FEDERAL COURT OF AUSTRALIA

Stuart v Rabobank Australia Ltd [2019] FCA 343

ORDERS

THE COURT ORDERS THAT:

1.    The application for leave to appeal be dismissed.

2.    The respondent notify the applicants or the court whether it wishes to apply for an order that its costs be paid under s 43(3)(f) of the Federal Court of Australia Act 1976 (Cth) on or before 22 February 2019.

3.    The question of who should be liable to pay the respondent’s costs be reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The applicants pay the respondent’s costs.

THE COURT NOTES THAT:

2.    The respondent notified the Court pursuant to order 2 made on 15 February 2019 that it did not apply for any order other than order 1 above.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

RARES J:

1    This is an application for leave to appeal from the decision of the primary judge on 17 September 2018 to summarily dismiss the proceeding. On 17 September 2018, her Honour also refused the applicants, Mark and Catherine Stuart, leave to file the draft fourth further amended statement of claim (current draft pleading), which, in fact, was the ninth iteration of an attempt to plead their case in a statement of claim. In 2015, her Honour had ordered the applicants to file an amended statement of claim. In early 2016, her Honour struck out that amended statement of claim. The strike out led to the subsequent seven iterations of a proposed replacement.

2    Her Honour made her orders of 17 September 2018 on the basis that, having given the applicants numerous opportunities to plead a statement of claim that disclosed an intelligible cause of action, the current draft pleading did not do so.

3    Mr and Mrs Stuart were farmers who had applied to the respondent, Rabobank Australia Limited, for finance. Mr and Mrs Stuart sought to assert in the current draft pleading against Rabobank that the bank, either, cannot rely upon, or there should be an order setting aside, a deed of forbearance and acknowledgement which it and a subsidiary had entered into with Mr and Mrs Stuart in 2012. They alleged that the bank, over the course of their banking relationship, both prior to the entry into the deed and subsequently, acted toward them in breach of contract and or unconscionably within the meaning of the unwritten law or the provisions of the Australian Securities and Investments Commission Act 2001 (Cth) or its statutory analogues.

The legislative context

4    Relevantly, the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act) provides:

23    Making of orders and issue of writs

The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate.

…

31A    Summary judgment

(1)    The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)    the first party is prosecuting the proceeding or that part of the proceeding; and

(b)    the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.

5    Additionally, r 26.01 of the Federal Court Rules 2011 provides:

26.01    Summary judgment

(1)    A party may apply to the Court for an order that judgment be given against another party because:

…

(c)    no reasonable cause of action is disclosed; or

(d)   the proceeding is an abuse of the process of the Court; or

    …

(emphasis added)

The primary judge’s reasons

6    In her Honour’s reserved judgment, the subject of the present application, she carefully considered the current draft pleading: Stuart v Rabobank Australia Ltd [2018] FCA 1304. I am unable to see any error in her conclusion that the current draft pleading failed to articulate a comprehensible or intelligible allegation of a cause of action on which it would be appropriate to allow the matter to proceed. Her Honour said that:

The versions of the statement of claim proposed thus far indicate that the Stuarts wish this Court to undertake some form of roving inquiry into the entirety of their relationship with Rabobank, in effect, involving every dealing between July 2004 when the Stuarts first became customers of Rabobank until 1 April 2015 when receivers appointed by Rabobank sold the Mount Morris property. The proposed inquiry concerns the credit contract entered into in 2004, numerous alleged oral, written and partly oral and partly written variations to that contract, numerous alleged new contracts (also oral and partly oral and partly written), representations said to form part of these contracts over many years at different times, a multiplicity of alleged breaches by Rabobank without any clear or in some cases any identification of the terms said to be breached or how they came to form part of the contract or contracts in questions, claims for excessive interest charges between 2005 and 2012, claims that the farm debt mediation leading to the deed in 2012 was unlawful in many different ways, as well as claims against the mediator and the receivers (who are not parties) and an apparent challenge to the lawfulness of the entire Queensland farm debt mediation scheme.

