JG Liddy, RJ McClenahan and IA Simic T/As Taylor and Scott Lawyers v Melhem
[2018] FCCA 2695
•21 September 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| JG LIDDY, RJ MCCLENAHAN & IA SIMIC T/AS TAYLOR AND SCOTT LAWYERS v MELHEM | [2018] FCCA 2695 |
| Catchwords: PRACTICE AND PROCEDURE – Application for the appointment of a litigation guardian. |
| Legislation: Federal Circuit Court Rules 2001 (Cth), rr.11.08, 11.11, 15.07 |
| Cases cited: Forster v Forster [2012] FamCAFC 47 |
| Applicant: | JG LIDDY, RJ MCCLENAHAN & IA SIMIC T/AS TAYLOR AND SCOTT LAWYERS |
| Respondent: | ROUSELL ANTANIOS MELHEM |
| File Number: | SYG 350 of 2017 |
| Judgment of: | Judge Barnes |
| Hearing dates: | 18 June and 2 August 2018 |
| Date of Last Submission: | 9 August 2018 |
| Delivered at: | Sydney |
| Delivered on: | 21 September 2018 |
REPRESENTATION
| Solicitors for the Applicant: | Carneys Lawyers |
| Respondent: | In person |
ORDERS
The application for the appointment of a litigation guardian for the Respondent is refused.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 350 of 2017
| JG LIDDY, RJ MCCLENAHAN & IA SIMIC T/AS TAYLOR AND SCOTT LAWYERS |
Applicant
And
| ROUSELL ANTANIOS MELHEM |
Respondent
REASONS FOR JUDGMENT
On 8 February 2017 the Applicants (partners in Taylor and Scott Lawyers, a firm of solicitors) presented a creditor’s petition in which the Respondent, Mr Melhem, was named as the debtor. The petition relied on a judgment debt of $39,478.72 in respect of legal costs said to have been incurred by Taylor and Scott in acting for Mr Melhem in a family law matter.
This judgment relates to Mr Melhem’s application for the appointment of a litigation guardian.
The judgment that formed the basis for the bankruptcy notice and petition was a default judgment of 27 May 2016 entered on 28 July 2016 in the Local Court at Sutherland. As discussed below, Mr Melhem has sought to have this judgment set aside on three occasions by filing notices of motion in the Local Court (in July 2017, December 2017 and July 2018).
A registrar made orders for substituted service of the creditor’s petition and accompanying documents in November 2017. These orders were varied on 23 January 2018.
Mr Melhem filed a notice of opposition on 26 February 2018 and affirmed a supporting affidavit (on 20 February 2018). On 27 February 2018 the petition was referred for allocation to a judge’s docket. It was subsequently listed before me on 7 March 2018.
In his notice of opposition Mr Melhem stated that he intended to oppose the petition on the basis that he had a legal incapacity within r.9.61 of the Federal Court Rules (sic). He sought an adjournment until a suitable litigation representative was appointed for him.
Division 11.2 of the Federal Circuit Court Rules 2011 (Cth) makes express provision for the appointment of a litigation guardian. I am not satisfied that this court’s rules are insufficient or inappropriate in this respect such as to warrant the application of Division 9.6 of the Federal Court Rules 2011 (Cth). Further references to the Rules are to the Federal Circuit Court Rules 2001 (Cth).
Rule 11.08 of the Rules sets out the circumstances in which a person “needs” a litigation guardian as follows:
(1) For these Rules, a person needs a litigation guardian in relation to a proceeding if the person does not understand the nature and possible consequences of the proceeding or is not capable of adequately conducting, or giving adequate instruction for the conduct of, the proceeding.
Under r.11.11, the court may, at the request of a party or of its own motion, appoint a litigation guardian in a proceeding in the interests of a person who needs a litigation guardian.
In this case, somewhat unusually, the Respondent himself claims to need a litigation guardian. In his affidavit of 20 February 2018 (said to have been prepared with the assistance of his brother), Mr Melhem claimed that he was “unable to write an affidavit effectively due to an ongoing fluctuating mental health issue which [had] been affecting [him] since 2012”. Mr Melhem expressed a wish for a guardian to be appointed to “help [him] make decisions” and to communicate with regard to “applications” made to the court “as the outcome will significantly impact [his] life”.
Mr Melhem claimed he had been under psychiatric treatment since 2012 and that his legal incapacity had been established in November 2014 by a Dr Canaris, a consultant psychiatrist, who was said to have stated that he was not able to give instructions to his lawyers comprehensively. The affidavit stated that a copy of a letter from Dr Canaris was attached. It was not. However attached to the affidavit was a copy of a handwritten letter from Dr Cook, psychiatrist, dated 14 January 2016 (sic) addressed “to whom it may concern”, which stated:
Mr Melhem has been very stressed in the past week over the Christmas/New Year period over fears of being incarcerated in hospital against his will, has been spending time in safe isolation. However, he has not had access to medications and has now much increased anxiety and fear. He describes having poor attention and concentration, which is quite understandable. He says that trying to concentrate on complex matters that relate also to memory/recall and mathematics is a considerable struggle and that, therefore, he cannot give clear and confident instructions to his legal advisers and he cannot quickly and confidently respond to questioning on complex matters. The symptoms of anxiety are very disruptive to matters of cognitive functioning. I hope this report is of some assistance.
When the matter first came before me for directions on 7 March 2018, there was no appearance by Mr Melhem. However earlier that day my chambers had received an email from Mr Melhem and his mother enclosing a medical certificate from a general practitioner certifying that Mr Melhem had been examined on 6 March 2018 and expressing the opinion that he was suffering from a “medical condition” (the nature of which was not described) and that he would be unfit for work from 6 March 2018 to 7 March 2018. The email also stated that Mr Melhem was awaiting a “medical report” from Dr Cook, his treating psychiatrist, regarding his ability to represent himself.
