McDonald v Colbran [2019] FCA 1937 | Case summary

Federal Court of Australia|2019-11-29|Before: Charlesworth J

THE APPLICATION FOR JUDICIAL REVIEW 95 The originating application contains six grounds for judicial review. Each commences with these words (or words to similar effect): R2.26 of the Federal Court rules should not be used by the National Judicial Registrar to obstruct new, fresh and compelling evidence which was not available at the time Justice Besanko handed down his decision in case SAD 178 of 2010 but which have become available since that time … 96 Each of the six grounds goes on to assert what the "new, fresh and compelling evidence" reveals about the conduct of the respondents to the proceedings before Besanko J and their legal representatives. I have traversed those allegations in the context of refusing the application for leave. The effect of my conclusion is that the allegations do not enjoy reasonable prospects of success and so constitute a claim of the kind that would be liable to be summarily dismissed as vexatious or an abuse of process: Rules, r 26.01. Alternatively, the documents would be liable to be removed from the Court file on the basis that they contain matter that is vexatious: Rules, r 6.01. The Registrar was correct to refuse to accept the documents for filing on that basis. 97 As I have already explained, the application for judicial review should be dismissed because the Registrar was obliged by r 2.27(f) of the Rules to refuse to accept the 2019 documents for filing in any event. That conclusion may be based upon an overly generous interpretation of the 2019 documents as intended to constitute an originating application for orders to set aside the judgment of Besanko J in the 2010 proceedings. That was the interpretation urged by Mr McDonald in the course of written and oral submissions. 98 If I am wrong in characterising the proposed proceeding in that way, I would nonetheless dismiss the application for judicial review on its substantive merits. 99 If the proposed proceeding was not to be characterised as an application to set aside the judgment in the 2010 proceedings, the only conclusion available to the Registrar was that the proposed proceeding was a further attempt by Mr McDonald to raise grievances relating to his former employment that had previously been summarily dismissed by this Court in the 2010 proceedings and otherwise determined against Mr McDonald in the 2004 proceedings. The circumstance that the proposed respondents are different from the respondents to the 2010 proceedings does not dissuade me from that view. It clearly constitutes an abuse of process to commence such an action in circumstances where the judgments delivered in the 2010 proceedings and the 2004 proceedings have not been set aside.

THE RECUSAL APPLICATIONS 100 A judge should not recuse herself from hearing a case without a proper and substantial reason for doing so: Rana v Commonwealth of Australia [2013] FCA 189 at [36] (Mansfield J). 101 The principles to be applied on an application for disqualification on the grounds of actual bias or apprehended bias are well established. I had occasion to summarise them in Burgess v Minister for Immigration and Border Protection (2018) 259 FCR 197 and repeat that summary here: 28 Where actual bias is alleged, the question is to be approached on the evidence and not by reference to the fair-minded lay observer: Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at [33] (Gummow A-CJ, Hayne, Crennan and Bell JJ). An allegation of actual bias is a serious allegation, requiring distinct proof: SBBA v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 90 at [15] (Weinberg, Stone and Jacobsen JJ). 29 In Jia, Hayne J said at [185] - [186]: 185 Saying that a decision-maker has prejudged or will prejudge an issue, or even saying that there is a real likelihood that a reasonable observer might reach that conclusion, is to make a statement which has several distinct elements at its roots. First, there is the contention that the decision-maker has an opinion on a relevant aspect of the matter in issue in the particular case. Secondly, there is the contention that the decision-maker will apply that opinion to that matter in issue. Thirdly, there is the contention that the decision-maker will do so without giving the matter fresh consideration in the light of whatever may be the facts and arguments relevant to the particular case. Most importantly, there is the assumption that the question which is said to have been prejudged is one which should be considered afresh in relation to the particular case. 186 Often enough, allegations of actual bias through prejudgment have been held to fail at the third of the steps I have identified. … … 34 The test for apprehended bias is sometimes referred to as the 'double might test'. It is whether a fair-minded lay observer might reasonably apprehend that the decision-maker might not bring an impartial mind to the resolution of the issue he or she is to decide: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at [6] (Gleeson CJ, McHugh, Gummow and Hayne JJ); Isbester v Knox City Council (2015) 255 CLR 135 at [12] (Kiefel, Bell, Keane and Nettle JJ). See also ALA15 v Minister for Immigration and Border Protection [2016] FCAFC 30 at [35] - [36] (Allsop CJ, Kenny and Griffiths JJ). 35 The first 'might' concerns the likelihood (to be assessed by the Court) of the lay observer forming the reasonable apprehension. The second 'might' concerns the content of the apprehension itself. It concerns the assessment (notionally made by the lay observer) of the likelihood of the decision-maker having a foreclosed mind (as opposed to having a predisposed opinion) and so deviating from the course of deciding a case on its merits. 36 Judicial statements to the effect that an allegation of apprehended bias must be distinctly made and clearly established are not to be understood as altering the degrees of likelihood inherent in the test itself: see MZZXM v Minister for Immigration and Border Protection [2016] FCA 405 at [106] and the cases cited therein. Each 'might' in the double might test connotes a degree of likelihood that is lower than that which may be required by the civil standard of proof in an ordinary fact-finding context. It must nonetheless be shown that the reasonable lay observer might apprehend that the decision-maker might have a foreclosed mind. It is not sufficient to demonstrate that the observer may have 'a vague sense of unease or disquiet' on the question: Jones v Australian Competition and Consumer Commission (2002) 76 ALD 424 (Jones) at [100] (Weinberg J). 102 The first recusal application was filed on 29 March 2019. It asserts five grounds (at [2] to [8]). An accompanying affidavit substantively repeated those grounds without elaborating upon them. 103 Mr McDonald acceded to the Court hearing submissions in support of the first recusal application at the same time as hearing argument in the substantive proceeding. That was considered to be the preferable course because it appeared that consideration of at least one of the recusal grounds may require a comparison of the issues to be determined in this proceeding with the issue I determined when giving the direction in relation to the 2017 documents. 104 Judgment on the first application was reserved on 29 April 2019, and argument reopened in August. The second recusal application was filed on 1 October 2019. It asserts a large number of grounds, many of which are repetitive either of the grounds previously relied upon or oral submissions that had previously been advanced. Given their number, it is convenient to deal with Mr McDonald's arguments in categories according to their subject matter.

