Burnett v Browne

Federal Court of Australia|2021-04-15|Before: O'Callaghan J

The applicant's interlocutory application dated 9 April 2021 be dismissed.
The respondents' costs of the application be taxed and paid out of the applicant's bankrupt estate in accordance with s 109(1)(a) of the Bankruptcy Act 1966 (Cth). Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

The application and the principles governing it 1 This is a further application by the applicant in this proceeding, Ms Gail Burnett, for the appointment of a litigation representative pursuant to r 9.63 of the Federal Court Rules 2011 (Cth) (the Rules) on the basis that, under the Rules, she is a "mentally disabled person", being "a person who, because of a mental disability or illness, is not capable of managing the person's own affairs in a proceeding". 2 The relevant general principles applicable were not in dispute. See Burnett v Browne [2021] FCA 85 at [15]. 3 At the hearing of this application, counsel for the first and second respondents (the creditors), Mr Andrew Walker, referred me to the decision of Derham AsJ in Vishniakov v Lay (2019) 58 VR 375, which, if I may say so with respect, contains a careful and detailed exposition of the relevant principles and their rationale, relevantly as follows (at 385-7 [30]): (a) There is a presumption that everybody of full age has the mental capacity to manage their own affairs, including the commencement and defence of legal proceedings. The burden of proving to the contrary rests with those asserting incapacity (citing Murphy v Doman (2003) 58 NSWLR 51 at 58 [36] (Murphy); L v Human Rights and Equal Opportunity Commission (2006) 233 ALR 432 at 437-8 [20]; Masterman-Lister v Brutton & Co (Nos 1 and 2) [2003] 1 WLR 1511 at 1520 [17] (Masterman-Lister); A v City of Swan (No 5) [2010] WASC 204 at [66] (City of Swan); Owners of Strata Plan No 23007 v Cross (2006) 153 FCR 398 at 414-15 [66]-[68]; Slaveski v Victoria (2009) 25 VR 160 at 182-3 [25]-[26] (Slaveski); Goddard Elliott v Fritsch [2012] VSC 87 at [546] (Goddard Elliott)). (b) The law requires that a person must have the necessary mental capacity if [they are] to do a legally effective act or make a legally effective decision for [themselves] (citing Masterman-Lister at 1533 [57]; Goddard Elliott at [547]). (c) The authority of a lawyer to represent a client depends on the client having the requisite mental capacity. A lawyer has a duty of care not to coerce their client into a settlement or to take or act on instructions from a client to settle a case when they know or should know the client lacked the mental capacity to give the instructions or could not be reasonably satisfied the client had that capacity (citing Goddard Elliott at [548], [541]). (d) The commencement of proceedings on behalf of a client implies the solicitor, as an officer of the court, is reasonably satisfied the client has that capacity. It is therefore the solicitor's responsibility to be reasonably satisfied that the client has the mental capacity to participate in the proceeding and to instruct. If the issue cannot be resolved to the reasonable satisfaction of the solicitor, they must raise the issue with the court. It is the court which has the final responsibility to determine the issue (citing Goddard Elliott at [541], [549], [568]; Borchert v Terry [2009] WASC 322 at [69]; Pistorino v Connell [2012] VSC 438 at [6] (Pistorino)). (e) A solicitor who persists with representing a client who has lost mental capacity is liable to have costs awarded against them on an indemnity basis even if there is no impropriety (citing Yonge v Toynbee [1910] 1 KB 215 at 228; Goddard Elliott at [549]). (f) The authority of a court-appointed litigation guardian may be challenged, and a proceeding issued by them dismissed, where the party is shown to be capable of managing their affairs (citing J (by her next friend) v J [1953] P 186 at 191; Martin v Azzopardi (1973) 20 FLR 345 at 348 (Martin); Goddard Elliott at [550]). (g) The appointment of a litigation guardian protects the person under a disability and the processes of the court as these apply to the parties generally (citing Masterman-Lister at 1525 [31], 1536 [65]; City of Swan at [63]-[65]; Goddard Elliott at [552]). (h) Provisions of the kind established by O 15 [of the Supreme Court (General Civil Procedure) Rules 2015 (Vic)] are procedural and not substantive law designed to ensure that: (i) there is someone answerable to the Court on behalf of the litigant with a disability; (ii) crucial decisions affecting that litigant can be properly and responsibly made (citing State Rail Authority of New South Wales v Hammond (1988) 15 NSWLR 395 at 400-1). (i) An application for the appointment of a litigation guardian for a person is very serious because it deprives the person of their fundamental civil rights under the common law, most especially the 'right to sue or defend in [his or her] own name, and ... compromise in litigation without the approval of the court' (citing Masterman-Lister at 1520 [17]; Goddard Elliott at [553]). (j) There is no universal test for determining whether a person is capable of managing his or her affairs. Lack of capacity is usually denoted by a person's inability to understand the nature of an event or transaction when it is explained (citing Murphy at 58 [33]; Slaveski at 183 [26]; Gibbons v Wright (1954) 91 CLR 423 at 437; Masterman-Lister at 1521 [18], 1533 [58]). (k) The words 'in relation to the proceeding' in r 15.01 are important because they focus on the person's ability to bring or defend a particular proceeding rather than on whether the person is able to manage his or her affairs generally or in relation to some other transaction (citing Slaveski at 183 [27]). (l) The question of incapacity in relation to litigation must be examined against the facts and subject matter of the particular litigation, the number and complexity of the issues involved and the identity, number and interests of the other parties, particularly opposing parties. A person can have the requisite capacity for one proceeding and lack it for another (citing Dalle-Molle v Manos (2004) 88 SASR 193 at 199 [23]; Slaveski at 183 [28]; Pistorino at [20]-[22]). (m) A person will be incapable of managing their affairs in relation to the proceeding if they do not have the mental capacity to understand the nature of the acts or transactions in respect of which they need to give instructions to the lawyer (citing Martin at 347-8; Slaveski at 183 [29]). … (q) The means by which the court will determine whether a guardian should be appointed varies from case to case. It is prudent, but not essential, that the decision whether a party lacks the relevant capacity be based on a medical assessment, or the assessment of another appropriately qualified expert. However, the court is entitled to rely on its own observation to make an assessment about the capacity of a party or to rely on other evidence, including the assessments of legal practitioners. This is so particularly where: (i) there is no medical evidence available or the party refuses to submit to an expert assessment; and (ii) the lack of capacity is so clear that medical evidence is not called for (citing Masterman-Lister at 1520 [17]; Pistorino at [16]-[17]; Slaveski). 4 The applicant sought to rely on three affidavits: (1) an affidavit sworn on 16 March 2021 by Mr Christopher Isherwood, the applicant's son and the proposed litigation representative; (2) an affidavit sworn on 28 March 2021 by Ms Fiona Burnett, the applicant's daughter; and (3) an affidavit sworn on 29 March 2021 by Dr Philip Reid, a psychiatrist, which annexed his psychiatric assessment of the applicant in the form of a report dated 12 March 2021. 5 Mr Walker made submissions opposing the application on behalf of the creditors. 6 The applicant's trustee in bankruptcy appeared by his solicitor (Mr Rapley), including because he sought to bring on an application to be relieved of his undertaking given to the court effectively not to take any steps to sell the applicant's real property. But he did not seek to be heard on that application. (In the events that occurred, the trustee's application was adjourned to 12 May 2021, which is the date that the hearing of the applicant's application to annul her bankruptcy or set aside the sequestration order made against her in 2017 commences.)