Notwithstanding the inadequacy of the medical certificate, I adjourned the hearing to 4 April 2018. The court notified Mr Melhem (at the email and postal addresses he had provided) that while an adjournment had been granted, the medical certificate of 6 March 2018 was inadequate and that if he sought to rely on any further medical certificate in relation to his absence from a hearing, it must address his medical condition and fitness to attend and participate in a hearing. Mr Melhem’s attention was also drawn to the fact that the affidavit he had affirmed on 20 February 2018 had not attached a medical certificate from a Dr Canaris as stated. He was advised that the issue of his need for a litigation guardian would be addressed on 4 April 2018 and that it would be necessary for him to attend on that day (unless he was legally represented). The content of r.11.08(1) of the Rules was brought to his attention.
Despite Mr Melhem’s failure to appear on 7 March 2018, he filed a second notice of opposition and supporting affidavit on that day in which he addressed the substance of the claim that he owed a debt to the petitioning creditor. He took issue with whether he owed the petitioning creditor any monies in light of copies of itemised bills which had been sent to him by the petitioning creditor’s debt collector. He also disputed the affidavit evidence of Mr Titus, the solicitor for the petitioning creditor, sworn on 27 February 2018 and filed on 5 March 2018. Mr Titus’s evidence related to Mr Melhem’s claims about the basis on which legal costs would be paid to Taylor and Scott in his affidavit filed in the Local Court in support of his notice of motion of 6 December 2017 to set aside the default judgment. Mr Titus also deposed that on 10 January 2018 Mr Melhem had appeared in the Local Court, but that this notice of motion had been refused.
Mr Melhem also sought an adjournment of these proceedings on the basis of an application to the Supreme Court of NSW for a costs assessment said to have been made by his mother on his behalf on 6 March 2018.
In addition, in his affidavit of 7 March 2018 (again said to have been written with the assistance of his brother), Mr Melhem claimed that he was “currently” suffered from recurring episodes of trigeminal neuralgia and the symptoms of post-traumatic stress syndrome “thus affecting my ability to concentrate, read or write effectively” and that due to the effects of his symptoms (errors in original):
…my response is slow and I am not able to file in responses in a timely manner or to read through lengthy and complex material and understand them properly. This is the reason I was not able to make timely responses for my defence in the Sutherland Local Court where Taylor and Scott had obtained a default judgment over myself.
Some 32 pages of annexures consisting of tax invoices and correspondence sent to Mr Melhem by the petitioning creditor in relation to his legal costs incurred in 2015 in relation to a family law matter in which the petitioning creditor had acted for him were attached to Mr Melhem’s affidavit. Mr Melhem explained that the costs assessment application filed in the Supreme Court of NSW had been made on the basis that, based on these itemised bills, he did not owe his former solicitors any money.
He also claimed that he “had entered an agreement to continue utilising the services of Taylor and Scott from late August 2015 onwards because Mr Mark Youssef from Taylor and Scott had agreed to sought (sic) an interim application to obtain funds from the controlled monies held in trust account with [a named firm of solicitors] on my behalf. But for such an agreement, I would not have continued to utilise his services”.
Having regard to Mr Melhem’s present claims about his inability to instruct lawyers or to represent himself, it is notable that in this affidavit he deposed to what occurred in telephone conversations between himself and Mr Youssef of Taylor and Scott and to a meeting he had with Mr Youssef in 2015.
Consistent with his email to this court of 7 March 2018, on 3 April 2018 (the day before the next scheduled hearing) Mr Melhem emailed to the court a copy of a letter dated 14 March 2018 from Dr Cook which is discussed below.
At the directions hearing on 4 April 2018 Mr Melhem appeared in person and unaccompanied. While initially silent, he ultimately participated in a responsive manner. I am satisfied that Mr Melhem understood my explanation that if he wished to rely on medical evidence in support of his claim that he needed a litigation guardian it must be in the form of an affidavit or report attached to an affidavit from the medical practitioner and must be filed or served before 18 April 2018. I adjourned the matter for hearing of the application for a litigation guardian to 20 April 2018.
Having regard to r.11.11, in circumstances where the documents Mr Melhem had filed referred to his having had the assistance of his brother and/or mother and there was evidence from the petitioning creditor that Mr Melhem’s sister was a solicitor, I indicated in the orders that it would be of assistance if a member of Mr Melhem’s family accompanied him to court on 20 April 2018 and also that, if a family member was prepared to be his litigation guardian (if it was determined that such a litigation guardian was needed), he or she should consent to such appointment by filing an affidavit in accordance with r.11.11(2) of the Rules. I also noted that the Applicant’s petitioning creditor had undertaken not to seek any personal award of costs against any litigation guardian were one to be appointed in these proceedings.
In accordance with my orders of 4 April 2018, on 18 April 2018 Mr Melhem filed a brief affidavit affirmed by Dr Gregory Ivan Cook on 11 April 2018 attaching a copy of his letter dated 14 March 2018 in relation to Mr Melhem. It is as follows:
I am writing a brief report in support of the contention that Mr Melhem is not capable of managing the complex cognitive issues involved in his legal affairs. He has impaired problems with attention, cognitive analysis, memory and evaluation functions. He has described that he feels he gets overly bombarded with information and that he cannot hold complex information “in his mind”, and as a consequence, struggles to find opinions and decisions to best reflect his final perspective of view. He has described these types of problems, independently of the matter ahead of him, on a number of times over a long period of time. In effect, it can take him a very long time, to make evaluations to come to the decisions that he believes to be fair and true.
Therefore, I believe that there is a very real need for him to have a person, consider to be a “Guardian”, to represent him in any complex issues such as court matters.