Working relationships 105 It is submitted that I should recuse myself on the basis of a "close working relationship" with Besanko J and White J. It may be accepted that each of Besanko J and White J have given judgments adverse to Mr McDonald in the past. The circumstance that a justice of a court is appointed to sit in a place at which other justices sit does not support a conclusion that the justice is in any form of relationship with the other justices sufficient to give rise to an apprehension of bias. 106 It is also submitted that I have demonstrated bias by attempting to protect lawyers employed by the Attorney-General's Department from allegations of fraud and by not permitting Mr McDonald to permit those persons to be served with the proposed proceeding. The grounds go so far as to assert that the Court as presently constituted has "covered up" the malpractice of solicitors who have previously appeared against Mr McDonald. These assertions are made without proper evidentiary support. 107 It may be that Mr McDonald is asserting bias on the basis of my prior employment as a solicitor in the Crown Solicitor's Office, most recently in 2007. However, it has not been suggested by Mr McDonald that I had any involvement in that capacity in any case to which Mr McDonald was a party. Nor has Mr McDonald asserted the existence of any particular relationship with any particular lawyer with whom he has had prior dealings other than an allegation that I am "acquainted" with persons who have committed fraud. It has not been established that my prior employment with the Crown Solicitor's Office forms a proper basis for recusal.

Fact and outcome of previous decision or decisions 108 Mr McDonald submits that my direction pursuant to r 1.37 of the Rules in relation to documents previously lodged for filing by him in 2017 gives rise to an apprehension of bias or otherwise demonstrates actual bias. 109 The allegation of actual bias is premised on a series of additional grounds to the effect that in making the earlier decision I had previously demonstrated bias and bad faith. These submissions assert no more than a sense of grievance that I have previously decided a question adversely to Mr McDonald's interests coupled with an assertion that the question was decided erroneously. Mere dissatisfaction with the outcome of a previous decision is insufficient of itself to demonstrate grounds for recusal in relation to a later proceeding. The earlier decision was made on an assessment of the content of the 2017 documents having regard to the nature of the claims summarily dismissed by Besanko J and the judgment in the 2004 proceedings. The decision did not require any question to be decided as to Mr McDonald's credit so as to affect the adjudication of any question of fact now arising before the Court. The circumstance that I have previously given a direction adverse to Mr McDonald does not of itself justify recusal in the present proceeding on the ground of apprehended bias. 110 It is then submitted that I have in fact prejudged the outcome of the present proceedings because the issues to be determined are the same as those determined in 2017. 111 To the extent that this submission raises a different issue from that which I have just determined (which is unclear) it must also be rejected. The 2017 documents were not in the nature of a proposed proceeding to set aside any judgment on grounds of fraud. They comprised an originating application and statement of claim each of which fell to be considered by reference to their content. I adjudged the proposed proceeding in 2017 to be one by which Mr McDonald sought to sue the same respondents he had previously joined in the 2010 proceedings for acts and omissions arising out of his prior employment. The proposed pleading in 2017 contained no allegation that the 2010 judgment had been procured by actual fraud. It was not an application set aside a judgment on Clone principles. Whilst it might have been Mr McDonald's intention to show in that proceeding that "new fresh and compelling evidence" had come to light, that of itself would be insufficient to invoke the Court's original jurisdiction in equity to set aside its own perfected judgment. I reject the contention that consideration of the 2017 documents has brought about the circumstance that the issues arising on this action have been prejudged in fact. I also reject the contention that there is a reasonable apprehension that the Court as presently constituted cannot bring an impartial mind to the questions now falling to be decided in relation to the different documents lodged in 2019. 112 It is then submitted that I have demonstrated bias by previously ignoring the principles in Clone. Clone had not been decided at the time of the 2017 decision, although the principles applying in that case were not new. The 2017 documents did not purport to invoke principles of the kind discussed in Clone. Even if they did, demonstrating error in the application of the principles on an earlier occasion could not of itself justify disqualification on the present action. 113 Next it is submitted that I have previously caused to be rejected a summons and statement of claim in action SAD 299 of 2018. It has not been established that I caused any documents in that action to be rejected. It does not appear that the action is one to which Mr McDonald is a party. 114 Mr McDonald may have intended to refer to action SAD 299 of 2017, being a late application for leave to appeal from the judgment of Besanko J. That application appears to have come before Collier J for case management before it was discontinued by Mr McDonald. There is no proper basis upon which Mr McDonald can allege that I had any involvement in action SAD 299 of 2017. I reject the factual premise underlying this ground.

