Michail v Mount Druitt and Area Community Legal Centre Inc

1. [1]

   THE COURT: Ms Michail seeks leave to appeal from the interlocutory judgment given on 24 September 2015 by the primary judge, Gibson DCJ, striking out various paragraphs of her third further amended statement of claim, but refusing the defendant’s application for summary dismissal. In relation to some, but not all, of those paragraphs, liberty to re-plead was granted.

2. [2]

   For present purposes, it suffices to say that Ms Michail alleges that she was a party to an “oral binding agreement” with the respondent Community Legal Centre involving her working as an unpaid admitted solicitor, at first part-time, later full-time. Ms Michail alleges that it was a term of the agreement that she could work “as an unpaid admitted solicitor until she completes the remaining 370 days of supervised legal practice”. She alleges that that agreement was breached by the Community Legal Centre, causing her substantial loss and damage. The largest component of her claim is expectation losses for breach of contract, based on her delayed receipt of an unrestricted practising certificate. She also alleges that she was defamed on a number of occasions. The total amount claimed is $736,248, excluding interest.

3. [3]

   The primary judge gave lengthy ex tempore reasons. Her Honour rejected the Community Legal Centre’s application for summary dismissal and for striking out the whole of the pleading. Her Honour formed the view that the pleading, insofar as it was based on contract, reduced to a claim of breach of contract due to workplace bullying resulting in damages attributable to delayed entry into the workforce and reputation damage. Her Honour regarded that as not so futile or misconceived, or certain to result in nil or nominal damages, that it should not go to trial.

4. [4]

   However, the primary judge did strike out many of the paragraphs in the pleading. Her Honour’s reasons annexed a marked-up copy of the statement of claim reflecting what was struck out and what was the subject of a grant of liberty to re-plead. In large measure, the primary judge struck out matters which were evidentiary, or embarrassing. In most, but not all, of the substantive claims of breach, the primary judge gave leave to re-plead.

5. [5]

   It is not necessary to deal with the particular allegations which were struck out in any greater detail. Ms Michail’s submissions directed to a grant of leave focused not on whether the primary judge erred in making the orders that her Honour made, but instead on the history of the litigation culminating in the hearing on 24 September 2015.

6. [6]

   That may be because the grounds identified in Ms Michail’s draft notice of appeal are “irregularity”, “illegality”, and “decision of 24 September 2015 is against good faith”. They do not come close to complying with the obligation to state “briefly, but specifically, the grounds relied on in support of the appeal”: UCPR r 51.18(1)(e). Instead, perhaps coincidentally, those grounds mirror the bases on which a judgment may be set aside under UCPR r 36.15.

7. [7]

   Even so, the appropriate course in this case is to address Ms Michail’s submissions on their merits, although in very large measure they go substantially beyond the matters identified in the draft notice of appeal. In order to do so, it is necessary to address the procedural history of the litigation in the District Court in some detail.

8. [8]

   Before doing so, it should be noted that the application for leave came to this Court in a way which was highly irregular. In accordance with the rules, the parties exchanged written submissions in support of, and in opposition to, the grant of leave. Ms Michail also filed a short reply. However, on the day before the matter was set down for hearing, Ms Michail supplied a substantive, new, written submission, accompanied by more than 90 pages of transcript, and more than 60 pages of correspondence and other materials which formed the foundation of her oral submissions. The explanation given by Ms Michail for taking that course was twofold. She said that there had been delays in obtaining the transcript, and comparing it with recordings which she had made (she said that she was aware of the prohibition on using recording devices on court premises imposed by s 9 of the Court Security Act 2005 (NSW) and that she had obtained permission of the District Court to make those recordings). She also said that the written document would cause the hearing to run more efficiently, and that she was surprised that the Court expressed concern at the course she had chosen to take.

9. [9]

   It should not be necessary to say so, but the parties’ written submissions on an application for leave should contain the essential points sought to be raised. It is for that reason that, in the ordinary course, oral submissions – if they are required – should take no more than 20 minutes. As it was, the Court granted very considerable accommodation and indulgence to Ms Michail, in a hearing that occupied in excess of 90 minutes, extending past the usual sitting time. The course taken by Ms Michail was not merely an inefficient use of the Court’s resources. It was also potentially unfair to the Community Legal Centre, which, so the Court was told, received Ms Michail’s documents shortly before the commencement of the hearing.

10. [10]

    While Ms Michail appeared in person, she is admitted to practise as a lawyer, albeit with a restricted practising certificate. Her conduct of the application for leave to appeal did not reflect well on her capacity to practise.