There was no appearance by or on behalf of Mr Melhem on 20 April 2018 and the court did not receive any explanation for his absence or request for an adjournment. However the solicitor for the petitioning creditor indicated that he wished to cross-examine Dr Cook on his affidavit of 18 April 2018. In these circumstances the matter was adjourned until 18 June 2018. The orders noted that if Mr Melhem did not appear on that day, his notice of opposition in relation to the appointment of a litigation guardian may be dealt with in his absence.
In addition, it seemed to me that, having regard to the court’s power to appoint a litigation guardian of its own motion, it was appropriate to give Dr Cook the opportunity to give more detailed evidence, particularly as, while it appeared that he may be intending to provide expert evidence to the court, his “report” was very brief and general and did not reflect or address matters of relevance under r.11.08. It was not in the form of an expert report within the Federal Court Expert Evidence Practice Note (and see r.15.07 of the Rules).
As Mr Melhem was advised by letter, Dr Cook agreed to give evidence and to be cross-examined by telephone on 18 June 2018 in relation to the question of whether Mr Melhem required a litigation guardian.
On the morning of 18 June 2018, my associate received an email from Mr Melhem’s mother, said to have been sent on behalf of Mr Melhem, stating that he was not able to attend the court today “due to his medical condition” and indicating that a medical certificate would be provided by 19 June 2018. The letter acknowledged that Mr Melhem’s treating psychiatrist, Dr Cook, was to be available for cross-examination by telephone that day. It did not request an adjournment. No medical evidence has been provided in relation to Mr Melhem’s non-appearance on 18 June 2018.
While neither Mr Melhem nor anyone on his behalf sought an adjournment of the hearing on 18 June 2018, I considered whether that was appropriate. However in the circumstances outlined above and on the evidence before the court, I was not satisfied that it was in the interests of justice or of the parties for there to be another adjournment.
Before Dr Cook gave evidence on 18 June 2018, I explained to him the meaning of litigation guardian under the Rules and the requirements of r.11.08. I informed him of the nature of the proceedings. I raised with him matters that would normally be found in an expert report. He was not familiar with the requirements for expert evidence. I pointed out that there was no indication in his brief letter of the extent of his professional involvement with Mr Melhem, no diagnosis of any medical condition and that matters relevant to the test in r.11.08 of the Rules had not been addressed.
In these circumstances (and with no opposition in this respect from Mr Titus, the solicitor for the petitioning creditor) Dr Cook was given the opportunity to elaborate on his evidence orally and also to later file a supplementary written report if he chose to do so.
Dr Cook stated that he did not have Mr Melhem’s file with him as it was in another surgery. He told the court that he thought Mr Melhem had become his patient in or about February 2013. He had been referred for treatment of post-traumatic stress disorder. He had developed severe anxiety or paranoid psychosis, being fearful in a delusional way of people who had subjected him to an armed office invasion in 2012. Dr Cook explained that Mr Melhem had developed a rapid cycling bipolar mood disorder and that the intensity of his symptoms had proven to be very difficult to treat.
Dr Cook also stated: “It took quite a few years to be able to settle matters down”. However he acknowledged that Mr Melhem now had much better stability and was not so obviously fearfully paranoid about people’s intentions and that the “very intense symptoms are a lot better”. He also explained that Mr Melhem “used to have” a severe pain syndrome called trigeminal neuralgia, but that the incidence of pain and headaches was much reduced, so that Mr Melhem was not severely and dramatically ill, although there was the possibility of a relapse.
Dr Cook explained that he did not see Mr Melhem very often. The frequency of appointments was perhaps every three or four months. Essentially, Mr Melhem would see him when his scripts for medication ran out or he wanted some sort of readjustment or perhaps to debrief.
Dr Cook explained that many people with post-traumatic stress disorder developed attention deficit disorder which impaired their capacity to attend to information and to analyse and that this could lead to problem-solving and memory problems, which Mr Melhem had suffered from, “even though things are much better”. Dr Cook also recognised that Mr Melhem’s life had been complicated by his past involvement in family law proceedings.
Dr Cook explained that when Mr Melhem was under pressure he had problems concentrating, could not think his way through situations and that he had reported that he was concerned that he was not going to make the right judgements.
Dr Cook acknowledged that if Mr Melhem was given time and the opportunity to respond to matters in writing, that would probably make tasks easier for him, although he suggested that if matters were complicated and related to causing Mr Melhem anxiety, it was possible Mr Melhem would still struggle. Dr Cook suggested that if the proceedings involved matters of importance and significance that would create anxiety in most people, they would also cause Mr Melhem anxiety and that he would not be able to perform well and that in this sense Mr Melhem might have problems conducting proceedings.
When asked in cross-examination if in his opinion Mr Melhem was able to instruct a solicitor to assist him to make an application of the nature of an application to set aside a default judgment, Dr Cook indicated that he was not sure what was involved in instructing a solicitor. He suggested that Mr Melhem might doubt his capacity to do so if that required a full and proper understanding of the complexities of the matter at hand.
However Dr Cook agreed that he thought that Mr Melhem had the ability to understand the nature of the problem in the present case, in that someone was trying to make him bankrupt for unpaid legal costs. He also thought Mr Melhem had the capacity to seek an adviser, which was what Dr Cook thought Mr Melhem was asking for by hoping to have someone to be his litigation guardian.
Dr Cook indicated that he was not in position to express an opinion as to whether Mr Melhem had the capacity to manage the implications of what was occurring in a courtroom. However he agreed that Mr Melhem may have a greater ability to deal with problems if given time to do so. He also acknowledged that the fact that Mr Melhem had made past applications to set aside the Local Court judgment would indicate a coping ability on Mr Melhem’s part, either in himself or to utilise others to assist him.
