University of New South Wales v Huang [2011] FCA 673 | Case summary

The Requirement of Leave 6 Jurisdiction to hear and determine an appeal from a decision of a Federal Magistrate of the present kind is conferred by s 24(1)(d) of the Federal Court of Australia Act 1976 (Cth). But s 24(1A) requires leave to be given if the appeal is from an interlocutory judgment. 7 An order striking out a statement of claim and dismissing a proceeding is interlocutory in character: Dart v Norwich Union Life Australia Ltd [2002] FCA 168; Creditors of Antal-Air Pty Ltd v Antal-Air Pty Ltd [2004] FCAFC 303 at [5], 51 ACSR 473 at 476. So, too, is a decision declining to strike out a proceeding. In circumstances where leave to appeal is sought from an interlocutory judgment, leave may be granted where: 1. in all the circumstances, the decision at first instance is attended by sufficient doubt to warrant its reconsideration by a Full Court; and 2. substantial injustice would result if leave were refused, supposing the decision to be wrong. Cf. Jarrett v Seymour (1993) 46 FCR 557 at 559, 119 ALR 46 at 49. These two requirements are "cumulative" and each limb must be made out: Rawson Finances Pty Limited v Commissioner of Taxation [2010] FCAFC 139 at [5] per Ryan, Stone and Jagot JJ. But the two elements of the test are not unrelated: Cabcharge Australia Ltd v Australian Competition and Consumer Commission [2010] FCAFC 111 at [20] per Kenny, Tracey and Middleton JJ. The "sufficiency of the doubt in respect of the decision and the question of substantial injustice should not be isolated in separate compartments": Sharp v Deputy Commissioner of Taxation (1988) 19 ATR 908, 88 ATC 4184 at [10] per Burchett J. 8 Where, however, the interlocutory decision sought to be challenged involves an exercise of discretion going to a matter as to the practice and procedure of that Court, an applicant confronts an additional obstacle. A party who seeks to appeal against such a decision undertakes "a formidable task": Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 at 393, 98 ALR 200 at 206. Wilcox and Gummow JJ, after having made such an observation, continued: This was made clear by Gibbs CJ, Aickin, Wilson and Brennan JJ in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177; 35 ALR 625 at 629: "Nor is there any serious dispute between the parties that appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure. Counsel for Brown urged that specific cumulative bars operate to guide appellate courts in the discharge of that task. Not only must there be error of principle, but the decision appealed from must work a substantial injustice to one of the parties. The opposing view is that such criteria are to be expressed disjunctively. Cases can be cited in support of both views ... For ourselves, we believe it to be unnecessary and indeed unwise to lay down rigid and exhaustive criteria. The circumstances of different cases are infinitely various. We would merely repeat, with approval, the oft-cited statement of Sir Frederick Jordan in Re Will of FB Gilbert (dec) (1946) 46 SR (NSW) 318 at 323: '… I am of the opinion that, … there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a judge in chambers to a Court of Appeal.' ... It is safe to say that the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration." The "formidable task" has also been described a "heavy burden of persuasion": IFTC Broking Services Ltd v Commissioner of Taxation [2010] FCAFC 31 at [14], 268 ALR 1 at 5 per Stone, Edmonds and Jagot JJ. The caution against laying down "rigid and exhaustive criteria", however, must constantly be borne in mind.