Alleged reliance on earlier direction 115 It is then submitted that by rejecting the 2019 documents the Registrar acted in accordance with the direction I had given in respect of the 2017 documents, with the result that I was, in effect, judicially reviewing my own prior decision in this action. I reject the factual premise underlying this submission. There is no evidentiary basis to support the assertion that the Registrar acted in accordance with an earlier direction and certainly no evidentiary basis to support the allegation that the Registrar did any such thing at my suggestion or insistence.

Bad faith, fraud and conspiracy 116 Mr McDonald alleges that the Court's discretionary powers have been used in bad faith to "bully" him out of a constitutional right to have his claims heard. There are broad allegations of conspiracy, fraud and breach of the oath of judicial office or other abuses of power. There has been no attempt to support such broad assertions with evidence. They appear to be based on inferences that interlocutory decisions adverse to Mr McDonald are wrong and so must be explained by corruption and mala-fides. The making of an error of fact or law in the performance of a judicial function does not demonstrate actual bias, nor does it give rise to a reasonable apprehension of bias.

Delay 117 In August 2019, Mr McDonald sent an email to my Associate enquiring when judgment in this matter might be delivered. The second recusal application was filed after Mr McDonald was told when judgment might be expected. It contains grounds that the delay in delivering judgment formed part of a deliberate and fraudulent design on the Court's part to obstruct justice in his case. 118 In oral submissions in support of this ground, Mr McDonald denied that his case should be given extraordinary priority over other matters in which judgment was reserved. He said that he did not intend to raise any such allegation. Rather, his submission was to the effect that the merits of his case were so strong and so obvious that any justice of the Court acting honestly and impartially could and should have promptly entered judgment in his favour. 119 Mr McDonald's frustration at any delay in the final resolution of this matter may well be understandable. Undue and unexplained delay in the resolution of a legal proceeding is, of course, undesirable. Whether the delivery of judgment has been unduly delayed will in all cases depend on the circumstances, having regard to the nature of the issues to be decided, the overall judicial and administrative resources of the Court, the Court's overall workload and any whether argument has been reopened for any purpose. 120 I consider this ground for recusal to be a manifestation of Mr McDonald's inability to comprehend that his arguments are without merit and his sense of frustration that the arguments have not been immediately accepted. Rejection of Mr McDonald's arguments demonstrates neither actual bias, nor corruption, nor abuse of judicial office, nor any other adjectival conclusion employed by Mr McDonald in the course of submissions. Having regard to all of the circumstances I reject the contention that the passage of time between reservation of judgment and resolution of this proceeding gives rise to an apprehension of bias.

Other grounds 121 In some respects the grounds for recusal are difficult to understand or otherwise appear to bear no relation to these proceedings. For example, it is asserted that there has been a failure to uphold a decision made by a Master of the Supreme Court of South Australia. It forms no part of the task of this Court to uphold any such judgment. There is no basis for recusal based on this or like grounds. 122 Regard has otherwise been had to complaints made by Mr McDonald in the course of the proceedings, particularly complaints made by him in oral submissions at a hearing that took place on 15 October 2019. On that day, argument was reopened for the purposes of permitting Mr McDonald to make oral submissions in relation to the second recusal application. Near the commencement of that hearing Mr McDonald was informed that argument had not been reopened for the purpose of hearing him repeat submissions he had previously made. Mr McDonald was asked several times to confine his submissions to new material, that is, material post-dating the reservation of judgment. He was interrupted because of his persistent attempts to revisit submissions he had already made about the substantive merits of his underlying claims. Mr McDonald claimed to be disadvantaged at the hearing because he had been interrupted and because he could not recall what submissions he had previously made. He asserted an entitlement to be provided with a copy of the transcript of the previous hearing without charge and complained that he had not previously been given a copy in response to an earlier request. He sought an adjournment to gather his thoughts. The adjournment was refused. 123 It was (and remains) apparent to the Court that Mr McDonald had sought to utilise the hearing of 15 October 2019 for the purpose of repeating submissions he had previously made, so as to reinforce his claim that a judge unaffected by bias would and should have readily accepted the submissions and promptly delivered judgment in his favour. The Court formed the view that Mr McDonald should not be permitted to use the judicial and administrative resources of the Court to prolong the hearing in that way. That view was expressed with increasing firmness as the hearing progressed. In response, Mr McDonald directed allegations of fraud, dishonesty and bad faith at the Court. It is appropriate to proceed on the basis that Mr McDonald's complaints about the conduct of the hearing of 15 October 2019 were intended to lend further support to the second recusal application and I will deal with them as such. 124 Considered in context, the circumstance that the Court interrupted Mr McDonald in respect of his conduct at the hearing on 15 October 2019 does not justify recusal on the grounds of actual or apprehended bias. Mr McDonald had been given ample opportunity to make submissions in support of the first recusal application. The Court's interruptions on the reopening of argument were neither unwarranted nor disproportionate in all of the circumstances. I am not satisfied that they form a proper basis for recusal on the grounds of actual or apprehended bias.

MRS MCDONALD 125 The extent to which the interests of Mrs McDonald differ from those of Mr McDonald is somewhat unclear. There is nothing in the material before me to support a conclusion that Mrs McDonald is in any better position to succeed. The case for the applicants was run on the basis that it was necessary for both parties to establish that the 2019 documents properly invoked the principles in Clone. I have found that they do not. That finding extends to Mrs McDonald as the second applicant.

