McDonald v Colbran

Federal Court of Australia|2020-04-09|Before: Besanko J, Charlesworth J

The applicants' interlocutory application filed on 9 December 2019 is dismissed.
The applicants are to pay the respondent's costs of the following applications, fixed in the sum of $2,959.78: (a) the applicants' interlocutory application filed on 9 December 2019; (b) the respondent's application for an order in terms sought in [3.2] of the affidavit of Tarley Leideritz affirmed on 27 November 2019.
Subject to the order in paragraph 5, the following orders are stayed pending the finalisation of SAD 276 of 2019: (a) the order in paragraph 2; and (b) the order in paragraph 4 of the orders made on 29 November 2019.
Pursuant to rule 39.03(2) of the Federal Court Rules 2011 (Cth), any further proceedings commenced by either or both of the Applicants which: (a) name Nicola Colbran as a Respondent; and (b) 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 4 of the orders made on 29 November 2019 has been satisfied by receipt of cleared funds.
In the event that a proceeding meeting the description in the order in paragraph 4 is commenced, the stay in paragraph 3 of these orders is lifted such that the costs become immediately due and payable from the date of the commencement of the proceeding. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE APPLICANTS' APPLICATION 12 Two issues arise on the applicants' application: (1) should the Costs Order be revoked? and (2) if the Costs Order is not revoked, should the sum of the award be varied? 13 Each of these questions should be answered no.

Costs to follow the event 14 The applicants submit that no order for costs should be made because these proceedings had their genesis in a decision of the Registrar which the Registrar knowingly had no power to make. It follows, they submit, that the Court does not have jurisdiction in this action and so cannot make an order as to costs. 15 These arguments were not advanced before me at the substantive hearing, at least not in the manner in which they are advanced now. The applicants' submission that the Registrar did not have jurisdiction to refuse to accept their documents for filing proceeds from the premise that they had an equitable entitlement to apply for an order setting aside the judgment of Besanko J in accordance with the principles stated by the High Court in Clone Pty Ltd v Players Pty Ltd (2018) 264 CLR 165. They submitted that the power conferred by r 2.26 of the Federal Court Rules 2011 (Cth) could not be exercised by the Registrar, as a non-judicial officer, in a way that would prevent them from exercising that entitlement. 16 The contention that the applicants had an absolute entitlement to commence a proceeding founded on the principles in Clone must be rejected. The entitlement of a litigant to access justice in this Court, whether on an application for judicial review or otherwise, is not absolute. In all cases, it is subject to the proper exercise of the Court's powers to protect its processes from abuse. Rule 2.26 confers a power upon a Registrar to refuse to accept documents for filing if the Registrar is satisfied that the documents are an abuse of the process of the Court. The rule is underpinned by the same principle that underpins other provisions that empower the Court to dismiss any action that constitutes an abuse of process, or to otherwise control the activities of a litigant in respect of whom a vexatious proceedings order has been made. Provisions of that kind operate in addition to the Court's implied power to prevent an abuse of its process, equivalent to the inherent power of courts of unlimited jurisdiction explained by Dixon J in Cox v Journeaux (No 2) (1935) 52 CLR 713 at 720. 17 Of course a decision made pursuant to r 2.26 is not made by a judge of the Court, but by a Registrar. Such a decision is amenable to judicial review by the Court constituted as a single judge. The legality of the Registrar's decision (and the asserted entitlement of the applicants to commence their foreshadowed proceeding) formed the very subject matter of the originating application in this action. Clearly, this Court has jurisdiction to review a decision of a Registrar, including for the purpose of identifying whether the Registrar has acted in excess of his or her authority in categorising a proposed proceeding as an abuse of process. It follows that the Court has the jurisdiction under s 43 of the Act to make an award of costs in the proceeding, having regard to the outcome. 18 For the reasons given on 29 November 2019, the Registrar was correct to find that the proceeding sought to be commenced by the applicants' documents did indeed constitute an abuse of process. In addition, the Court dismissed the applicants' application for leave to commence the proceeding by the same documents rejected by the Registrar. The Court's conclusion in relation to the latter application for leave did not depend on any conclusion as to whether the Registrar acted beyond her authority by refusing to accept the same documents for filing. 19 In the ordinary course, an order for costs will follow the event: Oshlack v Richmond River Council (1998) 193 CLR 72; and see r 40.04(a) of the Rules. In some cases, identifying the relevant "event" can be attended with some difficulty. However, there can be no real debate as to the relevant "event" in this action: the applicants were wholly unsuccessful. The award of costs against the applicants is an orthodox reflection of that outcome. 20 In reconsidering whether costs should follow that event, I have had regard to the circumstance that the Registrar filed a submitting appearance and so did not attend any substantive or case management hearings. That circumstance does not deter me from the view that an order for costs should be made against the applicants in this case. It will nonetheless be relevant to my consideration of whether the sum specified in the Costs Order should be varied. 21 I have also had regard to the circumstance that the action concerned the legality of an administrative decision made by the Registrar in her professional capacity. It is reasonable to infer (and I so find) that any financial liability the Registrar may owe to her legal advisors is one in respect of which she has a right of indemnity against her employer, an agency or instrumentality of the Commonwealth. Counsel for the Registrar did not suggest otherwise. However, it does not follow from that circumstance that no costs liability is owed by the Registrar personally to her solicitors. An order for costs may be made to compensate the Registrar in respect of that liability irrespective of whether an agency of the Commonwealth is liable, in turn, to indemnify the Registrar whether in whole or in part.

