Federal Court of Australia

Nugawela v Dudley (Trustee) (No 2) [2024] FCA 285

ORDERS

THE COURT ORDERS THAT:

1.    The time in paragraph 4 of the orders made on 14 December 2023 (appellant to provide security for costs by 19 February 2024 or appeal is dismissed) is varied to 4.00 pm AWST on 5 April 2024.

2.    Paragraph 1 of the orders made on 14 February 2024 (stay of springing order) is vacated.

3.    The appellant's application to set aside the orders made on 14 December 2023 is otherwise dismissed.

4.    The appellant's interlocutory application filed on 9 February 2024 is otherwise dismissed.

5.    The appellant must pay the respondent's costs of the above applications, to be assessed in the same manner as the costs that were awarded on 31 January 2024 and in accordance with further directions from the Chambers of Justice Jackson.

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

REASONS FOR JUDGMENT

JACKSON J:

1    On 14 December 2023 I ordered the appellant, Dr Nugawela, to give security for the costs of this appeal in the sum of $50,000, and made an order that if the security was not provided by 19 February 2024, the appeal would be dismissed: Nugawela v Dudley (Trustee) [2023] FCA 1603 (Nugawela (No 1)).

2    Dr Nugawela has applied to set those orders aside. Despite some initial confusion about the nature of his application, that is how I will treat it; any other course would only cause inefficiency.

3    The application is, or at least should be taken to be, made under r 39.05(a) of the Federal Court Rules 2011 (Cth). That provision empowers the Court to vary or set aside a judgment or order after it has been entered if it was made in the absence of a party. It applies because Dr Nugawela did not appear at the hearing of the security for costs application, when the orders were made.

4    The ground on which Dr Nugawela seeks to set the orders aside is essentially that he was unable to attend the hearing because he was in hospital. The respondent, who is Dr Nugawela's trustee in bankruptcy, opposes the application to set the orders aside.

Dr Nugawela's evidence and submissions

5    The background and reasoning set out in Nugawela (No 1) will not be set out again here; these reasons assume familiarity with those reasons.

6    Dr Nugawela relies on two affidavits he has sworn, one on 7 February 2024 and the other on 5 March 2024.

7    While both affidavits refer to Dr Nugawela's hospitalisation at the time of the hearing of 14 December 2023, it is the affidavit of 5 March which deals with it in the most detail. A cursory reading of that affidavit could lead to the view that Dr Nugawela had a reasonable excuse for his non-attendance on that day. But a document which Dr Nugawela himself tendered at the hearing of the application to set aside the orders of 14 December put a different complexion on his earlier evidence, and it is important to be precise as to what that evidence did and did not say.

8    Dr Nugawela's affidavit of 5 March 2024 says:

3.     I suffered a series of episodes leading up to my hospital admission on 12 December 2023. These were syncopal (loss of consciousness) and pre-syncopal (warning of imminent loss of consciousness) episodes. This was assessed initially upon being transported by ambulance to Sir Charles Gairdner Hospital.

4.     An episode of momentary loss of consciousness leading to collapse occurred at the Perth Magistrates Court and required me to be taken downstairs from the courtroom, where I was assisted by orderlies.

5.     The symptomatic disabilities required me to have radiographic coronary angiography. Then I consulted consultant cardiologist, Dr Mabote who arranged further angiographic procedures towards prevention of a serious coronary event. I had various procedures undertaken as an inpatient at the Hollywood Hospital.

6.     Whilst in hospital I requested that an email be sent to Justice Jackson's associate to advise my admission and consequential inability to attend court on 14 December 2023. I understand that the initial email was not received by the court, and that a follow-up email was. I had a period of recuperation upon discharge from hospital, and remain under the care of the coronary unit.

9    What this does not say is whether the assessment at Sir Charles Gairdner Hospital following the ambulance trip occurred on the same day as the admission to Hollywood Private Hospital. The date of the ambulance trip and of the assessment at Sir Charles Gairdner is not given. No documentary record of those things is presented. None of the dates of the syncopal or pre-syncopal episodes are given. The date of the momentary loss of consciousness at Perth Magistrates Court is not given. The procedures referred to in paragraph 5 of the affidavit appear to have resulted from a consultation with the cardiologist at Hollywood Hospital, Dr Mabote, which took place at a different time to the ambulance trip and assessment at Sir Charles Gairdner Hospital.

10    Lest this is thought to be an excessively close reading of an affidavit prepared by a self-represented litigant, two further pieces of evidence should be described. They are the only documentation of his medical treatment which Dr Nugawela has put before the Court.

11    The first is a document styled 'Medical Certificate' which is annexed to Dr Nugawela's affidavit of 7 February 2024. The document appears to be on Dr Mabote's letterhead at the WA Heart Clinic at Hollywood Consulting Centre and appears to have been signed by Dr Mabote. No challenge was made to its authenticity so I accept that it is what it appears to be.

12    This medical certificate says that Dr Nugawela attended a cardiology consultation on 7 December 2023 at Hollywood Consulting Centre and that he was admitted to Hollywood Private Hospital for 'further treatment' on 12 December 2023. There, Dr Nugawela 'underwent various inpatient tests and treatments under different specialists', co-ordinated under Dr Mabote's care.

13    The medical certificate makes no reference to syncopal or pre-syncopal episodes, to any ambulance, or to any assessment at Sir Charles Gairdner. It does not say, for example, that the admission to hospital was necessary to provide treatment to minimise the chance of further episodes or more serious coronary incidents.

14    According to this medical certificate, on 13 December 2023 'correspondence' was sent from an email address at Ramsay Health Care to the email address of my associate. The sender of the email is named and identified as a resident medical officer at the hospital, who is said to have sent it at Dr Nugawela's request to notify the Court of his hospitalisation. The email address given for my associate in the document is incorrect, which would explain why the email was never received.

15    Dr Nugawela asserts in his affidavit of 5 March that a 'follow-up email' sent at an unspecified time was received by the Court. But the Court has no record of having received any such email before the hearing on 14 December 2023 or thereafter. I was unaware at the hearing of any reason why Dr Nugawela did not appear.

16    The medical certificate states that Dr Nugawela was discharged from hospital on 16 December 2023. Neither the medical certificate nor any other evidence discloses what his conditions were diagnosed to be, or what treatments he underwent. Dr Nugawela's affidavit of 5 March 2024 says, without any supporting detail, that he had a period of recuperation upon discharge from hospital (for how long, he does not say) and that he remains under the care of the coronary unit (what form that care takes, and what conditions it relates to, are also left unsaid).

17    Then there is the further document I mentioned at the outset, which Dr Nugawela tendered at the hearing without objection. It is a second medical certificate signed by Dr Mabote (both certificates are undated). This second certificate says:

Patrick Nugawela DOB: 30/03/1949 has contacted my office prior to upcoming court date.

This letter seeks to clarify his medical treatment under my care.

He was referred by his General Practitioner for cardiac consultation on the 6th December 2023.

Cardiology consultation was undertaken on 07/12/2023 at Hollywood Consulting Centre.

Following consultation, an elective admission was recommended, for further investigations. He was admitted to Hollywood Private Hospital for further treatment on 12/12/23.

He underwent various inpatient tests and treatments under different specialists, co-ordinated under my care.

18    The second certificate then repeats the information in the earlier certificate about the attempt to email my associate on 13 December 2023, and Dr Nugawela's discharge on 16 December 2023. Once again, it says nothing about what treatments were administered or what conditions, if any, were diagnosed.

19    Dr Nugawela's affidavit of 5 March 2024 also refers to periods of hospitalisation in 2018 and 2021. It is not apparent why they are relevant.

20    The affidavit then goes on to say that Dr Nugawela's financial resources are 'severely limited' and that he has no income. This lack of resources, he says, leads to delays 'when orders from various jurisdictions are simultaneously pressed'. It is not clear whether this is advanced as a reason why the security for costs orders should be set aside but, to the extent that it is, there is once again no detail and no specific connection is drawn between this asserted lack of resources and Dr Nugawela's conduct of this appeal (or application for leave to appeal, as to which see Nugawela (No 1) at [6]).

21    Dr Nugawela also filed an outline of written submissions. This repeats the evidence from the affidavit of 5 March 2024 set out above. The outline then goes on to make allegations which, as best as they can be understood, can be summarised as follows:

(1)    After Dr Nugawela became a bankrupt, his medical practice and premises were put up for sale and there were offers which the respondent as his trustee in bankruptcy blocked. However they were eventually sold for a higher amount than the original offers.

(2)    The respondent arranged for the medical practice's equipment to be sold.

(3)    The respondent allowed banks to sell other properties over which they held mortgages.

(4)    The respondent removed some records from the medical practice. The records left behind were the subject of regulatory action by the Australian Health Practitioner Regulatory Agency (AHPRA), which led to the loss of Dr Nugawela's licence to practice. That is the subject of unspecified proceedings in the Supreme Court of Western Australia.

(5)    The respondent did not proceed with various objections to taxation assessments by the Australian Taxation Office (ATO). Dr Nugawela alleges that the respondent had a conflict of interest as trustee in bankruptcy because he acted for the ATO, the major creditor of the estate, who was also the major debtor. The factual basis for this claim is not articulated.

22    The point of all this appears to be that Dr Nugawela's impecuniosity was, he says, caused by the respondent's conduct and his asserted failures to prosecute legal actions, presumably against the ATO.

Principles

23    The orders Dr Nugawela seeks to set aside are interlocutory in nature. I respectfully adopt O'Bryan J's summary of the principles governing applications to set aside such orders, given in Polis v Zombor (No 5) [2022] FCA 122 at [43]-[45] (most citations removed):

43 The discretion permitted to the Court by r 39.05, while in its terms unconfined, should ordinarily be exercised only in exceptional circumstances, bearing in mind the overarching principle of the finality of litigation. Generally, the exercise of the discretion is limited to circumstances where it can be shown that, without fault on the part of the applicant, he or she has not been heard on a relevant question. An application under r 39.05 is not an appeal and is not the appropriate means by which to contend that the Court’s orders are affected by an error of law.

44 In determining whether to exercise the discretion permitted by r 39.05(a), “… it is usual for the court in these circumstances, to have regard to the explanation given by the absent party for its absence, and whether the evidence discloses a defence of sufficient merit to warrant setting aside the order …”: 3D Funtimes Ltd v Intellec Development Group Pty Ltd (No 2) [2011] FCA 407 at [6]. The requirement of a reason for the absence is based in the fundamental principle that a party should be bound by a decision if he or she has had full notice and an opportunity to appear and oppose the proceedings. In respect of the second element, the court should consider whether the respondent has a prima facie, arguable, defence.

45 In respect of r 39.05(c), the principle of the finality of litigation is also relevant to interlocutory orders and “counsels courts to exercise caution when considering whether orders previously made and final on their face and entered should be re-opened for consideration and set aside”: Professional Administration Service Centres Pty Ltd v Commissioner of Taxation [2012] FCAFC 180; 295 ALR 52 at [53] per Edmonds, McKerracher and Nicholas JJ. The too-ready resort to, or incautious application of, the power to vary or set aside orders, even of a procedural nature, also subverts the overarching purpose identified in s 37M of the Federal Court of Australia Act 1976 (Cth) … of facilitating the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible. The ability of a party to re-litigate interlocutory matters after they have been thoroughly determined is generally limited to situations where there has been a material change in circumstances or where new material has been discovered which could not reasonably have been put before the Court on the previous occasion.

Consideration

24    The two 'elements' O'Bryan J describes are not, of course, immutable prerequisites to making any order to set aside. But they are useful guidelines to the exercise of the discretion, and the hearing was conducted on the basis that Dr Nugawela did have to establish a good reason why he was unable to attend Court on 14 December 2023, and that he did have to establish that he had a prima facie basis to resist the orders for security for costs and for the dismissal of the appeal if security was not given within a certain time.

25    Dr Nugawela has failed to establish either of those things. As to the first, I have described above what Dr Nugawela's evidence does not say. It does not say that it was medically necessary that he be admitted to Hollywood Private Hospital on 12 December 2023. It may be accepted that he had been suffering pre-syncopal and syncopal episodes and that his consulting cardiologist thought it advisable to admit him for further tests and treatment. But there is no evidence that this had to occur over the particular range of dates on which it did occur.

26    To the contrary, Dr Mabote's second medical certificate refers to it as an elective admission that was recommended for further investigations. And the fact that it did not occur immediately after the consultation on 7 December 2023, but five days later, suggests that there was some flexibility as to the dates. As I have said, the production of this second medical certificate at the hearing put a different complexion on the evidence, and led me to give Dr Nugawela's affidavit the close reading that has been undertaken.

27    The sequence of events described in in the second certificate raises another matter that is relevant to the exercise of the discretion, namely why, if admission to hospital was recommended after a consultation on 7 December 2023, Dr Nugawela did not attempt to inform the Court before his admission, rather than on 13 December 2023. The proper course, if Dr Nugawela's presence in hospital was medically necessary on 14 December 2023, was to apply for an adjournment and with medical evidence in support. Dr Nugawela had the opportunity to do this. While a self-represented litigant, he has considerable experience of the courts. The fact that he did not apply for an adjournment further erodes his position that his presence in hospital on that day is a good explanation for why he did not attend the hearing.

28    Some 11 days before the hearing of the present application, the respondent filed an outline of written submissions which made serious allegations about what was asserted to be the real reason for Dr Nugawela's admission to hospital. Those allegations were withdrawn at the hearing; I mention them here to show that Dr Nugawela was on advance notice that the respondent challenged the adequacy of the evidence that he had adduced to support the position that his absence from the hearing on 14 December 2023 was medically necessary. Yet Dr Nugawela has not adduced any evidence which establishes that essential fact.

29    Dr Nugawela observed in oral submissions that his medical conditions and treatment were private matters. That can be accepted. But when a person seeks to rely on medical conditions and treatment as an explanation as to why he did not appear at a court hearing, the explanation and evidence supporting it needs to be sufficiently full and frank to demonstrate a good excuse for his non-attendance.

30    Dr Nugawela also observed that coronary care units such as that at Hollywood Private Hospital are highly specialised places where the activities of a large number of medical specialists are coordinated. They are not places where patients are admitted or kept as inpatients for no good reason. As a 74-year-old, his age also means that his hospitalisation was not unreasonable. All of that may be accepted too. But it does not follow that it was necessary for Dr Nugawela’s recommended hospitalisation for further investigations to take place on a day on which he had a court commitment. Nor does it explain why, if it was necessary, Dr Nugawela did not seek an adjournment.

31    As to the second 'element', namely whether the evidence discloses an argument of sufficient merit to warrant setting aside the order, Nugawela (No 1) sets out why security for costs was ordered on 14 December 2023. With two exceptions, Dr Nugawela's evidence and submissions do not address any of the reasons set out there, so as to demonstrate that he had a prima facie basis to resist the order for security for costs.

32    The first exception is that, as has been recounted, Dr Nugawela's own evidence on the present application states that his financial resources are severely limited and that he has no income. That disposes of a reservation I expressed in Nugawela (No 1) at [17]-[19] that there was no up to date evidence of Dr Nugawela's impecuniosity. Also, at the hearing of the present application the respondent produced an extract from the National Insolvency Register establishing that Dr Nugawela is an undischarged bankrupt. So on that basis, the case for ordering security appears stronger now than it did on 14 December 2023.

33    The other exception to Dr Nugawela's failure to address any of the reasons for ordering security is to be found in the submissions summarised above, which are said to show that the respondent's conduct has caused his impecuniosity. If established, that would be a reason against exercising the discretion to order security for costs.

34    As mentioned, those matters are submissions unsupported by evidence. But even if they were to be received as if they were evidence, they would not establish a prima facie case that the respondent caused Dr Nugawela's impecuniosity.

35    As to the medical practice and premises, they were sold and there is nothing to suggest that the price was depressed by the respondent's conduct.

36    There is also nothing to suggest that the sale of the medical practice's equipment caused financial loss. In any event, that the respondent did sell that equipment is contradicted by an affidavit sworn by him on 22 February 2024 which states that he did not auction off any medical equipment or other property, which was (to the best of his knowledge) sold by the relevant financier. That evidence is not contradicted and I accept it.

37    As to the sale of other properties by the banks, there is nothing to suggest that the respondent could stop that happening, or had any reason to do so.

38    As to the allegation about removing records, it is impossible to ascertain what connection, if any, this has to the apparent subsequent action by AHPRA which led to the loss of Dr Nugawela's licence to practice. In the absence of clear evidence to the contrary, there is no basis for any conclusion that the conduct of the respondent was causally related to that step, taken by an independent regulatory body.

39    As to the claim that the respondent did not proceed with various taxation objections, there is no basis in the evidence to think that, even if he had, that would have produced a better financial outcome for Dr Nugawela. The bases of the objections and the amounts involved are largely not disclosed. The submissions do say that the Full Court ruled that Dr Nugawela's 'basic tax debt' was about $150,000 plus penalties and interest, but why or how the conduct of the respondent contributed to this assessment is unknown. It is not enough for Dr Nugawela to say in general terms, as he does, that the respondent 'sided with the ATO'.

40    As a result, I am not persuaded that Dr Nugawela has a prima facie case that the respondent's conduct caused his impecuniosity. Beyond that, the reasons articulated in Nugawela (No 1) stand.

Conclusion

41    The matters I have canvassed, as well as the importance of finality in litigation, even at a putatively interlocutory stage, compel the conclusion that the orders of 14 December 2023 should not be set aside.

42    A further discretionary consideration strengthens that conclusion. Not only did Dr Nugawela not appear at the hearing of 14 December 2023, he failed to comply with directions for him to file evidence or submissions in advance of that hearing. Therefore this is different to a case where a person has simply not been informed of a hearing and has had no opportunity to present his or her case. Dr Nugawela did not take the opportunity to put his position in writing when it was given to him.

43    The application to set aside the orders of 14 December 2023 will be dismissed. One of the orders made on that day was that if security for costs was not given by 19 February 2024, the appeal would be dismissed. While that time has passed, the order was stayed pending the outcome of the present application. Counsel for the respondent rightly accepted that it would not be appropriate for that order to be reinstated in such a way that it would take immediate effect, so as to dismiss the appeal. Given that Dr Nugawela has already had ample notice of the possibility that he will, in the end, be required to provide security for costs in the sum of $50,000, it is appropriate to give him two more weeks to do so.

Associate:

Dated:    22 March 2024