Burnett v Browne

1. The application to appoint Mr Isherwood as Ms Burnett's litigation representative be dismissed.
2. The respondents' costs of the application be taxed and paid out of the estate of the applicant 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..

O'CALLAGHAN J: 1 This is an application pursuant to r 9.63 of the Federal Court Rules 2011 (Cth) (the Rules). 2 That rule provides: 9.63 Appointment of litigation representative by the Court (1) A party or an interested person may apply to the Court for an order appointing a person as a litigation representative. Note: Interested person, in relation to a person under a legal incapacity, is defined in the Dictionary. (2) A copy of the application must be served on the person under a legal incapacity. (3) The application must be accompanied by an affidavit stating: (a) that the person for whom the appointment is to be made is a person under a legal incapacity and giving details of the nature of the legal incapacity; and (b) that the proposed litigation representative: (i) has consented, in writing, to the appointment; and (ii) is a person who, under rule 9.62, may be appointed as a litigation representative. Note: For service on a person under a legal incapacity, see rule 10.09. 3 The application is made in the context of litigation that has a long and sorry history. That history is recounted for the most part in reasons delivered by Judge Riethmuller in FitzGerald v Burnett [2018] FCCA 2866, and by me in Burnett v Browne [2019] FCA 1233. I have prepared a chronology of relevant events that have occurred since Ms Burnett first sought legal advice in 2012 about a potential personal injuries claim, which in the events that occurred was never instigated. The chronology is attached to these reasons marked "Annexure A". 4 I do not propose to recite that history in any more detail, and it is assumed that the reader of these reasons has read the reasons of Judge Riethmuller and my own reasons, and is thus familiar with it. 5 At the hearing yesterday, Mr Williams, solicitor, appeared for the applicant, Ms Burnett, and sought an order that Mr Christopher Isherwood, Ms Burnett's son, be appointed her litigation representative. 6 Mr Rapley, solicitor for the trustee in bankruptcy, Mr Cook, appeared and read an affidavit sworn by his client. That affidavit, put shortly, contains a detailed recitation of Ms Burnett's refusal over a long period of time to engage with him in his capacity as trustee, including deposing to her failure to file a statement of affairs. Mr Rapley took no position on the application and was excused. 7 Mr Walker of counsel appeared for Messrs Browne and FitzGerald, who are the creditors. He opposed the making of any order under r 9.63. 8 Before proceeding to deal with the merits of the application, I should note that the application to appoint a litigation representative was listed for hearing together with an application brought by Ms Burnett seeking an annulment of her bankruptcy pursuant to s 153B of the Bankruptcy Act 1966 (Cth). It is obviously not possible to hear that application until the interim application to appoint a litigation representative is heard and determined. 9 Be that as it may, as I said during the hearing yesterday, it seems to me that the annulment claim as at present constituted is not only prolix but contains grounds which, for a variety of reasons I outlined, are untenable and an abuse of process, including because they seek to agitate claims made and determined in previous proceedings, or make claims that, if new, ought to have been made in previous proceedings. The annulment application also contains an allegation of fraud on the part of Mr Browne, who is a solicitor. That allegation is that Mr Browne told a Registrar of the Federal Circuit Court that Ms Burnett's review of a costs assessment was not on foot, when it was. It is not necessary in these reasons to explore that matter, beyond saying that in light of the affidavit filed in the proceeding by Mr Browne, and in the absence of a single particular of the alleged fraud, the allegation against Mr Browne is untenable. 10 I should also mention one other matter concerning the application for annulment. During the course of the hearing yesterday, Mr Williams raised an additional issue, not previously pleaded or mentioned in any correspondence between the parties. That issue is whether, at the time she was served with the creditor's petition in August 2017, Ms Burnett was a "mentally disabled person" within the meaning of r 10.09 of the Rules, because she was not capable of managing her affairs in a proceeding. (In the Rules, "mentally disabled person" means "a person who, because of a mental disability or illness, is not capable of managing the person's own affairs in a proceeding".) Mr Williams could do no more than suggest that such a claim might be brought. He also referred to the decision of Edmonds J in Owners of Strata Plan No 23007 v Cross (2006) 153 FCR 398; Goddard Elliott v Fritsch [2012] VSC 87 at [551]ff (Bell J); and Owners of Strata Plan 58041 v Temelkovski [2014] FCCA 2962 (Judge Manousaridis). In any event, no occasion arises now to say anything more about it. 11 I turn now to the merits of the application to appoint Mr Isherwood as Ms Burnett's litigation representative. 