Sheikholeslami v University of New South Wales (No.2)

[2007] FMCA 2020

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SHEIKHOLESLAMI v UNIVERSITY OF NEW SOUTH WALES (No.2) [2007] FMCA 2020

INDUSTRIAL LAW – Stay of proceeding due to outstanding costs in related proceeding – respondent allowed both matters to continue concurrently in two courts – delay in enforcement of costs orders and application for stay – final hearing imminent – whether continuance of proceeding would be unfairly oppressive to respondent – whether administration of justice would be brought into disrepute – application for stay refused.

Federal Magistrates Court Rules 2001 (Cth), r.13.10(c)
Human Rights and Equal Opportunity Commission Act 1986 (Cth), s.46PO
Workplace Relations Act 1996 (Cth)

Bowen v Hickey (1958) 78 WN (NSW) 820
Crypta Fuels Pty Ltd & Anor v Svelte Corporation Pty Ltd & Ors (1995) 19 ACSR 68
Devenish & Ors v Jewel Food Stores Pty Ltd (1990) 94 ALR 664
Idoport v National Australia Bank Limited & Anor [2006] NSWCA 202
Phillip Morris Limited v Attorney‑General for the State of Victoria & Lindsey [2006] VSCA 21
Sheikholeslami v Brungs [2006] FCA 933
Sheikholeslami v University of New South Wales [2006] FMCA 1200
Sheikholeslami v University of New South Wales [2006] FCA 712
Sheikholeslami v University of New South Wales [2005] FCA 1547

Applicant: ROYA SHEIKHOLESLAMI

Respondent: UNIVERSITY OF NEW SOUTH WALES

File Number: SYG 1404 of 2006

Judgment of: Smith FM

Hearing date: 23 November 2007

Delivered at: Sydney

Delivered on: 23 November 2007

REPRESENTATION

Counsel for the Applicant: Mr A Searle

Solicitors for the Applicant: The People’s Solicitors

Counsel for the Respondent: Ms N Sharp

Solicitors for the Respondent: Corrs Chambers Westgarth

ORDERS

1. The respondent’s application in a case filed on 9 November 2007 is refused.

2. Both parties have liberty to apply on 5 days notice to the other party for costs in relation to that application.

3. The date specified in orders 5, 6 and 7 made on 8 June 2007 is varied to 28 November 2007.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 1404 of 2006

ROYA SHEIKHOLESLAMI

Applicant

And

UNIVERSITY OF NEW SOUTH WALES

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

1. Dr Sheikholeslami commenced proceedings in the Federal Court on 30 March 2005 against the University of New South Wales (“the University”), her former employer, alleging that her employment as a senior lecturer had been unlawfully terminated. She sought relief under the Workplace Relations Act 1996 (Cth) as it then stood. The University’s response, seeking to justify termination without notice, has been met by Dr Sheikholeslami with counter allegations seeking to justify her conduct which the University criticised. The resultant proceeding raises multiple factual issues concerning events occurring during Dr Sheikholeslami’s employment at the University over several years.

2. The proceedings in the Federal Court were listed in the dockets of Gyles and Madgwick JJ in relation to a number of interlocutory disputes. These included an application by the University for summary dismissal or stay of the proceeding, which Gyles J refused on 21 October 2005 (see Sheikholeslami v University of New South Wales [2005] FCA 1547).

3. On 11 May 2006, Madgwick J entertained an application by the University for the proceedings to be transferred to this Court, and made that order notwithstanding objections by Dr Sheikholeslami. Her objections included the fact that she then had other proceedings in the Federal Court against the University, which could be consolidated. Madgwick J did not accept this submission, and said in Sheikholeslami v University of New South Wales [2006] FCA 712 at [7]:

   7It appears to me that it is likely that the proceedings could be heard and determined at less cost and more convenience to the parties than if the proceedings remained in this court.  It is also likely that they will be heard and determined earlier in the Federal Magistrates Court than in this Court. 

   I am unsure of the basis upon which his Honour formed his latter opinion, given the state of this Court’s lists at the time and its difficulties in accommodating a matter requiring a ten day hearing.

4. Since the matter came into my docket, I have endeavoured to bring it to an expeditious hearing, without exposing the parties to undue expense. A series of directions hearings have been held, including the resolution of issues concerning discovery (see Sheikholeslami v University of New South Wales [2006] FMCA 1200). The parties have filed voluminous evidence by way of affidavits, and on 8 June 2007 the University consented to the matter being listed for hearing commencing on 3 December 2007, with ten days being set aside. On that day I gave directions for the final preparation for the hearing, based upon my earlier attempts to direct the parties to focus and isolate the essential documents and issues. Some further directions hearings have been held since June at the request of the University, seeking leave to issue subpoenas.

