Mijac Investments Pty Ltd v Graham

REASONS FOR JUDGMENT 1 This is the most recent of a series of procedural applications which are designed to open the way for the applicant ("Mijac") to appeal from a judgment of Gordon J which was published on 22 July 2009: see Mijac Investments Pty Ltd (ACN 084 820 280) v Graham (No 2) [2009] FCA 773. 2 Mijac filed a notice of appeal on 12 August 2009. Complications arose because Mijac sought a waiver of fees which was rejected and Mijac failed to serve its notice of appeal on the respondents. 3 Between August 2009 and January 2010 a series of procedural orders were made by the Court (Ryan J, Middleton J and Luxton R) with a view to readying the appeal for hearing. For the most part Mijac failed to comply with these directions. The result was that the respondents moved the Court for orders under s 25(2B)(bb)(i) of the Federal Court of Australia Act 1976 (Cth) ("the Act") that the appeal be dismissed for failure of Mijac to comply with directions of the Court. Following a hearing on 20 January 2010 Gray J made such orders: see Mijac Investments Pty Ltd (ACN 084 820 280) v Graham [2010] FCA 87. 4 On 16 August 2010 Marshall J refused an application by Mijac for orders extending the time for the filing and serving a notice of appeal from Gordon J's judgment: see Mijac Investments Pty Ltd (ACN 084 820 280) v Graham [2010] FCA 895. On the same day his Honour also refused an application by Mijac to set aside the orders of Gray J: see Mijac Investments Pty Ltd (ACN 084 820 280) v Graham [2010] FCA 896. 5 By interlocutory application dated 22 January 2013 Mijac has applied to the Court for orders setting aside the decision of Gray J or, in the alternative, what are described as "the unentered decisions" of Marshall J. These applications are said to be made under Rule 39.05(c) and Rule 39.04 of the Federal Court Rules 2011 (Cth) ("the Rules") respectively. Mijac also seeks an order that the appeal which Gray J dismissed "be reinstated". 6 The procedural history of the appeal in the period between August 2009 and January 2010 is outlined in detail in the judgments of Gray J and Marshall J and need not be rehearsed. 7 The application to Marshall J to set aside the orders made by Gray J was made pursuant to Order 35 rule 7(1) of the former Rules of Court. That Rule was in the same terms as the present r 39.04. It provided that the Court "may vary or set aside a judgment or order before it has been entered." Gray J's orders were entered on 11 August 2010, the day after Mijac filed its application to set aside those orders. The present application to set aside Gray J's orders is made under r 39.05(c) which empowers the Court to set aside a judgment or order after it has been entered if it is interlocutory in nature. The scope for setting aside a judgment under r 39.04 is plainly wider than that comprehended by r 39.05. The discretionary power conferred by both rules is, nonetheless, in each case, to be exercised sparingly in order to ensure finality in litigation: see Venus Adult Shops Pty Ltd v Fraserside Holdings Ltd (No 2) (2007) 239 ALR 724 at 726 [6] (per French and Kiefel JJ). 8 The challenges to the orders made by Marshall J have been made in reliance on Rule 39.04. This is because Mijac has proceeded on the basis that his Honour's orders had not been entered. The records of the Court are unclear as to whether either or both of Marshall J's sets of orders have been entered, and I am advised that it would take some time to interrogate the database in a way which would provide a definitive answer. As a result I am prepared to proceed on the assumption made in Mijac's favour that the orders have not been entered and that Rule 39.04 may be relied on in respect of the applications to set aside Marshall J's orders. 9 The application relating to the orders made by Gray J may be seen as no more than an attempt to re-argue the application which failed before Marshall J. Mijac, however, sought to argue that new evidence had come to its notice which prejudiced its ability to prosecute its defence of the respondents' application to Gray J to dismiss the appeal. 10 Mijac contended that, since Gray J's orders had been made, it had obtained access to the Court file. That Court file contained some material which it was said was adverse to its interests and led to it being denied procedural fairness by Gray and Marshall JJ. 11 The first two documents to which reference was made were judgments in which the director of Mijac, Mr Alan Jorgensen, had been a party. In one case an appeal had been dismissed by reason of Mr Jorgensen's failure to comply with directions of the Court: see Jorgensen v Australian Securities and Investments Commission [2004] FCA 990. This judgment was referred to in an e-mail, dated 25 November 2009 from the Appeals Registrar to another Registrar of the Court. The second judgment was given by the High Court on a special leave application: see Jorgensen v Slater and Gordon Pty Ltd [2009] HCASL 195. In that case the High Court refused an application for special leave from a decision of the Victorian Court of Appeal refusing an application by Mr Jorgensen for an order that an appeal lodged by him not be taken to be abandoned. It had been so deemed by reason of a failure of Mr Jorgensen to comply with rules of the Victorian Supreme Court. 