Tucev v Commonwealth of Australia

REASONS FOR JUDGMENT (Revised from transcript) 1 Before the Court is an application to stay orders made by the Federal Circuit Court on 27 March 2015 and entered by that Court on 30 March 2015. Those orders were as follows: BY CONSENT, THE COURT ORDERS THAT: 1. The residential tenancy agreements entered into between the Commonwealth of Australia and Branislav Tucev in relation to the property situated at 40 Leggo Street, Badgerys Creek NSW 2555 (formerly known as Lot 63 in DP 2119) be terminated. 2. The property situated at 40 Leggo Street, Badgerys Creek NSW 2555 (formerly known as Lot 63 in DP 2119) comprising part of folio identifier Lot 1 in DP. 838361 be vacated by Branislav Tucev, and any other occupiers, on or before 15 June 2015. 3. Branislav Tucev, give vacant possession to the Commonwealth of Australia, the Applicant, the whole of the property situated at 40 Leggo Street, Badgerys Creek NSW 2555 (formerly known as Lot 63 in DP 2119) comprising part of folio identifier Lot 1 in DP. 838361 on or before 15 June 2015. 4. There be no order as to costs, with the intention that all parties bear their own costs of the proceedings. 2 The application for a stay was made to this Court this week and was heard by me yesterday, 11 June 2015. The application was interlocutory to another application which was to extend the time within which to apply for leave to appeal from the orders which had been made by Judge Smith. They were made by him on 27 March 2015 in chambers following the forwarding to his Honour's chambers of a minute of order indicating that the order was by consent. 3 That document was certainly signed by Mr Tucev. It is not clear whether it was also signed on behalf of the Commonwealth. The orders which were entered on 30 March would ordinarily signal the end of the proceedings. However, Mr Tucev subsequently applied to the Federal Circuit Court to set aside the entered orders pursuant to rule 16.05(2)(a) of the Federal Circuit Court Rules 2001. I will set the whole text of rule 16.05 out because, for reasons which will become apparent, some of its other provisions are also relevant to the issues which call for resolution on the present application. 16.05 Setting aside (1) The Court may vary or set aside its judgment or order before it has been entered. (2) The Court may vary or set aside its judgment or order after it has been entered if: (a) the order is made in the absence of a party; or (b) the order is obtained by fraud; or (c) the order is interlocutory; or (d) the order is an injunction or for the appointment of a receiver; or (e) the order does not reflect the intention of the Court; or (f) the party in whose favour the order is made consents. (3) This rule does not affect the power of the Court to vary or terminate the operation of an order by a further order. Note: See sections 57 and 58 of the Family Law Act in relation to rescission of a divorce order. 4 The application which was made to Judge Smith was made in explicit reliance upon rule 16.05(2)(a). That reliance, therefore, required Mr Tucev to prove that the order had been made in his absence. This he sought to do in two ways: first, by arguing that he was not physically present when Judge Smith made the consent orders in his chambers; and, secondly, by arguing that he was pressured into signing the consent orders in a way which meant that the consent which was exhibited in them was to be seen as able to be vitiated either in law or in equity. The substantial way that claim, that is the second claim, was made to Judge Smith was on the basis of the principle of economic duress explained by McHugh JA in Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 ('Crescendo') case. 5 In carefully drawn and thorough reasons, Judge Smith rejected the first argument as being inconsistent with the Federal Circuit Court Rules. He rejected the second argument on the facts as he found them. These conclusions he reached on 15 May 2015 (see Commonwealth of Australia v Tucev [2015] FCCA 1276). It is his Honour's orders on that day dismissing the application to set aside the consent orders that Mr Tucev now seeks to agitate in this Court by way of appeal should leave be granted. Pending the determination of that application, he seeks a stay of the orders which were originally made by Judge Smith on 27 March 2015 and entered on 30 March 2015. 6 It will be apparent from the terms of the orders, which I have set out above at paragraph 1, that Mr Tucev is required to give possession of his premises by 15 June 2015, which is Monday next. I do not think that a stay should be granted in respect of the first argument for the reasons which were given by Judge Smith. There is no explicit rule in the Federal Circuit Court Rules permitting consent orders to be made in chambers. However, rule 1.05 provides that if Federal Circuit Court Rules are themselves 'insufficient' then the provisions of the Federal Court Rules 2011 set out in Part 2 of Schedule 3 of the Federal Circuit Court Rules may be applied if the Court thinks it appropriate. 7 Amongst the rules set out in Part 2 of Schedule 3 is rule 39.11 which is as follows: 39.11 Consent orders (1) A Judge may make an order in accordance with the terms of a written consent of the parties by initialling or otherwise annotating the consent and placing it on the Court file. (2) The order must state that it is made by consent. (3) The order has the same force and validity as an order made after a hearing by the Judge. 8 That the Federal Circuit Court Rules are insufficient within the meaning of rule 1.05, in the sense that they have no rule which permits orders to be made in chambers by consent, is, I think, obvious. Thus, I am satisfied that Federal Court Rule 39.11 could be applied in the manner which Judge Smith did apply it. In his reasons, Judge Smith said at [10] that Federal Court Rule 39.11 'was the procedure adopted in this case'. Mr King of counsel for Mr Tucev submitted that there was no evidence either that the order in question had been signed by both parties, or that it had been initialled by Judge Smith. 