely to the applicant. 15 Further, a judge should only disqualify himself or herself with good cause. Good cause is not shown on the mere basis that a judge has made previous orders in a matter, or made findings which gave rise to those orders, which are adverse to one party. Something more than this is required. 16 In the circumstances, the applicant's contentions that the matters relied upon by her give rise to actual or apprehended bias do not meet the required standard and are rejected. As a consequence, I decline the application to recuse myself. 17 I turn then to the purpose of today's hearing, which is to decide whether to dismiss the proceeding. 18 The relevant background to this matter is set out in the 2021 decision and 2022 decision. For that reason, I will only highlight particular facts. 19 The applicant became bankrupt after she filed a debtor's petition on 31 March 2016. 20 This proceeding was commenced by the applicant on 1 April 2021. 21 On 19 July 2021, the applicant filed her first statement of claim and pleaded that she is and was, at all relevant times, a lawyer since May 2006, whether or not working as a solicitor. 22 The proceeding brought by the applicant is against the first respondent, who is her trustee in bankruptcy, and the second respondent, the Inspector-General in Bankruptcy. The second respondent has not taken an active role in the proceeding, save for providing brief and helpful submissions on certain legal issues. 23 The first respondent filed an interlocutory application on 26 August 2021, applying for summary judgment or, alternatively, an order that the statement of claim be struck out and an order that the applicant provide security for his costs of the proceedings should they be allowed to continue. An amended application and amended statement of claim were filed by the applicant on 22 September 2021, and the interlocutory application proceeded on the basis of those amended documents pursuant to an Order made on 28 October 2021. 24 Before the amended statement of claim was filed, the application first came on for hearing before me on 8 September 2021. At that hearing, the applicant was ready to proceed and did not seek an adjournment. However, due to a miscommunication by the Brisbane registry of the Court to the first respondent, the first respondent was not prepared to proceed. 25 On 8 September 2021, it was ordered that the application be adjourned and that the applicant have leave to amend her originating application and statement of claim. This was done when those documents were filed and served on 22 September 2021, as I have already noted. The applicant was also given a further opportunity to file and serve any further affidavits and any supplementary outline of submissions, also by 22 September 2021. The applicant proceeded to file further submissions, as well as an affidavit of 20 October 2021, a further set of submissions on 20 October 2021 and a further affidavit on 27 October 2021. 26 At the hearing on 28 October 2021, the applicant applied for an adjournment of the application on the basis of ill health. The application was again adjourned (ultimately) to 29 November 2021, with the applicant being given a further opportunity to file and serve any further affidavit material. Instead of filing further affidavit material, the applicant served on each of the respondents a lengthy Notice to Admit. Those Notices to Admit are Exhibit 2. 27 At the hearing on 29 November 2021, the following orders were made: 4. Pursuant to r 1.34 of the Federal Court Rules 2011 (Cth) (the Rules), the requirement of the First Respondent to comply with rules 22.02-22.05 of the Rules in relation to the Notice to Admit dated 15 November 2021, a copy of which is annexed at "RM2" to the affidavit of Roxanne McCardle filed 26 November 2021 and affirmed 24 November 2021, is dispensed with until further order. 5. Pursuant to r 1.34 of the Rules, the requirement of the Second Respondent to comply with rules 22.02-22.05 of the Rules in relation to the Notice to Admit dated 15 November 2021, a copy of which is annexed at "RM2" to the affidavit of Roxanne McCardle filed 26 November 2021 and affirmed 24 November 2021, is dispensed with until further order. 28 As submitted by the respondents, the effect of those orders was that the respondents did not need to comply with the rules identified in those orders in relation to the Notices to Admit until further order. No further order has been made. Nor was any application for leave to appeal (or associated appeal) brought from the orders of 29 November 2021. Issues relating to the Notices to Admit were raised by the applicant in her written and oral submissions, and so they were addressed by the respondents today. However, the Notices to Admit do not play any significant role in today's determination. 29 For the reasons given in the 2022 decision, orders were made on 4 March 2022 which included that: 4. The amended statement of claim filed 22 September 2021 is struck out in its entirety. 5. Subject to orders 6 and 7, the applicant has leave to file any further amended statement of claim which is confined to pleading causes of action relating to the final relief claimed in the amended application filed 22 September 2021 other than those claims referred to in orders 1, 2 and 3 above. 6. Any further amended statement of claim shall be filed and served by 1 April 2022. 7. By 1 April 2022, the applicant shall pay to the first respondent's solicitors the amount of $11,000 to be held by that firm as security for the first respondent's costs up to and including the preparation of a defence to any further amended statement of claim. 8. If security for costs is not provided pursuant to order 7, the proceeding shall be stayed until further order. 