The matter was adjourned until 2 August 2018 so that Dr Cook could file a supplementary report and the parties could file and serve written submissions in relation to the need for a litigation guardian.
Dr Cook advised by email of 3 July 2018 that he had thought through the matters and did not have any further information or opinion to add. He supported Mr Melhem’s request to have “a person, or more” assigned “to act for him” as a litigation guardian. He expressed the view that Mr Melhem did not have the capability to comprehend complex matters “with sufficient speed or accuracy” and that trying to do so would cause Mr Melhem “likely more considerable anxiety” and that this would compound his difficulties in functioning properly.
The petitioning creditor filed an affidavit of Mr Titus sworn on 17 July 2018 and detailed written submissions addressing the application for a litigation guardian. The petitioning creditor contended that, based on the evidence before the court, including that of Dr Cook, the court should not be satisfied that Mr Melhem did not understand the nature and possible consequences of the proceedings or that he was not capable of adequately conducting, or giving adequate instructions for the conduct of, the proceedings.
In response to the petitioning creditor’s submissions, on 31 July 2018 Mr Melhem filed a further (third) notice of opposition, an affidavit sworn by him on 27 July 2018 and written submissions.
The third notice of opposition developed the contention that, based on itemised bills for Taylor and Scott in evidence in these proceedings and the Local Court proceedings detailed in the annexures to Mr Titus’s affidavit of 17 July 2018 at pages 33 to 65, Mr Melhem did not owe the petitioning creditor any monies. It was submitted that it would be a miscarriage of justice for the court to bankrupt him.
Mr Melhem also sought a further adjournment of these proceedings pending the result of another notice of motion he had filed in the Sutherland Local Court on 27 July 2018. At the same time, Mr Melhem maintained his request that this matter be adjourned until a litigation guardian was appointed.
In his affidavit of 27 July 2018 Mr Melhem claimed he suffered from difficulties reading and writing “for long” and dealing with complex calculations. He claimed that this was why he had not made timely responses in the Local Court matter which had led to the default judgment. He also claimed that he struggled to read and respond to complex court documents as he had difficulty concentrating.
The affidavit explained in some detail that Mr Melhem’s mother had not proceeded with the application in the Supreme Court for a costs assessment because she had received legal advice that this would not overturn the default judgment. He explained that his application for a stay in relation to the default judgment had been listed in the Sutherland Local Court on 22 August 2018.
Mr Melhem annexed a copy of his July 2018 notice of motion filed in the Local Court which, as he explained, was based on a claim that the default judgment was based on a false and misleading representation by the petitioning creditor to the Local Court. He gave details (including mathematical calculations and references to invoices and payments). He claimed that in fact he was owed $996.28 by the petitioning creditor.
Mr Melhem sought that the bankruptcy matter not proceed further until his motion was heard in the Local Court.
Mr Melhem’s affidavit of 27 July 2018 also addressed further his claim that a litigation guardian should be appointed in these proceedings. He claimed that although his sister was a solicitor, she did not give him any legal advice, did not have any experience in bankruptcy matters, did not want to act as his litigation guardian and that he was “not able to coerce her into doing so”. Nor were any of his family members willing to take on the responsibility to “assist” him throughout the proceedings. He claimed that, without assistance, he was “not able” to make a response. He claimed that he could not afford a solicitor. He admitted he had attended this court and the Local Court on some occasions, but claimed he had difficulties running his case competently without a litigation guardian “or” a solicitor. He claimed that this was why he had not made timely responses in the Local Court proceedings, but also asserted that if he had the funds to instruct a solicitor he would have been able to do so. He claimed that his lack of ability and consistency in responding to court orders was consistent with his symptoms and the need for a litigation guardian.
Mr Melhem also made written submissions relating to his adjournment application on the basis of his most recent Local Court application. He claimed that he had entered into an oral agreement with a solicitor from Taylor and Scott in August 2015 which was a conditional agreement that the firm would only continue acting for him in circumstances “where the legal costs would be sought through an interim application in a case to access funds from controlled monies held with [a named firm of solicitors]”. Mr Melhem asserted that Mr Youssef, the solicitor from Taylor and Scott, then changed his mind and so, as a hearing was pending in his family law proceedings, Mr Melhem had offered an unencumbered property as security for costs. He submitted that this alleged “agreement” explained why Mr Youssef continued acting on his behalf (after suspending his account for alleged non-payments), incurring additional legal fees and then ceasing to act again in October 2015.
These submissions are clear and coherent and address matters of some complexity, including Mr Melhem’s interaction with his solicitor in 2015 and particular aspects of Mr Titus’s affidavit evidence.
In these submissions Mr Melhem also reiterated his claim to need a litigation guardian, but also asserted that if he had the funds to instruct a lawyer he would have been able to make timely responses in the Local Court.
Mr Melhem’s written submissions concluded by criticising the petitioning creditor’s “ethics” on the basis that Taylor and Scott was said to have actively pursued a default judgment knowing that he has a positive account with them and pursued “bankruptcy orders against a disadvantaged respondent based upon the legal technicalities of a wrongfully obtained default judgment”.
Mr Melhem was given, and took, the opportunity to appear by telephone link on 2 August 2018. He was responsive. While he had little further to add to his submissions, I gave both parties the opportunity to file further written submissions in relation to the issue of a litigation guardian having regard to Dr Cook’s email of 3 July 2018 which, it appeared, had not been brought to Mr Melhem’s attention. I advised the parties that judgment in relation to the application for a litigation guardian would be delivered on 21 September 2018 (a date which also meant that Mr Melhem’s most recent notice of motion in the Local Court should have been considered by that Court).