The Issues Sought To Be Canvassed on Appeal 9 Before the Federal Magistrate, the University argued that the proceeding should be struck out on three principal bases, namely: a failure on the part of Ms Huang to comply with orders made as to the filing of evidence; the proceeding lacked reasonable prospects of success; and the proceeding was an abuse of process. The Federal Magistrate rejected each of these arguments. 10 In support of its application for leave to appeal, the University now contends that the Federal Magistrate erred in a number of respects. It is unnecessary to address each of the arguments sought to be advanced by the University and unnecessary to address in any detail each of the proposed Grounds of Appeal should leave to appeal be granted. Indeed, given the conclusion that leave to appeal should be granted, it may well be preferable not to express any conclusion beyond that which is necessary to warrant the granting of leave. 11 Two interrelated considerations, it is respectfully concluded, warrant the granting of leave to appeal. Both have as their genesis the manner in which Ms Huang has to date conducted the proceedings in the Federal Magistrates Court. 12 First, Rule 13.03A(1) of the Federal Magistrates Court Rules provides as follows: When a party is in default For rule 13.03B, an applicant is in default if the applicant fails to: (a) comply with an order of the Court in the proceeding; or (b) file and serve a document required under these Rules; or (c) produce a document as required by Part 14; or (d) do any act required to be done by these Rules; or (e) prosecute the proceeding with due diligence. Rule 13.03B(1) thereafter provides as follows: Orders on default If an applicant is in default, the Court may order that: (a) the proceeding be stayed or dismissed as to the whole or any part of the relief claimed by the applicant; or (b) a step in the proceeding be taken within the time limited in the order; or (c) if the applicant does not take a step in the time mentioned in paragraph (b) - the proceeding be stayed or dismissed, as to the whole or any part of the relief claimed by the applicant. These Rules have as their counterpart Order 35A rr 2 and 3 of the Federal Court Rules. 13 When considering the comparable powers conferred upon this Court where a party has failed to comply with orders previously made, Besanko J in Jianshe Southern Pty Ltd v Turnbull Cooktown Pty Ltd (No 2) [2007] FCA 903 referred to the powers previously conferred by O 10 r 7. His Honour there said: [25] Previously, the power to make orders of this nature was contained in O 10, r 7. In Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388, Wilcox and Gummow JJ considered the principles which should govern the discretion to dismiss a proceeding under O 10, r 7 of the Federal Court Rules. In my respectful opinion, their Honours' observations apply equally to the power in O 35A, r 3(1). Their Honours said (at 396-397): "The discretion conferred by O 10, r 7 is unconfined, except for the condition of non-compliance with a direction. As it is impossible to foresee all of the circumstances under which the rule might be sought to be used, it is undesirable to make any exhaustive statement of the circumstances under which the power granted by the rule will appropriately be exercised. We will not attempt to do so. But two situations are obvious candidates for the exercise of the power: cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to co-operate with the Court and the other party or parties in having the matter ready for trial within an acceptable period and cases - whatever the applicant's state of mind or resources - in which the non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the respondent. Although the history of the matter will always be relevant, it is more likely to be decisive in the first of these two situations. Even though the most recent non-compliance may be minor, the cumulative effect of an applicant's defaults may be such as to satisfy the judge that the applicant is either subjectively unwilling to co-operate or, for some reason, is unable to do so. Such a conclusion would not readily be reached; but, where it was, fairness to the respondent would normally require the summary dismissal of the proceeding. In the second of the two situations we postulate, a significant continuing default, it does not really matter whether there have been earlier omissions to comply with the Court's directions. Ex hypothesi the default is continuing and is imposing an unacceptable burden on the respondent. But the continuance of the non-compliance is of the essence of this situation. If, when the Court looks at the matter, the direction has already been complied with, the defaulting applicant may be ordered to pay any wasted costs; but it would be difficult to justify the dismissal of the proceeding solely because of that default." These observations were later endorsed by the Full Court in Welsh v Digilin Pty Ltd [2008] FCAFC 149, 250 ALR 13. And in United Industries International Ltd v Chameleon Mining N/L [2009] FCA 1064 Stone J set forth the terms of Order 35A r 3(1)(a) and continued: [13] … Relying on observations made in Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 at 396, the first defendant submitted that, before dismissing the proceedings under O 35 r 3(1)(a) I needed to be satisfied either (a) that the second plaintiff's history of non-compliance indicates that he is unwilling or unable to progress his application so that it is ready for trial within an acceptable period or (b) that irrespective of his intention or resources his continued failure to comply is occasioning unnecessary delay, expense or other prejudice to the defendants. [14] While the principles articulated in Lenijamar relate to the