COSTS AND OTHER ORDERS 126 The respondent's solicitor has filed an affidavit seeking orders in the event that this proceeding were to be dismissed. The affidavit states (at [3]): I am instructed that the Respondent intends to seek the following orders in the event that this proceeding is dismissed: 3.1. The Applicants pay the Respondent's costs of the proceeding, fixed in the amount of $2,666.95 pursuant to section 43(3)(d) of the Federal Court Act 1976. 3.2. Pursuant to rule 39.03(2), any further proceedings commenced by either or both of the Applicants which: 3.2.1. name Nicola Colbran as a Respondent; and 3.2.2. seek (in form or in substance) an order of review of a decision pursuant to rule 2.26 to refuse to accept a document which seeks to set aside, reopen or otherwise relitigate the matters the subject of the decision of Besanko J in McDonald v South Australia [2011] FCA 297, are automatically stayed by operation of this order until such time as the costs order made in paragraph 1 of these orders (3.1 of this affidavit) has been satisfied by receipt of cleared funds. 127 The respondent's affidavit was filed on the morning of 27 November 2019 and served on Mr McDonald shortly afterward. Later that day, Mr McDonald advised the Court that he was not able to attending upon the delivery of judgment on 29 November 2019. He did not state why. 128 Notwithstanding that Mr McDonald was served with the affidavit before his communication with the Court, it is appropriate to proceed on the basis that the orders sought by the respondent may be opposed. Subject to what is said below, the applicants should be afforded an opportunity to be heard in respect of them. 129 The applicants have been aware from the commencement of the proceeding that the respondent's submitting appearance was subject to the respondent's reservation of her position as to costs. In the ordinary course I would have invited the applicants to make oral submissions in relation to costs at the time of delivering judgment. In the circumstances, I will make an order for costs in the terms sought by the respondent, but grant the respondents liberty to apply to vary or set aside the order. Without expressing any view as to the merits of any such application, it is appropriate to inform the applicants that should such an application be unsuccessful, a further adverse costs order may be made against them. 130 The application for an order in terms of [3.2] of the affidavit of Ms Leideritz raises a matter having ramifications for the applicants outside of this proceeding. It is a matter in respect of which they should be afforded an opportunity to advance oral or written submissions, should they wish to do. Orders will be made today to facilitate that. 131 I am satisfied that it is appropriate to order that any documents lodged for filing by the applicants in the meantime be referred to me for consideration as to whether they should be accepted for filing or as to whether any decision to accept them for filing should be deferred pending the outcome of the stay application. 132 In making that order I have had regard to the frequency with which the applicants have sought to commence proceedings in this Court, as evidenced by the material contained in Exhibit 2. It contains a record of the documents lodged for filing by Mr McDonald in the South Australia District Registry between 20 July 2017 and 15 February 2019. From those materials, I infer that from at least July 2017, Mr McDonald has attempted to lodge documents to commence a proceeding to set aside the judgment of Besanko J on the grounds of actual fraud. On my calculations, the 2019 documents were the tenth attempt to commence such a proceeding. On each attempt, the documents were rejected and returned by a Registrar or Deputy Registrar of the Court. Mr McDonald did not commence any application for judicial review in relation to any one of the prior decisions. I am mindful that he has not been provided with an opportunity to explain why no applications for review were made in relation to any one of the many prior decisions. For present purposes it is unnecessary to make any finding as to his subjective motivations. It is sufficient to find that there is a high likelihood that Mr McDonald will seek to commence further proceedings in the Court, or to file interlocutory applications in proceedings that have previously been finalised, and that he may seek to do so before the respondent's stay application is heard and determined. Whether any such documents should be accepted for filing should be determined by a justice of the Court, having regard to a potentially larger range of materials than that to which a Registrar may have regard in exercising the function conferred under r 2.26 of the Rules. I certify that the preceding one hundred and thirty-two (132) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Charlesworth.

Trade Practices Act 1974(Cth)ss 2B, 4

Acts Interpretation Act 1915(SA)s 4

Education Act 1972(SA)ss 5, 6, 7, 8, 9, 11, 15

Occupational, Health, Safety and Welfare Act 1986(SA)s 55A

Public Sector Management Act 1995(SA)ss 3, 7, 8, 74

Workers Rehabilitation and Compensation Act 1986(SA)s 54

Workplace Relations Act 1996(Cth)

Federal Court Rules 2011(Cth)rr 1.37, 2.26, 2.27, 6.01, 8.01, 26.01, 34.12, 39.05

Federal Court of Australia Act 1976(Cth)ss 19, 22, 23, 37AO, 37P

The judicial review application 3 The Registrar refused to accept for filing documents titled "summons" and "statement of claim" lodged by Mr McDonald on 11 February 2019 (the 2019 documents). By the 2019 documents, Mr McDonald sought to commence an action in which he alleged, among other things, that a judgment of this Court was obtained by fraud. The judgment is that given by Besanko J in action SAD 178 of 2010 (the 2010 proceedings). 4 Besanko J dismissed the 2010 proceedings on the basis that they could not be maintained, either by reason of res judicata, issue estoppel, Anshun estoppel or as an abuse of process by way of re litigation: McDonald v State of South Australia [2011] FCA 297. An application for leave to appeal from that judgment was filed on 24 October 2017, more than six years after it was delivered: action SAD 299 of 2017. The application for leave to appeal was discontinued in May 2018. 5 Rule 2.26 of the Federal Court Rules 2011 (Cth) provides that a Registrar may refuse to accept a document for filing if the Registrar is satisfied that the document is an abuse of process of the Court or is frivolous or vexatious either on the face of the document or by reference to any document already filed or submitted for filing with it. 6 In a letter to the applicants dated 15 February 2019, the Registrar said: On the face of the documents presented for filing, I am satisfied that each is an abuse of process. They are also vexatious. I refuse to accept the documents for filing and return them to you. If you disagree with a decision by a Registrar to refuse to accept your documents for filing, you should take appropriate steps to have this decision reviewed. 7 The Registrar's decision to refuse to accept the documents for filing is reviewable under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act): Satchithanantham v National Australia Bank Ltd [2010] FCAFC 47; (2010) 268 ALR 222 at [49] (Marshall, Cowdroy and Buchanan JJ); Rahman v Hedge [2012] FCA 68 (Perram J); Reaper v Luxton [2015] FCA 430 (Tracey J). 8 The Registrar filed a submitting appearance, subject to being heard on costs. 9 There are three other applications before the Court.