Mr Melhem did not file any further written submissions. The petitioning creditor filed supplementary written submissions in which it was submitted that while Dr Cook had expressed the belief in his email of 3 July 2018 that Mr Melhem “does not have the capacity to comprehend complex matters with sufficient speed and accuracy”, the applications made by Mr Melhem to this court and to the Local Court showed that there was in fact no need for a litigation guardian. It was contended that, given time, Mr Melhem had been able to seek to address relevant issues. It was pointed out that he had raised an issue that the amount that had been paid by him to the petitioning creditor in respect of costs fully satisfied the legal costs the subject of the judgment (although this was disputed). It was also pointed out that Mr Melhem had been able to note that an application could be made to the Supreme Court for an assessment of costs, and submitted that although he had indicated that this had not been proceeded with, this showed an awareness of the procedure.
The petitioning creditor submitted that Mr Melhem had demonstrated that he was able to respond to protect his interests. He had prepared detailed affidavits, made submissions in relation to matters and applied logical thought processes in trying to protect his interests.
It was contended that it was also relevant to have regard to the nature of these proceedings, in particular the fact that the proceedings were civil and not criminal litigation and that, as previously advised, Mr Melhem would not be required for cross-examination on the affidavit evidence he had filed. It was submitted that Mr Melhem could be afforded the time to take steps and to plan out his responses, as he had done to date in these proceedings.
It was submitted that Mr Melhem’s latest application to this court and his supporting material showed that, contrary to the opinion of Dr Cook, Mr Melhem did have the capacity to understand the matter and to act in these proceedings “with sufficient speed and accuracy”. It was suggested that he had functioned as a determined and resourceful litigant who had used processes in two courts to protect himself from bankruptcy.
The petitioning creditor contended that the court could not be satisfied on the balance of probabilities that Mr Melhem had a need for a litigation guardian. It was observed that no one in his family or any third person had come forward as being prepared to be nominated.
It was submitted that the application for a litigation guardian should be refused.
Before considering the law in relation to litigation guardians it is also relevant to detail Mr Melhem’s involvement in Local Court proceedings with the petitioning creditor, some of which is referred to above.
Mr Melhem’s recollection is that he first engaged the services of Taylor and Scott to act for him in connection with family law proceedings in 2014. This was after he experienced the 2012 armed office invasion and started to see Dr Cook. Mr Melhem has not suggested that he was unable to give adequate instructions to Taylor and Scott or that he did not understand the nature and consequences of the family law proceedings. Nor did Dr Cook make such a suggestion. Dr Cook’s letter of 14 January 2016 addressed the impact of particular heightened anxiety and a lack of medication over Christmas/New Year 2016 on Mr Melhem’s perceived ability to give clear and confident instruction to his legal advisers in early 2016 (presumably in relation to the family law proceedings). It does not establish legal incapacity or a need for a litigation guardian for Mr Melhem in these proceedings.
Relevantly, on Mr Melhem’s own evidence, in at least the second half of 2015 he gave instructions to his solicitor, including orally by telephone and in a meeting. It appears that he agreed to continue utilising the services of this solicitor, although the basis for such further representation is in dispute. On Mr Melhem’s evidence he also proposed an alternative arrangement to meet his solicitor’s costs. The invoices Mr Melhem has referred to in his evidence and submissions describe attendances, email correspondence and telephone calls between Mr Melhem and his then solicitor.
As indicated, the petitioning creditor obtained a default judgment in the Local Court on 27 May 2016. On 6 July 2017 (which was after the creditor’s petition was presented), Mr Melhem filed a notice of motion in the Local Court to stay proceedings and set aside the default judgment. He also filed a supporting affidavit in the Local Court in which he claimed that he had not received correspondence about the default judgment claim until he was notified of the bankruptcy proceedings. He set out, coherently, the basis for his notice of motion. He denied he owed the amount claimed and asserted that many of Taylor and Scott’s charges were unreasonably excessive and/or not made based on his instruction. The petitioning creditor opposed the Local Court motion and filed a detailed affidavit in response. The motion was listed in the Local Court on 26 July 2017.
On 26 July 2017 there was no appearance by Mr Melhem in the Local Court. His motion was refused. However it appears that the Local Court then found earlier correspondence from Mr Melhem in which he had sought an adjournment of the hearing of 26 July 2017. On 16 August 2017 the default judgment was set aside by the Local Court, which also ordered that Mr Melhem file his defence within 21 days. He did not do so. The Local Court determined that accordingly the judgment would be reinstated.
In December 2017 (after orders were made for substituted service of the creditor’s petition) Mr Melhem filed a second notice of motion to set aside the Local Court judgment (with a supporting affidavit). A stay on enforcement was granted. The matter came before the Local Court on 10 January 2018. Mr Melhem appeared personally. His application was refused. As described above, the evidence before the Local Court at that time was addressed in affidavits of Mr Titus and Mr Melhem filed in February and March 2018.
As indicated, on 27 July 2018 Mr Melhem filed a further notice of motion in the Local Court seeking review, that there be a stay on enforcement and that the default judgment be set aside. This application was accompanied by a detailed affidavit affirmed by Mr Melhem alleging that Taylor and Scott had made false and misleading representations to the Local Court to obtain a default judgment. He relied on the fact of this notice of motion in support of his most recent application for an adjournment in these proceedings.
In an affidavit of 10 September 2018 Mr Titus deposed that on 5 September 2018 he and Mr Melhem had appeared in the Local Court, that Mr Melhem had provided written and oral submissions, but that the Magistrate had refused the application to set aside the default judgment.
Consideration
Rule 11.08 of the Rules is relevantly as follows:
(1) For these Rules, a person needs a litigation guardian in relation to a proceeding if the person does not understand the nature and possible consequences of the proceeding or is not capable of adequately conducting, or giving adequate instruction for the conduct of, the proceeding.