30 No security was provided by the due date or has been provided, and no further amended statement of claim has been filed and served. 31 The applicant does not explain in her affidavit material why the Order of 4 March 2022 was not complied with. Instead, the applicant submits that, because she is bankrupt and the trustee in bankruptcy has "all of her assets", she is unable to obtain a loan or a credit card. 32 However, I cannot place any weight on that submission in circumstances where it was not the subject of evidence. Further, as noted in the 2022 decision, the evidence of the first respondent was that the applicant has failed to comply with her obligations in that she has failed to pay her compulsory contributions as assessed under the Bankruptcy Act 1966 (Cth). For this reason, I cannot be satisfied that the applicant's submissions describe her true asset position. 33 Conversely, if it is the case that the applicant has failed to comply with the Order of 4 March 2022 because she does not have any assets, then that tells me that there is little prospect that the applicant will provide the ordered security in the future, which has the consequence that the proceedings will continue to be stayed indefinitely. 34 That is because the applicant did not bring any application for leave to appeal (or any associated appeal) from the Order of 4 March 2022. 35 That is so notwithstanding that the applicant received advice on 6 June 2022 in a letter from Judicial Registrar Lynch that she has the ability to make an application for leave to appeal the Order of 4 March 2022. The applicant was also advised that she had the ability to apply for an extension of time to seek leave to appeal and that, to do so, she must file an application in accordance with form 118. The letter was sent by Judicial Registrar Lynch in response to an attempted filing by the applicant of an application to set aside or stay the Order of 4 March 2022 (as appears from page 2 of that letter). The applicant's attempt to file that application was rejected by the Judicial Registrar on the basis that it was an abuse of process. No application for review of that decision was brought by the applicant. 36 Instead, nothing has happened. 37 It is now more than 12 months since the applicant received the letter from Judicial Registrar Lynch and more than 16 months since the Order of 4 March 2022. 38 For these reasons, I do not have any confidence that the applicant intends to prosecute this proceeding. I also infer that the applicant does not intend to provide the security as was ordered pursuant to the Order of 4 March 2022. 39 I am satisfied that the applicant was on notice that today's hearing concerned whether I should dismiss the proceedings by reason of her failure to comply with the Order of 4 March 2022. That notice was given, at least, by the terms of my Order dated 5 June 2023, which was over a month ago. 40 I am also satisfied that the applicant has no ability to fund the proceedings in the future and, had I not brought the matter on for hearing today, that the matter would have continued to be stayed indefinitely. The indefinite stay of the proceedings would cause prejudice to the respondents and, in particular, the first respondent, because the bankrupt estate is unable to be finalised. It is also wholly unsatisfactory, from the point of view of this Court, to have a party commence proceedings and then fail to comply with orders of the Court for such an extended period of time and with no intention, apparently, of prosecuting them. 41 There is a public interest in the finalisation of bankrupt estates, and proceedings in bankruptcy need to be progressed expeditiously. Further, the first respondent has an interest in having allegations made about his professional conduct dealt with as soon as possible. Contrary to the applicant's oral submissions, the fact that he may have professional indemnity insurance is not to the point. I made various findings about the nature of the pleaded allegations against the first respondent in the 2022 decision. Taking into account the nature of those allegations, it is understandable that the first respondent would not wish to have this proceeding remain on foot any longer than it needed to be. 42 As to this and by her affidavit and her submissions, the applicant sought to re-agitate factual allegations made in her pleading which was struck out pursuant to the Order of 4 March 2022. That includes a number of factual statements made which are not supported by any evidence before me today. In any event, it is not my role at this hearing to decide any issues of fact. 43 In summary, the applicant has not attested to any explanation for a failure to comply with my orders, given no evidence of her financial position, given no evidence that she will be able to provide the ordered security for costs in the future, and has not demonstrated that she intends to prosecute this proceeding or that she intends to file a modified statement of claim which complies with the Federal Court Rules 2011 (Cth). Further, no application for leave to appeal or appeal has been brought in relation to the Order of 4 March 2022 or any review application brought in relation to the refusal by Judicial Registrar Lynch to accept the filing of an application to set aside that Order. 44 I consider that, in all of the circumstances, it is a proper exercise of the Court's discretion, pursuant to s 56(4) of the Federal Court of Australia Act 1976 (Cth), to order that the proceeding be dismissed. Neither respondent seeks their costs. 45 For these reasons, I will make orders in accordance with what I have just indicated. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Downes.