The inquiry sought would involve Rabobank’s conduct over the full period of dealings between 2004 and 2015 (without, I should note, any apparent regard to issues such as limitation periods or consideration of necessary or appropriate parties given the claims against or about the mediator, the Queensland farm debt mediation scheme, and the receivers). This proposed inquiry, moreover, is only loosely tethered to various causes of action which, on analysis, remain beyond comprehension or seriously deficient. An inquiry of this kind is not a function of the Court. Courts decide legal claims. They do so within a framework designed to ensure procedural fairness to all parties. The right which every person has is to come to court and have a full and fair opportunity to have their legal claims heard on the merits consistent with the requirement that the process be procedurally fair to both parties. This opportunity is not unconfined. It does not continue to be available in all circumstances and at any cost. I am unable to avoid the conclusion that the opportunity has been exhausted in this case.

7    Her Honour recounted the history of the litigation in some detail. She explained why, by July 2017, she had concluded that the only practical means of there being a fair hearing of Mr and Mrs Stuart’s claim was for them to file “a statement of claim that meets a minimum threshold of comprehensibility”. She noted that the reality was that the repeated indulgences that Mr and Mrs Stuart had been granted in the matter up until then had caused significant delay, expense and inefficiency. However, the primary judge accepted (as I do) that Mr and Mrs Stuart had acted in good faith and, in the main, they had lawyers acting for them. However, for a period in 2016 and 2017, they had been subject to financial and serious personal stresses, and at that time they did not have legal representation. In that period, satellite litigation had distracted them and her Honour. That was because Rabobank had sought to enforce what it claimed was a settlement of the proceeding at a mediation that her Honour had ordered earlier.

8    Her Honour noted in her reasons of 17 September 2018 that Rabobank had not sought an order under s 31A of the Federal Court Act. Rather, as her Honour recorded:

It is an application for summary dismissal based on the Court’s general power under s 23 to “to make orders of such kinds, including interlocutory orders… as the Court thinks appropriate”. The summary dismissal is sought on the basis that since at least 28 July 2017 the Stuarts have been on notice that the case will not be permitted to proceed without a statement of claim and, despite having multiple opportunities provided to them, they have not been able to provide a document which satisfies the essential functions of a statement of claim. (emphasis added)

9    Her Honour identified statements of principle in the recent decision of Rozenblit v Vainer (2018) 356 ALR 26 that guide the exercise of the Court’s discretion to make an order dismissing a proceeding without a trial on the merits. The primary judge said that, ordinarily, a litigant is entitled to a determination on the merits of a bona fide claim of the nature of that which Mr and Mrs Stuart had satisfied her Honour they had sought to bring, unless, as Kiefel CJ and Bell J said in Rozenblit 356 ALR at 30 [10]:

… to allow the claim to proceed would amount to an abuse of process or would clearly inflict unnecessary injustice on the party seeking the stay, in which case the proceeding should be halted.

10    On 5 February 2018, her Honour had refused Mr and Mrs Stuart leave to file a pleading headed “third further amended statement of claim”: Stuart v Rabobank Australian Limited [2018] FCA 30 at [20]-[25]. There, the primary judge also canvassed, in more detail, the earlier history of the litigation and the good faith, but unsuccessful, attempts of Mr and Mrs Stuart to seek to articulate a comprehensible cause of action. She concluded that ([2018] FCA 30 at [25]):

I have decided that the Stuarts should be given one further opportunity to attempt to plead their case. In so doing I have given the most weight to the fact that, despite the terms of paragraph 2 of its interlocutory application dated 5 October 2017, Rabobank does not contend that the case should be dismissed under s 31A of the Federal Court of Australia Act 1976 (Cth), which permits summary dismissal of a case which does not have a reasonable prospect of success. Rather, Rabobank’s point, which is correct, is that the Stuarts have been given multiple opportunities to file a statement of claim which satisfies the fundamental requirement of a pleading that it give to the other party adequate notice of the case that other party must meet but have not been able to do so. In such a case, it is not easy to draw the line. In my view, the line is now drawn. The Stuarts will get one more chance to plead their case. I will give the Stuarts six weeks in which to do so. If the next version of the proposed statement of claim remains unintelligible then, as matters currently stand, I see no option other than to dismiss the proceeding, with costs. (emphasis added)

11    In the event, her Honour extended the time for that final opportunity to be complied with from her original requirement that, by 23 March 2018, Mr and Mrs Stuart serve and provide to the Court the proposed fourth further amended statement of claim. On 24 April 2018, the draft was not finalised and the primary judge permitted them to serve it by 8 May 2018, on which occasion they provided the current draft pleading.