In this case, Mr Melhem himself asserts that he needs a litigation guardian.
In L v Human Rights and Equal Opportunity Commission [2006] FCAFC 114; (2006) 233 ALR 432 the Full Court of the Federal Court considered the law relating to the appointment of a litigation guardian under Div.11.2 of the Federal Magistrates Court Rules 2001 (Cth) (now Div.11.2 of the Rules) on the Court’s own motion under r.11.11(1). Their Honours relevantly observed at [23]-[27]:
23. The law relating to the appointment of a litigation guardian for a person who lacks the requisite capacity to conduct litigation or the capacity to give instructions to a person conducting litigation on their behalf, has a long history. Its origins can be traced back to the prerogative power of the Crown to protect those in need of protection on account of mental incapacity.
24. The law developed in the context of property disputes. In 1891, Kekewich J observed that it was ‘undoubted’ that the Chancery Division of the High Court had jurisdiction ‘to protect the estates of those who, though not found lunatic, are yet incompetent, by reason of a weakness of intellect, to take proceedings themselves – that is to say, to instruct their solicitors to take proceedings on their behalf’: Howell v Lewis (1891) 61 LJ Ch 89 at 89.
25. There are valuable statements about the court’s power to appoint litigation guardians in Masterman-Lister v Brutton & Co (Nos 1 and 2) [2003] 1 WLR 1511. In substance, the purpose is to protect plaintiffs and defendants who would otherwise be at a disadvantage, as well as to protect the processes of the court. Kennedy LJ said (at [31]):
‘In the context of litigation, rules as to capacity are designed to ensure that plaintiffs and defendants who would otherwise be at a disadvantage are properly protected, and in some cases that parties to litigation are not pestered by other parties who should be to some extent restrained’.
Chadwick LJ (at [65]) said:
‘The pursuit and defence of legal proceedings are juristic acts which can only be done by persons having the necessary mental capacity; and the court is concerned not only to protect its own process but to provide protection to both parties to litigation which comes before it. A defendant is entitled to expect that he will not be required to defend proceedings brought against him by a person of unsound mind acting without a next friend’.
26. There is a presumption of competence unless and until the contrary is proved; that is, there is a presumption that a litigant of full age is competent to manage his or her affairs: Masterman-Lister at [17] (Kennedy LJ); Murphy v Doman [2003] NSWCA 249; (2003) 58 NSWLR 51 at [36] (Handley JA). When it is alleged that a person is incompetent, the onus of proof is on those so asserting: Masterman-Lister at [17] (Kennedy LJ); Dalle-Molle v Manos [2004] SASC 102; (2004) 88 SASR 193 at [17] (Debelle J); Andreapoulou v Nowak [2002] VSC 462; Pratt v Dickson [2000] QSC 314.
27. The means by which the court will determine whether a guardian should be appointed can vary from case to case. In Masterman-Lister, Kennedy LJ said (at [29]) that the decision as to capacity rests with the court but in almost every case the court would need medical evidence to guide it. Earlier, Kennedy LJ had observed (at [17]):
‘even where the issue does not seem to be contentious, a district judge who is responsible for case management will almost certainly require the assistance of a medical report before being able to be satisfied that incapacity exists’.
Cases such as Hutchinson v Gaitazis (1980) 25 SASR 30, AJI Services Pty Ltd v Manufacturers’ Mutual Insurance Ltd [2005] NSWSC 709 and Levey v Levey (1979) 11 BCLR 97 (SC) were decided on medical evidence. There will, however, be cases where no medical evidence is available as, for example, when a litigant refuses to submit to a medical examination. And there will be cases where the lack of capacity is so clear that medical evidence is not called for. In those cases, and perhaps others, the court is entitled to rely on its own observation to make an assessment about the capacity of a party: see, for example Murphy v Doman at [37] (Handley JA); AJI Services Pty Ltd v Manufacturers Mutual Insurance Ltd at [57] (Bell J).
The Full Court also made the point (at [29]) that the circumstances in r.11.08 were expressed as alternatives. Further the Court made it clear in L (at [34]) that conduct that might appear to be against the interest of a litigant (such as putting forward a case that revealed no reasonable cause of action) “may say nothing at all about the litigant’s capacity to present such a case”.
It is notable that, as pointed out in L at [26], there is a presumption of competence. As the Full Court of the Family Court stated in Forster v Forster [2012] FamCAFC 47 at [126] the presumption of competence “cannot be, nor should it be, easily displaced. It is the common experience of courts that many self-represented litigants appear to act against their interests, file voluminous documents and file many applications, some of which, at least at first blush, would enjoy no prospects of success”.
In Goddard Elliot v Fritsch [2012] VSC 87 Bell J of the Victorian Supreme Court discussed the issue of the mental capacity of a litigant. While Bell J was considering a provision in the Supreme Court (General Civil Procedure) Rules 2005 (Vic) and the particular issue of whether a solicitor had taken instructions from a client who lacked mental capacity, the remarks are instructive and refer to much cited authority. Bell J stated at [555]-[557]:
555. The standard of capacity which is required for a person to participate in legal proceedings is the same standard of capacity which is required for a person to enter into legal transactions. That required standard of capacity was stipulated by Dixon CJ, Kitto and Taylor JJ in Gibbons v Wright in these terms:
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.
As you can see, the standard is based on the subjective understanding of the person. The understanding which is required is contextual and relates to the nature of what the person is doing. The question is not whether the person can do the legal act intentionally, as by putting their signature to a deed; it is whether they can understand the nature of the legal consequences which will be brought about. On the facts, these principles are important in the present case.