5. Until recent weeks Dr Sheikholeslami has acted for herself without any legal assistance. However, she now has solicitors on the record who have briefed counsel for today’s interlocutory application.

6. The application was filed by the University on 9 November 2007, and presents a major challenge to the continuance of the proceedings in this Court. It invokes rule 13.10(c) of the Federal Magistrates Court Rules 2001 (Cth), which empowers the Court to stay a claim for relief if the Court is satisfied that “the proceeding or claim for relief is an abuse of the process of the Court”.

7. The University seeks what is described as a “temporary” stay on all further proceedings in Dr Sheikholeslami’s application, until she has paid all outstanding costs orders made in the other Federal Court proceedings to which Dr Sheikholeslami had referred Madgwick J, and in some related appeal proceedings, with interest.

8. Although it is not conceded by the University, counsel for Dr Sheikholeslami submits, and I accept, that if I made that order today it would be necessary to vacate the appointed hearing. The amount of costs which are sought is in the region of $84,000. Although there is some evidence before me as to Dr Sheikholeslami’s means, which suggests that she may have an asset exceeding her liability, there is no evidence that she has an ability to raise that money immediately. She is at present overseas. In the circumstances, I accept that it would be unduly onerous upon her, and indeed also upon the University, to expect that their preparation for a hearing only nine days away should proceed, while the hearing itself is under the cloud which would be produced by the orders sought. Upholding the present application therefore would require me to vacate the hearing. The exigencies of this Court’s workload, and of my own docket in particular, would mean that a further hearing of ten days would be unable to be appointed until beyond June 2008. The University’s application therefore is of far more than transient significance.

9. The University’s application draws upon general principles concerning the concept of abuse of process, which were identified in the judgment of Maxwell P in Phillip Morris Limited v Attorney‑General for the State of Victoria & Lindsey [2006] VSCA 21 at [15]‑[20]:

   Abuse of process 

   15Phillip Morris submitted that the question of abuse of process should be approached by reference to what Mason, C.J. in Rogers v The Queen identified as its two aspects, namely –

   “... first, the aspect of vexation, oppression and unfairness to the other party to the litigation and, secondly, the fact that the matter complained of will bring the administration of justice into disrepute.”  

   16Earlier, Mason, C.J. had said: 

   “The concept of abuse of process is not confined to cases in which the purpose of the moving party is to achieve some foreign or ulterior object, in that it is not that party’s genuine purpose to obtain the relief sought in the second proceedings.  The circumstances in which abuse of process may arise are extremely varied and it would be unwise to limit those circumstances to fixed categories.”  

   17His Honour noted the recognition by the majority of the High Court in Williams v Spautz, that –

   “the concept [of abuse of process] extends beyond use of court processes for ulterior purposes to the use of such processes so as to cause vexation or oppression.”  

   18Phillip Morris also relied on what was said by McHugh, J. in Rogers v The Queen, where his Honour said that abuse of process usually fell into one of three categories, as follows: 

   (a)the Court’s procedures are invoked for an illegitimate purpose;

   (b)the use of the Court’s procedures is unjustifiably oppressive to one of the parties;

   (c)the use of the Court’s procedures would bring the administration of justice into disrepute.  

   19In Walton v Gardiner, Mason, C.J., Deane and Dawson JJ. said that the jurisdiction to stay proceedings that are an abuse of process –

   “extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness.” 

   20Their Honours gave the following examples of abuse of process: 

   (a)where the proceedings can be clearly seen to be foredoomed to fail;

   (b)where the court in which the proceedings are instituted is, in all the circumstances, a clearly inappropriate forum;

   (c)notwithstanding that the circumstances do not give rise to an estoppel, the continuance of the proceeding would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings. 

   (citations omitted) 

10. Beyond these general principles, counsel for the University relied upon a more refined principle, being the “outstanding costs principle”, which was addressed in Phillip Morris by Maxwell P at [88] and following, and by Ormiston JA, in his lengthy judgment which examined the relevant authorities. I was also referred to the judgment of Beazley JA in Idoport v National Australia Bank Limited & Anor [2006] NSWCA 202 at [103]‑[112]. She quoted the statement of the principle in Bowen v Hickey (1958) 78 WN (NSW) 820 at 822:

    It has long been established that where a plaintiff has failed in an action and seeks to bring a second action based on the same facts against the same defendant, the general rule is that the Court will stay proceedings in the second action until costs of the first action are paid. 