12 At the commencement of the hearing yesterday morning, Mr Williams said, in substance, that he is currently unable to obtain instructions from Ms Burnett because she is under a legal incapacity. In particular, Mr Williams said as follows: MR WILLIAMS: Yes, your Honour. Well, I will say it now, the great difficulty that I have is giving advice and receiving competent instructions from Ms Burnett. That has been apparent now since I first met her in May. The primary issue for today is the interim application for Mr Isherwood, her son, who is in the court, your Honour, to be appointed as her litigation guardian under the rules. At the moment I have a difficulty, and I actually - before I understood what your Honour said when I'm seeking leave to appear for Ms Burnett. As an officer of the court I have a problem in appearing for someone when even this morning they've given me instructions, which I don't consider are competent or based upon a sound reasoning of the events that are before the court, your Honour. … Well, the status is - presents a difficulty for me, your Honour. 13 Mr Williams also relied upon a report from Dr Phillip Reid MBBS FRANZCP dated 5 August 2020. In his affidavit, in which he annexes the report, Mr Williams swore: The applicant, being the person for whom the appointment is to be made is a person under a legal incapacity and the nature of her legal incapacity is that the applicant is a vulnerable person with a mental illness. The combination of poor short-term memory and her likely psychiatric illness has reduced her level of capacity. The current poor outcome reflects her [il]logicality and inability to accept reason. Since 2014 it has appeared that she has lacked reasonable judgments on her health and undertaking legal proceedings. 14 Mr Walker submitted that I should not allow the report into evidence. Among other things, he points to the fact that the report refers to a covering letter and enclosed documentation which was not produced. He also contended that the report goes nowhere near addressing factors which are relevant to determining whether a party is a person under a legal incapacity within the meaning of the relevant rule. 15 In Owners of Strata Plan No 23007 v Cross (2006) 153 FCR 398 at 413 [61], Edmonds J identified the following factors as relevant to determining whether a party is a person under a legal incapacity: (a) whether the person had the ability to understand that he or she required advice in respect of the relevant legal proceeding; (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; (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; and (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. See also Slaveski v State of Victoria (2009) 25 VR 160 at 182 [24]ff (Kyrou J). 16 Mr Williams relied in particular upon Dr Reid's statement that, although he was "unable to provide a definitive diagnosis for Ms Burnett", "the diagnostic possibilities include both chronic untreated psychotic disorder or a chronic anxiety condition that has evolved over the years from phobic anxiety to a more somatic symptom disorder …" 17 Mr Walker, on the other hand, in addition to seizing on the fact that Dr Reid conceded that his assessment was "incomplete" and based mainly on a one-hour "cross-sectional interview and mental state examination", relied on the fact that Dr Reid also conceded that Ms Burnett had not disclosed fully her background or her personal history and that he "did not have access to any prior assessments by previous doctors and others that could be relevant in her psychiatric assessment". He also pointed to the fact that none of the correspondence referred to in the report from other doctors was produced. 18 In sum, Mr Walker submitted that nowhere in Dr Reid's report is there to be found any indication that he addressed the pertinent question, namely, whether because of a mental disability or illness Ms Burnett is not capable of managing her own affairs in this proceeding. He submitted that, to the contrary, Ms Burnett's conduct since she was served with the creditor's petition in 2017 suggests that she is able to manage her affairs in various proceedings, including because she filed a notice of objection following service of the creditor's petition, and she appeared before Registrar Browning at the hearing of the creditor's petition and again before Judge Riethmuller and myself. 19 The tender of Dr Reid's report should be rejected, essentially for the reasons advanced by the creditors - that is to say, because the report has numerous references to important documents that are not produced, the diagnosis that is given is admitted to be incomplete, and the report does not in any event address the facts, matters or diagnoses going to the question whether because of a mental disability or illness Ms Burnett is capable or not of managing her affairs in this proceeding. Cf Owners of Strata Plan No 23007 v Cross (2006) 153 FCR 398 at 413 [61] (Edmonds J). 