now defunct O 10 r 7, it is clear that the same principles are applicable in relation to the Court's power under O 35 r 3(1)(a); Jianshe Southern Pty Ltd v Turnbull Cooktown Pty Ltd (No 2) [2007] FCA 903 per Besanko J. 14 More recently in Smart Company Pty Ltd (In Liquidation) v Clipsal Australia Pty Ltd (No 6) [2011] FCA 419, Lander J emphasised that the powers conferred by Order 35A r 3 of the Federal Court Rules are not exercised in every case where there has been a failure to comply with an order of the Court. His Honour there relevantly observed: [560] The jurisdiction to make an order under O 35A r 3 is enlivened by the respondents establishing any one or more of the sub-paragraphs of O 35A r 2(1). On this application the respondents rely on paragraphs (a) and (f) of sub-rule 1 of O 35A r 2. [561] Insofar as the claim is based on a failure to comply with paragraph (a) the jurisdiction is not exercised in every case where a respondent is able to establish a failure to comply with an order of the Court. [562] It is not possible to lay down a universal test for the exercise of the jurisdiction under O 35A r 3 when the respondent relies upon O 35A r 2(1)(a) but ordinarily a respondent would have to establish a serious breach or a number of breaches which are of a kind that should lead to the result that the applicant should not be entitled to prosecute the proceeding in the Court. That result would again ordinarily only come about if the Court were of the opinion that the applicant's failure to comply with an order or orders of the Court meant that it was in the interests of justice that the applicant not be permitted to prosecute the proceeding. [563] Usually a respondent would have to not only establish the failure to comply with an order or orders but some sort of prejudice occasioned to the respondent by reason of the failure. If for example, a respondent was able to show that the failure meant that any trial could not be fair then ordinarily the respondent would have discharged the onus which the respondent undoubtedly bears on an application of this kind. The respondent might also be able to satisfy the Court that an order should be made if by reason of the applicant's failure to comply with an order or orders of the Court the respondent has been put to very great expense which is irrecoverable. A respondent might discharge the onus if the respondent could show that paragraph (1)(a) of O 35A r 2 has been enlivened and that it is unlikely, in the sense of being more probable than not, that the applicant will be able to prosecute the proceeding to a conclusion. 15 For present purposes it may be accepted that these observations are equally applicable to the exercise of the discretion conferred by Order 13.03B(1) of the Federal Magistrates Court Rules. 16 In the present proceeding, the Federal Magistrate recognised that Ms Huang was "in default of the orders made by the Court": [2011] FMCA 235 at [3]. After recognising such default, the Federal Magistrate continued as follows: [4] The fact that the applicant took until last week to file a further affidavit is, undoubtedly, a breach of the order made on 31 July 2010 but, at the end of the day, if the applicant wishes to file further affidavits in support of her case or does not wish to file affidavits in support of her case that is a matter for her. Orders dismissing proceedings for default in compliance with earlier orders of the Court should only be made where the step which is required to be taken is one which is necessary for the forward conduct of the matter, whether that be the necessity for a respondent to file a response and a supporting affidavit, for a party to give discovery, answer interrogatories or something of that sort. A default of that nature may, in certain circumstances, justify the Court in dismissing a matter summarily. However, the fact that an applicant has failed to file evidence in addition to what she has already filed is not the sort of default which, in my view, justifies dismissal of the matter. 17 It may readily be accepted that the striking out of a proceeding is a power to be exercised "cautiously" (cf. Lawson v NSW Minister for Land and Water Conservation [2007] FCA 8 at [22]) and will "only be made in a plain and obvious case" (Davis v Commonwealth (1986) 68 ALR 18 at 23; Andrews v Australia and New Zealand Banking Group Ltd [2011] FCA 388 at [23] per Gordon J). And although it is a power that manifestly need not be exercised simply by reason of a "default" having occurred, it is respectfully considered that the Federal Magistrate may well have erred in concluding that a proceeding should be dismissed "only … where the step which is required to be taken is one which is necessary for the forward conduct of the matter…". The exercise of the discretion in the present proceeding appears to have placed to one side the prior conduct of the case by Ms Huang and focussed primarily (if not exclusively) on the future conduct of the proceeding. To so proceed, it is considered, may well be an unnecessary constraint upon the power of the Federal Magistrates Court conferred by Rule 13.03B(1) and an unnecessary constraint upon the significance to be ascribed to a prior "default" in compliance with Court orders. 18 Second, it is further respectfully concluded that the Federal Magistrate may also have erred in the manner in which he rejected the University's argument that the proceeding was an abuse of process. 