12 There is nothing to indicate that his Honour's attention was drawn to the references to these decisions on the Court file (if indeed the e-mail and the High Court reasons appeared on the file). Both documents had been published. It is, however, difficult to see how they could have had any bearing on the outcome of the application which was considered by Gray J. Neither of these judgments was referred to by Gray J in his reasons for decision. 13 Two other documents were also referred to by Mijac. The first was an e-mail from the Court Registry to the respondents' solicitors on 25 August 2009. The respondents' solicitors had sought to file a motion striking-out Mijac's appeal. The e-mail advised the solicitors that the motion had been rejected for filing by order of Marshall J. It advised the solicitors that his Honour's associate was to telephone the firm to advise the basis for the rejection. Some months later the solicitors filed an itemised bill of costs which had, among its items, one dated 25 August 2009 which read: "Attending Associate to Marshall J. Being advised that Notice of Motion will be rejected as Court's view is that there is no Appeal before it. An appeal number will be allocated if Notice of Appeal is properly filed." 14 This communication, it was submitted, was improper because it involved a unilateral communication between the solicitor for one party to the exclusion of the other and because it deprived Mijac of the information that the Court took the view that no appeal was on foot as at 25 August 2009. 15 These documents do not, in my view, disclose any sinister communications between the respondents' solicitors and Marshall J's Associate. The respondents had filed a motion which his Honour had directed should not be filed. The itemised bill of costs suggests no more than that his Honour's Associate rang the solicitors to explain why the document had been rejected. The reason was that, at the time the solicitors had sought to lodge the notice of motion, the appeal to which it related was not on foot. This was because the filing fee had not been waived and was not, in fact, paid until 28 August 2009. 16 More importantly, there is no evidence that Gray J ever saw the e-mail from the Registry or the bill of costs. 17 One other document was also referred to in argument. It was an e-mail between the Appeals Registrar and another Registrar of the court dated 3 September 2009. It recorded that the respondents' solicitor had called the Appeals Registrar earlier that day. 18 The solicitor had advised that his clients were considering a motion to dismiss the appeal as incompetent. This was because there was then no solicitor on the record for Mijac. The solicitor had referred to Order 4 Rule 14 of the former Rules which provided that a corporation could not, without the leave of the Court, commence or carry on any proceeding including an appeal otherwise than by a solicitor. 19 This communication was in no way improper. It merely advised the Appeals Registrar of a course of action proposed by the solicitors acting for the respondent which had a bearing on the procedural steps that were then in train in relation to the conduct of the appeal. 20 Again, there is no evidence that this document came to the attention of Gray J or indeed Marshall J but, even assuming in Mijac's favour that their Honours did see the email, there was nothing in it which could be said to prejudice Mijac's interests beyond drawing attention to a provision of the Rules. In any event, within a matter of days, the respondents' solicitors had written to Mijac advising that the terms of the Rules were such as to prevent the matter proceeding without either the leave of the Court being obtained or a solicitor being instructed. 21 Attention was also drawn to what was said to be a misleading guide published by the Court as to how the then form 55 notice of appeal should be used and the requirements of the relevant rules relating to the filing and service of such notices. One of the paragraphs, which was later to be amended, advised a potential litigant: "You must arrange for a stamped copy of the Notice of Appeal to be served on each respondent within 5 days of filing your appeal. For more information about service, see Order 52, rule 2, of the Federal Court Rules." 22 It was contended in argument that Mr Jorgensen and, perhaps, others acting during the latter part of 2009 on behalf of Mijac had failed to serve on the respondents a stamped copy of the notice of appeal. It was common ground that no stamped copy of the notice of appeal had been filed by 12 August 2009, on which date the 21 day appeal period provided for in the Rules expired. The explanation given on behalf of Mijac from the bar table was that this had not occurred because there was no stamped copy of the notice available to Mr Jorgensen on 12 August 2009 and one did not become available until after 28 August 2009, when he, on behalf of Mijac, paid the filing fees. 23 Whilst it may be understood that a non-lawyer or indeed a lawyer might have been misled, by the terms of the paragraph that I have just quoted, into thinking that it was impossible to serve a stamped copy of the notice of appeal within five days of filing the appeal, that was a matter well known to Mr Jorgensen in August 2009 and thereafter. 