20 Mr Williams also sought to rely on Mr Cook's affidavit detailing the refusal of Ms Burnett to cooperate (as she is obliged by law to do) with the trustee. Mr Williams relied in particular on Mr Cook's evidence, which in his oral submissions he summarised as follows: The bankrupt's conduct in relation to this matter includes … a continuing failure to lodge a statement of affairs … on multiple occasions, failing to respond to correspondence from me. On multiple occasions failing to meet with me or my representatives. Failing to return phone calls made by me or my representatives. On occasions, hanging up on my representatives when they were trying to converse with the bankrupt in order to progress the administration of the bankrupt estate. … Generally refusing to recognise my standing as the trustee of her bankrupt estate or the existence of the bankrupt estate at all. 21 Mr Williams also submitted that Mr Cook's affidavit "very clearly sets out the factual nightmare that has confronted the trustee in trying to engage the bankrupt who refuses to accept that she's finally bankrupt". Having thus correctly characterised Mr Cook's evidence, Mr Williams asked the question "why?". He answered his own question by saying "because she hasn't had the capacity to manage her legal affairs". 22 I do not accept that submission. In my view, the fact that a party, without more, refuses to comply with their statutory responsibilities in a context such as this provides no basis for a submission that because of a mental disability or illness they are incapable of managing their affairs. 23 Mr Williams further relied upon observations made by Pearce J in his reasons for refusing to set aside a notice of discontinuance filed by Ms Burnett's then solicitors in an appeal brought in the Supreme Court of Tasmania from orders made by Magistrate Mollard. Mr Williams referred to Pearce J's reasons in Burnett v FitzGerald (2015) 25 Tas R 42 at 52-53 [38], and in particular to the emphasised words below: I would first make some general observations about Ms Burnett's evidence. Apart from the brief period during which she was represented by Mr Fernandez, the applicant has represented herself throughout the proceedings in the Magistrates Court and in the Supreme Court. She has strong views about the correctness of her own position. She firmly maintains her opinion about the merits of her case in the Magistrates Court, despite being unsuccessful in those proceedings. She feels unjustly dealt with by Mr Browne and by the magistrate. She was at a disadvantage in the Magistrates Court because the other party to the proceedings was a legal practitioner. It is natural that a person in her position is less familiar with the legal, procedural and evidentiary requirements of court proceedings. The same applies to the proceedings in this Court. During this application she has not only been faced with the difficult situation of, in the face of opposition by experienced counsel, having to present her own evidence and be cross-examined, and also cross-examine witnesses who are legal practitioners. The training and experience of legal practitioners gives a particular advantage in giving evidence. Legal practitioners are naturally more able to cope with the court room situation, and evidence given by them will commonly be more impressive as a result. Allowance should be made for all of those factors. At the same time I have concluded that the applicant's determination to vindicate her position has affected her insight into the issues in the case, and reduces my confidence in her ability to accurately recall and recount events. Her perception of events is coloured by the opinions and beliefs she holds. When cross-examined she frequently failed to answer straightforward questions directly and she was argumentative and evasive. Her evidence was at times inconsistent. (Emphasis added.) 24 I fail to see how any of the observations made in that paragraph assist the application. They have no bearing on any relevant consideration. 25 Mr Walker submitted, leaving to one side the question of Dr Reid's report, that in any event I should not have regard to Mr Williams' concerns expressed at the commencement of his submissions that he is unable to obtain proper instructions from Ms Burnett. See [12] above. 26 Mr Walker submitted that after Dr Reid's report was received, shortly after 5 August 2020, Mr Williams prepared the application for annulment on behalf of Ms Burnett and filed it on behalf of Ms Burnett. He also points to the fact that the application for annulment includes a number of claims, including the fraud claim which I mentioned earlier, for which Mr Williams must have believed he had a proper basis, on his instructions. He also relies on the fact that Ms Burnett's lengthy affidavit was apparently prepared with Mr Williams' assistance and was in any event filed by his firm. Mr Walker says further that, having been filed, Mr Williams presumably intended that the affidavit was to be read in the proceeding. 