The evidence of Dr Reid ruled inadmissible 7 At the commencement of the hearing, counsel for the creditors objected to the admissibility of Dr Reid's evidence (his affidavit and the annexed report), on the ground that it does not explain how the field of specialised knowledge that Dr Reid undoubtedly possesses (psychiatry) applies to the facts assumed or observed so as to produce the opinions expressed. 8 I heard submissions on this objection on the first morning of the hearing, and ruled, before proceeding further with the hearing of the application (see Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 at 599 [19] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ)), that Dr Reid's affidavit was inadmissible, in substance because: (1) Dr Reid had not made explicit how his field of specialised knowledge applied to the facts which he either asserted or assumed, and, in those circumstances, it was not possible for the court to make a judgment as to whether the prerequisites of s 79 of the Evidence Act 1995 (Cth) (Evidence Act) were satisfied. (2) Dr Reid had not stated or explained the grounds or reasoning that led to his opinions. (3) Dr Reid had not been asked, and certainly had not purported to opine, about a critical question, namely, whether the applicant was capable of managing her own affairs in this proceeding. 9 I said that I would give more detailed reasons for that ruling in my reasons for judgment on the application, which I now do. 10 Section 76 of the Evidence Act is headed "The opinion rule". Sub-section 76(1) provides that "Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed". 11 Sub-section 79(1) of the Evidence Act provides that "If a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge". 12 As the High Court explained in Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 at 602-5 [31]-[42] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ): Section 76(1) expresses the opinion rule in a way which assumes that evidence of an opinion is tendered 'to prove the existence of a fact'. That manner of casting the rule does not, as might be supposed, elide whatever distinction can be drawn between 'opinion' and 'fact' or invoke the very difficult distinction which sometimes is drawn between questions of law and questions of fact. It does not confine an expert witness to expressing opinions about matters of 'fact'. Rather, the opinion rule is expressed as it is in order to direct attention to why the party tendering the evidence says it is relevant. More particularly, it directs attention to the finding which the tendering party will ask the tribunal of fact to make. In considering the operation of s 79(1) it is thus necessary to identify why the evidence is relevant: why it is 'evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding'. That requires identification of the fact in issue that the party tendering the evidence asserts the opinion proves or assists in proving. To be admissible under s 79(1) the evidence that is tendered must satisfy two criteria. The first is that the witness who gives the evidence 'has specialised knowledge based on the person's training, study or experience'; the second is that the opinion expressed in evidence by the witness 'is wholly or substantially based on that knowledge' … … It should be unnecessary, but it is nonetheless important, to emphasise that what was said by Gleeson CJ in HG [(1999) 197 CLR 414 at 427 [39]] (and later by Heydon JA in the Court of Appeal in Makita (Australia) Pty Ltd v Sprowles [(2001) 52 NSWLR 705 at 743-4 [85]]) is to be read with one basic proposition at the forefront of consideration. The admissibility of opinion evidence is to be determined by application of the requirements of the Evidence Act rather than by any attempt to parse and analyse particular statements in decided cases divorced from the context in which those statements were made. Accepting that to be so, it remains useful to record that it is ordinarily the case, as Heydon JA said in Makita, that 'the expert's evidence must explain how the field of "specialised knowledge" in which the witness is expert by reason of "training, study or experience", and on which the opinion is "wholly or substantially based", applies to the facts assumed or observed so as to produce the opinion propounded'. The way in which s 79(1) is drafted necessarily makes the description of these requirements very long. But that is not to say that the requirements cannot be met in many, perhaps most, cases very quickly and easily. That a specialist medical practitioner expressing a diagnostic opinion in his or her relevant field of specialisation is applying 'specialised knowledge' based on his or her 'training, study or experience', being an opinion 'wholly or substantially based' on that 'specialised knowledge', will require little explicit articulation or amplification once the witness has described his or her qualifications and experience, and has identified the subject matter about which the opinion is proffered. … A failure to demonstrate that an opinion expressed by a witness is based on the witness's specialised knowledge based on training, study or experience is a matter that goes to the admissibility of the evidence, not its weight. To observe, as the Court of Appeal did, that what Dr Basden said about the volume of respirable dust to which Mr Hawchar was exposed over time was 'an estimate' that was 'contestable and inexact' no doubt did direct attention to its worth and its weight. But more importantly, it directed attention to what exactly Dr Basden was saying in his evidence and to whether any numerical or quantitative assessment he proffered was admissible. And if, as the Court of Appeal observed, his opinion on that matter lacked reasoning, the absence of reasoning pointed (in this case, inexorably) to the lack of any sufficient connection between a numerical or quantitative assessment or estimate and relevant specialised knowledge. (Footnotes omitted.) 13 And as Heydon JA (as his Honour then was) additionally explained in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at 744 [85]: … it must be established that the facts on which the opinion is based form a proper foundation for it; and the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached: that is, the expert's evidence must explain how the field of 'specialised knowledge' in which the witness is expert by reason of 'training, study or experience', and on which the opinion is 'wholly or substantially based', applies to the facts assumed or observed so as to produce the opinion propounded. If all these matters are not made explicit, it is not possible to be sure whether the opinion is based wholly or substantially on the expert's specialised knowledge. If the court cannot be sure of that, the evidence is strictly speaking not admissible … 14 Along similar lines, the Full Court in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397 at 420 [107]-[108] (Black CJ, Emmett and Middleton JJ) explained: The evidence in chief of a witness giving opinion evidence must explain how the field of specialised knowledge possessed by the witness, by reason of training, study or experience, and on which the opinion is wholly or substantially based, applies to the facts established or assumed, so as to produce the opinion about which evidence is to be given. If those matters are not made explicit in chief, it would normally not be possible for the Court to make a judgment as to whether the prerequisites of s 79 have been satisfied and whether the evidence is in fact admissible. Further, unless a witness states in his or her evidence in chief the grounds and reasoning that have led to the opinion, the opinion is valueless. Before the Court can assess the value of an opinion, it must know the facts on which it is based. If the opinion is based on irrelevant facts or facts that are clearly not going to be proved, the opinion is likely to be valueless. It should not be for a cross-examiner to endeavour to elicit the facts or assumptions upon which an opinion is expressed, and it would be unfair to leave such matters to the cross-examiner. Except in a straightforward, uncomplicated case, where the facts are admitted or otherwise readily identified, opinion evidence would normally be rejected under s 135 if the facts or assumptions upon which the opinion is based are not expressly stated. 