Procedural history of the litigation

1. [11]

   Although proceedings were only commenced on 20 February 2015, the pleading which was the subject of the decision by the primary judge on 24 September 2015 was the third further amended statement of claim.

2. [12]

   There was correspondence between Ms Michail and the solicitor acting for the Community Legal Centre on 11 March 2015 in relation to the statement of claim filed on 5 March 2015. (On 20 February 2015, the proceedings had been incorrectly commenced by summons.) The solicitor wrote:

3. [13]

   Ms Michail advised, promptly thereafter, that:

4. [14]

   Later that afternoon, the solicitor responded:

5. [15]

   It will be seen below that one of Ms Michail’s complaints, both to the primary judge and in support of her application for leave, was based on this exchange.

6. [16]

   It appears that the amended pleading foreshadowed by Ms Michail was filed on 11 March 2015. It attracted a notice of motion filed on 9 April 2015, under which the Community Legal Centre sought either for it to be struck out in its entirety, or for a series of identified paragraphs to be struck out.

7. [17]

   Ms Michail was, and is, concerned that the notice of motion did not comply with Practice Note 6 (District Court Defamation List). She points to two sentences in that Practice Note: “Any application for interlocutory rulings should include a concise description of the issues and list of authorities” and “Notices of Motion are not required for interlocutory arguments unless otherwise ordered”.

8. [18]

   Her principal complaint was, and is, that there was no concise description of issues or list of authorities. However, the notice of motion had been preceded by a six page letter dated 16 March 2015 identifying what were said to be deficiencies in the pleadings.

9. [19]

   A further amended pleading was filed on 25 May 2015. The Community Legal Centre’s solicitors sent a detailed letter of objections to that pleading on 11 June 2015. One of the judgments first supplied to this Court the day before the hearing of the leave application was one given on 18 June 2015 by the primary judge, whose opening paragraph was as follows:

10. [20]

    The judgment deals with the history of the pleading, and extracted parts of it. It referred to the letter of 11 June 2015 and described it as “unhelpful to the court, as well as to the plaintiff, in that it simply lists pleading errors and refers the plaintiff to the relevant Rules.” Her Honour then identified “what I see as the principal problems with the defamation claims as currently pleaded” over some 15 paragraphs. Her Honour then recorded at [28]-[29]:

11. [21]

    Ms Michail was directed to file and serve a second further amended statement of claim by 16 July 2015.

12. [22]

    That second further amended statement of claim was filed and served on 27 July 2015. It attracted a letter dated 29 July 2015 from the Community Legal Centre’s solicitors which identified objections they had to the pleading. They further said:

13. [23]

    At a directions hearing on 30 July 2015, Ms Michail submitted that there had been non-compliance with the Practice Note, and the primary judge made a referral for legal assistance.

14. [24]

    Following the acceptance of a pro bono referral, the third further amended statement of claim was filed on 24 August 2015. Ms Michail placed great reliance upon what was said at a directions hearing following that occurring on 3 September 2015. On that occasion, her Honour is recorded as saying:

15. [25]

    Nevertheless, her Honour put in place a timetable for the hearing of the notice of motion to strike out passages of the pleading. In light of the complaints made by Ms Michail, it is appropriate to reproduce the following exchange:

16. [26]

    On 14 September 2015 the Community Legal Centre filed an amended notice of motion, seeking an order that the proceedings be dismissed, or alternatively that the proceeding be struck out. The motion was accompanied by written submissions signed by counsel, which, in paragraph 27, identified seven areas in respect of which it was said that the pleading was defective.

17. [27]

    The motion came on for hearing on 24 September 2015. After hearing from counsel for the applicant on the motion at some length, Ms Michail interrupted. There was the following exchange:

18. [28]

    Towards the end of submissions by counsel for the Community Legal Centre, there was the following exchange:

19. [29]

    At the conclusion of those submissions, complaints were made by Ms Michail that her Honour was “quite biased”, and she then returned to the email exchanges of 11 March 2015. The primary judge raised with counsel for the Community Legal Centre whether particular paragraphs of the pleading should be struck out, in the event that her Honour was not persuaded to dismiss the proceedings or strike it out in its entirety. There followed the following exchange with counsel for the Community Legal Centre:

20. [30]

    Following that exchange Ms Michail addressed with very few interruptions or questions from the primary judge for some five pages of transcript. She did not address the particular matters contained in paragraph 27 of the written submissions. In answer to a submission that the Community Legal Centre had agreed not to object to the current state of the pleadings, there was this exchange:

21. [31]

    After a further exchange when it appears that Ms Michail was speaking over the primary judge, her Honour returned to paragraph 27:

22. [32]

    In the course of further submissions to the effect that the Community Legal Centre had agreed to the form of the pleading, there followed this exchange:

23. [33]

    Shortly thereafter, Ms Michail asked to be excused. She said: “I’m just going to have to appeal it. I – this is a waste of time”. Ms Michail left the room at 12.10pm. As she did so, she made a series of allegations of bias and about the law firm acting for the Community Legal Centre. After Ms Michail left the courtroom, counsel for the Community Legal Centre proceeded through the pleading identifying paragraphs which, so she submitted, should be struck out.