24 Subsequent orders by Ryan and Middleton JJ provided for Mijac to make applications for leave to serve a stamped notice of appeal out of time. Neither of these orders was complied with because, again as I was told from the bar table, Mr Jorgensen took the view that it wasn't necessary. 25 Gray J's reasons for decision make it clear that this misunderstanding, if there had been one, on the part of Mr Jorgensen, was not a consideration which led to his Honour dismissing the appeal. In the first place, it is to be observed that his Honour's first order was that the appeal instituted by a notice of appeal filed on 12 August 2009 be dismissed. His Honour, therefore, treated the appeal as being on foot as at 20 January 2010, notwithstanding the continued failure of Mijac to obtain leave to serve its notice of appeal out of time. 26 Moreover, as his Honour noted in his reasons, and I quote from paragraph 15: "Mr Jorgensen's affidavit explains some of the circumstances in which he filed the notice of appeal. Apart from saying that he emailed the original notice of appeal to the respondents' solicitors within the seven day timeframe after filing the notice of appeal (the seven-day time frame apparently being for dealing with the application for waiver of the fee), Mr Jorgensen offers no explanation and no reason for failing to serve the notice of appeal on 12 August itself, the last day for filing and service of it. Apart from saying that, on that day, he was flying to Beijing and arrived about 3.00 pm Melbourne time, he does not offer any explanation as to why a notice of appeal was not filed and served within time. He advances arguments about the adequacy of the grounds expressed in the notice of appeal and an argument that the time for technical objections to the appeal has passed." 27 It is clear from what his Honour there said that at the time at which his Honour made his decision in January 2010, Mr Jorgensen had not advised the Court that he was labouring under any misapprehension arising from the terms of the Court's notice. 28 More significantly for present purposes, however, is the fact that the consideration which did bear on his Honour's decision was the absence of any explanation for Mijac's failure to serve its notice of appeal. Although he had the opportunity to do so, Mr Jorgensen gave no evidence to support an argument that Mijac had been misled by the terms of the Court notice or anything else. His Honour was simply not made aware of that matter and can, therefore, hardly be criticised for not bringing it into account. What did cause him concern and lead him to dismiss the appeal was a series of failures by Mijac to comply with procedural orders made by the Court. 29 I turn now to the material which it was said was on the Court file, was prejudicial to Mijac and which it was to be assumed had been available to, if not considered, by Gray J before he made his orders. As I have already noted, there is no evidence that any of this material was considered by his Honour or that any of it was placed on the Court file for malign purposes. 30 In fact, the material, whilst in a sense prejudicial to some interests of Mijac or Mr Jorgensen, could not reasonably be seen as being prejudicial for the purposes of the application being considered by Gray J. The fact that there had been two prior decisions of other courts involving Mr Jorgensen could and did have no bearing on his Honour's decision and they were public documents. 31 Insofar as the communication between the respondents' solicitors and the chambers of Marshall J were concerned, this was not a communication instigated by the solicitors. It was a courtesy call from his Honour's associate to advise of the reason that his Honour had directed that certain documents not be accepted for filing in the Court registry. There was nothing improper about the communication. 32 The final communication that is complained about is that between the respondents' solicitor and the Appeals Registrar in which he foreshadowed to the Registrar the prospect of the respondents seeking to prevent the appeal progressing further unless and until there was a solicitor on the record on behalf of Mijac or the leave of the Court had been obtained to permit Mr Jorgensen or some other non-lawyer to act on Mijac's behalf. 33 The communication involved, at least insofar as it is recorded in the email between the Appeals Registrar and another Registrar, no more than a record that that advice had been received from the solicitor. 34 It is important to note that the advice was given to the Registrar and not to Gray J or any other judge who was or might be involved in the appeal. Furthermore, as I have already noted, the respondents' solicitors shortly afterwards advised Mijac in writing that it was proposing to take the point when the matter next came on before the Court. 