11. The principle was similarly stated by Goulding J in Thames Investment and Securities plc v Benjamin [1984] 3 All E.R. at 393 as follows (cited in Phillip Morris at [93]):

    … there is no rigid and inflexible rule that dictates what the court must do.  I think the matter is one for the court’s discretion to be judicially exercised on the facts of the particular case, though authority does give some indication of the way in which the discretion should generally be exercised. 

    Quite apart from authority, two propositions would seem to me plain as a general rule.  The first is that where an application has been made for a particular relief and has been dismissed with costs because of some fault or lack of success on the part of the applicant, then, generally speaking, the applicant ought not to be allowed to apply again for identical or equivalent relief if he is guilty of failure to pay the costs of the previous application.  [The second proposition is not presently relevant].  

12. To consider whether this principle has relevance to the present situation, it is necessary for me to trace the other proceeding which was commenced by Dr Sheikholeslami against the University in the Federal Court. It was a proceeding which she commenced after, not before, the present proceeding. It was commenced on 17 May 2005, and invoked the Federal Court’s jurisdiction under s.46PO of the Human Rights and Equal Opportunity Commission Act 1986 (Cth), following a notice of termination by the Human Rights and Equal Opportunity Commission (“the Commission”) dated 20 April 2005 of a complaint by Dr Sheikholeslami of unlawful discrimination by Dr Brungs as head of Dr Sheikholeslami’s school at the University. The University was later also joined.

13. Dr Sheikholeslami alleged that in the course of her employment she had been subjected to unlawful discrimination on the grounds of her sex, marital status, religion, race, and ethnic origin, and also that she had been sexually harassed. The Commission terminated the complaint on the ground that the subject matter of the complaint to the Commission could be more effectively or conveniently dealt with by another statutory authority, being the Federal Court, in the course of Dr Sheikholeslami’s unlawful termination proceeding which, as I have indicated, had been commenced on 30 March 2005, and is the proceeding which is now before me and is set down for hearing in nine days time.

14. In the Federal Court discrimination matter, there were extensive interlocutory proceedings which gave rise ultimately to a judgment by Tamberlin J on 28 July 2006, in which he dismissed the proceedings on the ground that “the way in which these proceedings have been conducted amounts to an abuse of process under O 20 r 2” of the Federal Court Rules. His Honour at [3] of his judgment in Sheikholeslami v Brungs [2006] FCA 933 said:

    3Since the commencement of the proceedings in May 2005, there have been eleven directions and interlocutory hearings and repeated failures by the applicant to cooperate in bringing the matter to a hearing. The applicant has also made several applications to the Court devoid of merit or substance.  … 

    His Honour identified a persistent failure by Dr Sheikholeslami to provide particulars of specific incidents upon which her claims of unlawful discrimination depended. When dismissing her application, he awarded indemnity costs to the University.

15. As I have indicated, his Honour’s orders were made at a time when the present proceedings had reached this Court on the application of the University, and were passing through interlocutory procedures. No similar application for summary dismissal was ever made to this Court.

16. Ultimately, the costs under the order made by Tamberlin J on 28 July 2006 were taxed in the amount of $55,919.89 on 30 April 2007, and judgment in this amount was entered on 15 May 2007. This was several weeks before 8 June 2007, when I set down the present matter for hearing. The outstanding costs were not raised by the University at that time as an objection to this matter proceeding to hearing.

17. Further costs orders were made against Dr Sheikholeslami in the Federal Court, as a result of unsuccessful applications seeking leave to appeal from Tamberlin J’s summary dismissal of her discrimination proceeding. These have added another $27,743 to the total amount of costs now outstanding against Dr Sheikholeslami.

18. There is some evidence before me of demands by the University on Dr Sheikholeslami, and attempts to negotiate payment. However, the only enforcement action which has been taken by the University is the issuing on 13 September 2007 of a bankruptcy notice in relation to a debt of $70,205.59. It appears there may be pending proceedings in this Court in relation to that notice.

19. It is the fact of the outstanding payment which now is sought to be relied upon by the University to stay the present proceedings, in a context where it is argued that factual issues in the matter which was dismissed by Tamberlin J also arise in the matter before me.

20. In my opinion, the “outstanding costs principle” as stated in the authorities discussed in Phillip Morris and Idoport does not have direct application to the circumstances of the present case. In its terms, it is a principle which arises once a first action has been concluded with a costs order against the plaintiff, and where the plaintiff then commences a second action raising the same allegations. Implicit in judicial statements of the principle, is that the application for stay will be brought before that second proceeding will have progressed so as to expose the defendant to further substantial costs. It is the commencement of the second proceeding, without the outstanding costs having been paid, which is identified as giving rise to the prima facie abuse of process, because the repetition of the litigation in that circumstance may be regarded as vexatious or oppressive.