The principles in Clone 39 The respondent in Clone had commenced two applications in the Supreme Court of South Australia in which it sought to set aside a judgment obtained by the appellant in earlier proceedings in the same court. The respondent alleged malpractice by the appellant's legal practitioners during the course of the trial, specifically in relation to the non-disclosure of documentary evidence. One of the actions was brought within the same proceeding in which the impugned judgment was obtained. The other was commenced as a separate proceeding. The primary judge found that the non-disclosure of the document constituted serious malpractice by the appellant's lawyers and ordered a new trial in relation to an issue potentially affected by the non-disclosure. The order for a new trial was upheld by a majority of the Full Court of the Supreme Court. The High Court reversed the judgment of the Full Court. 40 The following principles may be discerned from the reasons of the High Court insofar as they concerned that category of case in which actual fraud is alleged: (1) the power to set aside a perfected judgment by an original bill is a narrowly defined exception to the principle of finality (at [56]); (2) the appropriate procedure for seeking an order setting aside an earlier perfected judgment is by application in a new proceeding, and not by application in the proceeding in which the judgment was obtained (at [68)]); (3) it is necessary to demonstrate actual fraud. Proof of misconduct, accident, surprise, mistake or lack of frankness will not suffice (at [55] - [56]); (4) the party seeking to set aside the judgment on the ground of actual fraud need not demonstrate that he or she exercised reasonable diligence to discover the fraud in the course of the earlier proceeding, although a lack of diligence may inform the Court's discretion as to whether relief should be granted (at [63] - [68]); and (5) whether or not the fraud (if proven) might have affected the outcome of the original proceedings is not a matter pre-conditioning the exercise of the power, but will be relevant to the exercise of the Court's discretion (at [50]). 41 The High Court's remarks in relation to the topics in [40(4)] and [40(5)] above are to be understood as obiter, as fraud of the kind necessary for setting aside the earlier judgment had not been established. 42 Whilst the High Court referred to other categories of case in which a perfected judgment may be set aside in the exercise of a court's equitable powers, it was unnecessary for the Court to determine their limits. The present case does not concern those alternate categories. 43 This Court's power to set aside its own perfected judgments in the exercise of its original jurisdiction may be sourced in ss 19, 22 and 23 of the Federal Court of Australia Act 1976 (Cth) and in r 39.05(b) of the Rules. The principles applicable in this Court are the same as those stated by the High Court in Clone in their application to courts of unlimited jurisdiction. 44 In Spalla v St George Motor Finance Ltd (ACN 007 656 555) (No 5) [2004] FCA 1262, French J summarised the authorities concerning the nature of the fraud that must be established in order to invoke the discretionary power to set the impugned judgment aside: 60 … The circumstances in which a judgment can be set aside for fraud were considered by the Court of Appeal in Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 by Kirby P, with whom Hope JA and Samuels JA agreed. That case involved an appeal from a decision of Young J striking out a statement of claim which sought an order that the verdict of a jury and a judgment previously entered pursuant to that verdict should be set aside on the ground that the verdict and judgment were procured by fraud. Kirby P set out the essential criteria for success in an action seeking to set aside a judgment on the basis of fraud. In summary they were as follows: 1. The essence of the action is fraud and particulars of the fraud claimed must be exactly given and the allegations established by the strict proof which such a charge requires. 2. It must be shown by the party asserting that the judgment was procured by fraud that there has been a new discovery of something material in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment. 3. Mere suspicion of fraud raised by fresh facts later discovered will not be sufficient to secure relief. 4. Although perjury by the successful party or a witness or witnesses may, if later discovered, warrant the setting aside of a judgment on the ground that it was procured by fraud and although there may be exceptional cases where such proof of perjury would suffice, without more to warrant relief of this kind, the mere allegation or even the proof of perjury will not normally be sufficient to attract such drastic and exceptional relief as the setting aside of a judgment. 5. It must be shown by admissible evidence that the successful party was responsible for the fraud which taints the judgment under challenge. 6. The burden of establishing the components necessary to warrant the drastic step of setting aside a judgment allegedly affected by fraud or other relevant taint, lies on the party impugning the judgment. It is for that party to establish the fraud and to do so clearly. Kirby P said, at 539: 'In summary [the applicant] must establish that the case is based on newly discovered facts; that the facts are material and such as to make it reasonably probable that the case will succeed; that they go beyond mere allegations of perjury on the part of witnesses at the trial; and that the opposing party who took advantage of the judgment is shown, by admissible evidence, to have been responsible for the fraud in such a way as to render it inequitable that such party should take the benefit of the judgment.' 61 In Monroe Schneider Associates (Inc) v No 1 Raberem Pty Ltd (No 2) (1992) 37 FCR 234, the Full Court of the Federal Court also reviewed the general principles governing the equitable jurisdiction to set aside a judgment on the basis that it was obtained by fraud. In particular, reference was made, with apparent approval, to 'the stringent principles established by the authorities to confine the jurisdiction' which were summarised by Mr DM Gordon QC in Fraud or New Evidence as Grounds for Actions to Set Aside Judgments (1961) 77 LQR 358. Those principles set the following requirements: '(a) evidence discovered since the trial; (b) evidence that could not have been found by the time of the trial by exercise of reasonable diligence; (c) evidence so material that its production at the trial would probably have affected the outcome and when the fraud charge consists of perjury, then: (d) the evidence must be so strong that it would reasonably be expected to be decisive at a rehearing, and if unanswered must have that result. (at 241)' See also Magarditch v Australia and New Zealand Banking Group Ltd (1999) 17 ACLC 1275 and Pembroke School Incorporated v Human Rights and Equal Opportunity Commission [2002] FCA 1020. 45 In this case, whilst it is necessary to consider the proposed proceeding against the principles stated in Clone and Spalla, that is to be done in a context in which leave for the documents to be accepted for filing is being considered as a threshold requirement. On the leave application, the proposed proceeding is not to be assessed with a view to deciding the claims on their substantive merits. If leave were to be granted, the question of whether facts sufficient to justify the judgment being set aside have been proven to the requisite standard will be for the trial judge to decide. On the leave application, the merits of the action may nonetheless be considered for the purposes of identifying whether the allegations of fraud are bona fide and whether the evidence upon which Mr McDonald proposes to rely provides a sufficient prima facie foundation for the claims to justify the question proceeding to trial. The Court may also consider whether the proposed proceeding enjoys reasonable prospects of success such that it would not be liable to be struck out in the exercise of powers such as those conferred by r 6.01 of the Rules. It is also relevant to consider whether the allegations of actual fraud are pleaded with the clarity and degree of particularity ordinarily required in relation to allegations of that kind. Such allegations must be clearly pleaded and (at the trial stage) proved: Clone at [62].