9 It was certainly signed by Mr Tucev. The evidence does not show whether it was also signed on behalf of the Commonwealth. Assuming in Mr Tucev's favour that it was not signed on behalf of the Commonwealth, I do not think that this would assist him. What rule 39.11 requires is not a document which is signed by the parties, but a document which is a written consent. The rule does not, therefore, require the consent order to be signed. The document which is in evidence before me is, in my opinion, a written consent of the Commonwealth. That is sufficient. I do not think that I should conclude that the order was not initialled by Judge Smith because, in substance, what Judge Smith has said at [10] of his reasons is that the procedure in rule 39.11 was adopted and that procedure necessarily involves the initialling of the order by the judge. 10 The Federal Circuit Court's file was not available in this Court. Mr King made various submissions as to why it was not available. I would not be prepared to embark upon the task of contradicting [10] of Judge Smith's reasons without having that file before me. The powers of this Court to obtain that file are ample, but they were not enlivened. At the end of the day, the absence of the file in front of me in circumstances where Judge Smith has made the statement he has at [10] is Mr Tucev's problem. Judge Smith said the procedure in rule 39.11 was followed and, until the contrary is proven, that is how I propose to proceed. 11 The case, then, is one in which the rules contemplated that the consent order could be made in a judge's chambers and, implicitly, in the absence of a party. This involved no infringement of the principle of open justice because that principle, as expressed in the Federal Circuit Court of Australia Act 1999 (Cth) and, more particularly, in s 13, explicitly contemplates derogation from the principle where that is authorised by the rules. For the reasons Judge Smith gave, and for the reasons I have just given, the rules contemplated that an order might be made in the absence of a party if it was a consent order and it was initialled by the judge. This is what I have concluded occurred. 12 In relation to the second argument, matters are less clear. The evidence which was placed before Judge Smith did not show that Mr Tucev had been pressured by the Commonwealth into signing the consent orders by, what I might loosely call, an illegitimate threat to place him on a blacklist of tenants. There was evidence that such a threat had been made to other tenants. Before this Court, fresh material was put on by Mr Tucev in which he said that such a threat was, indeed, made to him. That claim now made suffers from the deficiency that it was not advanced in the Court below and, indeed, on one view, it may be inconsistent with the evidence which was advanced in the Court below. Before this Court, evidence was eventually led as to why this fresh evidence was not made available to Judge Smith. 13 If that evidence were to be accepted, it might justify the receipt by a Full Court of the new evidence that Mr Tucev has now presented that he was pressured by the Commonwealth into signing the consent orders. The Commonwealth disputes not only the correctness of the fresh evidence itself, but also the evidence which is now sought to be put before the Court to explain why it was that this fresh evidence was not led before Judge Smith. It categorically disputes the allegation that it threatened to place Mr Tucev on a blacklist. Further, it also points out a number of inconsistencies between the new account he has now given and the old account which he gave to Judge Smith. And it submits - and perhaps not without some force - that this is going to have potential implications on any issues as to credit. 14 There is force in these submissions, but I do not think they are apt to be decided on a stay application. In order to resolve the various issues which arise it would be necessary to see the witnesses cross-examined. I cannot say that Mr Tucev's account is such that I can simply dismiss it as if on a summary judgment application by the assertion that it simply could not be accepted. It seems to me that there is an issue to be tried about whether Mr Tucev was threatened in the way that he alleges. In saying that, I accept that if and when the times comes for that matter to be ventilated, that one can readily see some blows which the Commonwealth might strike on that front, but those blows are not such as to allow me to conclude that the matter is not arguable. 15 Mr Rayment, who appeared with Mr Doyle of counsel on behalf of the Commonwealth, made a submission that Mr Tucev's proceedings were irregularly constituted. His point was that in order to set aside the agreement underlying the consent orders, Mr Tucev needed to commence a fresh proceeding. This seems to me to make a lot of sense. In order to set aside the consent order there are really two steps which need to be taken; the first is a proceeding in which the underlying agreement is set aside by a court; the second is the interlocutory application under Federal Circuit Court rule 16.05 in which once that consent itself is destroyed by curial order, a further order is then made setting aside the consent order itself. 16 That would appear to require a separate proceeding seeking final relief to set aside the consent order embodied in the document which was signed by Mr Tucev. Once that agreement was set aside, the issue would then be which rules under rule 16.05 might be invoked in order to set aside the consent order. There appear to be three candidates. The first is subrule (2)(a), which was the one upon Mr Tucev moved in the Court below, namely that the order was made in the absence of a party. Here the argument would be that once the consent was vitiated, Mr Tucev could, in some senses, be said not to have been present when the order was made. For myself, that argument seems to have some difficulties. 