Mr and Mrs Stuart’s submissions

12    Mr and Mrs Stuart argued that the primary judge’s order for summary dismissal was a final order and that they did not need leave to appeal. They relied on observations by each of Finkelstein J and Gordon J in Jefferson Ford Pty Limited v Ford Motor Company of Australia Limited (2008) 167 FCR 372 at 378-379 [10] and 417 [173] (a case concerned with an order under s 31A) that an order for summary judgment in relation to all claims and all parties was final. I note that since then, s 24(1D)(b) of the Federal Court Act has been inserted to provide expressly that an order under s 31A is taken to be interlocutory and, by force of s 24(1A) and (1D), requires leave to appeal.

13    Counsel for Mr and Mrs Stuart argued that her Honour, having found that his clients were acting bona fide in seeking to litigate the proceeding, should have found “some other way” in which to allow the proceeding to continue rather than summarily dismissing it. He contended that there was no power summarily to dismiss it under s 23 of the Federal Court Act and that her Honour had not availed of the powers in r 26.01(c) or (d). He argued that, in any event, her Honour erred in determining that the current draft pleading should not be allowed to be filed as a statement of claim.

14    Counsel for Mr and Mrs Stuart argued that a refusal of leave to appeal would occasion them substantial injustice because they are in straitened circumstances and are coping (as I accept they are) with a very difficult personal tragedy that no parent would wish to have in his or her life. He contended that it would be extremely difficult for them to be in a position to commence new proceedings within any applicable limitation period prior to what he asserted to be a cut-off of 1 June 2019. He also argued that her Honour was wrong to have found that the current draft pleading did not articulate reasonable and intelligible causes of action.

Consideration

15    The observations of Finkelstein J and Gordon J in Jefferson Ford 167 FCR at 378-379 [10] and 417 [173], on which Mr and Mrs Stuart relied, were not necessary for the decision. That was because the issue before the Full Court in that case was whether an order for summary dismissal of only part of the proceeding under s 31A of the Federal Court Act was interlocutory or final. Gordon J and I held that an order for partial summary judgment was interlocutory because it did not finally dispose of the substantive rights of the parties in the principal case pending between them: see 167 FCR at 393-394 [71], per Rares J, and 420 [182], per Gordon J. As I noted above, the Parliament amended the Federal Court Act subsequently to make it clear that all orders under s 31A are interlocutory.

16    Subsequent to the decision in Jefferson Ford 167 FCR 372, the Court of Appeal of the Supreme Court of New South Wales, Allsop P, Tobias JA and Handley AJA, held that an order for summary dismissal made under the analogue of r 26.01 was interlocutory see: Macatangay v State of New South Wales (No 2) [2009] NSWCA 272 at [10]-[13]. Their Honours held (at [11]):

… This court decided that in Wickstead v Browne (1992) 30 NSWLR 1 in dealing with the relevantly indistinguishable provisions of Pt 13 of the then Supreme Court Rules, citing relevant decisions of the High Court and Privy Council: Hall v Nominal Defendant [1966] HCA 36; 117 CLR 423 at 440; Tampion v Anderson (1973) 48 ALJR 11 at 12. The order for dismissal may be seen to have a degree of finality in practical effect, but the test is whether it was final in legal effect: Carr v Finance Corporation of Australia Ltd [No 1] [1981] HCA 20; 147 CLR 246 at 248; Bienstein v Bienstein [2003] HCA 7; 195 ALR 225 at [25]; Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (1998) 155 ALR 94 at 104–105. It was not final in legal effect because there was no triable issue, and it did not finally determine the rights of the parties or create res judicata estoppels. Whatever jurisprudential complexities lie behind the analysis, as the Privy Council made clear in Tampion v Anderson, clarity and consistency in approach is vital. The courts have had a consistent approach to the status of orders for, or to the effect of, summary dismissal since the 19th century: they are interlocutory. The High Court most recently reiterated this in In the Matter of An Appeal by Luck [2003] HCA 70; 78 ALJR 177 at 178–179, where the clear rule in Tampion v Anderson was expressly affirmed. The court (McHugh ACJ, Gummow and Heydon JJ) said at 179:

An order is an interlocutory order, therefore, when it stays or dismisses an action or refuses leave to commence or proceed with an action because the action is frivolous vexatious, an abuse of the process of the court or does not disclose a reasonable cause of action. (emphasis added)

17    Here, the primary judge’s order for summary dismissal did not determine any substantive rights or liabilities as between Mr and Mrs Stuart and Rabobank. Her Honour was dealing, and only dealing, with the adequacy of the latest version of the current draft pleading, on which Mr and Mrs Stuart relied, to articulate an intelligible cause of action on which they wanted the Court to determine whatever those substantive rights might be. The order for summary dismissal was made under the Court’s powers in s 23 and r 26.01(1)(c) and (d), and its inherent jurisdiction to stay or dismiss proceedings as an abuse of process.