The principle of finality 46 As has been said, the equitable jurisdiction of a court to set aside its own perfected judgment on the basis that the judgment was obtained by actual fraud represents a narrow exception to the principle of finality. That fundamental principle underlies the various legal doctrines upon which Besanko J relied in dismissing the originating application in the 2010 proceedings. It is convenient to extract his Honour's summary of the principles and authorities, which I adopt: Res judicata 36 The doctrine of res judicata operates to prevent parties from re-litigating causes of action which have already been the subject of a judicial decision. A party relying on the doctrine of res judicata must establish that a Court with the relevant jurisdiction has already given judgment on the cause of action raised in the later litigation. The claim or cause of action is said to have merged in the judgment and no longer to have an independent existence: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 597 ('Anshun'). This doctrine operates only where the parties to the first action are the same as the parties to the second action: Ramsay v Pigram (1968) 118 CLR 271 at 276 ('Ramsay v Pigram'). The parties must be suing or being sued in the same right or capacity: Leggott v Great Northern Railway Co (1876) 1 QBD 599. The parties will be considered to be the same where they share a privity of interest, defined by Sir Robert Megarry VC in Gleeson v J Wippell & Co Ltd [1977] 1 WLR 510 as 'a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party' (at 515). In Ramsay v Pigram, Barwick CJ said that to establish privity of interest 'the privy must claim under or through the person of whom he is said to be a privy': at 279. Issue estoppel 37 Issue estoppel arises where a party, for the purpose of a claim or cause of action, alleges or denies the existence of facts which were necessarily decided by a prior judgment. That is, a party will be estopped from re-arguing questions of fact or law decided in a previous case, even though the cause of action in the subsequent case has not been determined, so long as the findings of fact or law were a necessary ingredient in the determination of the previous cause of action: Anshun at 597-8. Ordinarily issue estoppel will arise only in a subsequent action between the same parties, but in Arthur JS Hall & Co v Simons [2002] 1 AC 615 Lord Hoffman considered that issue estoppel may extend to situations where the parties to the subsequent proceeding are not the same as the parties to the earlier proceeding, but the circumstances are such as to bring the parties within the spirit of the rules (at 701). Anshun estoppel 38 Parties are not permitted to litigate issues which could and should have been litigated in earlier proceedings between them: Henderson v Henderson (1843) 67 ER 313 ('Henderson'); Anshun. In Henderson, Sir James Wigram VC said (at 320) that: Where a given matter becomes the subject of litigation in and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. 39 In Anshun the High Court said that where a matter relied on as a defence in a second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it, the party will be estopped from raising it as a defence in the second action: at 602. There must be a close connection between the subject matter of the first litigation and the second, such that it would be expected that the matter would have been raised in the first litigation. 40 In Spalla, French J (as his Honour then was) referred to Anshun estoppel as an analogical extension of the doctrines of res judicata and issue estoppel (at [59]). Abuse of process by relitigation 41 The doctrines set out above have a number of technical requirements. The Court's jurisdiction to protect a party from an abuse of process constituted by an attempt to relitigate a case already disposed of is not limited to cases where those technical requirements can be made out: Walton v Gardiner (1993) 177 CLR 378 at 393 per Mason CJ, Deane and Dawson JJ ('Walton'); Rana v University of South Australia [2008] FCA 1903 at [43]. The operation of the doctrines of res judicata, issue estoppel and Anshun estoppel is subsumed into the Federal Court's implied incidental power to prevent abuse of its processes: Spalla at [59]. Justice French said in Spalla (at [66]) that: the doctrines of res judicata, issue estoppel, and Anshun do not exhaust the circumstances in which a proceeding may be regarded as amounting to an abuse of process by way of attempted relitigation of a dispute already judicially determined. In Walton Mason CJ, Deane and Dawson JJ said (at 393) that: … proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings. 42 The power to strike out a claim is to be exercised sparingly and 'upon an examination of the relevant circumstances of the particular case before the Court': Spalla at [70]. 43 In State Bank of New South Wales Ltd v Stenhouse Ltd (1997) Aust Torts Reports 81-423 (at 64,089) ('Stenhouse'), Giles CJ set out a list of relevant matters in determining whether it would be an abuse of process if a party were allowed to litigate an issue already raised in previous proceedings: (a) the importance of the issue in and to the earlier proceedings, including whether it is an evidentiary or an ultimate issue; (b) the opportunity available and taken to fully litigate the issue; (c) the terms and finality of the finding as to the issue; (d) the identity between the relevant issues in the two proceedings; (e) any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceedings; all part of - (f) the extent of the oppression and unfairness to the other party if the issue is relitigated and the impact of the relitigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and (g) an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process. In Spalla, French J described this list as a non-exhaustive one (at [70]). 44 The parties need not necessarily be the same for the proceedings to be permanently stayed as an abuse of process. 45 In a case bearing some similarities to the present, R v Lessur-Millar (1990) 47 A Crim R 111, Lockhart J said (at 117-118): For this Court to allow the present matter to proceed and to consider granting the relief sought by the applicant would be to lend its aid to a further investigation of the very matters which have been fully considered by judges at first instance and on appeal in New South Wales and, though a special leave application and not the hearing of a substantive appeal, by the High Court. No fresh evidence of any probative kind has been placed before the Court additional to what was before the New South Wales courts. It is vexatious and an abuse of process for a party, having sued unsuccessfully before the courts of New South Wales, to seek to agitate the very same issues and facts in this Court. The proceedings, remedies and parties are not precisely identical; but they are in all essential respects the same 46 There are a number of cases dealing with the category of abuse of process by relitigation. For present purposes it is sufficient for me to refer to SZJAB v Minister for Immigration (2008) 168 FCR 410 at 423 per French J and Rippon, in addition to the cases to which I have already referred. Untenable claims 47 A claim or cause of action may be so obviously untenable that the continued pursuit of the claim or cause of action is vexatious or an abuse of process or both: Walton v Gardiner (1993) 177 CLR 378 at 393 per Mason CJ, Deane and Dawson JJ; Cox v Journeaux [No 2] (1935) 52 CLR 713 at 720 per Dixon J (as his Honour then was).