556. Masterman-Lister is of general importance and has been widely followed in Australia. Kennedy LJ said the standard “was related to the individual plaintiff and [his or her] immediate problems”. His Lordship went on to emphasise
the issue-specific nature of the test; that is to say the requirement to consider the question of capacity in relation to the particular transaction (its nature and complexity) in respect of which the decisions as to capacity fall to be made.
Chadwick LJ held:
The authorities are unanimous in support of two broad propositions. First, that the mental capacity required by the law is capacity in relation to the transaction which is to be effected. Second, that what is required is the capacity to understand the nature of that transaction when it is explained.
557. In Masterman-Lister, the trial judge and Kennedy LJ on appeal applied the approach which had been adopted by Boreham J in White v Fell. The relevant passage from the regrettably unreported judgment of Boreham J was set out in the judgment of Kennedy LJ in these terms:
To have that capacity [he or she] requires first the insight and understanding of the fact that [he or she] has a problem in respect of which [he or she] needs advice … Secondly, having identified the problem, it will be necessary for [him or her] to seek an appropriate adviser and to instruct [him or her] with sufficient clarity to enable [him or her] to understand the problem and to advise [him or her] appropriately … Finally, [he or she] needs sufficient mental capacity to understand and to make decisions based upon, or otherwise give effect to, such advice as [he or she] may receive.
Under this approach, it can be seen 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. This approach has found favour in Australian authorities and I would endorse it and follow it here.
(footnotes omitted)
Bell J made the point (at [558]) that the test of capacity in the case of self-represented persons is “more intensive” than in the case of represented persons (as to which see Owners of Strata Plan 23007 v Cross [2006] FCA 900; (2006) 153 FCR 398 at [61]). Bell J referred to the fact that in Slaveski v State of Victoria [2009] VSC 596 at [31] Kyrou J had followed the NSW Court of Appeal in Murphy v Doman [2003] NSWCA 249; (2003) 58 NSWLR 51 in holding that:
Where a person is a self-represented party to a proceeding, the level of mental capacity required to be a “capable” litigant will be greater than that required to instruct a lawyer because a litigant in person has to manage court proceedings in an unfamiliar and stressful situation.
Rule 11.08 of the Rules refers to a need for a litigation guardian “in relation to a proceeding”. This focuses on the person’s ability to bring or defend particular proceedings, not on whether the person has the ability to manage his or her affairs generally or in relation to some other kind of transaction (or proceeding) (see Slaveski at [27] and Cross at [53]). Thus, the question of the need for a litigation guardian must be examined in the context of the particular litigation, its facts and subject matter and the complexity of the issues involved, as well as the identity and interests of the opposing party. As stated in Slaveski at [28] “A person can have the requisite capacity for one proceeding and lack it for another”.
It is also important to bear in mind that what is in issue for the purposes of the second aspect of r.11.08 is a degree of capacity. The rule requires an assessment of Mr Melhem’s capacity to “adequately” conduct this particular proceeding or to give “adequate” instructions for the conduct of these proceedings. As stated in Krnjic v Bunnings Group Ltd (No. 2) [2018] FCCA 1609 at [20] “[s]omething less than a perfect ability [is] invoked” by this aspect of r.11.08. The fact that a self-represented litigant may experience difficulty in participating in litigation without legal representation does not of itself establish that a person is “not capable of adequately conducting or giving adequate instruction for the conduct of the case” (see Materanzi v Suskain (No. 2) [2011] FamCA 276 at [19]-[21] per Forrest J considering Family Law Rules which, relevantly, defined “a person with a disability” in terms akin to the two aspects of r.11.08 of the Rules).
The first aspect of r.11.08 requires it to be established that Mr Melhem “does not understand the nature and possible consequences of the proceeding”. The present proceeding is a creditor’s petition. The debt relied on is a judgment debt based on the default judgment of the Local Court for costs said by the petitioning creditor (a firm of solicitors) to have been incurred acting on behalf of Mr Melhem in family law proceedings. The possible consequence of these proceedings is the bankruptcy of Mr Melhem.
Notwithstanding the complexity which can arise in relation to a creditor’s petition, it is abundantly clear from the evidence and applications filed by Mr Melhem in these proceedings and his various attempts to set aside the Local Court judgment that he understands the factual framework of the creditor’s claims in this instance (which he disputes), the type of evidence required to succeed in his application to set aside the default judgment and also what is relevant to these proceedings. He has demonstrated a clear understanding of the court processes and the basic rules for conducting his case when these matters are explained to him. He has complied with court orders, filed relevant material in anticipation of listings and, based on what has occurred to date, has shown himself capable of complying with court processes, basis rules and court rulings. There is no evidence, or suggestion, of any “weakness of intellect” on Mr Melhem’s part. His behaviour in court does not demonstrate legal incapacity.
The documents Mr Melhem has filed in this court and the Local Court reveal an awareness of the processes, nature and possible consequences of these particular proceedings. It is clear Mr Melhem understands he has a legal problem, that he faces the prospect of bankruptcy, and that he has the ability to seek assistance (including from his family) to ensure provision of timely written material (including submissions as well as applications and affidavits). He has been able to act for himself in the conduct of the proceedings.
Dr Cook did not suggest that Mr Melhem lacked the mental capacity to understand the nature and possible consequences of the present proceedings. Indeed in cross-examination he agreed that Mr Melhem would be able to understand the nature of the problem. Dr Cook’s belief that Mr Melhem does not have the capability to comprehend complex matters “with sufficient speed and accuracy” (emphasis added) is not determinative in this respect. Dr Cook was not familiar with the nature of the present proceeding and the applicable and available procedures. There is evidence that, given time and the opportunity to present arguments in written form, Mr Melhem has been able to address relevant issues. He has raised technical issues in relation to his liability for the debt relied on by the petitioning creditor. He has shown an awareness of procedural requirements and of available proceedings, including in other courts, to dispute the judgment debt and his liability to the petitioning creditor for costs. I am not satisfied that Mr Melhem does not understand the nature and possible consequences of the present proceeding.