Costs in a fixed sum 22 Having considered the applicants' submissions, I remain of the view that it is appropriate to award costs in a specified sum. The referral of the question of costs to taxation would result in undue delay and additional unwarranted expense: see Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120 (Von Doussa J). It is not difficult to envisage the additional expense of a taxation far exceeding the liability already incurred up to the date that judgment on the substantive issues was delivered. 23 The sum specified in the Costs Order was based upon evidence contained in the affidavit of Tarley Leideritz affirmed on 27 November 2019. The solicitor deposes to the existence of a retainer, the present existence of a liability under the retainer and the incurring of other expenses yet to be invoiced. 24 As at 27 November 2019, the total costs were said to be $3,649.20. The solicitor applied discounts to that amount to reflect the circumstance that costs were sought on a party-party basis. The discounts also accommodate a very small portion of work properly attributable to the Stay Application rather than any issue arising in the substantive action. The discounts reduce the amount claimed to $2,666.95. 25 The applicants' objections to the sum specified in the Costs Order fell within two categories. First, the applicants questioned the existence of a retainer and the Registrar's liability to pay her solicitors. These submissions proceeded on the basis that there was no evidence that monies had been paid up front to the Registrar's solicitor prior to the commencement of work and no evidence that the Registrar had paid her solicitor's invoices. These submissions must be rejected. The liability of a client to pay his or her solicitor in accordance with the terms of a retainer is not dependent upon the client paying any amount in advance. Further, the purpose of an award of costs is to indemnify a successful litigant against the liability he or she may owe to his or her solicitors. The successful party's liability to pay his or her solicitors arises by reason of the retainer and the work performed pursuant to it. For an award of costs to be made it is not necessary to show that the liability owed by the client to the solicitor has been discharged. 26 The second category of submissions took issue with the reasonableness of particular charges of the Registrar's solicitor and counsel. Even if there is merit in some of those submissions, it remains that the sum specified in the Costs Order does not equate to the amount actually charged by the Registrar's legal representatives. An appropriate discount has been applied to reflect the fact that costs of the substantive proceedings are sought on a party-party basis. In assessing the sum I have again had regard to the circumstance that the Registrar abided the event and so may be expected to incur only moderate or minimal expense. The Registrar was nonetheless entitled to seek legal advice in relation to the application for judicial review. That is especially so in circumstances where the Registrar was named personally as a respondent and where baseless allegations of deliberate wrongdoing were advanced. The circumstance that the Registrar is a person who is legally qualified does not detract me from that view. 27 I am not satisfied that the sum specified in the Costs Order should be varied. However, as the Registrar acknowledged, it is appropriate that the order be stayed pending the finalisation of any appeal from the orders made on 29 November 2019 or the finalisation of any appeal from the orders to be made today. The continuation of that stay should be subject to a further order, to be explained below.