Materiality of alleged fraud 61 For the purposes of what follows, it may be assumed that Mr McDonald was in a contract of employment with the Minister for Education and Child Development (constituted as a body corporate in accordance with s 7 of the Education Act), as were the five individuals joined as respondents in the 2010 proceedings. 62 Without being exhaustive, the following propositions are said by Mr McDonald to follow: (1) he was not an employee of DECS or the State of South Australia and, accordingly, the wrong defendant was joined in the 2004 proceedings; (2) the fact that the State of South Australia had been named as the sole defendant did not have the consequence that the Supreme Court had determined his case on the basis that his employer was the Minister; (3) he has a good suit against the Minister arising out of his former employment as a teacher which has been neither tried nor finally determined; (4) as a body corporate, the Minister is a corporation for the purposes of the TPA and so may be sued for contravention of its provisions directed to corporations; and (5) as employees of the Minister, the individual respondents were appointed under the Education Act and not under the PSM Act and so did not enjoy immunity from suit under s 74 of the PSM Act. 63 In this proceeding, as in the 2010 proceedings, Mr McDonald faces the insurmountable difficulty that the judgments of the Supreme Court of South Australia arising out of the 2004 proceedings have not been set aside. The material before this Court indicates that Mr McDonald has commenced or attempted to commence multiple proceedings in the Courts of South Australia to have the judgments set aside or to otherwise avoid their consequences, including by reference to the principles stated by the High Court in Clone: see McDonald v State of South Australia [2018] SASC 41; McDonald v State of South Australia (No 2) [2018] SASC 57; McDonald & Anor v State of South Australia; McDonald & Ors v Minister for Education and Child Development & Ors (No 3) [2016] SASC 79. To date, his attempts have been wholly unsuccessful. 64 This Court does not have jurisdiction to set aside the judgments of the Supreme Court of South Australia, whether in the exercise of its equitable jurisdiction or otherwise. 65 Accordingly, the question of whether the judgment of Besanko J should be set aside must be determined on the footing that the judgments and orders in the 2004 proceedings remain operative. If judgment in the 2010 proceedings were to be set aside, the claims in the 2010 proceedings would remain in the nature of a claim for damages against the Minister and the six individual respondents arising out of Mr McDonald's former employment as a teacher. The claims would not proceed to trial without the respondents' notice of motion first being re-heard. On that notice of motion, proof that Mr McDonald's employer was the Minister and proof that the Minister was constituted as a body corporate could not assist Mr McDonald to avoid the application of the doctrines of res judicata, Anshun estoppel, issue estoppel and abuse of process by re litigation. It would remain that the 2010 proceedings were liable to be summarily dismissed as constituting an abuse of process by reference to the judgments delivered in the 2004 proceedings. 66 As Besanko J said, any issue about the precise identity of Mr McDonald's employer properly belonged to the Supreme Court. The same may be said of any issue as to whether the employer was a body corporate and the legal consequences that might follow from that corporate status. 67 Furthermore, the Minister (as named in the Education Act) is, and always was, a Minister of the Crown in right of South Australia, whether or not constituted as a body corporate: Acts Interpretation Act 1915 (SA), s 4 (definition of Minister). As such, the Minister (as Mr McDonald's employer) could be sued in the name "the State of South Australia" in accordance with s 5 of the Crown Proceedings Act 1992 (SA). That is not to say that Mr McDonald's employer was the State of South Australia: see generally TransAdelaide v Evans (2005) 98 SASR 394. It is simply to say that the proper name of the defendant in the 2004 proceedings was the State of South Australia whether Mr McDonald's employer was the Director General or DECS or the Minister as a body corporate, or any other manifestation of the same Crown. It was open to Mr McDonald in the 2004 proceedings to plead alternative cases as to the entity that was liable to pay him damages in contract, tort or any other cause. It was also open to him to plead the legal consequences of s 7 of the Education Act which constituted the Minister as a body corporate, at least as he perceived those consequences to be. Critically, the SA Full Court noted that there was an issue concerning the identity of the employer and dismissed the appeal on the basis that identifying the employer could make no difference to the outcome. If the Full Court was wrong in that regard, it does not follow that Mr McDonald is free to commence a differently formulated case in this Court, whether against the Minister or against his former colleagues or superiors. 