24. [34]

    The primary judge rejected the principal application made by the Community Legal Centre that the proceedings be dismissed, or the whole statement of claim be struck out. However, some paragraphs were struck out, mostly with liberty to re-plead, as noted above.

The submissions in support of leave to appeal

1. [35]

   The written submissions in support of Ms Michail’s application for leave were difficult to understand, or indeed even to summarise. By way of representative example, p 2 of the submissions in reply is annexed to these reasons. The oral submissions, although very lengthy, were helpful to explain what Ms Michail regarded as the essential problems in what had occurred. Doing the best we can, those complaints were as follows.

2. [36]

   First, it appears that Ms Michail seeks to rely upon the email exchanges of 11 March 2015 outlined above. They were said by Ms Michail to amount to a representation that there were no objections to the pleading. But it is obvious that the chain of emails does not support the conclusion drawn by Ms Michail. Even were that not so, the filing of a notice of motion on 9 April 2015 and the correspondence and submissions that ensued thereafter made the Community Legal Centre’s attitude clear beyond argument.

3. [37]

   Secondly, Ms Michail considers that Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1985) 2 NSWLR 340 supports her view. The decision is to the effect that in some circumstances a party may be bound by the acceptance of an opposing party’s particulars. She is wrong to consider that Southern Cross Exploration has any application to her position. There has never been an acceptance by the Community Legal Centre of the adequacy of her pleading. At all times the Community Legal Centre reserved all of its rights and promptly filed notices of motion seeking to have the pleading struck out.

4. [38]

   Thirdly, Ms Michail was and is under the view that the referral to a pro bono barrister to “settle” the pleading and the acknowledgement by the primary judge on 3 September 2015 that that referral had taken place was an end to the complaints. That misunderstands what occurred. It may be that Ms Michail confuses between “settling” a document and “settling” a dispute in court. It may also be that because it was the Community Legal Centre that applied for the pro bono referral in order to settle the pleading, which application was granted, she held and holds the view that it was not open to the Community Legal Centre to apply for the pleading, so amended, to be struck out. There may be other reasons that Ms Michail holds that view. However, it is wrong.

5. [39]

   There is nothing to suggest that the Community Legal Centre waived its rights to object to what it said was a defective pleading by its application for a referral for pro bono legal assistance. At all relevant times, there was a motion filed by it for the proceeding to be struck out. Ms Michail submitted that the primary judge should not, in light of that history, have heard and determined the amended notice of motion. That misunderstands the role of courts to deal with disputes that are raised by the parties to litigation.

6. [40]

   Fourthly, Ms Michail complains that there was non-compliance with the portions of the Practice Note referred to above. In part this seems to be based on an understanding that applications by way of notice of motion are not permitted in proceedings to which the note applies. Any such understanding is incorrect. In part, Ms Michail continues to complain that a list of authorities was not provided to her. However, she had the benefit of written submissions which included references to the authorities upon which the Community Legal Centre relied.

7. [41]

   Fifthly, Ms Michail complains about the way she was treated on 24 September 2015. As will be clear from the transcript extracted above, what essentially occurred was this. The primary judge heard first, and at some length, from counsel for the moving party, seeking to strike out the statement of claim or dismiss the proceedings. The primary judge objected to an interruption from Ms Michail in the course of submissions. Her Honour indicated a view that aspects of the pleading were defective. That view is self-evidently correct, and we did not understand Ms Michail to make any oral submissions to the contrary.

8. [42]

   However, her Honour also indicated a tentative view, favourable to Ms Michail, that she was not minded to accede to the application to dismiss the proceedings or strike out the entirety of the pleading. Her Honour then, repeatedly, invited Ms Michail to address the detailed criticisms of individual paragraphs. Counsel for the Community Legal Centre offered to go through those criticisms orally. Ms Michail made it quite clear that she did not wish that to occur. The primary judge, repeatedly, directed Ms Michail to address the particular complaints about particular paragraphs. This Ms Michail declined to do. Instead, she returned to the matters referred to above. Finally, rather than remaining in the courtroom to hear the submissions to be made by the Community Legal Centre, Ms Michail left the courtroom.