THE STAY APPLICATION 28 Rule 39.03(2) of the Rules provides: (2) If: (a) a proceeding has been dismissed in whole or in part; and (b) the Court has ordered the applicant to pay another party's (the second party's) costs; the second party may apply to the Court for an order staying any further proceedings brought by the applicant against the second party on the same or substantially the same cause of action or relief, until the costs have been paid. 29 Counsel for the Registrar referred to the background and findings in the Reasons. Counsel submitted that the orders sought on the Stay Application were justified in all of the circumstances because: (1) The applicants had repeatedly and unsuccessfully attempted to commence an action to have the judgment of Besanko J in SAD 178 of 2010 aside, as detailed at some length in the Reasons. (2) The applicants were preoccupied with the question of whether the judgment of Besanko J should be set aside and more generally with the questions arising in the Supreme Court proceedings referred to in the Reasons. (3) There is a strong likelihood that the applicants will again lodge documents for filing with a view to commencing an application for orders setting aside the judgment of Besanko J. (4) There is a strong likelihood that the Registrar will again be joined as a respondent on an application for judicial review of any decision not to accept any documents for filing in the exercise of the power conferred under r 2.26 of the Rules. (5) The proposed orders were confined in operation in that they were directed to proceedings of a very limited kind in which the Registrar is joined as a respondent. (6) Whilst it was open to the Registrar to make an application for security for costs in relation to any future application, the steps involved in preparing, filing and arguing the application would itself cause the Registrar to incur costs that may not be recoverable. (7) The order would not operate to prohibit the commencement of an application for judicial review of the Registrar's decision. Rather, the effect of the order would be to impose a condition to be fulfilled before any such application could progress to a hearing on its merits. 30 As explained in the Reasons, the Registry of this Court has assessed a multitude of documents lodged for filing by the applicants or at least by Mr McDonald. Over and again, decisions have been made to not accept the documents for filing. The applicants did not commence an application for judicial review in relation to most of those decisions. Rather, on each occasion, they again lodged yet further documents purporting to distinguish them from those that had previously been lodged. The decision of the Registrar forming the subject of this proceeding was one of at least ten earlier decisions to substantially the same effect made between November 2017 and the commencement of this action. 31 From the bar table, Mr McDonald submitted that the reason the earlier decisions had not been the subject of an application for judicial review was because he had continued to obtain "new, fresh and compelling evidence". As I said in the Reasons, the material which the applicants submitted constituted "new fresh and compelling evidence" did not fall within the categories "new", "fresh", or "compelling" and the proposed proceedings did not otherwise satisfy the principles stated in Clone. 32 I accept the submission that there is a very strong likelihood that the applicants will yet again lodge documents in the Registry of this Court with a view to commence a proceeding to have the judgment of Besanko J set aside. The applicants have positively asserted an unqualified present entitlement to commence such an action. The Court can have no confidence that anything said in the Reasons will give them pause. I conclude that the applicants are unable or unwilling to accept the correctness of the multitude of judgments that have been made against them. In the circumstances I have described, any further application for judicial review of a refusal to accept a document for filing of the limited kind referred to in the order would prima facie constitute an abuse of process or otherwise be a vexatious proceeding of the kind to which r 39.03(2) is directed. 33 It is significant that in response to the Stay Application, the applicants have adduced no evidence to suggest that they do not presently have the capacity to pay the sum specified in the Costs Order: cf Rozenblit v Vainer (2018) 262 CLR 478. Nor was any claim of impecuniosity asserted in the course of the applicants' oral submissions. Whilst the first applicant has referred to himself as an "aged pensioner", he did not rely on that status as a basis for resisting the order. His status as an aged pensioner of itself is insufficient to show that the applicants together do not have the financial resources to pay the sum I have specified. 34 On the materials before me, I do not consider that the order now sought by the Registrar would have the practical effect of stultifying any application for judicial review of the kind to which the order is directed. Rather it would impose a condition on the continuation of any such proceeding, namely compliance with a legal obligation that the applicants are able (albeit unwilling) to fulfil. 