35 Even if it be assumed in favour of Mijac that the material to which it has directed attention could be regarded as "new evidence", that new evidence provides no foundation for disturbing Gray J's orders. I therefore refuse the application to the extent that it deals with those orders. 36 I turn now to the application to set aside Marshall J's orders. As I have indicated already, I am prepared to assume in Mijac's favour that these orders have not yet been entered and that, as a result, rule 39.04 of the Rules empowers me to set aside his Honour's orders if a proper basis for doing so is established. Mijac relied on the same "new evidence" arguments to support its application in relation to Marshall J's orders as it did in relation to Gray J's. For the same reasons that I have given in relation to Gray J's orders, I do not accept these submissions and the applications, insofar as they relate to Marshall J's orders, must also be refused. 37 The third order that Mijac seeks is an order that the appeal from Gordon J's orders be reinstated. Counsel for Mijac was unable to direct my attention to any power vested in the Court to make such an order. Even if I had such a power, I would not, for the reasons already given, be willing to exercise it. 38 This third application must also be refused. 39 Before concluding these reasons, I want to record my serious disquiet at some of the contents of affidavits sworn by Mr Alan Bradley Jorgensen on 12 January 2013 and 26 February 2013. A number of passages in these affidavits make serious, unsubstantiated and unwarranted allegations of professional misconduct against the solicitor acting for the respondents. The allegations should not have been made and it would be proper for them to be withdrawn. I cannot, however, direct that they be publicly withdrawn. 40 I would also record before concluding these reasons that, earlier today, another interlocutory application by Mijac seeking the transfer of the hearing of the interlocutory application to another registry of the Court was withdrawn. 41 The orders of the Court on the three applications that were pressed are that, in each case, the application be refused. 42 The respondents sought an order that Mijac's solicitor, Mr Terence Ferreira pay their costs of these applications on an indemnity basis. They sought such an order pursuant to s 37N(4) of the Act. 43 Two affidavits, being the aforementioned affidavits sworn by the director of Mijac Mr Alan Bradley Jorgensen, had been filed in support of Mijac's applications. It was evident that Mr Jorgensen was the author of both affidavits. Both affidavits recorded that they had been prepared by him but filed by Mr Ferreira of Madina Legal. The first affidavit misspelt Mr Ferreira's surname. It was evident from a reading of the affidavits that they had not been prepared or settled by a lawyer. The second affidavit, in particular, contained a series of serious and unsubstantiated allegations against judges of this Court, an associate of one of the judges and Registrars. To cite but one egregious example, Mr Jorgensen alleged that the Appeals Registrar "obviously, made sure that each Registrar and Judge due to sit, was fully primed with all the information and even gossip … Therefore, without doubt, [the Appeals Registrar] would have ensured Gray J was aware of Marshall J's previous ruling that there was no Appeal before the Court on 25 August 2009. … [b]ecause the Registry and Court had an agenda, which coincided with the Respondents' and [the respondents' solicitors] agenda. Get rid of Mijac's $10M Appeal." 44 The respondents submitted that Mr Ferreira had simply acted as a "post box" for Mr Jorgensen and that he had failed to exercise any independent professional judgment in the conduct of the applications. They supported their contention by reference, not only to the contents of the affidavits, but also to the restatement, by Mr Ferreira, during oral submissions, of much of what appeared in the affidavits. There were also long delays in the course of argument during which Mr Ferreira obtained instructions from Mr Jorgensen in the body of the Court in relation to some of the basic details of the procedural history of the litigation. 45 Courts are extremely reluctant to make costs orders, much less indemnity costs orders, against legal practitioners. A serious dereliction of duty on the part of the practitioner must be established: see White Industries (Qld) Pty Ltd v Flower and Hart (a firm) (1998) 156 ALR 169 at 230-1. Even if such a dereliction of duty occurs it is to be borne in mind that "[t]he primary object of the jurisdiction is to reimburse to a party to proceedings costs which that party has incurred because of the default of the practitioner, that is to say it is a jurisdiction which is compensatory rather than punitive or disciplinary": see White Industries at 229. 