JG Liddy, RJ McClenahan and IA Simic T/As Taylor and Scott Lawyers v Melhem

The applicants, JG Liddy, RJ McClenahan and IA Simic, partners in Taylor and Scott Lawyers, presented a creditor's petition against the respondent, Roussell Antanios Melhem, seeking to have him declared bankrupt based on a judgment debt of $39,478.72 for legal costs. The dispute before the Federal Circuit Court of Australia concerned Mr Melhem's application for the appointment of a litigation guardian. This application was made on the basis that Mr Melhem claimed to have a legal incapacity preventing him from adequately conducting the proceedings or giving proper instructions to legal representatives.

The court was required to determine whether Mr Melhem met the criteria for needing a litigation guardian under Rule 11.08 of the Federal Circuit Court Rules 2011 (Cth). This rule stipulates that a person needs a litigation guardian if they do not understand the nature and possible consequences of the proceeding, or are not capable of adequately conducting it or giving adequate instructions for its conduct. The court also considered the evidence presented by Mr Melhem, including medical reports from his treating psychiatrist, Dr Cook, and the submissions of the petitioning creditor, which argued against the necessity of a guardian.

Judge Barnes reasoned that while Mr Melhem had presented medical evidence suggesting difficulties with concentration, memory, and cognitive analysis, particularly under pressure, this evidence did not establish that he lacked the capacity to understand the nature and consequences of the bankruptcy proceedings or to adequately conduct them. The court noted that Mr Melhem had demonstrated a capacity to engage with the legal process, having filed multiple applications to set aside the default judgment in the Local Court and having prepared detailed affidavits and submissions in the current proceedings. Furthermore, Dr Cook's evidence, while indicating Mr Melhem might struggle with complex matters and experience anxiety, also acknowledged Mr Melhem's ability to understand the core problem and seek advice. The court found that Mr Melhem had shown himself to be a determined litigant capable of protecting his interests, even if it took him time and effort.

Consequently, the court was not satisfied on the balance of probabilities that Mr Melhem met the threshold for needing a litigation guardian. The application for the appointment of a litigation guardian for the respondent was refused.