The alternative basis on which a litigation guardian is needed is that a person is not capable of adequately conducting, or giving adequate instruction for the conduct of, the proceeding. As indicated, something less than a perfect ability to conduct proceedings is invoked by the reference to “adequately” conducting the proceeding or giving “adequate” instruction.
While medical evidence may not be essential in every case to establish a “need” for a litigation guardian (see L at [27]), this is not a case in which “the lack of capacity is so clear that medical evidence is not called for” (L at [27]). On the contrary, I am not satisfied, based on my own observations, that it is apparent that Mr Melhem is not capable of adequately conducting or giving adequate instruction for the conduct of the proceeding.
There is some medical evidence before the court in this case, from Dr Cook who has been Mr Melhem’s treating psychiatrist since about early 2013. I have borne in mind that while the written statement attached to Dr Cook’s affidavit was perfunctory, he was not asked by Mr Melhem to provide a comprehensive psychiatric assessment. He was not familiar with the requirements of r.11.08 or more generally with the Expert Evidence Guidelines. His oral evidence was more expansive, but he did not have the benefit of Mr Melhem’s medical file notes while giving such evidence (as he had left the file at another surgery). He did not provide a supplementary report, beyond the brief email described above. I have nonetheless had regard to all the evidence and material from Dr Cook.
In his January 2016 letter Dr Cook referred to Mr Melhem’s view that at that particular time (when he had no access to medication over the Christmas/New Year period and was particularly stressed and anxious) he could not give clear and confident instructions to his legal advisers (presumably in his family law proceedings) and “quickly and confidently” respond to questions on complex matters. As indicated, this letter does not establish that Mr Melhem needs a litigation guardian in the present proceedings.
Further, Dr Cook’s recent evidence is that the intensity of Mr Melhem’s symptoms resulting from post-traumatic stress disorder and severe anxiety has settled down, that his “very intense symptoms are a lot better” and that the incidence of pain and headaches were now much reduced.
Dr Cook’s ultimate view, as expressed in his email of 3 July 2018 is that he believes that Mr Melhem “does not have the capability to comprehend complex matters with sufficient speed or accuracy”. However this opinion must be assessed in the context of the particular litigation in issue (something with which Dr Cook was not familiar and did not address).
In these proceedings, given time, Mr Melhem has been able to seek to address relevant issues, to respond and to act to protect his interests. He has prepared detailed affidavits, filed timely notices of opposition, sought adjournments and made written submissions demonstrating the application of logical thought processes in the attempt to protect his interests. He has raised an issue of some complexity to the effect that the amount he paid the petitioning creditor fully satisfied the legal costs the subject of the default judgment. He has provided detailed and coherent evidence about his own past dealings with his former solicitor, of relevance to his legal arguments in this court and the Local Court. He has shown a very clear awareness of available procedures and an ability to seek to rely on such procedures.
While I accept that Mr Melhem suffers from severe anxiety following post-traumatic stress disorder after being subjected to a 2012 armed office invasion, and that he copes by isolation and avoiding dealing with problems, Dr Cook agreed that, apart from “some” avoiding issues, Mr Melhem could understand the nature of the problem he faces in these proceedings and seek advice. Mr Melhem does not suggest, and nor does the evidence establish, that he is not presently capable of seeking and giving adequate instructions to a lawyer (see Cross at [61]). His difficulty in finding a lawyers appears to relate to his financial circumstances. Such circumstances do not provide a basis for the appointment of a litigation guardian.
Nor am I satisfied that Mr Melhem is not capable of adequately conducting this proceeding. In essence, Mr Melhem’s claim is that he is not capable of adequately conducting the proceeding as a self-represented litigant. To the extent that he seeks a litigation guardian in order to obtain expert legal advice and representation, this misunderstands the nature of a litigation guardian and the test of capacity to adequately conduct proceedings. Mr Melhem’s desire for legal representation does not establish that he has a lack of capacity to adequately conduct the proceedings as a self-represented litigant, particularly given his demonstrated ability to understand and utilise available court procedures, both in this court and the Local Court, and to act in a timely fashion in compliance with court rulings. The present case has some complexity in relation to the debt relied on by the petitioning creditor. Yet Mr Melhem clearly understands this and has taken action in the Local Court (in which he has appeared for himself) to have the judgment debt set aside (albeit unsuccessfully). He has filed detailed evidence and submissions.
I have borne in mind the stress and pressure of the proceedings. I accept that Mr Melhem requires additional time, finds it easier to deal with matters of complexity in writing and finds attending court premises stressful. However I am not satisfied that he has a mental incapacity such as to render him incapable of adequately conducting these particular proceedings. The present proceedings are such that, with the promised and already evident cooperation of the solicitor for the petitioning creditor, Mr Melhem can and will be afforded the opportunity to participate in the hearing by telephone link (as he has indicated is his preference) and to respond in writing to any submissions for the petitioning creditor. He has had, and will continue to have, time to plan out and make responses with “sufficient” speed in the context of these particular proceedings. Importantly, he will not be required for cross-examination on the affidavit evidence he has filed, which, I acknowledge, he may well have found particularly stressful. I am not satisfied that Mr Melhem is not capable of adequately conducting these particular proceedings.
I am not satisfied that Mr Melhem needs a litigation guardian in relation to these proceedings. Hence the application for the appointment of a litigation guardian should be refused.
I certify that the preceding ninety-three (93) paragraphs are a true copy of the reasons for judgment of Judge Barnes
Date: 21 September 2018
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