18    The test for granting leave to appeal is uncontroversial. An applicant for leave must establish that, first, the decision in question is attended with sufficient doubt to warrant the grant of leave and, secondly, substantial injustice would result from a refusal of leave to appeal: Bienstein v Bienstein (2003) 195 ALR 225 at 231 [29], per McHugh, Kirby and Callinan JJ.

19    It would serve no purpose here to illustrate again the deficiencies that her Honour, in her reasons, correctly and lucidly identified in the current proposed pleading. I can see no arguable or, indeed any, error in her reasoning. The current proposed pleading in fact reads more like a set of submissions, at a high level of generality, without it condescending to pleading material facts. Nor, in my opinion, is there any reason to doubt her Honour’s conclusion that, in all of the circumstances of the case, the continuing failure of Mr and Mrs Stuart to be in a position to file a statement of claim that identifies, in a comprehendible and clear form, the causes of action on which they wish to rely, entitled her Honour to act either in the Court’s inherent jurisdiction, or under s 23 or each of r 26.01(c) and (d) to summarily dismiss the proceeding.

20    In my opinion, it is not arguable that her Honour was doing anything other than treating the current proposed pleading as one that failed to disclose a reasonable and comprehendible cause of action. The primary judge was entitled to act on the basis that the current proposed pleading, as the last of many attempts to plead, was at that stage an abuse of process, in the sense that the continuation of the proceeding, having regard to Mr and Mrs Stuart’s wish to rely (however bona fide) on such an obviously deficient document, would unfairly burden the other party to the litigation, Rabobank, and the Court. As her Honour noted, she was not evaluating the merits of Mr and Mrs Stuart’s case against Rabobank but rather determining whether or not, having given them numerous opportunities to plead their case as best it could be presented, the proceeding should be further protracted in light of the inadequacy of this latest, but still deficient, attempt.

21    Her Honour was mindful that the consequence of her order would be that Mr and Mrs Stuart’s proceeding would then be brought to an end in the Court. But she found that she was unable to identify any practical and just alternative to summary dismissal and that any costs orders that she might make in the future, having regard to the ones she had already made, would not ameliorate the injustice to Rabobank of it being, in effect, party to a proceeding in which no properly articulated claim (after many attempts) could be made.

22    The relevant considerations in respect of deciding whether to grant leave to appeal do not include whether the Court feels sympathy for a party in whatever predicament the party may be. The issue is whether there is sufficient doubt in the decision sought to be made the subject of the appeal to warrant the grant of leave to appeal and whether substantial injustice would result from a refusal.

23    Here, Mr and Mrs Stuart can commence fresh proceedings (if and when they can plead an intelligible cause of action) because no rights have been finally determined by her Honour’s summary dismissal, for the reasons I have given: see Macantangay (No 2) [2009] NSWCA 272; Re Luck 203 ALR 1. They will be free to litigate any cause of action that they may have in a further proceeding, albeit that they will have to be mindful of the need to comply with the requirements of Pt 16 of the Rules that deal with the proper pleading of causes of action, particularly in light of her Honour’s decisions.

Conclusion

24    For these reasons, I am not satisfied that her Honour’s decision is attended with sufficient doubt to warrant the ground of leave. Indeed, in my opinion on the material before me, her decision appears to have been correct. I am not satisfied that there would be substantial injustice from a refusal to grant the leave.

25    I will order that the application for leave to appeal be dismissed with costs. However, I will hear the parties on whether I should order the lawyers for Mr and Mrs Stuart, who drafted the current proposed pleading and its predecessor and propounded this application, to pay Rabobank’s costs under s 43(3)(f) of the Federal Court Act.

Postscript

26    On 22 February 2019, the solicitors for Rabobank informed my associate that their client did not seek any order other than that Mr and Mrs Stuart pay Rabobank’s costs. In light of that, I made such an order in chambers.

Associate:

Dated:    13 March 2019