15 It is necessary also to refer to the reasons of Edmonds J in Owners of Strata Plan No 23007 v Cross (2006) 153 FCR 398. That was a most unfortunate case in which his Honour had to determine whether Ms Cross was incapable of managing her affairs in relation to a bankruptcy proceeding at the time she was served with a creditor's petition. Ms Cross was at that time, and to the knowledge of the creditor, an involuntary patient in a psychiatric ward of a hospital. 16 Edmonds J summarised at 413 [61] the questions to be addressed in that case, having regard to the use of the words "in respect of the proceedings" in the relevantly identical predecessors to r 10.09 of the Rules and the definition of "mentally disabled person" (O 1, r4 and O 43, r 13(6) of the Federal Court Rules 1979 (Cth)), in determining capacity: (a) whether Ms Cross had the ability to understand that she required advice in respect of the Creditor's petition which had been left with her; (b) whether she had the ability to communicate this requirement to someone who could arrange an appointment with an appropriate advisor or, alternatively, that she could arrange such an appointment of her own accord; (c) whether she had the ability to instruct her advisor with sufficient clarity to enable him or her to understand the situation and to advise her appropriately; and (d) whether she had the ability to make decisions and give instructions based upon, or otherwise give effect to, such advice as she might receive. 17 In his affidavit, Dr Reid relevantly deposed: I am able to state that there are a number of bases on which I can advance my opinions which are expressed [in the annexed report] as being Schizophrenia which dominates her mental state leading to incapacity to communicate based on fixed false beliefs and illogical form of thought. The various bases of fact for my opinions for the previous report were the interviews that I had conducted with Ms Burnett and also the supplied transcript of an interview of her son, Mr Isherwood. In addition to those bases, I have now been supplied with an as yet unsworn affidavit by Ms Burnett's daughter, Fiona Burnett, a copy of which is annexed ... I have considered that transcript and the circumstances that she describes about her mother's situation and this, in my view, further confirms my diagnosis as expressed in the report of 12 March 2021. 18 In his report, Dr Reid first set out matters of "background", including some details concerning a report by a Dr Mestitz dated 23 December 2012 that concluded that, despite the applicant's insistence to the contrary, she does not in fact suffer from sleep apnoea. Dr Reid then turned to answer the four questions asked of him (which, as will be seen, bear some similarity to the questions posed by Edmonds J in the Owners of Strata Plan No 23007 case), as follows: a) Whether the person had the ability to understand that he or she required advice in respect of the relevant legal proceeding. I had the benefit of reviewing Ms Burnett a second time and provided additional information in the form of the original sleep study by Dr Mestitz and collateral history from her son Mr Isherwood. At interview, again I found Ms Burnett to be disorganised and illogical. She continued to maintain the belief that she suffered a central sleep apnea and still maintained this belief when I pointed out that this was refuted by the assessment of Dr Mestitz. The study revealed that she had no apneas and he did not diagnose a central nor obstructive sleep apnea. I conclude that this is a delusional belief. A delusion is a fixed false belief not amenable to reason. In addition past history suggests persecutory ideas. Her son reports that at times she felt that she was being observed, her telephone was tapped and her computer infiltrated. Suspicious ideas and paranoia was played out both medically and in the legal arena. She declined a cardiac and medical stent for fear of nickel allergy and there are strong themes of persecution from legal practitioners and processors. Reports by her son suggest a deterioration of mental state over years. Diagnostically Ms Burnett suffers the psychotic illness Schizophrenia. This is based on delusions and thought disorder in the form of illogicality. She had symptoms for many years and a deterioration her social functioning. She now had [sic] thoughts that are dominated by ideas of ill health and legal matters at the expense of social harmony and enriched family relationships. b) Whether the person had the ability to communicate this requirement to someone who could arrange an appointment with an appropriate advisor or, alternatively, whether he or she could arrange such an appointment of his or her own accord. Ms Burnett's Schizophrenia dominates her mental state leading to incapacity to communicate based on fixed false beliefs and illogical form of thought. She also reports short-term memory and being easily overwhelmed emotionally. c) Whether the person had the ability to instruct the advisor with sufficient clarity to enable him or her to understand the situation and to advise the person appropriately. As stated in my own report Ms Burnett superficially presents adequately in regard to self-care and independent living. However she is labouring under delusions and disorganised communication that would undermine her judgement on major health and property decisions. d) Whether the person had the ability to make decisions and give instructions based upon, or otherwise give effect to, such advice as might be received. I consider that Ms Burnett has a delusional belief about her physical health being effected [sic] from exposure to the Brickworks. This dates back to 2012. From here there appears to be a steady decline in her mental health, being preoccupied with the legal process, feeling under threat and expressing frank delusions of being observed and persecuted by others to her son. Anxiety dates back to 2003. Psychotic symptoms are unlikely to have been present continuously through the period starting at the Magistrates Court to her current predicament. I do not believe that Ms Burnett has the capacity to manage her own affairs. I feel that her delusional beliefs have dominated her thinking and pursuit of outcomes through the legal system. Given her illogical communication, I would argue that she lacks capacity. I found that she is formally thought disordered which significantly impacts on her ability to communicate with others. Her illogicality would impact on her ability to instruct or advise others. Many of her ideas are fixed and therefore she struggles to take advice. 19 I should interpolate at his point that there was a dispute about whether the word "unlikely" in the final paragraph of the above extract is a typographical error, or not. It was unnecessary to consider the point, in the view I took of the inadmissibility of the report as a whole. 20 A number of things may be said about what Dr Reid said in answer to those questions that go to the admissibility of his evidence. 21 As to answer a), his conclusion that the applicant's belief that she suffers a central sleep apnoea is delusional, because Dr Mestitz said 8 years earlier that she did not, strikes me as susceptible to the criticism that it is both irrelevant to the inquiry and forensically dubious given the age of Dr Mestitz's report. In any event, and more importantly, Dr Reid's conclusion that the applicant "suffers the psychotic illness Schizophrenia … based on delusions and thought disorder in the form of illogicality", has "had symptoms for many years and a deterioration in her social functioning", and "now ha[s] thoughts that are dominated by ideas of ill health and legal matters at the expense of social harmony and enriched family relationships" is just that - a conclusion. Absent "the grounds and reasoning that have led to the opinion, the opinion is valueless". Cf Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397 at 420 [107] (Black CJ, Emmett and Middleton JJ). 22 As to answer b), Dr Reid does not, with respect, at all address the question asked of him. 23 As to answer c), the same may be said. It is also unclear what "report" he has in mind. 24 As to answer d), whatever other shortcomings it has, Dr Reid was not asked, and thus unsurprisingly did not say, whether the applicant is currently capable of managing her own affairs in this proceeding. In my view, the answer is, and was bound to be, valueless to the task at hand. 25 For those reasons, in my view, Dr Reid did not explain how his field of specialised knowledge applied to the facts established or assumed so as to produce his opinions, and did not state in his evidence the grounds and reasoning that led to those opinions. His evidence is thus inadmissible.