46 These principles have, however, now been qualified, in part at least, by the provisions of ss 37M and 37N of the Act. Relevantly these sections provide: "37M The overarching purpose of civil practice and procedure provisions (1) The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes: (a) according to law; and (b) as quickly, inexpensively and efficiently as possible. (2) Without limiting the generality of subsection (1), the overarching purpose includes the following objectives: (a) the just determination of all proceedings before the Court; (b) the efficient use of the judicial and administrative resources available for the purposes of the Court; (c) the efficient disposal of the Court's overall caseload; (d) the disposal of all proceedings in a timely manner; (e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute. (3) … (4) The civil practice and procedure provisions are the following, so far as they apply in relation to civil proceedings: (a) the Rules of Court made under this Act; (b) any other provision made by or under this Act or any other Act with respect to the practice and procedure of the Court. 37N Parties to act consistently with the overarching purpose (1) The parties to a civil proceeding before the Court must conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose. (2) A party's lawyer must, in the conduct of a civil proceeding before the Court (including negotiations for settlement) on the party's behalf: (a) take account of the duty imposed on the party by subsection (1); and (b) assist the party to comply with the duty. (3) … (4) In exercising the discretion to award costs in a civil proceeding, the Court or a Judge must take account of any failure to comply with the duty imposed by subsection (1) or (2). (5) If the Court or a Judge orders a lawyer to bear costs personally because of a failure to comply with the duty imposed by subsection (2), the lawyer must not recover the costs from his or her client." 47 As Gray J observed in Modra v Victoria (Department of Education and Early Childhood Development and Department of Human Services) (2012) 205 FCR 445 at 455, "the impact of those sections on the obligations of legal practitioners practising in this Court is significant." 48 By s 37N(1) a party is required to conduct a proceeding in a way that is consistent with the overarching purposes identified in s 37M. By s 37N(2) the party's lawyer must take into account the overarching duty imposed by subsection (1) and assist his or her client to comply with that duty. A failure of either the party or the practitioner to comply with these obligations may have costs consequences: see s 37N(4). 49 The achievement of the overarching purpose of the civil practice and procedure depends in part on a practitioner offering objective and considered advice to a client. This includes advice as to matters such as whether a proper basis in law exists for the making and pursuit of a particular application and the contents of any affidavits sworn in support of such an application. Without such advice, the just resolution of disputes according to law and as quickly and inexpensively as possible may well be hampered, if not frustrated. 50 It is clear, in my opinion, that Mr Ferreira failed to consider and advise Mr Jorgensen as to the legal merits of the applications or about the form and substance of the two affidavits. It may be that Mr Ferreira allowed misplaced benignancy towards Mr Jorgensen to subvert his professional judgment. Whatever the reason, he allowed himself to be used by Mr Jorgensen to bring a number of wholly unmeritorious applications before the Court. Those applications were supported by affidavits which were sworn by Mr Jorgensen and to which Mr Ferreira did no more than lend his name. As already noted, these affidavits contained scandalous and unsubstantiated allegations against a large number of people. 51 When objectionable parts of the affidavits were drawn to Mr Ferreira's attention in the course of argument he seemed to appreciate that they failed to meet even the basic requirements of the law of evidence. Although he stopped short of disavowing any parts of the affidavits he did not, when pressed, seek to submit that a proper foundation had been established for the various allegations of impropriety. 52 There can be no doubt that Mr Ferreira failed to comply with the duties imposed on him by s 37N(2) of the Act. He failed to take into account the duties which fell on his client carefully to assess the legal merit of the proposed applications, to consider whether a proper legal foundation existed for making the applications and to prepare affidavits in proper form. Mr Ferreira failed to assist Mijac to comply with these duties. The consequence was that applications which should not have been made were made and the respondents incurred costs in resisting them. 53 In the circumstances I consider that Mr Ferreira should pay the respondents' costs of the applications, those costs being calculated on a party-party basis rather than on an indemnity basis. Although Mr Ferreira was over ready to compromise his professional and statutory duties to the Court and his client, he did not do so for base reasons and his oral submissions to the Court were far more restrained than would have been the case had he sought to have the Court accept the full panoply of allegations raised by Mr Jorgensen. 54 Mr Ferreira should pay the respondents' costs of the applications. In making this order I am mindful of the provisions of s 37N(5) of the Act. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey.