Federal Court of Australia

Meshram v Bing Lee Electrics Pty Ltd [2025] FCA 769

ORDERS

THE COURT ORDERS THAT:

1.    The hearings listed for 12 August 2025 and 1 and 2 September 2025 be vacated.

2.    The applications to be considered at those hearings be adjourned to dates to be determined.

3.    The appellant not take any further steps in these proceedings without leave of the Court.

4.    By 4.00pm on 11 July 2025, the appellant’s legal representatives provide these orders and reasons to the appellant.

5.    There be no order as to costs.

6.    Liberty to apply.

THE COURT NOTES THAT:

7.    The appellant’s legal representatives are to arrange for the appellant to meet with a consultant psychiatrist for the purpose of evaluating the appellant’s legal capacity to participate in, and give instructions for the purposes of, these proceedings.

8.    The appellant is not compelled to attend the meeting with the consultant psychiatrist. However, if she were not to attend, the appellant would not be permitted to take further steps in these proceedings without leave of the Court.

9.    As officers of the Court, the appellant’s legal representatives are entrusted with the responsibility of arranging and facilitating the meeting with the consultant psychiatrist, and providing the briefing questions and materials in accordance with these reasons.

10.    The report of the consultant psychiatrist is to be provided directly by the consultant psychiatrist to the chambers of Justice Stellios. Unless otherwise ordered by the Court, it is not to be provided to the appellant’s legal representatives or the respondents or their legal representatives, and will remain confidential until further order of the Court.

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

REASONS FOR JUDGMENT

STELLIOS J:

1    These proceedings concern (i) an appeal from orders made on 1 September 2022 in Meshram v Bing Lee Electrics Pty Ltd [2022] FedCFamCG 718 (the FCFCOA (Div 2) proceeding) summarily dismissing various claims made by the appellant against the respondents, and (ii) an application for leave to appeal parts of the accompanying judgment in the FCFCOA (Div 2) proceeding.

2    The matters have been listed for hearing on 1 and 2 September 2025. Ahead of that hearing, two interlocutory applications have been listed for hearing on 12 August 2025. The first application is by the respondents for an order pursuant to ss 56(1) and (2) of the Federal Court of Australia Act 1976 (Cth) and r 36.09(1)(a) of the Federal Court Rules 2011 (Cth) that the appellant provide security for the payment of the respondents’ costs of and incidental to the appeal. The second application is by the appellant for a stay of the orders for costs made against the appellant in the FCFCOA (Div 2).

3    The appellant’s pro bono counsel and solicitors raised concerns with the Court about the mental capacity of the appellant to participate in these proceedings and provide them with instructions. The Court was informed that the appellant’s legal representatives have sought the appellant’s consent to speak with her treating doctor and psychologist, but that consent has not been forthcoming. A case management hearing was held on 8 July 2025 to consider the matter.

Legal incapacity to participate in legal proceedings and instruct legal representatives

4    Under r 9.61, “a person under a legal incapacity may start, or defend, a proceeding only by the person’s litigation representative”. A “person under a legal incapacity” is defined in the Dictionary in Sch 1 to the Rules to include a “mentally disabled person” which is further defined to mean “a person who, because of a mental disability or illness, is not capable of managing the person’s own affairs in a proceeding”.

5    The Court has the power to appoint a person as a litigation representative on application by a party or an interested person (r 9.63(1)), and the Rules deal with who may be a litigation representative (r 9.62(1)).

6    The appointment of a litigation representative serves “two protective purposes – the protection of the person with the disability and of the processes of the court as these apply to the parties generally”: Goddard Elliot (a firm) v Fritsch [2012] VSC 87 at [552] (Bell J).

Standard of capacity

7    In Goddard Elliot, Bell J explained the standard of capacity required of a litigant in terms which I respectfully adopt (at [554], references omitted):

To examine whether a person has mental capacity for specific legal purposes is not to examine whether they should be subjected to involuntary medical treatment under mental health legislation or have an administrator or guardian appointed to manage their property and personal affairs under guardianship and administration legislation. A person can lack the mental capacity to participate in legal proceedings yet be capable of performing the usual activities of daily life. It is therefore not a requirement for the appointment of a litigation guardian or someone else with representative responsibility for the person that the person is proved to be of general unsound mind or a “lunatic”.

8    His Honour equated that standard to that required of a person entering legal transactions and, in that respect, referred to what was said by Dixon CJ, Kitto and Taylor JJ in Gibbons v Wright (1954) 91 CLR 423 at 437:

The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation.

9    Having referred to the observations of Kennedy LJ in Masterman-Lister v Brutton & Co (Nos 1 and 2) [2003] 1 WLR 1511 at [18], and Boreham J in White v Fell (Unreported, Queen’s Bench of the High Court of Justice, 12 November 1987), Bell J in Goddard Elliot summarised in the following way the approach which has found favour in Australian authorities at [557] (reference omitted):

the focus should be on the capacity of the client to understand they have a legal problem, to seek legal assistance about the problem, to give clear instructions to their lawyers and to understand and act on the advice which they are given.

10    In making those evaluations, the standard of capacity that is required is “context and issue specific”: at [562].

11    The principles were summarised by Lundberg J in M v P (No 3) [2024] WASC 123 at [21], drawing from the analysis of Seaward J in Snook v Magistrate Trevor Darge (No 2) [2024] WASC 91:

(a)    there is no fixed standard of the mental capacity required at law for a person to be deemed “capable” of managing their own affairs;

(b)    the standard will fluctuate according to the legal character, complexity and significance of the matter in question;

(c)    proof of complete incapacity or proof that the party should be subjected to involuntary medical treatment under mental health legislation is not required;

(d)    a person can lack the mental capacity to participate in legal proceedings yet still be capable of performing the usual activities of daily life;

(e)    the Court must consider whether the person has sufficient mental capacity to understand the case and the legal issues involved, to make decisions in relation to the case and (if instructing a solicitor) to give instructions; and

(f)    where the litigant is self-represented, the standard has been described as being greater than the level of mental capacity required to instruct a solicitor, because a litigant in person has to manage court proceedings in an unfamiliar and stressful situation.

Duty of legal representatives

12    As is evident from the above statements of principle, a person must have the capacity to give clear instructions to their legal representatives and to understand and act on their advice. A lawyer’s authority “to represent a client depends on the client having the requisite mental capacity”: Goddard Elliot at [548] (Bell J). In relation to a lawyer’s duty in circumstances where there are concerns about the legal capacity of their client, Bell J said (at [549], [568] and [569], references omitted):

As a lawyer is an officer of the court, it is their “primary responsibility” to be reasonably satisfied that the client has the mental capacity to participate in the proceeding and to instruct. Where the client does not have that capacity, the lawyer does not have the authority to represent them in the proceeding, except for certain limited purposes, most particularly perhaps for the purpose of an inquiry into that question. I say perhaps because they are not really representing the client in that process, but rather assisting the court as an officer of the court. …

Doubts about this issue in the mind of the lawyer can also have important consequences for the conduct of legal proceedings. If the issue cannot be resolved to the reasonable satisfaction of the lawyer, as occurred in the present case, the lawyer must raise the issue with the court. …

By these rules and principles, a person having mental capacity can, but a person lacking mental capacity cannot, commence or defend legal proceedings. The person lacking mental capacity must have a litigation guardian appointed (by whatever name). A lawyer must be reasonably satisfied that their client has the mental capacity to give instructions. If they are not so satisfied, they cannot act for or represent the client. They can only be, or act for and represent, the litigation guardian. When a client loses mental capacity, their lawyer loses the authority to act for and represent them. If a person commences a proceeding with that capacity but loses it thereafter, their capacity to participate in the proceeding on their own behalf and instruct their lawyer to do so is also lost. The lawyer loses their authority to act for and represent the party in those circumstances. Therefore, when it arises, the issue of the person’s capacity to commence or participate in legal proceedings is a matter of the first importance for the court and for the person’s legal representative as an officer of the court.

Position of the parties

13    As indicated, the appellant’s legal representatives have expressed that they have concerns about the appellant’s legal capacity. At the case management hearing on 8 July 2025, the appellant’s counsel indicated that those concerns were based on interactions with the appellant — all of which are privileged. Having been denied permission to speak with the appellant’s doctor and psychologist to reassure themselves of her legal capacity, the appellant’s legal representatives have been unable to bring themselves to a level of reasonable satisfaction that she has the requisite capacity.

14    Counsel for the appellant submitted that the principles set out by Bell J in Goddard Elliot would suggest that, in those circumstances, they have lost their authority to act for and represent the appellant. That position has been communicated to the appellant.

15    Counsel for the appellant indicated a preparedness to continue to act for the appellant at the hearing of the interlocutory applications if the Court were of the view that the appellant had legal capacity. However, it was emphasised that if the appellant were considered by the Court to lack legal capacity, then she would consequently lack the capacity to conduct the proceeding as a litigant in person.

16    The appellant was present at the case management hearing and was given an opportunity to address the Court. The appellant expressed dissatisfaction with the position taken by her legal representatives on the question of her legal capacity and, further, denied that she lacked legal capacity. The appellant also expressed in her belief that her legal representatives were not acting on her instructions and sought the appointment of new pro bono legal representatives who would act as instructed.

17    The appellant claimed that she was in possession of a medical certificate from her doctor which supported her capacity to give instructions. She was willing to allow the Court to view the certificate. However, she was not prepared to show the certificate to her legal representatives or the respondents or their legal representatives. Although counsel for the appellant and the respondents were content for me alone to see the certificate, I have decided that it is not an appropriate course of action, particularly because the certificate is not a report from a specialist and would provide me with limited assistance in assessing her legal capacity.

18    On the question of legal capacity, counsel for the first and fourth to eleventh respondents indicated that his clients were in a difficult situation because they do not have an understanding of the circumstances and have not seen any medical certificates. He indicated that the appellant had been in communication with his instructing solicitors without including her legal representatives in the communication. That, it was argued, suggests an ability to continue with the proceeding and, perhaps, a dispute between the appellant and her legal representatives.

19    Counsel for the second and third respondents suggested that the appellant’s self-advocacy at the case management hearing was consistent with the way in which she has self-represented in the past, and that circumstance would not suggest a concern about her legal capacity.

Resolution

Legal capacity

20    In light of the concerns held by the appellant’s legal representatives, and their inability to resolve those concerns by communicating with the appellant’s doctor or psychologist, it was incumbent on them to raise the matter with the Court, and they were right to do so.

21    Given that the concern has been raised by the appellant’s legal representatives as officers of this Court, and the opportunity to allay those concerns has not been permitted by the appellant, I am satisfied that there is a real question about the appellant’s capacity that needs to be addressed.

22    However, I am not able to test those concerns because they arise from privileged communications. Additionally, I have not had the benefit of seeing any medical report directed to the appellant’s capacity to participate in, and give instructions for the purposes of, these proceedings.

23    I am not reassured by the appellant’s representations during the case management hearing, nor by the fact that she has communicated with the respondents independently of her legal representatives without the benefit of their representation to protect her interests.

24    In light of the procedural history of this proceeding, what transpired at the case management hearing on 8 July 2025, and the impending hearings, it is in the interests of justice that the question of legal capacity be determined ahead of those hearings. As Bell J said in Goddard Elliot at [563], “[w]hen the issue is properly raised, it is the duty of the court at the earliest opportunity to examine whether the person has the mental capacity which is required”: see also M v P at [19] (Lundberg J).

25    As Lundberg J said in M v P at [20], “[t]he importance of considering the application is underscored by the risk that any determination of the action at a final trial, which is likely to require a significant expenditure of legal fees on the [respondents’] part and draw considerably on the Court’s resources, may be challenged as irregular if the [appellant] is later found to be under a disability”.

Approach for determining legal capacity

26    Counsel for the appellant submitted that the proceeding be stayed until the appellant’s capacity to provide instructions and make decisions about her legal rights is established. I am not presently minded to stay the proceedings. Instead, I will vacate the hearing dates on 12 August 2025 and 1 and 2 September 2025 and I will adjourn the applications that were to be heard at those hearings to dates to be determined.

27    Counsel further indicated that a named consultant psychiatrist was available to meet with the appellant on 22 August 2025. The cost of the report would be approximately $4,000 and there would likely be a 15-day turnaround on the report.

28    I am concerned that the cost of such a report is sizable, particularly in the context of a litigant who already is subject to costs orders. However, as things presently stand, and in the absence of suggested alternatives, there would appear to be no other option to address the question of legal capacity that arises in these proceedings.

29    I am not proposing to compel the appellant to attend the meeting with the consultant psychiatrist. She would need to consent to the meeting and to the report being prepared. However, if she were not to attend, the appellant would not be permitted to take further steps in these proceedings without leave of the Court.

30    If the appellant were willing to attend the meeting, the consultant psychiatrist would need to be briefed to assist the Court in determining whether the appellant is a person who, because of a mental disability or illness, is not capable of managing her own affairs in these proceedings. To that end, the consultant psychiatrist should be requested to prepare a report as to the appellant’s capacity to:

(1)    participate in the proceedings before this Court;

(2)    give clear instructions to her lawyers; and

(3)    understand and act on the advice which she is given.

31    The consultant psychiatrist would need to be provided with the following documents:

(1)    these reasons;

(2)    the transcript of the case management hearing held on 8 July 2025;

(3)    the affidavit sworn by the appellant on 4 July 2025 and accepted for filing on 8 July 2025;

(4)    any other instructions which would assist in resolving the question of legal capacity; and

(5)    any other material that the appellant consents to be provided which would assist in resolving the question of legal capacity.

32    That report is to remain confidential until further order of the Court, and provided directly by the consultant psychiatrist to the chambers of Justice Stellios. Unless otherwise ordered by the Court, it is not to be provided to the appellant’s legal representatives or to the respondents or their legal representatives.

33    I would entrust the appellant’s legal representatives, as officers of the Court, with the responsibility of arranging and facilitating the meeting with the consultant psychiatrist and providing the necessary briefing questions and materials.

34    I am mindful that this approach will lead to further delays in the proceedings. However, the Court must be satisfied that the appellant has the requisite legal capacity to participate in these proceedings.

35    There will be no order as to costs and liberty to apply.

Associate:

Dated:    11 July 2025

SCHEDULE OF PARTIES