The evidence of the applicant's children 26 The applicant also relied on the evidence of two of her children, which was to the following effect.

Mr Isherwood 27 In his affidavit, Mr Isherwood made a number of observations about his mother's behaviour, particularly during court hearings and meetings with Mr Glyn Williams (the applicant's solicitor, who appeared on her behalf at the hearing of this application). Mr Isherwood observed that his mother had been argumentative, unwilling to accept the opinions of others, and scornful and dismissive of any challenge to her beliefs. He said that she continues to insist that, contrary to medical advice, her health issues relate solely to breathing difficulties. He also said that she had taken an "overall dominant and all-consuming negative view" about the actions of the respondents. 28 Mr Isherwood annexed to his affidavit a transcript of an interview between himself and Mr Williams dated 12 February 2021. During that interview, Mr Isherwood stated his view that, although his mother has resisted psychiatric assessment, she has mental health issues stemming from her use of prescription painkillers following a car accident in the late 1990s. He said that his mother is "obsessed" and "completely consumed" by this litigation; that her house is filled with legal papers, which she reads every day; and that she has maintained for several years that her trustee in bankruptcy is spying on her. Mr Isherwood said that he acts as her caretaker by performing tasks such as mowing her lawn and checking the oil in her car. 29 In cross-examination, Mr Isherwood said that he sees his mother twice a month, but speaks to her on the telephone almost every day. He said that he does not manage the financial affairs of a trust of which he is trustee, and assumes that his mother attends to this. He also said that he had never discussed the possibility of appointing someone to manage his mother's properties, banking or other affairs.