9. [43]

   It is to be recalled that those exchanges occurred in a context where, highly unusually, the primary judge had already provided a judgment constructively identifying matters in the pleading which required attention.

10. [44]

    There was nothing procedurally unfair in what occurred. It was wrong for Ms Michail to interrupt her opponent’s submissions, and right for the primary judge to insist on hearing first from the moving party.

11. [45]

    Ms Michail went so far as to complain of a breach of procedural fairness in that submissions were made in her absence as to the defects in the pleading. It is true that those submissions went beyond what had been contained in paragraph 27 of the Community Legal Centre’s written submissions, and counsel for the Community Legal Centre candidly and forthrightly acknowledged as much. But the obligation to accord procedural fairness is discharged by providing an opportunity to be heard. It was Ms Michail who turned down the opportunity to hear those submissions. It was Ms Michail who thereafter left the courtroom before they were made. It was quite wrong for Ms Michail to make the serious allegation that she had not been treated in a way which was procedurally fair.

12. [46]

    Sixthly, Ms Michail complained that she was suffering from stress at the time, and indeed that she was ill. Despite the voluminous materials supplied by Ms Michail in support of her application for leave, there was no evidence provided in support of that submission. Moreover, what she said at the time was not that she was leaving because of illness, but because she was minded to appeal to the Supreme Court.

13. [47]

    Seventhly, Ms Michail relied heavily on this Court’s decision in Goater v Commonwealth Bank of Australia [2014] NSWCA 382; 88 NSWLR 362, setting aside a default judgment obtained by the bank from the District Court when the bank had contravened obligations assumed by it when a customer had lodged a dispute with the Financial Services Ombudsman. Ms Michail sought to translate the factual findings in that case to the conduct by the Community Legal Centre in the proceedings commenced by her. To be clear, it should be noted that (a) factual findings in one matter do not automatically translate to other matters, (b) Goater was a case where there was default judgment, and (c) Goater was also a case where it was demonstrated that the bank had departed from procedural obligations binding upon it. Goater is not relevant to Ms Michail’s application for leave.

14. [48]

    Eighthly, to the extent that Ms Michail complained about the actual or apparent bias by the primary judge, it must be said that the complaints are, so far as the materials disclose, entirely without foundation. To the contrary, both the judgment and the transcripts of the hearings disclose a judicial officer taking considerable efforts to hear the merits of the application and to assist Ms Michail. That is seen by the judgment delivered on 18 June 2015, by the efforts which are apparent from the exchanges reproduced above to elicit constructive assistance from Ms Michail, and by the fact that the primary judge ruled against the Community Legal Centre on its principal submissions.

Conclusions and orders

1. [49]

   What is generally required to obtain a grant of leave from an interlocutory judgment is a demonstration by the applicant for leave that there is a question of principle, or a matter of public importance involved, or where there is an injustice which goes beyond that which is merely arguable: see Carolan v AMF Bowling Pty Ltd [1995] NSWCA 69; Lee v New South Wales Crime Commission [2012] NSWCA 262; 224 A Crim R 94 at [12].

2. [50]

   None of the matters of which Ms Michail made complaint is made out. Ultimately, Ms Michail needs to demonstrate that there has been a reasonably clear case of injustice in order for leave to be granted on the interlocutory decision of the primary judge. This she has signally failed to do. The application for leave must be dismissed, with costs.

3. [51]

   Ms Michail had also sought, by motion filed in this Court, a stay of the proceedings in the District Court. (The Court was told that the litigation had in fact been stayed pending the determination of this application.) The result of dismissing the application for leave to appeal is that the notice of motion must also be dismissed.

4. [52]

   The Community Legal Centre sought an order that its costs be paid on an indemnity basis. Such an order is only made in very clear cases. The Community Legal Centre claimed indemnity costs, albeit without supporting reasons, in the response to Ms Michail’s application for leave to appeal, which it filed and served on Ms Michail. Ms Michail filed a reply to the response in which she made no submissions on the question of costs. Nor did she make any response in the further submissions supplied shortly before the hearing, or in her oral submissions. As indicated above, Ms Michail is admitted to practise as a lawyer, and it must be assumed that she sought to say nothing in reply. It will be evident from the foregoing that an order for indemnity costs is appropriate in the present case.

5. [53]

   The formal orders of the Court are:

   1. (1)

      Summons seeking leave to appeal dated 5 October 2015 and notice of motion dated 5 October 2015 be dismissed.

   2. (2)

      Ms Michail to pay the costs of the Mount Druitt and Area Community Legal Centre Inc, such costs to be assessed on an indemnity basis.