21. No authority was cited to me by counsel for the University where the principle has been applied in circumstances comparable to the present. In my opinion, assuming that there is a significant overlap of issues in the two pieces of litigation commenced by Dr Sheikholeslami, the occasion for the University to seek to stay the continuance of the present action on the ground of oppressive duplication has long passed. The University has had ample opportunities to draw attention to the overlap, but never took those opportunities. Rather, as I have indicated above, it maintained the separation of the two proceedings by applying for the transfer of one of them to this Court, and then by allowing the matter in this Court to proceed to the threshold of its hearing before raising any issue of duplication or oppression.

22. I am not satisfied that the duplication or overlapping of issues which has now been identified provides a justification for staying this proceeding at the stage at which it has reached, in particular where this will require the vacating of the imminent hearing. Those issues have never been judicially addressed on their merits. I am at present unable to form any opinion on their merits, and have not been asked to do so. I do not consider that the administration of justice is brought into disrepute by this Court’s continuation with a hearing which will address them, but indeed the converse might appear.

23. I also consider that the time has long passed for the Court to be persuaded that the existence of the costs orders arising from the termination of the other Court proceeding should lead it to characterise the continuance of this proceeding into a final hearing as being unfairly oppressive to the University. As I have indicated, the substantial costs order arising from Tamberlin J’s judgment was made more than 16 months ago, and the quantification of that order to produce an enforceable judgment occurred more than a year ago. I do not accept the submission by counsel for the University that the delay in seeking to stay proceedings in this Court was sufficiently justified by attempts to negotiate with Dr Sheikholeslami.

24. In my opinion, an application of the present nature should be brought promptly, as soon as the events relied upon have occurred. This principle is applied in applications for security for costs (cf. Devenish & Ors v Jewel Food Stores Pty Ltd (1990) 94 ALR 664 at 666 and Crypta Fuels Pty Ltd & Anor v Svelte Corporation Pty Ltd & Ors (1995) 19 ACSR 68 at 71). Although the present case is not an application for security for the University’s costs, it implicitly relies upon a similar consideration, that is, that it would be oppressive for the University to be put to the expense of this proceeding without security for, or payment of, its costs in the related proceeding.

25. As the discussion of Lehane J in Crypta Fuels indicates, there is strong resistance to the making of any orders for security supported by a stay of proceedings, when a final hearing is imminent. The making of such an order at that stage in the proceedings, particularly when it could have been made at an earlier stage, becomes manifestly oppressive to the applicant, and that oppression may appear to outweigh the prejudice suffered by the respondent.

26. Counsel for the parties made submission concerning the financial effects on both parties of the hearing proceeding or being stayed, and some evidence was led concerning the financial resources of both the University and of Dr Sheikholeslami. I am not sure that such matters provide a consideration of great, if any, significance. However, it was a matter which was addressed in Phillip Morris, where a litigant in person was noted to be impecunious and the respondent was assumed to be otherwise. The Court took this into account, when allowing the proposed new action to proceed notwithstanding unpaid costs orders in a previous action. Such a stark difference in resources may not appear in the present case, but there is a significant differential in favour of the University.

1. I have taken into account the arguments presented to me in relation to financial matters, but I am not persuaded that the financial burden to the University, in proceeding with the appointed hearing while its costs on the other proceeding are outstanding, should cause me to order the stay which it seeks. In my opinion, its remedies against Dr Sheikholeslami in relation to the costs orders can, and should, be sufficiently pursued by way of whatever avenues of execution are available to it. I do not consider that its enforcement remedies should be augmented by a stay of the present proceeding. Whether those remedies themselves should be stayed pending an outcome in this proceeding, and upon what conditions, is not something which I am called upon to decide.

2. As the general principles concerning abuse of process which I have extracted above indicate, the Court needs to consider whether the continuance of the proceeding would bring the administration of justice into disrepute in the circumstances at the time when an order under r.13.10(c) is sought. In the present case, I have no doubt that the administration of justice would not be brought into disrepute by Dr Sheikholeslami being permitted to pursue her claims made in this proceeding against the University, through the continuance of the imminent hearing which has been appointed since June. The fact that she was not able properly to focus and present related claims in the other proceedings in the Federal Court is, in my opinion, irrelevant. It has not been contended at any stage in this Court that her failings have been repeated in this proceeding.

3. For the above reasons, I consider that the University’s application for a stay should be refused.

I certify that the preceding twenty‑nine (29) paragraphs are a true copy of the reasons for judgment of Smith FM

Associate:  Lilian Khaw

Date:  10 December 2007