Ms Fiona Burnett 30 Ms Fiona Burnett's brief affidavit annexed a transcript of an interview with Mr Williams dated 23 March 2021. During that interview, Ms Burnett stated that she had a "fairly normal" childhood, until, when she was 16 or 17, she and her mother moved to a house near a brickworks at New Town in Tasmania. She said that from that point forward she began to notice changes in her mother's behaviour: worsening memory, paranoia, papers piling up in the house, and a fixation on the health effects of the brickworks. 31 Ms Burnett said that these changes to her mother's behaviour have worsened in the last 10 years, and that this litigation and her bankruptcy are now her mother's "entire life". She said that her mother will not accept information that does not align with her beliefs, nor will she accept her psychiatric diagnosis. She said that her mother's house is now full of stacks of paper concerning this litigation and her bankruptcy, but is otherwise neat and clean. 32 Ms Burnett said that she sees her mother once or twice a fortnight, but finds spending time with her frustrating because "every single conversation will turn into something about the court case", and because her mother "seems to think that everyone that does not agree with her is out to get her in some way and will not listen to explanations or reason". She said that her mother has often said that her trustee in bankruptcy is bugging her phone and computer. 33 In cross-examination, Ms Burnett said that, to her knowledge, her mother does her own shopping and banking and pays her own bills.