27 Each of the following documents - the annulment application dated 28 August 2020, Mr Williams' affidavit attaching Dr Reid's report dated 28 August 2020, Ms Burnett's 482-page affidavit filed 4 September 2020, and the interim application to appoint a litigation representative - contains the standard form information on the bottom of the front page disclosing that the documents were "prepared by" Mr Williams of the law firm Glynn Williams Legal. Although Mr Walker did not refer to it, Mr Williams also prepared on behalf of Ms Burnett an affidavit sworn on 11 September 2020 seeking a stay of execution of orders made by Kerr J in proceeding TAD 11 of 2020. 28 Mr Walker submitted that I should not accept what Mr Williams said from the bar table about his inability to obtain proper instructions. His submissions in that regard were as follows: MR WALKER: The [creditors] do not concede that the matters raised by Mr Williams with you concerning his concern that he is not able to obtain instructions from Ms Burnett because she is under a legal incapacity. The reason that concession is not made is manifold. Firstly, Dr Reid's report is dated 5 August 2020. After that report was received by Mr Williams, presumably sometime after 5 August, Mr Williams has prepared the application on behalf of Ms Burnett. He has filed it on behalf of Ms Burnett. It includes a number of claims, including a fraud claim upon which he must have, at that time, had reasonable grounds that material available to him provided a proper basis for making that allegation. He filed an interim application on behalf of Gail Burnett on 15 September. He prepared an affidavit for Gail Burnett extending to 91 paragraphs dealing with a number of matters in detail with 456 pages also of annexures. He filed that affidavit, and it is apparently the case that affidavit is intended to be read. Now, what has changed? If Ms Burnett was capable of providing the instructions in August for the applications and the affidavit, she is capable of providing those instructions now. Mr Williams' submission this morning was that the report from Dr Reid was very clear that the incapacity alleged now would have existed at the time of the service of the petition - the creditor's petition which, of course, was in 2017. So if her capacity was the same then as it is now, and as we said if she's capable of providing the instructions for the application in August then she is capable of providing it now, and that's actually a complete answer to the application. If she is - if you accept that she is not - or she has a legal incapacity now then the only conclusion is that Mr Williams filed this application without instructions, and we submit that is a highly unlikely situation. 29 In reply, Mr Williams pointed to the difficult position he was in being unable to go into any detail about the difficulties he has had in recent times in obtaining instructions from Ms Burnett. He also pointed to the fact that applications of this sort are ultimately matters for the court to decide. 30 In my view, the application to appoint a litigation representative must be dismissed. 31 In my view, Mr Walker is correct in saying that, in circumstances where Mr Williams himself has acted on behalf of Ms Burnett by filing the detailed annulment application and her lengthy affidavit as recently as August last year, a mere statement from the bar table about difficulties in obtaining instructions is a manifestly insufficient basis to appoint a litigation representative under the Rules. Further, I cannot accept Mr Williams' submission (see [12] above) that he has had "great difficulty … giving advice and receiving instructions from Ms Burnett … since [he] first met her in May". To say the least, that submission does not sit comfortably with the fact that Mr Williams prepared and caused to be filed in this proceeding the various documents described above, which he could only have done on instructions from his client. 32 It is important to bear in mind the presumption that everybody of full age has the mental capacity to manage their own affairs. As Bell J said in Goddard Elliott v Fritsch [2012] VSC 87 at [546]: That a person has the mental capacity to make decisions for themselves is implicitly asserted every time someone takes a legal step, including that of commencing or defending a legal proceeding. The assertion is afforded respect and not challenged unless capacity is made a legitimate issue. 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. That a party to legal proceedings has that capacity is the working assumption of the courts until the contrary is proven. The burden of proving to the contrary rests with those asserting incapacity. (Citations omitted.) 33 It follows that the application to appoint a litigation representative must be dismissed. 34 I will order that the respondents' costs of the application be taxed and paid out of the estate of the applicant in accordance with s 109(1)(a) of the Bankruptcy Act 1966 (Cth). 35 Accordingly, the court orders that: (1) the application to appoint Mr Isherwood as Ms Burnett's litigation representative be dismissed; and (2) the respondents' costs of the application be taxed and paid out of the estate of the applicant in accordance with s 109(1)(a) of the Bankruptcy Act 1966 (Cth). I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Callaghan.