19 The Federal Magistrate relevantly characterised the manner in which Ms Huang sought to support her case as follows: [12] The third limb of the University's application is that the proceedings are an abuse of process. There can be no doubt that there are aspects of these proceedings which, truly, are abusive. The applicant seems to find it difficult to confine her claim to something within the ambit of what she alleged to the Human Rights and Equal Opportunity Commission. Secondly, she makes bold assertions which appear to be unsubstantiated by facts. She also makes bold assertions from the bar table which are scandalous and embarrassing on occasions. She files many applications in a case, not as many in this case as in Dr Xiao's case (proceedings SYG577/2008), but certainly applications in a case which seem to be vexatious. The application in a case which was filed today is undoubtedly vexatious in some respects because it seeks to canvass the ruling which I made last Thursday on the application in a case which she had filed last week. It is, I accept, an expensive case for the University to run. The cost is disproportionate to the matters in issue, both factually and in terms of the damages which are likely to flow were the applicant to be successful, and it is unfair on the respondents that they seem to be dealing with a claim which is not set in stone, and it does seem to move. However, all those things are examples of conduct which can be addressed on each individual occasion. The Federal Magistrate went on to reject the University's argument as follows: [13] The essence of a decision to dismiss proceedings on the grounds that they are an abuse of process is that they are deliberately vexatious to a party, deliberately oppressive of a party or have no prospects of success whatsoever. It might be a case where all of the issues have been decided by the parties previously and the proceedings are just a reventilation of the matters which have previously been determined. Those sorts of cases are an abuse of the process of the Court and should not be entertained. However, the fact that the applicant, who plainly has psychiatric issues which she freely admits, is not a lawyer but a scientist by background and is operating in a language which is not her first language, tends to explain, though not always excuse, her conduct of the proceedings. Because the proceedings themselves are not so forlorn as to deserve dismissal on the basis of them wanting reasonable prospects of success, it could not be said, for the reasons I have already given, that they should be found to be an abuse of process. 20 Again, it is respectfully concluded that the Federal Magistrate may well have too confined the circumstances in which a proceeding may be dismissed as being an abuse of process. Although unquestionably conscious of the difficulties confronting the University by reason of the manner in which Ms Huang was conducting her case, it is concluded that the Federal Magistrate may well have erred in confining abuse of process to those circumstances he summarises at paragraph [13] of his reasons for decision. 21 "What amounts to abuse of court process", it is well recognised, "is insusceptible of a formulation comprising closed categories. Development continues.": Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27 AT [9], 226 CLR 256 at 265 per Gleeson CJ, Gummow, Hayne and Crennan JJ. But from "early times" the courts have exercised an inherent power to see that their processes were not abused and to protect themselves and thereby safeguard the administration of justice: Dupas v The Queen [2010] HCA 20 AT [14], 241 CLR 237 at 243 per French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ. A recurring concern - albeit by no means the exclusive concern - when considering whether a proceeding involves an abuse of process is whether a proceeding involves "oppression and unfairness": eg, State Bank of New South Wales Ltd v Stenhouse Ltd [1997] Aust Torts Reports 81 to 423 per Giles CJ; Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699 at [67] to [69] per French J (as His Honour then was). 22 An abuse of process may potentially be exposed if the case sought to be mounted against a respondent is of uncertain and ever-changing content and advanced in a manner devoid of compliance with orders made by a court - orders presumably made for the very purpose of ensuring the orderly and proper administration of justice, being justice to both an applicant and a respondent. 23 In the present proceeding, there is considerable doubt as to whether the Federal Magistrate may have confined too narrowly the circumstances in which an abuse of process may be demonstrated and thereby failed to properly consider the conduct of the case to date. It may well be queried whether the "essence" of an "abuse of process" is confined to the "deliberate" conduct to which the Federal Magistrate referred. An "abuse of process" may also, for example, embrace "undue delay": cf. Jago v District Court of New South Wales (1989) 168 CLR 23 at 26 per Mason CJ. There is a "need to deal with cases expeditiously if they are to be dealt with justly": Bi v Mourad [2010] NSWCA 17 at [47] per Allsop P. And, irrespective of whether or not the Federal Magistrate may have confined too narrowly the ambit of that which constitutes an abuse of process, there is also considerable doubt as to whether the Federal Magistrate impermissibly equated his consideration of an abuse of process with prospects of success. 