The parties' submissions 34 In his closing oral submissions, Mr Williams was unable to say more than this in support of the application: It's my submission that based on the evidence that has been put before the court by the children of the applicant, effectively, they weren't challenged as to their views, which is formed over a period of time, about the incapacity of their mother to manage her affairs in relation to this litigation. Accordingly, it's submitted that the rules are enlivened in relation to the question of incapacity of the bankrupt to properly conduct the substantive application under the Bankruptcy Act. [The parties] provided a list of authorities, your Honour, in February. The two strata title cases which have been referred to a number of times in these proceedings are instructive, particularly the decision of Edmonds J [Owners of Strata Plan No 23007 v Cross (2006) 153 FCR 398] that deals in a very thorough way with the issues that relate to the principles to be considered by a court when forming views about capacity and as to the Federal Court Rules, the decision … in Temelkovski [Owners of Strata Plan 58041 v Temelkovski [2014] FCCA 2962] also confirms that, questions of weight of medical opinion aside in this case, of course, medical opinion having been ruled inadmissible, the court can have regard to other evidence such as has been put to the court today by interested persons. In that case, the daughter of the bankrupt, Mary Temelkovski, provided evidence to the court about her mother's behaviours, responses and inability to deal with the matters in a timely manner. There was some parallel in that case to this one where there was a lateness, as such. That was a period of 12 months or so from when - so not as much lateness as in this case, but in this case I do submit that the period of September to now is relatively rapid in the course of this bankruptcy, which is heading towards its fourth year. In that case of Temelkovski, the other significant factor was the increase in costs which had been incurred in the administration of the estate, which raises the gravity of the issue of capacity, your Honour, overall. Those are my submissions, your Honour. 35 Mr Walker submitted that, applying the principles set out above, there was no evidence before the court sufficient to justify the appointment of a litigation representative. He submitted that the evidence adduced by Ms Burnett's two children demonstrates only that, although "their mother is very fixated on a piece of litigation", she has the ability to understand that she requires advice in relation to her application to annul her bankruptcy or set aside the sequestration order, and it is clear that she in fact sought such advice, including from Mr Williams. 36 Mr Walker submitted that Mr Isherwood had accompanied his mother to many meetings with Mr Williams prior to the commencement of this proceeding, and that Mr Isherwood was aware of the contents of his mother's application and her extensive affidavit in support of it. 37 Mr Walker also submitted that, although the evidence proves that the applicant, as Mr Isherwood put it, "has at all times … maintained her belief that her opinions were correct and should be preferred to any other opinions, for example, criticisms of the application by the Judge", the evidence does not demonstrate "that she cannot instruct her advisor with sufficient clarity to enable him to understand her and advise her. She may not accept the advice. That happens not infrequently". 38 Mr Walker further submitted that it is to be presumed that Mr Williams was satisfied in September 2020 that the applicant had the requisite mental capacity to commence this proceeding, because he caused it to be commenced on her behalf in his capacity as her solicitor (see Vishniakov v Lay (2019) 58 VR 375 at 385 [30(d)] (Derham AsJ) and the cases there cited), and that there was no admissible evidence that demonstrated any change to that position since then. 39 In reply, Mr Williams submitted that: I do make the point that, in terms of giving instructions or understanding issues that may arise, your Honour, it's not about non-acceptance of advice; it's about the capacity to alter fixed views. It's about the capacity to have insight and reflect and make decisions. If someone, as I submit has been deposed in the family evidence and, indeed, in answers to questions, has developed an obsession, and as Ms Burnett said, it's going to keep going, then that actually does meet the test …