68 For the reasons given below, there is nothing in the material before this Court to support the contention that by actual fraud Mr McDonald was deprived of the opportunity of pleading that the Minister was a body corporate or that he was in a contractual relationship with that body corporate or that the body corporate owed him a duty of care at general law or was an entity to which the relevant provisions of the TPA applied. Even prior to Anderson J delivering judgment in the 2004 proceedings, Mr McDonald had in his possession the memorandum of agreement constituting his contract of employment. Section 7 of the Education Act was in force then as it is now. In any event, if there be fraud affecting any judgment of the Supreme Court of South Australia, this Court has no jurisdiction to rectify it. 69 As Besanko J said (with respect, correctly) issues of breach by Mr McDonald and his employer were decided against him and, accordingly, his claims vis a vis his employer are bound to fail irrespective of the employer's precise identity. To those observations I would add that proof of the corporate nature of the Minister does not have the consequence that leave should be granted to commence a claim against the Minster for contraventions of the TPA. Such claims would be untenable not only because the Minister is not a "corporation" as defined in s 4 of the TPA (as in force at the relevant time), but also because the TPA binds the Crown in right of State (including the Minister) only in the limited circumstances defined in s 2B(1) of the TPA. Mr McDonald has not suggested how those critical limitations could be overcome in relation to matters arising in the relevant employment context. It is impossible to see how they could be. 70 The same may be said of the operation of s 54(1) of the WRC Act. The Minister, as employer, would be entitled to the protection of that provision, whether or not a body corporate. So too would be the individual respondents named in the 2010 proceedings, as they also fall within the definition of "employer": WRC Act s 54(8). Mr McDonald's allegation that the actions of the individuals constituted serious and wilful misconduct (so as to put his case outside of the operation of s 54) is yet another attempt to litigate an issue that he attempted, belatedly, to introduce in the 2004 proceedings. 71 As to the individual respondents in the 2010 proceedings, Besanko J struck out those claims on a number of discrete bases. Each of the individuals had given evidence in the 2004 proceedings and it was their acts and omissions for which Mr McDonald's employer was said to be vicariously liable. Proof that a different employer was vicariously liable for their acts or omissions would not avoid the consequence that their acts and omissions have been found at trial not to constitute an actionable breach. Similarly, if the individual respondents are employees of the Minister (as Mr McDonald asserts), s 54(4a) of the WRC Act would nonetheless apply, as Besanko J found. To the extent that Mr McDonald contends otherwise, the occasion to do so was in the context of the 2004 proceedings. 72 It may be that Mr McDonald did not join the individuals as parties to the 2004 proceedings because he believed them to have the protection of an immunity conferred by s 74 of the PSM Act. He now seeks to argue that they enjoy no such protection because they, too, are employees of the Minister appointed under the Education Act and so were not appointed under the PSM Act. Again, these are contentions of fact and law that were available to be agitated by Mr McDonald in the 2004 proceedings if he considered they might be of some utility. For the reasons given below, there is nothing to suggest that Mr McDonald was fraudulently deprived of the opportunity to seek an award of damages against the individual respondents on the basis that they were not personally immune from suit. It follows that even if the judgment of Besanko J were to be set aside, it would remain that Mr McDonald cannot now proceed against the individual respondents in this Court. That is the case irrespective of the substantive merits of the proposed claims against the individuals (as Mr McDonald perceives them to be) and irrespective of whether they had previously been joined in any earlier action. 73 Many of the considerations to which I have referred thus far are matters that would affect the exercise of the discretion as to whether the equitable power to set aside the judgment of Besanko J for any proven fraud should be exercised in Mr McDonald's favour assuming that actual fraud could be established. They affect the materiality of the alleged fraud and go particularly to the contention that a different outcome would have or might have ensued on the respondents' notice of motion had the "actual fraud" not occurred. 74 In my view, Mr McDonald's prospects of succeeding on his arguments as to the materiality of any fraud have such grim prospects of success that the proposed proceeding would be liable to be struck out in the exercise of this Court's powers under s 37P(6)(b) of the Federal Court of Australia Act. That is a sufficient basis to refuse leave whatever conclusions might be drawn as to the nature of the alleged fraud and Mr McDonald's prospects of proving it.

McDonald v Colbran

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Judgment (10 paragraphs)

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Legislation Cited (12)

Cases Cited (31)

Cited By (4)