35 The narrow compass of the Stay Application makes it unnecessary to speculate about the various kinds of proceedings the applicants have foreshadowed they may seek to commence. The Stay Application is directed only to the circumstance that the applicants in fact commence an application for judicial review of a decision of the Registrar to refuse to accept a particular kind of document for filing, namely a document that in form or substance seeks an order setting aside the judgment of Besanko J. 36 Rule 2.27(f) of the Rules provides: (f) the Court has given a direction that the document not be accepted without the Court's leave, and leave has not been obtained. 37 It is important to bear in mind that the applicants are presently precluded from commencing an originating application for orders setting aside the judgment of Besanko J except with the leave of a judge of the Court. That is the effect of the order of Kerr J in SAD 246 of 2017 as discussed at [11], [12] and [13] of the Reasons. Should the applicants seek to commence an originating application meeting the description in Kerr J's order, r 2.27(f) would compel the Registrar not to accept the initiating documents for filing, irrespective of whether the proceeding appeared to the Registrar to constitute an abuse of process. The Registrar cannot dispense with the requirement of leave imposed by Kerr J's order. 38 The applicants now have the benefit of the Reasons reinforcing the requirement that they first obtain leave in accordance with the orders of Kerr J to commence a proceeding of that kind. Assuming that an application for judicial review may be brought in relation to a decision mandated by r 2.27(f) because of the absence of leave, the applicants' prospects of succeeding on that application for judicial review would be very grim indeed. I can see no reason why such an unmeritorious application for judicial review should not be stayed pending satisfaction of the Costs Order I have made in this action. 39 The order now sought by the Registrar would not prevent the applicants from commencing an application to set aside the orders of Besanko J, provided that leave has been granted for the commencement of the action in accordance with Kerr J's order. 40 In all of the circumstances, the order sought by the Registrar is an appropriate and proportionate response to the risk that the applicants might lodge documents for filing with a view to agitate the same (or substantially the same) issues that have arisen on this application, or otherwise to vex the Registrar in the performance of her functions and the exercise of her powers under the Rules. 41 I have had regard to the likelihood that the Registrar would abide the event on any future application for judicial review as she has done in this proceeding, such that any costs incurred on a subsequent application may (depending on the circumstances) be minimal. 42 However, as has been mentioned, the claims and submissions advanced by the applicants in the present case were articulated in ways that alleged serious misconduct (including fraud) against the Registrar personally, and without proper foundation. Whether it would be appropriate for the Registrar to abide the event on any like application must be left to her discretion. 43 I have not overlooked that it would be open to the Registrar to make an application for security for costs on any subsequent application for judicial review. On such an application it would be relevant to consider any failure by the applicants to satisfy any previous costs orders. However, I accept the submission that adopting that course would serve only to increase the overall costs of the subsequent action in circumstances where the new action raises substantially the same issues as those already disposed of in this proceeding. 44 Finally, it is relevant that an order under r 39.03(2) is interlocutory in nature. It is an order that may be varied or revoked at a later time. An occasion may arise where a judge considers it appropriate to vary or revoke the order in the exercise of the power conferred under r 39.05(c) of the Rules of its own initiative or on the application of the applicants or either one of them. That affords a measure of flexibility to permit consideration of circumstances that cannot presently be foreseen and that may render the continued operation of the order unjust. It is appropriate that the applicants bear the burden of demonstrating at that time why the order should be varied or revoked. Whether the Registrar should be heard on any such application may be left to the discretion of the judge adjudicating the matter. 45 In all of the circumstances described above and in the Reasons, I am satisfied that an order should be made in the terms sought. 46 The applicants should pay the Registrar's costs of the Stay Application. I am not satisfied that the costs of that application should be payable on an indemnity basis, as has been suggested by Counsel for the respondent. On the affidavit material before me, and having regard to the nature and length of the hearing, I am satisfied that the award should be fixed in the sum of $2,959.78.

STAY OF COSTS ORDERS 47 The orders for costs will be stayed pending the finalisation of the Appeal. However, the stay of those orders must not be seen by the applicants as opening a window of opportunity to commence another application for judicial review against a decision of the Registrar of the kind to which the orders made on the Stay Application refer. Should the applicants commence such a proceeding before their Appeal is finalised, the stay of the costs orders will be lifted and the costs will, from that time, be immediately due and payable. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Charlesworth.

Federal Court Rules 2011(Cth)rr 2.26, 2.27, 39.03, 39.05, 40.04

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