24 Left to one side is a further submission advanced by the University that the Federal Magistrate failed to take into account the very real prejudice said to have been suffered by the University. That prejudice extended, so it was submitted, beyond the legal costs incurred in conducting the proceeding to date and extended to the fact that the Second Respondent was no longer within the jurisdiction and had returned to Sri Lanka. Further prejudice was claimed by reason of an inability to now locate witnesses. But such matters do not seem to have been considered by the Federal Magistrate when exercising his discretion. The weight to be given to such matters was a matter for the Federal Magistrate; but they were matters which should have been, but apparently were not, taken into account. Given the lapse of time between 2001 and 2011, a consideration that cannot be discounted - and which most probably should have been addressed by the Federal Magistrate - is any prejudice that the University may have suffered by reason of that lapse of time and any "presumptive prejudice" that may arise in such circumstances: cf. Brisbane South Regional Health v Taylor (1996) 186 CLR 541 at 551 per McHugh J. His Honour there relevantly observed: … Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties. Prejudice may exist without the parties or anybody else realising that it exists. As the United States Supreme Court pointed out in Barker v Wingo [(1972) 407 US 514 at 532], "what has been forgotten can rarely be shown". So, it must often happen that important, perhaps decisive, evidence has disappeared without anybody now "knowing" that it ever existed. Similarly, it must often happen that time will diminish the significance of a known fact or circumstance because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose. A verdict may appear well based on the evidence given in the proceedings but, if the tribunal of fact had all the evidence concerning the matter, an opposite result may have ensued. The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose. See also: Jago v District Court of New South Wales (1989) 168 CLR 23 at 33 per Mason CJ. 25 Underlying each of the two related concerns is the apparent failure on the part of the Federal Magistrate to expressly address the mandate imposed by s 42 of the Federal Magistrates Act 1999 (Cth) to ensure that proceedings are "not protracted". That section provides as follows: Federal Magistrates Court to operate informally In proceedings before it, the Federal Magistrates Court must proceed without undue formality and must endeavour to ensure that the proceedings are not protracted. The balance between endeavouring to ensure that a proceeding is "not protracted", whilst at the same time proceeding "without undue formality", may in some cases involve difficulty. But it is a balance that must at least be attempted. 26 Also left to one side is whether the Federal Magistrate erred in his consideration of the University's submission that the case against it lacked reasonable prospects of success. The University contended that the conduct of Mr Abayawickrama in 2001 was said by Ms Huang to fall fell within s 28B and/or s 28F of the Sex Discrimination Act 1984 (Cth). If that was so, the University then contended that it could only be liable for his conduct if Ms Huang could bring the University within the reach of either s 105 or s 106. Section 105 provides as follows: Liability of persons involved in unlawful acts A person who causes, instructs, induces, aids or permits another person to do an act that is unlawful under Division 1 or 2 of Part II shall, for the purposes of this Act, be taken also to have done the act. But Counsel for the University contended, with some degree of merit, that neither s 28B nor s 28F were within Division 1 or 2 of Part II. That left the potential application of s 106 which provides as follows: Vicarious liability etc. (1) Subject to subsection (2), where an employee or agent of a person does, in connection with the employment of the employee or with the duties of the agent as an agent: (a) an act that would, if it were done by the person, be unlawful under Division 1 or 2 of Part II (whether or not the act done by the employee or agent is unlawful under Divison 1 or 2 of Part II); or (b) an act that is unlawful under Division 3 of Part II; this Act applies in relation to that person as if that person had also done the act. (2) Subsection (1) does not apply in relation to an act of a kind referred to in paragraph (1)(a) or (b) done by an employee or agent of a person if it is established that the person took all reasonable steps to prevent the employee or agent from doing acts of the kind referred to in that paragraph. But the difficulty confronting Ms Huang in invoking that section was said to be the factual difficulty of establishing that Mr Abayawickrama was an "employee or agent" and/or that the acts complained of were done "in connection with the employment of the employee." 27 The further potential difficulty exposed by the Federal Magistrate's consideration of the application made before him by the University was his failure to address the merit of these arguments. Given the conclusion that leave to appeal should be granted, it is prudent to not further address or resolve the merit of this additional submission. 28 Although the difficulties confronting an unrepresented litigant who may well be experiencing personal difficulties must necessarily be recognised, it is considered that the decision of the Federal Magistrate declining to dismiss the present proceeding is attendant with sufficient doubt as to the manner in which the discretion was exercised as to warrant the grant of leave to appeal. There is a real question as to whether the Federal Magistrate has focussed more upon his concern to ensure that Ms Huang should be permitted to present her case of uncertain content and focussed less (if at all) upon the conduct of the proceeding to date and the need to ensure that the proceeding was "not protracted". Injustice to the University is occasioned by the prospect that the proceeding, if not dismissed, has the prospect of exposing it to protracted litigation of uncertain content.

University of New South Wales v Huang

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Judgment (11 paragraphs)

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Cases Cited (22)