Consideration 40 In my view, this application to appoint a litigation representative must be refused. 41 In an application such as this, the issue of whether an applicant is currently capable of managing their own affairs in a particular proceeding is not to be equated with their ability to make prudent decisions. See AJI Services Pty Ltd v Manufacturers' Mutual Insurance Ltd [2005] NSWSC 709 at [57] (Bell J). 42 Nor does it follow, merely because an applicant lacks insight to reflect, or is fixated or obsessed with the litigation, that they are, without more, incapable of managing their own affairs in the proceeding. 43 In relation to taking advice, for example, it is not unheard of for clients to refuse to take advice, even in circumstances where, objectively speaking, their interests would best be served if they did. Where psychiatric evidence is relied upon, or where a diagnosis or other matters are relied upon by people close to the applicant (here, her children), the evidence must demonstrate why it is that the diagnosis or those matters compromise the applicant's ability to provide instructions, to seek advice and to participate, if necessary, in a hearing. A good example of the sort of psychiatric evidence that will pass muster is the detailed reports of Drs Sullivan and Farnbach tendered in evidence in Slaveski v State of Victoria (2009) 23 VR 160 at 177 [6]ff (Kyrou J). And in Owners of Strata Plan 58041 v Temelkovski [2014] FCCA 2962 (Judge Manousaridis), the evidence of Ms Temelkovski's daughter was critical, explaining as it did that Ms Temelkovski: (1) did not understand when she was served with the creditor's petition the nature and possible consequences of the proceedings that had been initiated against her, including because she could not "differentiate between insignificant documents such as shopping catalogues and important letters" (at [77]); and (2) did not have the ability to instruct any advisor with sufficient clarity to enable the advisor to understand the situation and to advise her appropriately, including because, according to her daughter, Ms Temelkovski "was no longer capable of actually understanding the importance of information, or of retaining information" (at [78]). 44 In this case, however, essentially for the reasons given by Mr Walker, the evidence falls a long way short of that required to make an order the effect of which is to deprive a person of their fundamental civil rights under the common law, being the right to sue or defend in their own name, and to compromise litigation without the approval of the court.

Disposition 45 For those reasons, the application must be dismissed, and an order made that the respondents' costs be paid out of the bankrupt estate. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Callaghan.

Federal Court Rules 1979(Cth)

Supreme Court (General Civil Procedure) Rules 2015(Vic)

Evidence Act 1995(Cth)ss 76, 76(1), 79, 79(1)

Federal Court Rules 2011(Cth)rr 9.63, 10.09

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