17 The second would be under subrule (b) which allows an order to be set aside in the case of fraud. Here the argument would be that the expression 'fraud' in the rule contemplates the notion of equitable fraud; one would then contend that the kind of relief sought in the posited final proceedings setting aside the underlying consent could be described as fraud in equity. 18 The third is subrule (e) which would proceed upon the basis that if the consent itself was set aside by an order, the order which was then entered by the Court could not be said to reflect the Court's intentions which, on this hypothesis, would have proceeded upon an assumption that the consent order reflected an underlying consent. Regardless of which of those routes were taken, one would still have that which Mr Rayment identified, namely a substantive proceeding seeking final relief to set aside the underlying agreement. 19 If that procedure were to be adopted, then there would need to be a trial on Mr Tucev's claims to set aside the agreement. That trial would be, in effect, a normal equity suit. It might have appended to it various statutory counts. It might have a common law duress claim attached to it. But what it would be would be a trial of the question of whether the consent orders were obtained under any of a number of species of what I will loosely call duress. Although the case was put below on the basis of Crescendo, it seems to me that there are a number of other related principles which would probably end up in the same place, and I have here in mind the general equitable notion of unconscionability involving the unconscientious exploitation of one party's weaker position by another's stronger position, perhaps one of the unspecified categories of undue influence, perhaps statutory unconscionability, perhaps common law duress. These are all matters which may in due course need to be investigated. 20 But whatever one says about them, they would appear to be matters which would have to be tried. In any event, the actual procedure, which has been enlivened below and which comes now before this Court is that all these issues have been rolled up in an interlocutory application made in the Federal Circuit Court. That is to say by means of the application to set aside the consent orders, there has been, effectively, concealed within the interstices of that application a substantive order to set aside the agreement for want of a true consent. 21 Judge Smith very properly noted this matter in his reasons, but was able to skirt the procedural consequences of it by reason of the factual findings which he made. Mr Rayment submitted with considerable force that the application as now articulated was, in effect, an application which should have been made to Judge Smith to revisit the matter on the basis that fresh evidence had become available which was not available at the time of the original hearing. 22 This may well be correct. However, to accept its correctness does not necessarily mean that the Full Court or this Court in its appellate jurisdiction would lack jurisdiction to deal with that which has been filed before it. Mr Rayment relied upon the Full Court's decision in Williams v Grant [2004] FCAFC 178 ('Williams') where Lander J with whom North and Dowsett JJ agreed on this issue appeared to countenance the possibility that in the rather unusual circumstance where fresh evidence is permitted to be led in an appeal but that evidence really involves quite complicated trial issues that it might be possible to allow the appeal on a procedural basis and remit the matter back to the original judge or the primary judge for a fresh hearing. 23 I have my doubts about that as a procedural possibility. In that case, Lander J was critical of the Full Court being put in that position and the actual conclusion was that the evidence which was sought to be tendered on that occasion was not, in fact, led. There are some complex questions coming out of Williams, not the least of which is how on the procedure identified by Lander J one could be able to identify the jurisdictional prerequisite for the Full Court's jurisdiction, namely, error: see Branir Pty Ltd v Owston Nominees (No. 2) (2001) 117 FCR 424. 24 Regardless, it seems to me that Williams, whatever it has to say, may be distinguished from the situation in this case, because there was an explicit finding at [46] that no explanation for why the evidence was not led in the Court below had been put before the Full Court. Here, that evidence has been put before me, which is - I will not say any more - an explanation for why the evidence was not led below. Whether that account is ultimately accepted is a different question. But there is evidence before me. 25 It seems to me that if all of Mr Tucev's evidence were accepted, and by all I mean his fresh evidence as to the threat which he says was made to him together with his explanation for why he did not put that evidence before Judge Smith, the Full Court could conclude that an appeal could succeed. No doubt there are some procedural difficulties for the reasons which I have already explained, but I am not satisfied to the requisite standard that those difficulties are not necessarily fatal. For that reason, it seems to me that Mr Tucev has an arguable case for leave to appeal. 26 The balance of convenience favours Mr Tucev, who, if the stay order is not made, will lose his home on Monday. No doubt a failure by the Commonwealth to get possession on Monday will itself be inconvenient, but at least in the short term, I am not satisfied that that inconvenience is extreme. This is because, as I understand it, there are still pending in the Federal Circuit Court a number of cases dealing with the Badgerys Creek site, which have hearing dates after 16 June. In those circumstances, I propose to stay the orders made by the Federal Circuit Court granting possession to the Commonwealth. The form of order will need to be formulated. However, I propose to do so on an undertaking that Mr Tucev will prosecute his application for leave to appeal and any appeal in the most expeditious fashion possible.